PISMO BEACH COUNCIL AGENDA REPORT
Agenda Item #9.F
SUBJECT/TITLE:
ANNUAL REPORT FOR FISCAL YEAR 2022-23 FROM THE PISMO BEACH
CONFERENCE AND VISITORS BUREAU / LODGING BUSINESS IMPROVEMENT DISTRICT (LBID) ADVISORY BOARD; DECLARING THE CITY COUNCIL’S INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR THE LBID FOR FY 2023
RECOMMENDATION:
Adopt a Resolution approving the Annual Report for Fiscal Year 2023 from the Pismo Beach Conference and Visitors Bureau / Lodging Business Improvement District Advisory Board, and declaring the City Council’s intention to levy an annual assessment for the LBID for FY 2023, and directing the City Clerk to schedule a public hearing for April 19, 2022, to consider levying the assessment.
EXECUTIVE SUMMARY
The primary purpose of this agenda item is to present for approval the CVB/LBID Advisory Board’s LBID Annual Report for Fiscal Year (FY) 2023, and recommend that the Council declare its intention to levy an annual assessment for the LBID district for FY 2023 and direct the City Clerk to schedule a public hearing for April 19, 2022, to consider levying the assessment.
Background
The Lodging Business Improvement District (LBID) is an assessment district created by the Pismo Beach City Council on August 4, 2009 via Ordinance No. O-2009-008 at the request and approval of a majority of the lodging businesses operating in the City. These lodging businesses requested to raise money by assessing themselves, and then to use that money to promote Pismo Beach lodging businesses. Each year since then, the City Council has approved an annual assessment for lodging properties at 1% of gross lodging revenues. The assessments have been used to fund promotional activities for lodging and other tourism opportunities within Pismo Beach.
Pismo Beach Municipal Code Section 3.26.110 provided for a three-year sunset provision for the LBID (in early September 2012). After the passage of the LBID ordinance, California voters enacted Proposition 26, which amended the California Constitution to revise the definition of a “tax.” This set in motion the fact that the LBID assessment, in order to be extended beyond the September 2012 sunset date, was subject to compliance with Proposition 26 to avoid being considered a special tax requiring a 2/3 majority vote of the electorate to pass. With the renewal of the LBID following adoption of Proposition 26, the purposes for which LBID assessments could be expended were more limited than when the LBID was initially established. As such, the improvements and activities permitted under Section 3.26.030 of the Pismo Beach Municipal Code include:
Council Agenda 4-5-2022 9.F-1
a) The general promotion of lodging operations within the LBID shall include costs of programs and physical improvements as specified in the business plan to be adopted annually;
b) The marketing of conference, group, and vacation business that benefits the local lodging industry in the district;
c) The marketing of the LBID to the travel industry in order to benefit the local lodging industry in the district;
d) Administration of the LBID, including collection and enforcement of assessments.
In FY 2019, the Advisory Board and City Council approved an additional 1% LBID assessment starting on January 1, 2019 to be annually approved for 5 years to provide the funding to complete some significant community enhancing projects that would help promote and benefit the lodging businesses in the city of Pismo Beach. These community enhancing projects include the pier plaza improvements, pedestrian connections under US interstate 101 at Price Street and Spyglass Drive for entrance into the Pismo Preserve, Addie Street area improvements, and the Shell Beach Streetscape improvements.
Going forward, the LBID physical improvements that have not yet been completed but are either already budgeted or planned, include a sidewalk connection along Spyglass Road to the Pismo Preserve, updating playground equipment adjacent to the Addie Street and Pier parking lots, replacing the Addie Street parking lot bathroom with an expanded bathroom facility, and making improvements in the area of the terminus of Park Place.
Since passage of the LBID, the total amount of assessments collected has been $14.75 million, including $11.15 million from the original 1% assessment and $3.60 million from the 1% assessment for physical improvements.
Annual Report Requirement
Section 3.26.100 of the Pismo Beach Municipal Code states that the Advisory Board shall review the implementation of the code chapter, the implementation of programs and activities funded through the code chapter, and advise the City Council on the amount of the district’s assessments and on the services, programs, and activities to be funded by the assessments, and perform such other duties as required by the Business Improvement District Law, including preparing the Annual Report required by California Streets and Highways Code Section 36533. California Streets and Highways Code Section 36533 requires that the report include information addressing the following six items:
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(1) Any proposed changes in the boundaries of the parking and business improvement area or in any benefit zones within the area.
(2) The improvements and activities to be provided for that fiscal year. (3) An estimate of the cost of providing the improvements and the activities for that fiscal year.
(4) The method and basis of levying the assessment in sufficient detail to allow each business owner to estimate the amount of the assessment to be levied against his or her business for that fiscal year.
(5) The amount of any surplus or deficit revenues to be carried over from a previous fiscal year.
(6) The amount of any contributions to be made from sources other than assessments levied pursuant to this part.
At its March 16, 2022 meeting, the CVB/LBID Advisory Board moved to recommend that the 2% Assessment be continued in FY 2023, and approved the Annual Report, which addresses the above items (See Attachment 1.A, which will be included as Exhibit A to the Resolution if adopted).
FY 2023 Annual Report
See Attachment 1.A: Updated CVB/LBID Advisory Board Annual Report for FY 2023.
Public Hearing
If the City Council approves staff's recommendation this evening, a public hearing regarding the assessment will be scheduled for the next City Council meeting. Pismo Beach Municipal Code Section 3.26.060 states that “After approval of the annual report, the Pismo Beach City Council shall follow the hearing process as outlined in [California Streets and Highways Code] Section 36534 of the Law to levy assessments for the ensuing fiscal year. At the public hearing the Pismo Beach City Council shall hear and consider all protests to the levy of assessment. If written protests are received from lodging operations in the district proposed to pay fifty percent (50%) percent or more of the annual assessment, no further proceedings to impose the levy of assessments shall take place during the ensuing fiscal year.” If protests received do not represent 50% or more, the Council may proceed to adopt a resolution imposing an assessment for FY 2023.
Conclusion and Recommendation
Staff recommends that Council adopt a Resolution (Attachment 1) approving the annual report for fiscal year FY 2023 from the CVB/LBID Advisory Board, and declaring the City Council’s intention to levy an annual assessment for the Lodging Business Improvement District for FY 2023, and directing the City Clerk to schedule a public hearing for April 19, 2022 to consider levying the assessment. This date is not less than 10 days after the adoption of the resolution of intention per California Streets and Highways Code Section 36534(a)(6).
Council Agenda 4-5-2022 9.F-3
FISCAL IMPACT:
If the proposed FY 2023 Annual Report is approved, it is estimated that a 1% LBID annual assessment for FY 2023 will generate $1,606,930 in LBID Assessment Revenues in FY 2023 which, after $135,381 of administrative expenses, could be used to promote the lodging businesses in Pismo Beach. These costs could, in turn, generate transient occupancy tax revenues and other revenues for the City and related agencies.
In addition, the 1% LBID annual assessment for FY 2023 for physical improvements is estimated to generate the same $1,606,930, of which $1,077,042 is scheduled to be transferred to the Motor Vehicle Replacement Fund to support the loan repayment for the Pier Plaza and Pismo Preserve physical improvements.
Not passing this or a similar Resolution would preclude the Council from setting an Annual Assessment for the LBID for FY 2023, and thus preclude the LBID from generating an estimated $3,213,860 in Assessment Revenues in FY 2023, which could be used to promote the lodging businesses in Pismo Beach.
ALTERNATIVES:
1. Do not adopt the Resolution; do not levy an assessment in FY 2023.
2. Provide staff with other direction.
ATTACHMENTS:
1. Resolution
1.A Exhibit A to Resolution: CVB/LBID Advisory Board Annual Report for FY 2023
Submitted by: Meeting Date: April 5, 2022
Nadia Feeser, Administrative Services Director
City Manager Approval:
Council Agenda 4-5-2022 9.F-4
RESOLUTION NO. R-2022-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA APPROVING THE ANNUAL REPORT FOR FISCAL YEAR 2023 FROM
THE PISMO BEACH CONFERENCE AND VISITORS BUREAU / LODGING
BUSINESS IMPROVEMENT DISTRICT ADVISORY BOARD, AND DECLARING THE CITY COUNCIL’S INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR THE LBID FOR FY 2023, AND DIRECTING THE CITY CLERK TO SCHEDULE A PUBLIC HEARING FOR APRIL 19, 2022, TO CONSIDER LEVYING THE ASSESSMENT
WHEREAS, the Parking and Business Improvement Area Law of 1989 (California Streets and Highway Code Section 36500 et seq.) authorizes cities to establish parking and business improvement areas for the purpose of imposing assessments on businesses for certain purposes; and
WHEREAS, the Pismo Beach City Council established the Lodging Business Improvement District (“the District” or “LBID”) by the adoption of Ordinance O-2009-008; and
WHEREAS, the Conference and Visitors Bureau / Lodging Business Improvement District Advisory Board has submitted an Annual Report to Council that outlines the activities of the District proposed for Fiscal Year (FY) 2023 as required by California Streets and Highways Code Section 36533; and
WHEREAS, the City Council finds the Annual Report to be complete, to comply with the interests of the District assessees, and to contain the information required by California Streets and Highways Code Section 36533; and
WHEREAS, California Streets and Highways Code Sections 36534 and 36535 require that in order to levy an assessment, the Council must adopt a Resolution of Intention that declares its intent to levy such assessment, and then set a date for a public hearing where interested parties may be heard on the issue.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of Pismo Beach as follows:
Section 1. The City Council hereby approves the Annual Report for FY 2023, as submitted to the City Clerk by the CVB/LBID Advisory Board attached as Exhibit A.
Section 2. No changes are proposed to the boundaries of the Lodging Business Improvement District.
Section 3. Pursuant to the provisions of Section 36500 et seq. of the California Streets and Highways Code, City Council declares its intent to levy and collect an annual assessment for the Lodging Business Improvement District for FY 2023. The assessment Attachment 1
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shall be calculated based upon 2% of the gross lodging revenues, as that term is defined in Pismo Beach Municipal Code Section 3.26.020(D).
Section 4. The authorized uses for the revenues derived from the assessment are stated in Pismo Beach Municipal Code Section 3.26.030, and no changes to these uses are proposed in the Annual Report for FY 2023. The authorized uses as stated in that section are:
a) The general promotion of lodging operations within the LBID shall include costs of programs and physical improvements as specified in the business plan to be adopted annually;
b) The marketing of conference, group, and vacation business that benefits the local lodging industry in the district;
c) The marketing of the LBID to the travel industry in order to benefit the local lodging industry in the district;
d) Administration of the LBID, including collection and enforcement of assessments.
Section 5. An outline description of the improvements and activities to be provided in FY 2023, the boundaries of the District, and the proposed assessments to be levied upon the businesses within the area are contained within the Annual Report for FY 2023 filed with the City Clerk by the CVB/LBID Advisory Board.
Section 6. A public hearing shall be held before the City Council on April 19, 2022 in the City Council Chamber, 760 Mattie Road, Pismo Beach, California. Following the hearing, Council will consider adoption of a resolution levying the assessment as recommended by the CVB/LBID Advisory Board.
At this hearing, Council will hear all interested persons, and protests may be made orally or in writing. Written protests shall be filed with the City Clerk at or before the hearing. A written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Any protest pertaining to the regularity or sufficiency of the proceedings shall be in writing, and shall clearly set forth the irregularity or defect to which the objection is made. Council may correct minor defects in the proceedings during the hearing.
If written protests against the assessment are received from business owners that will pay fifty percent or more of the proposed assessment, no further proceedings to levy the assessment shall be taken for one year from the date of the finding of a majority protest by Council. If the majority protest by business owners is against the furnishing of a specified improvement or activity within the District, those improvements or activities shall be eliminated. In order to be counted toward a majority protest, each written protest shall be from the business owner and contain a business description sufficient to identify the business. If the protesting person is not shown on the City’s official business license records as owner of the business, the protest shall contain written evidence that the person is the business owner.
Attachment 1
Council Agenda 4-5-2022 9.F-6
Section 7. The City Clerk is hereby directed to give notice of said hearing by causing the Resolution of Intention to be published once in a newspaper of general circulation in the City of Pismo Beach not less than seven days before the public hearing.
Section 8. This Resolution is effective on its adoption.
UPON MOTION OF Council Member , seconded by Council Member , the foregoing resolution was adopted by the City Council of the City of Pismo Beach this 5th day of April 2022, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
Attachment 1
Council Agenda 4-5-2022 9.F-7
Pismo Beach Lodging Business Improvement District
Updated Annual Report and Business Plan for FY 2022-2023
Presented to the Pismo Beach City Council By the City Conference & Visitors Bureau / Lodging Business Improvement District Advisory Board
The City of Pismo Beach’s Conference & Visitors Bureau (CVB) Board at its meeting on March 16, 2022, completed its Pismo Beach Lodging Business Improvement District Updated Annual Report and Business Plan as required by Section 3.26.060 of the Pismo Beach Municipal Code.
Regarding the requirements for the Annual Report, as stated in Section 36533 of the California Streets and Highways Code:
1. The Pismo Beach Lodging Business Improvement District (LBID) Advisory Board did not propose any changes in the Boundaries of the LBID, which were established in Section 3.26.040 to be the boundaries of the City of Pismo Beach.
2. With the renewal of the LBID following adoption of Proposition 26, the purposes for which LBID assessments could be expended were more limited than when the LBID was initially established. As such, the improvements and activities to be provided for in Fiscal Year FY 2023 are those services and activities permitted under Section
3.26.030 of the Pismo Beach Municipal Code, which include:
A. The general promotion of lodging operations within the LBID shall include costs of programs and physical improvements as specified in the business plan to be adopted annually;
B. The marketing of conference, group, and vacation business that benefits the local lodging industry in the district;
C. The marketing of the LBID to the travel industry in order to benefit the local lodging industry in the district;
D. Administration of the LBID, including collection and enforcement of assessments.
The continuing initiatives proposed for the original 1% LBID Assessment for FY 2023 include the following: Following the Strategic Plan including smart tourism growth, collaborative partnerships, expanding the brand of Classic California, Wine and Waves and the current campaign of “The Drive is on to Pismo Beach” and ExperiencePismoBeach.com. This will be accomplished by following the 2023-2025 Marketing Plan with ongoing reviews at the CVB/LBID Advisory Board Meetings. Specific initiatives include emphasis on lodging packages, targeted advertising of the four-to-five- hour drive markets of both Southern and Northern California, Fresno, Bakersfield, Ventura County, and Santa Barbara County, as well as San Luis Obispo flight routes from Los Angeles, San Diego, Phoenix, Denver, Seattle, Dallas and San Francisco. Continue Attachment 1.A
Council Agenda 4-5-2022 9.F-8
cooperative advertising with the County Tourism Marketing District and other tourism partners, such as Central Coast Tourism Council and Visit California. There will be a continuing effort to promote off-season events that benefit the lodging industry in Pismo Beach and other marketing efforts with emphasis on all social media platforms. These efforts are designed to improve lodging occupancies, RevPAR and TOT taxes which benefit all the residents of Pismo Beach.
The physical improvements proposed for the additional 1% LBID Assessment for FY 2023 include paying down the loan to the Motor Vehicle Replacement Fund for the Pier Plaza and Pismo Preserve project, consistent with the original intent of the additional 1% for physical improvements. These efforts are designed to improve lodging occupancies, RevPAR and TOT taxes which benefit all the residents of Pismo Beach.
3. Estimated Costs for FY 2022 and FY 2023
FY 2022 Projected Actuals for Original 1% Assessment
Sources: The FY 2022 projected actual total sources of $2,327,851, made up of $751,205 from fund balance carried over from the prior fiscal year, an estimated $1,575,420 from LBID assessment revenues, and a projected $1,226 in interest earnings and fees.
Uses: The FY 2022 projected actual expenditures are $1,457,523. This total includes $121,976 for administrative costs and $1,335,547 for direct costs.
The following table shows: the FY 2022 budget and projected actuals for the original 1% assessment, followed by summary tables of the total uses by administrative costs, direct costs, and improvements and details on the direct costs.
Attachment 1.A
Council Agenda 4-5-2022 9.F-9
The next tables summarize the total uses by administrative costs and direct costs, and provides the components of the direct costs.
Original 1% Assessment
Revised
Budget
Projected
Actuals
Variance
(Proj. -
Fund Balance 751,205$ 751,205$ -$
Revenues
1% LBID Assessment 1,575,420 1,575,420 -
LBID Penalty & Interest 1,226 1,226 - Total Sources 2,327,851$ 2,327,851$ -$
Uses
Overtime 158$ 158
Temporary Salaries 31,827$ 22,418 (9,409) Benefits 2,791 3,403 612
Auditor 3,600 3,600 -
Legal 2,000 1,181 (819)
Cooperative Media 2,500 2,500 -
Travel & Meetings 10,000 10,000 -
Oper. Supplies & Maint 1,800 1,800 - Postage 500 500 -
Overhead 78,917 78,917 -
Advertising & Promotion 976,658 976,658 -
Purchased professional 91,389 91,389 -
LBID Audit costs 16,000 - (16,000) Contributions 245,000 245,000 -
CA Welcome Center 20,000 20,000 -
Total Uses $1,482,982 $1,457,523 ($25,459)
Net Sources less Uses $844,868 $870,327 $25,459
FY 2022
Original 1% Assessment
Revised
Budget
Projected
Actuals
Variance
(Proj. -
Total Administrative Costs 131,435 121,976 (9,459) Total Direct Costs 1,351,547 1,335,547 (16,000) Total Uses $1,482,982 $1,457,523 ($25,459)
Direct Cost Detail
TJA contract $1,068,047 $1,068,047 -
Other Contributions 265,000 265,000 -
Miscellaneous direct costs 2,500 2,500 - Total Direct Costs $1,335,547 $1,335,547 -
FY 2022
Attachment 1.A
Council Agenda 4-5-2022 9.F-10
FY 2022 Projected Actuals for 1% Assessment for Physical Improvements Sources: The FY 2022 projected actual total sources of $(523,870), made up of $(2,100,515) from fund balance carried over from the prior fiscal year based on an interfund loan payable to the City’s Motor Vehicle Replacement Fund, an estimated $1,575,420 from LBID assessment revenues, and a projected $1,226 in interest earnings and fees.
Uses: The FY 2022 projected actual expenditures are $358,888. This total includes:
$300,000 for the pedestrian connections under US interstate 101 at Spyglass; $36,000 to replace the beach playground equipment at Main Street and Addie Street, consistent with the original intent of the additional 1% for physical improvements; and $22,888 for the second interest payment on the interfund loan agreement. In addition, the principal on the interfund loan of $1,222,433 will be made this fiscal year.
The following table shows: the FY 2022 budget and projected actuals for the 1% assessment for physical improvements.
FY 2023 Proposed Actuals for Original 1% Assessment
Sources: The FY 2023 projected actual total sources of $2,478,807, made up of $870,327 from fund balance carried over from the prior fiscal year, an estimated $1,606,930 from LBID assessment revenues, and a projected $1,550 in interest earnings and fees.
Uses: The FY 2023 projected actual expenditures are $1,226,631. This total includes $135,381 for administrative costs and $1,091,250 for direct costs. 1% Assessment for Phsyical
Improvements
Revised
Budget
Projected
Actuals
Variance
(Proj. -
Budget)
Fund Balance (2,100,515)$ (2,100,515)$ -$
1% LBID Assessment for physical
improvements
1,575,420 1,575,420 -
Interest Earnings 1,550 - (1,550) LBID Penalty & Interest - 1,226 1,226 Total Sources (523,545) (523,870) (324)
Uses
Spyglass pedestrian connection 300,000 300,000
Beach Playground equipment - Addie
St, Main St.
36,000 36,000
Loan Interest 22,888 22,888
Total Uses 358,888 358,888 -
Net Sources less Uses (882,433)$ (882,758)$ (324)$ Loan Repayment $1,222,433 $1,222,433 -
FY 2022
Attachment 1.A
Council Agenda 4-5-2022 9.F-11
The following table shows: the FY 2023 projected actual sources and uses, followed by summary tables of the total uses by administrative costs, direct costs, and improvements and details on the direct costs.
The next tables summarize the total uses by administrative costs and direct costs, and provides the components of the direct costs.
FY 2023
Original 1% Assessment
Revised
Budget
Fund Balance 870,327$
Revenues
1% LBID Assessment 1,606,930
LBID Penalty & Interest 1,550
Total Sources 2,478,807$
Uses
Overtime
Temporary Salaries 31,827$
Benefits 2,791
Auditor 3,600
Legal 2,000
Cooperative Media 2,500
Travel & Meetings 10,000
Oper. Supplies & Maint 1,800
Postage 500
Overhead 82,863
Advertising & Promotion 884,900
Purchased professional 83,850
LBID Audit costs
Contributions 100,000
CA Welcome Center 20,000
Total Uses $1,226,631
Net Sources less Uses $1,252,176
FY 2023
Original 1% Assessment
Revised
Budget
Total Administrative Costs 135,381$
Total Direct Costs 1,091,250
Total Uses $1,226,631
Direct Cost Detail
TJA contract 968,750$
Other Contributions 120,000
Miscellaneous direct costs 2,500
Total Direct Costs 1,091,250$
Attachment 1.A
Council Agenda 4-5-2022 9.F-12
FY 2023 Proposed Actuals for 1% Assessment for Physical Improvements Sources: The FY 2023 projected actual total sources of $725,722, made up of $(882,758) from fund balance carried over from the prior fiscal year based on an interfund loan payable to the City’s Motor Vehicle Replacement Fund, an estimated $1,606,930 from LBID assessment revenues, and a projected $1,550 in interest earnings and fees.
Uses: The FY 2023 projected actual expenditures include $10,664 for the third interest payment on the interfund loan agreement. In addition, the principal on the interfund loan of $1,066,378 will be made this fiscal year.
The following table shows: the FY 2023 budget and projected actuals for the 1% assessment for physical improvements.
As the revenues and expenditures in this report reflect projections, it is prudent to continue to monitor these items over the course of the fiscal year.
4. No change in the LBID method or basis of levying the assessment was proposed for FY 2023. More specifically, the CVB/LBID Advisory Board approved a motion to recommend that the 2% Assessment be continued in FY 2023.
5. The FY 2022 LBID budget for the original 1% assessment is projected to include a $870,327 surplus left over for carryover into FY 2023. The FY 2022 LBID budget for the 1% assessment for physical improvements is projected to include a $(882,758) deficit fund balance for carryover into FY 2023.
FY 2023
1% Assessment for Phsyical
Improvements
Revised
Budget
Fund Balance (882,758)$
1% LBID Assessment for physical
improvements
1,606,930
Interest Earnings 1,550
LBID Penalty & Interest -
Total Sources 725,722
Uses
Spyglass pedestrian connection -$
Beach Playground equipment - Addie
St, Main St.
-
Loan Interest 10,664
Total Uses 10,664
Net Sources less Uses 715,058$
Loan Repayment $1,066,378
Attachment 1.A
Council Agenda 4-5-2022 9.F-13
6. The FY 2023 LBID Projected Actuals includes $3,100 in projected interest earnings, which comes from investments from the 2% assessment levied on transient rentals, and fund balance carried over from the prior fiscal year. The CVB/LBID Advisory Board did not recommend that any other contributions be budgeted for FY 2023.
Attachment 1.A
Council Agenda 4-5-2022 9.F-14