CITY OF PACIFICA
COUNCIL AGENDA SUMMARY REPORT
4/28/2025
1 SUBJECT:
Resolution Declaring Results of Majority Protest Proceedings and Establishing the Pacifica Tourism Marketing District
RECOMMENDED ACTION:
Hold a final hearing and adopt the resolution establishing the Pacifica Tourism Marketing District (PTMD)
STAFF CONTACT:
Yulia Carter, Assistant City Manager
(650) 738-7402
[email protected]
BACKGROUND/DISCUSSION:
Pacifica Hotel Business Improvement District
In 2004, the Pacifica Hotel Business Improvement District (PHBID) was formed pursuant to the Parking and Business Improvement Area Law of 1989 (‘89 Law). The City Council of the City of Pacifica adopted Ordinance No. 714-C.S creating the PHBID and levying an annual assessment of $1.00 per room per day of occupancy on the hotels within the City.
The City of Pacifica and Pacifica lodging businesses now seek to modernize the PHBID by forming a new Pacifica Tourism Marketing District (PTMD) pursuant to the Property and Business Improvement District Law of 1994, Streets and Highways Code section 36600 et seq. (‘94 Law) and allowing the PHBID formed under the ‘89 Law to expire at the end of its current 1- year term on June 30, 2025, by not undergoing the annual renewal process at City Council.
In early 2024, the process to form the ’94 District was initiated and a Management District Plan (MDP) was drafted based on feedback from the PHBID Advisory Board (Board). At that time, the Board had decided on a 1% assessment rate for the new ’94 District. In April 2024, petitions in support of formation of the ’94 district at a 1% assessment rate were collected from lodging business owners paying over 50% of the proposed assessment - six signed petitions were received out of a total of eight hotel owners. Although the required legal threshold had been met, the City Council elected to not move forward with the formation of the ’94 district at that time.
With the ’89 PHBID approaching the end of its current term, staff brought the continuation of the ’94 district formation as an agenda item at the January PHBID Board meeting. At the meeting, the Board expressed concerns about the financial burden of the 1% assessment rate on their guests. While the Board agreed to continue with the ’94 district formation, they proposed to modify the 1% assessment rate that they approved previously. On March 21st, the Board reviewed various financial projections and considered several assessment rate scenarios, ultimately deciding on a 0.5% assessment rate by a unanimous vote.
Pacifica City Council 2
April 28, 2025
At the conclusion of the ’94 PTMD formation process, the City Council may adopt, revise, change, reduce, or modify the proposed assessment pursuant to Streets and Highways Code section 36624. Proposed assessments may only be revised by reducing any or all of them. The attached MDP dated March 25, 2025, has been revised to reflect the updated 0.5% assessment rate as requested by the Board.
Management District Plan
The Management District Plan (Attachment 1) includes the proposed boundary of the PTMD, a service plan and budget and a proposed means of governance. The PTMD will include lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Pacifica.
The annual assessment rate is one-half of one percent (0.5%) of gross short-term sleeping room rental revenue. Annually, the Owner’s Association may increase or decrease the assessment rate by a maximum of one-quarter of one percent (0.25%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days; any officer or employee of a foreign government, which officer or employee is exempt by reason of express provision of Federal law or international treaty.
The proposed PTMD will have a five (5) years year term, beginning July 1, 2025 or as soon as possible thereafter, and ending five (5) years from its start date. The assessment will be implemented beginning July 1, 2025 or as soon as possible thereafter. Once per year beginning on the anniversary of PTMD formation there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the PTMD.
The City will be responsible for collecting the assessment on a monthly basis from each lodging business located in the PTMD boundaries. The City shall forward the assessments to a nonprofit organization, which will have the responsibility of managing PTMD programs.
The PHBID will expire on June 30, 2025, and the new ’94 PTMD, if approved, will begin collecting assessments on July 1, 2025.
94 PTMD formation PROCESS
March 10, 2025 RESOLUTION OF INTENTION (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the proposed district who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to establish a district by the adoption of a resolution expressing its intention to establish a district.
Petition Status: Petitions in favor of PTMD formation were submitted by 6 lodging businesses, which represent 50.10% of the total PTMD assessment, not counting a single business proposed to pay more than 40 percent (40%), pursuant to California Streets and Highways Code section 36621(a). This majority petition allows the Council to initiate proceedings for PTMD formation at the March 10, 2025 meeting.
No later than
March 14, 2025 NOTICE (COMPLETED)
The ‘94 Law requires the City to mail written notice to the owners of all Pacifica City Council 3
April 28, 2025
businesses proposed to be within the PTMD. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest PTMD formation.
March 24, 2025 PUBLIC MEETING (COMPLETED)
Allow public testimony on the formation of the PTMD and levy of assessments. No Council action required.
April 28, 2025 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the proposed PTMD which will pay fifty percent (50%) or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
At the conclusion of the public hearing to establish the district, the City Council may adopt, revise, change, reduce, or modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with the revenues from the assessments pursuant to Streets and Highways Code section 36624. Proposed assessments may only be revised by reducing any or all of them.
The adoption of the Resolution of Formation shall establish the PTMD and levy of the assessment in each of the fiscal years referred to in the Plan.
If the ’94 PTMD is approved after the foregoing process, the City will need to amend Chapter 17, “Hotel Business Improvement District” within Chapter 17, Title 3 of the Pacifica Municipal Code.
ALTERNATIVE ACTION:
The City Council may elect not to form the PTMD.
RELATION TO CITY COUNCIL GOALS AND WORK PLAN:
"Fiscal Sustainability" includes investing in economic development to increase revenues for tourism and marketing that will directly benefit the lodging industry and improve the local economy.
FISCAL IMPACT:
No significant fiscal impact is associated with this action. The City currently collects no fee for administering the BID.
ORIGINATED BY:
City Manager's Office
ATTACHMENT LIST:
Pacifica City Council 4
April 28, 2025
Attachment 1: Management District Plan (PDF)
Pacifica City Council 5
April 28, 2025
RESOLUTION NO. _____________
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PACIFICA ESTABLISHING THE
PACIFICA TOURISM MARKETING DISTRICT (PTMD)
WHEREAS, the Property and Business Improvement Law of 1994, Streets and Highways Code § 36600 et seq., authorizes the City of Pacifica (City) to establish business improvement districts upon petition by a weighted majority of the business owners located within the boundaries of the district; and
WHEREAS, the proposed PTMD includes all hotels, RV parks, and all short-term vacation rental businesses (hereinafter referred to collectively as “lodging businesses”), existing and in the future, available for public occupancy located within the boundaries of the City of Pacifica; and
WHEREAS, lodging business owners who will pay more than fifty percent (50%) of the proposed assessment, as weighted according to the amount of the assessment to be paid by the petitioner, within the boundaries of the PTMD have petitioned the City Council (Council) to establish the PTMD; and
WHEREAS, included with the petitions was a Management District Plan (Plan) summary that describes the proposed assessment to be levied on lodging businesses within the PTMD to pay for sales, marketing and destination development programs, and other improvements and activities set forth in the Plan; and
WHEREAS, the assessed lodging businesses within the PTMD will receive a specific benefit from the activities and improvements set forth in the Plan; and WHEREAS, on March 10, 2025 at 6:00 PM at the Council Chambers located at 2212 Beach Blvd., Pacifica, CA 94044, the Council adopted a Resolution of Intention, Resolution No. 20-2025; and
WHEREAS, the public meeting and public hearing to consider the formation of the PTMD have been properly noticed in accordance with Streets and Highways Code §36623; and WHEREAS, on March 24, 2025 at 5:00 PM at the Council Chambers located at 2212 Beach Blvd., Pacifica, CA 94044, the Council held a public meeting regarding the formation of the PTMD, and the Council heard and received objections and protests, if any, to the formation of the PTMD and the levy of the proposed assessment; and WHEREAS, on April 28, 2025 at 7:00 PM at the Council Chambers located at 2212 Beach Blvd., Pacifica, CA 94044, the Council held a public hearing regarding the formation of the PTMD, and the Council heard and received all objections and protests, if any, to the formation of the PTMD and the levy of the proposed assessment; and WHEREAS, the City Clerk has determined that there was no majority protest. A majority protest is defined as written protests received from owners of businesses in the established Pacifica City Council 6
April 28, 2025
PTMD which would pay fifty percent (50%) or more of the assessments proposed to be levied.
Protests are weighted based on the assessment proposed to be levied on each lodging business; and
WHEREAS, the City bears the burden of proving by a preponderance of the evidence that an assessment imposed for a specific benefit or specific government service is not a tax, that the amount is no more than necessary to cover the costs to the City in providing the specific benefit or specific government service, and that the manner in which those costs are allocated to a payor bear a fair or reasonable relationship to the specific benefits or specific government services received by the payor.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL THAT:
1. The recitals set forth herein are adopted by the Council as findings and they are true and correct.
2. The PTMD is hereby established for a five (5) year term, beginning July 1, 2025, or as soon as possible thereafter, and ending five (5) years from its start date, unless renewed pursuant to Streets and Highways Code § 36660.
3. The Plan dated March 25, 2025 is hereby adopted and approved.
4. The activities to be provided to benefit businesses in the PTMD will be funded by the levy of the assessment. The revenue from the assessment levy shall not be used: to provide activities that directly benefit businesses outside the PTMD; to provide activities or improvements outside the PTMD; or for any purpose other than the purposes specified in this Resolution, the Resolution of Intention, and the Plan. Notwithstanding the foregoing, improvements and activities that must be provided outside the PTMD boundaries to create a specific benefit to the assessed businesses may be provided, but shall be limited to marketing or signage pointing to the PTMD.
5. The Council finds as follows:
a) The activities funded by the assessment will provide a specific benefit to assessed businesses within the PTMD that is not provided to those not paying the assessment. b) The assessment is a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.
c) The assessment is a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.
d) Assessments imposed pursuant to the PTMD are levied solely upon the assessed business, and the business owner is solely responsible for payment of the assessment when due. If the owner chooses to collect any portion of the assessment from a transient, that portion shall be specifically called out and identified for the transient in any and all communications from the business owner as the “PTMD Assessment” or “Tourism Assessment” as specified in the Plan.
6. The assessments levied for the PTMD shall be applied towards sales, marketing and Pacifica City Council 7
April 28, 2025
destination development programs to market Pacifica lodging businesses as tourist, meeting and event destinations, and other improvements and activities as set forth in the Plan.
7. Assessments levied on lodging businesses pursuant to this resolution shall be levied on the basis of benefit. Because the services provided are intended to increase sleeping room rentals, an assessment based on gross short-term sleeping room rental revenue is the best measure of benefit.
8. The annual assessment rate is one half of one percent (0.5%) of gross short-term sleeping room rental revenue. Annually, the Owner’s Association may increase or decrease the assessment rate by a maximum of one-quarter of one percent (0.25%) of gross short-term sleeping room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days; any officer or employee of a foreign government, which officer or employee is exempt by reason of express provision of Federal law or international treaty.
9. The assessments for the entire PTMD will total approximately $143,000 in year one (1).
10. Bonds shall not be issued to fund the PTMD.
11. The PTMD shall include all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City. A boundary map is attached hereto and incorporated herein by reference.
12. The assessments shall be used for the purposes set forth above and any funds remaining at the end of any year may be used in subsequent years in which the PTMD assessment is levied as long as they are used consistent with the requirements set forth herein.
13. The assessments to fund the activities and improvements for the PTMD will be collected by the the City on a monthly basis, and in accordance with Streets and Highways Code §36631.
14. The Council, through adoption of this Resolution and the Plan, has the right pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the Owners’ Association of the PTMD as defined in Streets and Highways Code §36612.
15. The Owners’ Association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvement and activities described in the report. The first report shall be due after the first year of operation of the PTMD.
16. The PTMD established pursuant to this Resolution will be subject to any amendments to the Property and Business Improvement District Law of 1994 (California Streets and Highways Code §36600 et. seq.).
17. The City Clerk, or his or her designee, is directed to take all necessary actions to complete the formation of the PTMD and to levy the assessments.
18. This Resolution shall take effect immediately upon its adoption by the Council. • • • • •
Pacifica City Council 8
April 28, 2025
I HEREBY CERTIFY that the foregoing Resolution of Formation was introduced and adopted at a regular meeting of the Council on April 28, 2025 by the following vote:
AYES, Councilmembers:
NOES, Councilmembers:
ABSENT, Councilmembers:
ABSTAIN, Councilmembers:
_________________________________
Sue Beckmeyer, Mayor
ATTEST: APPROVED AS TO FORM:
______________________________ _________________________________ Sarah Coffey, City Clerk Michelle Kenyon, City Attorney