PISMO BEACH CITY COUNCIL STAFF REPORT
Agenda Item #9.D
Meeting Date: April 1, 2025
TITLE:
Annual Report for Fiscal Year 2026 from the Pismo Beach Conference and Visitors Bureau / Lodging Business Improvement District (LBID) Advisory Board; Declaration of the City Council’s Intention to Levy an Annual Assessment for the LBID for FY 2026
RECOMMENDATION:
Adopt a Resolution approving the Annual Report for Fiscal Year 2026 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 2026, and directing the City Clerk to schedule a public hearing for April 15, 2025, to consider levying the assessment.
EXECUTIVE SUMMARY:
The primary purpose of this agenda item is to present for approval the Conference and Visitors Bureau / Lodging Business Improvement District (CVB/LBID) Advisory Board’s LBID Annual Report for Fiscal Year (FY) 2026, recommend that the Council declare its intention to levy an annual assessment for the LBID for FY 2026, and direct the City Clerk to schedule a public hearing for April 15, 2025, 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 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 4-1-2025 9.D-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; and
d) Administration of the LBID, including collection and enforcement of assessments.
Additional 1% LBID Assessment for Physical Improvements Starting in FY 2019, the Advisory Board and City Council approved an additional 1% LBID assessment starting on January 1, 2019, to be annually approved 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. The following list provides the status of the various visitor serving projects that were supported in whole or in part by the LBID 1% assessment for physical improvements.
Completed
Pier Plaza improvements – Completed
Pedestrian connection under US 101 at Price Street for entrance into the Pismo Preserve – Completed
Pedestrian connection under US 101 at Spyglass Drive – Completed Beach swings – Completed
Christmas decorations – Completed
Maintenance equipment to clean Promenade and restrooms – Completed Stewardship banners – Completed
Sponsorships for events/seed funding – Completed
Pressure washing of sidewalks for expanded area – Completed In Progress
Addie Street restroom – Design in progress with City Council feedback, working with State Lands to ensure compliance with lease
Butterfly Grove trail signage – pending City taking over Highway 1, delays per Caltrans Butterfly Grove parking crosswalk design – pending City taking over Highway 1, delays per Caltrans
Annual Beautification Fund – in progress
Visitor Information Center – in progress
Stewardshipbanners – in progress
Sponsorships for events/seed funding – in progress
Future projects scheduled for FY 2026 include more progress on the above “In Progress” projects, plus:
Butterfly Grove parking crosswalk construction
Downtown Strategic Plan update
Christmas decorations
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Lighting of ball fields
Some of these projects are multi-year projects. As such, the amount of these proposed projects that could be accomplished depends on how many years the additional 1% assessment is continued. These projects would need to be further defined with City staff working with the CVB/LBID Advisory Board and supported by the City Council.
Since passage of the LBID, the total amount of assessments collected has been $23.19 million, including $15.37 million from the original 1% assessment and $7.82 million from the 1% assessment for physical improvements.
Annual Report Requirement
Section 3.26.100 of the Pismo Beach Municipal Code states that the CVB/LBID 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:
(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.
Staff attended the March 18, 2025 Pismo Beach Hospitality Association (PBHA) Board meeting to discuss the LBID Annual report, the various proposed projects, and continuing the 2% Assessment to FY 2026. The PBHA Board unanimously supported the 2% Assessment. On March 19, 2025, the CVB/LBID Advisory moved to recommend that the 2% Assessment be continued in FY 2026, and approved the Annual Report.
FY 2026 Annual Report
See Attachment 1.A: Updated CVB/LBID Advisory Board Annual Report for FY 2026.
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Public Hearing
If the City Council approves the CVB/LBID Advisory Board’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 2026.
Conclusion and Recommendation
Staff recommends that Council adopt a Resolution (Attachment 1) approving the Annual Report for Fiscal Year (FY) 2026 from the Pismo Beach Conference and Visitors Bureau/ LBID Advisory Board, declaring the City Council’s intention to levy an annual assessment for the LBID for FY 2026, and directing the City Clerk to schedule a public hearing for April 15, 2025, 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).
FISCAL IMPACT:
If the proposed FY 2026 Annual Report is approved, it is estimated that a 1% LBID annual assessment for FY 2026 would generate $1,371,000 in LBID Assessment Revenues in FY 2026 which, after $177,906 of administrative expenses, could be used to promote 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 2026 for physical improvements is estimated to generate the same $1,371,000. This assessment could be used to support visitor serving improvements.
Not adopting this or a similar Resolution would preclude the Council from setting an Annual Assessment for the LBID for FY 2026 and thus preclude the LBID from generating an estimated $2,742,000 in Assessment Revenues in FY 2026, which could be used to promote the lodging businesses in Pismo Beach.
ATTACHMENTS:
1. Resolution
1.A Exhibit A to Resolution: Annual Report and Business Plan for FY 2026 Submitted by: Nadia Feeser, Administrative Services Director City Manager Approval:
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RESOLUTION NO. R-2025-XXX
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PISMO BEACH, CALIFORNIA APPROVING THE ANNUAL REPORT FOR FISCAL YEAR 2026 FROM
THE PISMO BEACH CONFERENCE AND VISITORS BUREAU / LODGING
BUSINESS IMPROVEMENT DISTRICT ADVISORY BOARD, DECLARING THE CITY COUNCIL’S INTENTION TO LEVY AN ANNUAL ASSESSMENT FOR THE LBID FOR FY 2026, AND DIRECTING THE CITY CLERK TO SCHEDULE A PUBLIC HEARING FOR APRIL 15, 2025, 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) 2026 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 2026, as submitted to the City Clerk by the CVB/LBID Advisory Board and 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, the City Council declares its intent to levy and collect an annual assessment for the Lodging Business Improvement District for FY 2026. The assessment Council Agenda 4-1-2025 9.D-5
Attachment 1
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 2026. 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 2026, 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 2026 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 15, 2025 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.
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Attachment 1
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 1st day of April 2025, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
RECUSED:
Approved: Attest:
________________________ ________________________
Ed Waage, Mayor Erica Inderlied, City Clerk
IN WITNESS WHEREOF, I have hereunto set my hand on _______________________. ________________________
Erica Inderlied, City Clerk
Council Agenda 4-1-2025 9.D-7
Attachment 1
Pismo Beach Lodging Business Improvement District
Annual Report and Business Plan for Fiscal Year 2025-2026 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 19, 2025, 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) 2026 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 2026 include the following: Following the Strategic Plan including smart tourism growth, collaborative partnerships, expand brand initiatives and awareness and visitor and resident satisfaction with Pismo Beach. This will be accomplished by following the 2025-2028 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, Council Agenda 4-1-2025 9.D-8
Attachment 1.A
Phoenix, Denver, Seattle, Dallas and San Francisco. Continue 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. All advertising and marketing efforts will drive customers to the ExperiencePismoBeach.com website to select their lodging preference.
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 2026 include the Addie Street restroom improvements project and the Butterfly Grove Trail Signage project continued from FY 2024, plus visitor information center, stewardship banners, sponsorship or seed funding for events, Christmas decorations, beautification, Butterfly Grove parking crosswalk construction, beach cleaning equipment, lighting of ball fields, and a Downtown Strategic Plan update. 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 2025 and FY 2026
FY 2025 Projected Actuals for Original 1% Assessment
•Sources: The FY 2025 projected actual total sources of $2,114,705, made up of $707,097 from fund balance carried over from the prior fiscal year, an estimated $1,348,712 from LBID assessment revenues, and a projected $58,896 in interest earnings and fees. •Uses: The FY 2025 projected actual expenditures are $1,636,703. This total includes $145,310 for administrative costs and $1,491,393 for direct costs.
The following table shows: the FY 2025 projected actuals for the original 1% assessment, followed by summary tables of the total uses by administrative costs, direct costs, and improvements and details on the direct costs.
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Attachment 1.A
The next tables summarize the total uses by administrative costs and direct costs, and provides the components of the direct costs.
FY 2025
Original 1%
Beginning Fund Balance 707,097$
Revenues
LBID Assessment Revenues 1,348,712
Interest Earnings 58,896
Total Revenues 1,407,608$
Total Sources 2,114,705$
Expenditures
SALARIES & WAGES 34,946
BENEFITS 7,800
PURCHASE PROFESSIONAL SVCS 130,166
TOT Audit 16,000
OTHER PURCHASED SERVICES 1,235,227
OPERATIONS & MAINTENANCE 2,300
OTHER EXPENSES 100,264
Sponsorships for Events 80,000
CalPoly Clam Study 30,000
Total Expenditures 1,636,703$
Net Revs - Exp (229,095)
Carryforward
Ending Fund Balance 478,002$
FY 2025
Original 1%
Administrative/Overhead 145,310$
Direct Costs 1,491,393$
Direct Costs
TJA Agreement 1,347,255$
Miscellaneous direct costs 34,138
CalPoly Clam Study 30,000
Contributions/Sponsorships
WSL SLO CAL Open at Pismo Beach 60,000
2024 Surfing for Hope Longboad Classic Event 20,000
Subtotal Contributions 80,000
Total Direct Costs 1,491,393$
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Attachment 1.A
FY 2025 Projected Actuals for 1% Assessment for Physical Improvements •Sources: The FY 2025 projected actual total sources of $3,323,695, made up of $1,916,088 from fund balance carried over from the prior fiscal year, an estimated $1,348,712 from LBID assessment revenues, and a projected $58,896 in interest earnings and fees.
•Uses: The FY 2025 projected actual expenditures are $509,218. This total includes various direct costs as listed in the following table.
The following table shows the FY 2025 projected actuals for the 1% assessment for physical improvements.
FY 2026 Proposed Budget for Original 1% Assessment
•Sources: The FY 2026 preliminary proposed budget total sources of $1,864,166, made up of $478,002 from fund balance carried over from the prior fiscal year, an estimated $1,371,000 from LBID assessment revenues, and a projected $15,164 in interest earnings and fees.
•Uses: The FY 2026 preliminary proposed budget expenditures are $1,623,299. This total includes $177,906 for administrative costs and $1,445,393 for direct costs.
FY 2025
Physical
Improvements
Beginning Fund Balance 1,916,088$
Revenues
LBID Assessment Revenues 1,348,712
Interest Earnings 58,896
Total Revenues 1,407,608$
Total Sources 3,323,695$
Expenditures
Visitor Information Center 50,000
Stewardship Banner 25,000
Christmas Decorations 120,000
Annual Beautification 50,000
Pressure washer for expanded area 18,793
Maintenance Equipment to clean Promenade and
Restrooms 245,425
Total Expenditures 509,218$
Net Revs - Exp 898,389
Carryforward
Ending Fund Balance 2,814,477$
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Attachment 1.A
The following table shows: the FY 2026 preliminary proposed budget 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 2026
Original 1%
Beginning Fund Balance 478,002$
Revenues
LBID Assessment Revenues 1,371,000
Interest Earnings 15,164
Total Revenues 1,386,164$
Total Sources 1,864,166$
Expenditures
SALARIES & WAGES 38,880
BENEFITS 3,977
PURCHASE PROFESSIONAL SVCS 130,166
OTHER PURCHASED SERVICES 1,235,227
OPERATIONS & MAINTENANCE 500
OTHER EXPENSES 134,549
Sponsorships for Events 50,000
CalPoly Clam Study 30,000
Total Expenditures 1,623,299$
Net Revs - Exp (237,135)
Carryforward
Ending Fund Balance 240,867$
FY 2026
Original 1%
Administrative/Overhead 177,906$
Direct Costs 1,445,393
Direct Costs
TJA Agreement 1,347,255$
Miscellaneous direct costs 18,138
CalPoly Clam Study 30,000
Contributions/Sponsorships 50,000
Subtotal Contributions -
Total Direct Costs 1,445,393$
Council Agenda 4-1-2025 9.D-12
Attachment 1.A
FY 2026 Proposed Budget for 1% Assessment for Physical Improvements • Sources: The FY 2026 preliminary proposed budget total sources of $4,200,641, made up of $2,814,477 from fund balance carried over from the prior fiscal year, an estimated $1,371,000 from LBID assessment revenues, and a projected $15,164 in interest earnings and fees.
• Uses: The FY 2026 preliminary proposed budget expenditures total $2,705,000, including various projects carried over from the previous fiscal year that were not completed. This total includes various direct costs as listed in the following table.
The following table shows the FY 2026 proposed budget for the 1% assessment for physical improvements.
As the revenues and expenditures in this report reflect projections, it is prudent to continue to monitor these items over the course of the fiscal year.
FY 2026
Physical
Improvements
Beginning Fund Balance 2,814,477$
Revenues
LBID Assessment Revenues 1,371,000
Interest Earnings 15,164
Total Revenues 1,386,164$
Total Sources 4,200,641$
Expenditures
Visitor Information Center 50,000
Stewardship Banner 20,000
Sponsorships for Events 50,000
FY24 Addie St Restroom Improvements 1,200,000
Christmas Decorations 25,000
Annual Beautification 50,000
Butterfly Grove Trail Signage 50,000
Butterfly Grove Parking Crosswalk 600,000
Beach Cleaning Equipment 100,000
Lighting of Ball Fields 60,000
Downtown Strategic Plan Update 500,000
Total Expenditures 2,705,000$
Net Revs - Exp (1,318,836)
Carryforward
Ending Fund Balance 1,495,641$
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Attachment 1.A
4.No change in the LBID method or basis of levying the assessment was proposed for FY 2026. The CVB/LBID Advisory Board approved a motion to recommend that the 2% Assessment be continued in FY 2026.
5.The FY 2025 LBID budget for the original 1% assessment is projected to include a $478,002 surplus left over for carryover into FY 2026. The FY 2025 LBID budget for the 1% assessment for physical improvements is projected to include a $2,814,477 surplus left over for carryover into FY 2026.
6.The FY 2026 LBID Projected Actuals includes $30,328 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 2026.
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Attachment 1.A