City of Sacramento
City Council Report
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Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-00314 8/23/2022 Consent Item 12.
Fiscal Year (FY) 2022/23 Sacramento Tourism Marketing District (STMD) Annual Proceedings File ID: 2022-00314
Location: Citywide
Recommendation: Adopt a Resolution approving the Sacramento Tourism Marketing District (STMD) Annual Report for FY2022/23.
Contact: Sini Makasini, Development Project Manager, (916) 808-7967, [email protected]; Sheri Smith, Special Districts Manager, (916) 808-7204, [email protected], Department of Finance
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
3-Exhibit A, District Map
4-Exhibit B, District Budget & Business Assessment
5-Exhibit C, Annual Report
Description/Analysis
Issue Detail: On May 22, 2012, the Council established the STMD by Resolution No. 2012-0141 under the Property and Business Improvement Law of 1994. On November 10, 2016, Council approved the 10-year renewal of the STMD by Resolution No. 2016-0374, which allows the STMD to continue providing marketing and sales promotions with the intent to increase tourism and market STMD lodging businesses as tourist, meeting, and event destinations. California Streets and Highways Code section 36650(c) requires that an Annual Report be filed with the City Clerk for Council approval. The Annual Report is attached to the Resolution as Exhibit C.
Visit Sacramento, as the owners’ association for the STMD, has prepared the Annual Report (Report) City of Sacramento Page 1 of 3
File ID: 2022-00314 8/23/2022 Consent Item 12.
for FY2022/23, which is also on file with the Department of Finance Infrastructure Finance Division designated by the City Clerk as the custodian of such records. The Report addresses the proposed budget, annual assessment, and services to be provided for FY2022/23. The Report does not change the STMD boundaries, the rate and methodology of assessment, the scope of services, or any other aspect of the STMD’s legal structure as established in the Management District Plan approved upon renewal the STMD.
Policy Considerations: The actions in the recommended resolution are required by the Property and Business Improvement Law of 1994 (California Streets and Highways Code section 36600 et seq.)
Economic Impacts: Not applicable.
Environmental Considerations:
California Environmental Quality Act (CEQA): Administration of assessment districts does not constitute a project under CEQA because it involves continuing administrative or maintenance activities and organizational or administrative activities that will not result in direct or indirect physical changes in the environment. [14 Cal. Code Regs. § 15378(b)(2) & (5))].
Sustainability: Not applicable.
Commission/Committee Action: None.
Rationale for Recommendation: Approval of the Report for the STMD authorizes the levy of assessments to fund services over and above those provided by the City, including marketing of the lodging businesses within the City and unincorporated portion of the County, marketing to attract conventions and trade shows, and other activities related to increasing hotel room night rentals in FY2022/23.
Financial Considerations: Financing is provided by the levy of assessments upon lodging businesses within the STMD boundaries that benefit from the improvements and services provided by the STMD. The STMD does not plan to issue bonds. The operating budget for the STMD fluctuates with market conditions and room night sales and is adjusted annually to reflect Council approved assessments and expenditure plans. The total STMD assessment budget for FY2022/23 is estimated to be $6.86 million, with approximately $6 million of the revenue collected from businesses within the City. The City will retain 2% of the amount of assessment collected from businesses within the City to cover the costs of the City’s collection and administration for the STMD. The County is also responsible for collecting assessments from businesses within the unincorporated County area and will remit an estimated $808,500 in assessments to Visit Sacramento for FY2022/23. Budget details are provided in Exhibit B to the Resolution. The STMD is self-supporting and has no impact to City of Sacramento Page 2 of 3
File ID: 2022-00314 8/23/2022 Consent Item 12.
the General Fund.
Local Business Enterprise (LBE): Not applicable.
City of Sacramento Page 3 of 3
RESOLUTION NO. 2022-
Adopted by the Sacramento City Council
August 23, 2022
Resolution Approving the Annual Report for the Sacramento Tourism Marketing District for Fiscal Year 2022/23
BACKGROUND
A. On May 22, 2012, City Council approved formation of the Sacramento Tourism Marketing District No. 2016-06 (STMD) for a five-year term to provide marketing and sales promotions with the intent to increase tourism and to market Sacramento lodging businesses as tourist, meeting, and event destinations (Resolution No. 2012-0141). In 2016, Sacramento lodging business owners within the boundaries of the STMD petitioned the City of Sacramento (City) to renew the STMD.
B. On November 10, 2016, by Resolution No. 2016-0374, City Council approved the renewal of the STMD for a ten-year term commencing on July 1, 2017, running through June 30, 2027. A map of the STMD is attached hereto as Exhibit A.
C. The City Council established the STMD under the Property and Business Improvement District Law of 1994 (California Streets and Highway Code section 36600 et seq.) (PBID Law) and has previously levied assessments on businesses in the STMD to pay for services to be provided within the STMD, in accordance with the PBID Law.
D. Expenditures of STMD funds provide for promotion, marketing, and sales efforts within the STMD, which are intended to increase tourism and room night sales within the boundaries of the STMD. All services are as defined within the Annual Report and by reference made a part of this resolution. The Annual Report is attached to this resolution as Exhibit C and is also on file with the Infrastructure Finance Division of the Finance Department, which the City Clerk has designated as the custodian of such records.
E. The Fiscal Year (FY) 2022/23 rate and methodology of assessment is not changed from the prior year.
F. Pursuant to California Streets and Highways Code section 36650(c), City staff is seeking City Council approval of the Annual Report.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council finds and determines that Background statements above are true and correct.
Section 2. The City Council finds and determines that the businesses within the STMD specifically benefit from the marketing activities described in the Annual Report and funded by the proposed assessment.
Section 3. The City Manager or City Manager’s designee is authorized to make any necessary budgetary adjustments associated with the STMD budget for FY2022/23 as shown on Exhibit B.
Section 4. The annual budget and assessments as set forth in the FY2022/23 Annual Report (attached hereto as Exhibit C) are confirmed, and the Annual Report is hereby approved.
Section 5. Exhibits A, B, and C are part of this resolution.
Table of Contents:
Exhibit A - District Map
Exhibit B - FY2022/23 District Budget & Business Assessment Exhibit C - Annual Report FY2022-23
Exhibit A
STMD Map
Exhibit B
(Fund 2243)
STMD
BUSINESS IMPROVEMENT DISTRICT
FY2022/23 DISTRICT BUDGET & BUSINESS ASSESSMENT
Estimated Beginning Fund Balance -
Total Assessed to Business Owners 6,860,000
Total Resources $6,860,000
STMD
Activities
Estimated Disbursement $6,722,800
Administrative Costs
2% for City and County collection fees $137,200
Total Expenditures $6,860,000
Estimated Ending Fund Balance -
Year-Over-Year Change in Fund Balance -
Business Assessment
Annual assessment rates on lodging businesses for short term room rental (stays 30 days or fewer) are:
Zone 1 – 3% of gross room rental revenue
Zone 2 – 2.5% of gross room rental revenue
Zone 3 – 2% of gross room rental revenue
Zone 4 – 1% of gross room rental revenue
Based on the benefit received, assessments shall not be collected on stays of more than 30 consecutive days.
Sacramento Tourism Marketing District
Fiscal Year 2022-23
Annual Report
Developed by the Sacramento Hotel Association, the Sacramento Tourism Marketing District (STMD) is a benefit assessment district formed to help fund marketing and sales promotion efforts to provide specific benefits and exclusive privileges to Sacramento lodging businesses.
The STMD is administered by Visit Sacramento in conjunction with an STMD Tourism Committee consisting of the following members:
Zone 1:
Barry Miller General Manager, Holiday Inn Downtown Arena Nikki Carlson General Manager, Kimpton Sawyer Hotel
Shelly Moranville General Manager, Residence Inn by Marriott at Capitol Park Zone 2:
S ami Qureshi General Manager, Hilton Sacramento Arden West Royce Pollard General Manager, Double Tree by Hilton
Zone 3:
Denia Phillips General Manager, Residence Inn by Marriott – Natomas/Airport Zone 4:
David Huber General Manager, Wyndham Sacramento
Location
The STMD includes all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the City of Sacramento and the unincorporated areas of the County of Sacramento. A boundary map is attached as Exhibit A.
Assessment Rates
Annual assessment rates will remain the same as the prior fiscal year and are three percent (3%) of gross short- term (stays fewer than 31 days) room rental revenue on lodging businesses in Zone 1, two and one-half percent (2.5%) of gross short-term room rental revenue on lodging businesses in Zone 2, two percent (2%) of gross short- term room rental revenue on lodging businesses in Zone 3, and one percent (1%) of gross short-term room rental revenue on lodging businesses in Zone 4.
Based on the benefit received, assessments shall not be collected on stays of more than thirty (30) consecutive days. The assessment shall apply to room rental revenue from all stays which are on a transient basis; a stay is considered to be on a transient basis until thirty (30) consecutive room night stays have elapsed.
Budget
The total STMD annual budget for Fiscal Year 2022-23 is anticipated to be approximately $6,860,000.
Approximately 88.2 percent of the budget will be funded from revenues collected within the City ($6,051,500) and
11.8 percent from the unincorporated area of Sacramento County ($808,500). The budget, attached as Exhibit B, was approved by the STMD Tourism Committee on June 28, 2022.
Services
Marketing and sales promotions to specifically benefit assessed lodging businesses by increasing tourism and group business and to marketing Sacramento lodging businesses as tourist, meeting, and event destinations to provide the specific benefit and exclusive privilege of additional hotel room night rentals.
Sales and Marketing
While actual revenues collected will determine the scope of services that can be performed, the sales and marketing program will have a central theme of promoting Sacramento as a desirable place to visit overnight, and they could include, but are not limited to, the following activities:
• Internet marketing efforts to increase awareness and optimize internet presence • Print ads in magazines and newspapers targeted at potential visitors • Television ads targeted at potential visitors
• Radio ads targeted at potential visitors
• Attendance at trade shows
• Sales blitzes
• Familiarization tours
• Preparation and production of collateral promotional materials such as brochures, flyers, and maps • Attendance at professional industry conferences and affiliation events • Lead generation activities designed to attract tourists and group events to Sacramento • Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts • Education of lodging business management and the owners’ association on marketing strategies best suited to meet Sacramento’s needs
• Special events designed to educate clients about Sacramento amenities and hospitality • Contract hiring for graphic design, production, public relations, and media relations support Zone Micro-Marketing
Ten percent (10%) of the budget is dedicated to individual zones for zone-specific tourism improvement activities as described below.
The zone marketing funds are utilized for local zone activities that promote, support, and enhance zone-based tourism marketing efforts. These programs are an exclusive privilege and shall provide a direct specific benefit to assessed businesses in the Zone, incremental room night sales.
Individual zone marketing funding is designed to support zone-based activities that promote, support, and enhance room night sales, including but not limited to:
• Internet marketing efforts to increase awareness and optimize internet presence • Print ads in magazines and newspapers targeted at potential visitors • Television ads targeted at potential visitors
• Radio ads targeted at potential visitors
• Attendance at trade shows
• Sales blitzes
• Familiarization tours
• Preparation and production of collateral promotional materials such as brochures, flyers and maps • Attendance at professional industry conferences and affiliation events • Lead generation activities designed to attract tourists and group events to Sacramento • Director of Sales and General Manager meetings to plan and coordinate tourism promotion efforts • Education of hospitality staff on service and safety (related to alcohol and food) designed to create a visitor experience that will bring repeat visits
• Education of lodging business management and the owners’ association on marketing strategies best suited to meet Sacramento’s needs
• Special events designed to educate clients about Sacramento amenities and hospitality
EXHIBIT A
STMD Boundary Map
EXHIBIT B
STMD BUDGET for FISCAL YEAR 2022-23
(Approved by STMD Tourism Committee 6/28/2022)
Assessment Revenue
STMD - City $ 6,051,500
STMD - County $ 808,500
Total Revenue $ 6,860,000
Expenses
Administration
Employee Services $ 625,592
Total Administration $ 625,592
Marketing
Employee Services $ 228,377
Tradeshows & Travel Marketing $ 83,000
Advertising $ 310,000
Marketing Collaterals $ 472,600
Marketing Support $ 332,000
Total Marketing $ 1,425,977
Sports Marketing
Employee Services $ 204,138
Marketing Collaterals $ 177,000
Event Support $ 1,010,000
Total Sports Marketing $ 1,391,138
Convention Sales
Employee Services $ 1,207,864
Tradeshows & Travel Marketing $ 455,000
Advertising $ 490,000
Sales Support $ 799,000
Convention Services $ 38,000
Total Convention Sales $ 2,989,864
Travel Industry Sales
Tradeshows & Travel Marketing $ 30,500
Advertising $ 8,700
Sales Support $ 16,000
Total Travel Industry Sales $ 55,200
Partner Marketing
Employee Services $ 128,797
Tradeshows & Travel Marketing $ 16,000
Sales Collaterals $ 2,500
Total Partner Marketing $ 147,297
Community Relations
Employee Services $ 185,942
Sales Support $ 1,000
Total Community Relations $ 186,942
Farm to Fork
Employee Services $ 22,990
Tradeshows & Travel Marketing $ 15,000
Farm to Fork $ 37,990
Total Expenses $ 6,860,000
BUSINESS IMPROVEMENT DISTRICT
ANNUAL REPORT CHECKLIST
FY
BID NAME: CONTRACT #
AUTHORITY
(CS&H Code Section) REQUIREMENT PAGE
FOUND
36650(b) Specify BID name
-Does the BID name exactly match the previous year’s BID name? (Check one) YES NO 36650(b) Specify fiscal year to which report applies
36650(b)(1) Any proposed changes in the boundaries
36650(b)(1) Any proposed changes in any benefit zones
-Do the boundaries and benefit zones exactly match the previous year? (Check one) YES NO (If not, describe change(s) in the NOTES section)
36650(b)(2) The improvements and activities for that fiscal year -Are the improvements and activities in line with the Original MDP? (Check one) YES NO 36650(b)(3) An estimate of the cost of providing the improvements and activities for that fiscal year
- How does the overall budget compare to last year? (Check one) HIGHER SAME LOWER - What is the greatest change (by percentage) between line items from last year to this year ______ 36650(b)(4)
The method of levying the assessment in sufficient detail to allow each real property owner/business owner to estimate the amount of the assessment to be levied against his or her property for that fiscal year 36650(b)(4)
The basis of levying the assessment in sufficient detail to allow each real property/business owner to estimate the amount of the assessment to be levied against their business/property for that fiscal year -Does the Method and Basis match the MDP? (Check one) YES NO -Is there a CPI increase for this year? (Check one) YES NO - If so: What is the rate? _______
36650(b)(5) The amount of any surplus revenues to be carried over from a previous fiscal year
-Is the surplus identified for use in specific categories? (Check one) YES NO if yes, What category(ies) ____________________________________________ 36650(b)(5) The amount of any deficit revenues to be carried over from a previous fiscal year 36650(b)(6) The amount of any contributions to be made from sources other than assessments levied pursuant to this part
-Are the contributions identified for use in a specific category? (Check one) YES NO -Did an authorized representative of the nonprofit Board sign the report? (Check one) YES NO -Does the report state the date the Board approved the Report/Budget? (Check one) YES NO NOTES: