Administrative
Report
L.1., File # 23-6139 Meeting Date: 6/20/2023
To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT AND ECONOMIC DEVELOPMENT DIRECTOR TITLE
PUBLIC HEARING TO CONSIDER THE RENEWAL OF THE REDONDO BEACH TOURISM
MARKETING DISTRICT (RBTMD) AND THE LEVY OF ASSESSMENTS ON LICENSED LODGING BUSINESSES COMPRISED OF TWENTY (20) OR MORE ROOMS
PROCEDURES:
a. Open the Public Hearing, take testimony, and
b. Continue the Public Hearing to July 18, 2023 at 6:00 P.M.
EXECUTIVE SUMMARY
On December 19, 2017, the City Council approved a contract with Civitas Advisors, Inc. (Civitas) to assist the City with the formation of a Tourism Improvement District (TID), also commonly referred to as a Tourism Marketing District (TMD), to provide a dedicated revenue source to lodging businesses to market Redondo Beach as a tourist, meeting, and event destination. During the formation process, Civitas worked with a steering committee comprised of local hoteliers and City representatives to create a Management District Plan (MDP), which established a framework for the TMD including boundaries, a service plan, annual budget, and a proposed structure for governance.
Management of the Redondo Beach Tourism Marketing District (RBTMD) is the responsibility of the non-profit entity Redondo Beach Travel & Tourism (RBTT), which was also established as part of the District formation process. RBTT serves as the RBTMD’s Owner’s Association, manages the funds, and implements the RBTMD programs.
On August 21, 2018, the City Council approved the establishment of the RBTMD for a five-year term that expires August 31, 2023. On May 16, 2023, City Council approved Resolution No. CC-2305-046 declaring its intention to renew the Redondo Beach Tourism Marketing District and setting the two required public hearing dates as June 20, 2023 and July 18, 2023, at which time the City Council can accept public testimony on the proposed RBTMD and consider renewing the district and levying the appropriate assessments (currently 1% of gross short-term sleeping room rental revenue). The RBTT is proposing a renewal of the RBTMD for a 10-year period beginning September 1, 2023.
BACKGROUND
The RBTMD is a benefit assessment district proposed to continue as a revenue source to help fund marketing and sales promotion efforts for Redondo Beach lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive demand for additional room nights to assessed lodging businesses. The renewed RBTMD includes all lodging businesses with 20 rooms or more, existing and in the future, available for public
L.1., File # 23-6139 Meeting Date: 6/20/2023
all lodging businesses with 20 rooms or more, existing and in the future, available for public occupancy within the boundaries of the City of Redondo Beach.
Due to the August 31, 2023 expiration of the RBTMD term, lodging business owners have decided to pursue renewal of the RBTMD in order to continue generating and utilizing a revenue source devoted to marketing Redondo Beach as a tourist, meeting and event destination. If renewed, the RBTMD would generate approximately $700,000 on an annual basis for promotion of travel and tourism that is specific to Redondo Beach.
TOURISM MARKETING DISTRICTS
Tourism Marketing Districts utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism. Lodging business owners within the TMD fund the TMD, and those funds are used to provide services that are desired by and benefit the lodging businesses within the TMD.
TMD benefits:
· Funds cannot be diverted for other government programs · They are customized to fit the needs of each destination · They allow for a wide range of services; including: destination marketing, tourism promotion and sales lead generation
· They are designed, created and governed by those who will pay the assessment · They provide a stable funding source for tourism promotion In California, TMDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (1994 Law). This law allows for the creation of a special benefit assessment district to raise funds within a specific geographic area. The key difference between TMDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TMD.
MANAGEMENT DISTRICT PLAN
The attached MDP includes the boundary of the RBTMD, a service plan, budget and a means of governance.
The initial annual assessment rate is 1% of gross short-term sleeping room rental revenue. During the ten-year term, the assessment rate may be increased by the Owners’ Association Board to a maximum of 3% of gross short-term sleeping room rental revenue. If the assessment rate is increased, it may subsequently be decreased but shall not be decreased below a minimum of 1% of gross short-term sleeping room rental revenue. The maximum increase or decrease in any year shall be of 1%. Any proposed assessment rate increase or decrease approved by the RBTT Board will be included in the annual report and will not be effective until approved by the Redondo Beach City Council.
Based on the benefit received, assessments will not be collected on: stays of more than thirty consecutive days; stays by any Federal or State officer when on official business; stays by any
L.1., File # 23-6139 Meeting Date: 6/20/2023
consecutive days; stays by any Federal or State officer when on official business; stays by any officer, employee or consultant of the City when on official business; stays by any officer or employee of a foreign government who is exempt by reason of express provision of Federal law or international treaty and the portion of gross short-term sleeping room rental revenue allocable to food and beverage products of every kind provided by the lodging business for consumption by transients and invitees of transients. Long-term contract renters shall receive a partial exemption from the assessment as described in Section IV(D) of the Plan.
The renewed RBTMD will have a ten-year life, beginning September 1, 2023, or as soon as possible thereafter, and ending ten years from its start date. The funds collected under the RBTMD are in addition to the 12% Temporary Occupancy Tax currently paid by licensed lodging businesses operating in Redondo Beach. The TMD assessments are remitted at the same time as the TOT remittances. The City will be responsible for continuing to collect the assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging business located in the boundaries of the RBTMD. The City shall take all reasonable efforts to collect the assessments from each lodging business. Once per year, beginning on the anniversary of RBTMD renewal, there is a thirty-day period in which lodging business owners paying 50% or more of the assessment may protest and begin proceedings to terminate the RBTMD.
RBTMD RENEWAL PROCESS
May 16, 2023 CONSENT ITEM: RESOLUTION OF INTENTION (COMPLETED) Upon the submission of a written petition, signed by the lodging business owners in the renewed RBTMD who will pay more than 50% of the assessments proposed to be levied, the City Council may initiate proceedings to renew the RBTMD by the adoption of a resolution expressing its intention to renew the RBTMD.
Petition Status: Petitions in favor of RBTMD renewal were submitted by 6 hotels comprised of 20 rooms or more, which represent 75.09% of the total RBTMD assessment. This majority petition allows the Council to initiate proceedings for RBTMD renewal at the May 16, 2023 meeting.
May 17, 2023 NOTICE (COMPLETED)
The 1994 Law requires the City to mail written notice to the owners of all lodging businesses proposed to be within the RBTMD. Mailing the notice begins a mandatory 45-day period in which owners may protest RBTMD renewal.
June 20, 2023 PUBLIC MEETING
Allow public testimony on the renewal of the RBTMD and levy of assessments.
No Council action required.
July 18, 2023 FINAL PUBLIC HEARING
If the Council, following the public hearing, decides to renew the RBTMD, the Council shall adopt a resolution of formation.
L.1., File # 23-6139 Meeting Date: 6/20/2023
RBTMD ACCOMPLISHMENTS
FY 2018-2019:
· Contracted a marketing agency, Paolucci, Salling & Martin, to provide branding, a marketing plan, digital campaigns, and public relations and social media services · Established the Redondo Beach Tourism Brand and website · Funded two (2) $20k Expedia campaigns that increased awareness of Redondo Beach and produced over $1 million in revenue for RBTMD hotels
· Created photo/video library that the City of Redondo Beach and all RBTMD hotels can access FY 2020-2021:
RBTT successfully maneuvered through the fiscal year with ever-changing strategic demands based on the COVID-19 pandemic and associated realities for tourism:
· Concepted and released a new creative ad campaign highlighting Redondo Beach’s uniquely special attributes during the pandemic: The Coast is Clear · Secured and distributed new creative assets promoting best health practices in COVID-19 travel
· Made use of less expensive non-paid ad solutions to increase the RBTT’s footprint locally and regionally through organic social media promotion that yielded 275,000 engaged users and over 18,000 unpaid interaction
· Increased regional paid search efforts resulting in 3.24 million impressions on Google, 5.7 million programmatic impressions, 6.1 million YouTube impressions and 12 million plus Facebook/Instagram impressions
FY 2021-2022:
· Launched seasonal and tactical campaigns tied to travel trends such as winter holiday travel, summer kick-off travel and “stay two nights get your third night free” incentive · Supported BeachLife Festival through a significant paid sponsorship program that garnered over 750,000 digital impressions through email, social postings and web page views tied to RBTT offerings
· Made use of social influencers with four familiarization tours that supported outreach into new market segments for actively engaged travelers across three key demographics: regional family travel, empty nester escapes and millennial active travel FY 2022-2023:
· Supported BeachLife Festival through a significant paid sponsorship program that garnered over 750,000 digital impressions through email, social postings and web page views tied to RBT offerings
· Invested $66,000 in three Expedia ad campaigns that returned directly attributed bookings valued at over $1,900,000
· Made use of social influencers with four familiarization tours that supported outreach into new market segments for actively engaged travelers across three key demographics: regional family travel, empty nester escapes, and millennial active travel · Optimized regional paid search and social efforts resulting in 13.8 million total RBT impressions served across Google, Facebook related platforms, BING search and YouTube
L.1., File # 23-6139 Meeting Date: 6/20/2023
FY 2023-2024:
RBTT continues to focus on the following:
· Positioning Redondo Beach as a premier destination for travelers visiting SoFi stadium and other LA attractions
· Continued support of BeachLife Festival through paid sponsorship program with a focus on digital impressions
· Investing in at least three Expedia ad campaigns to increase exposure of Redondo Beach within the greater Los Angeles market
COORDINATION
The formation of the RBTMD was coordinated by the Waterfront and Economic Development Department with assistance from the City Manager’s Office, City Attorney’s Office, City Clerk’s Office, City Treasurer’s Office, and the Financial Services Department.
The Financial Services Department will continue to assist with RBTMD assessments, receipt of payments, and the processing of the assessments and payments. The Waterfront and Economic Development Department will take the lead in the renewal process with assistance from the City Manager’s Office.
FISCAL IMPACT
Funds from the Redondo Beach Tourism Marketing District will be collected from the assessed hotels by the City via the Transient Occupancy Tax billing on a monthly basis. Revenues will then be submitted to the RBTMD corporation.
Adoption of the proposed 2023-2033 RBTMD is not expected to have a direct fiscal impact on the City’s budget. RBTMD assessments (currently 1% of gross short-term sleeping room rental revenue) are restricted for use exclusively by the RBTMD and must be reported to the City Council annually. It is anticipated that the Tourism Marketing District will continue to increase visitation to the City, resulting in an increase in Transient Occupancy Tax, and sales tax collections.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
· Redondo Beach Tourism Marketing District 2023-2033 Management District Plan, April 20, 2023
· Reso - No. CC-2305-046 Intent to Renew the Redondo Beach Tourism Marketing District, May 16, 2023
· Petitions to Renew the Tourism Marketing District Received as of May 8, 2023 · Public Hearing Notice, May 17, 2023
· City Council Presentation - June 20, 2023