City of Sacramento
City Council - 5PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2024-00669 3/26/2024 Public Hearing Item 8.
Public Hearing and (Pass for Publication) Ordinance on Renewal of Sacramento Tourism Marketing District No. 2024-01
File ID: 2024-00669
Location: Citywide
Recommendation: Conduct a public hearing and upon conclusion: pass a Motion approving the proposed assessment and marketing services, and the boundary map shown on Attachment 4, for the Sacramento Tourism Marketing District No. 2024-01 (STMD) renewal term, and directing the City Clerk to: a) tabulate any written protests submitted and not withdrawn before the hearing is closed; and b) bring back the matter as a consent item on April 2, 2024, with the protest results, for City Council’s formal renewal of the STMD; 2) pass for publication an Ordinance to renew the STMD; and 3) bypass the Law and Legislation Committee for review of the renewal ordinance.
Contact: Susanne Tam, Development Project Manager [email protected], (916) 808-7535; Sheri Smith, Special Districts Manager, [email protected] (916) 808-7204, Department of Finance
Presenter: Susanne Tam, Development Project Manager [email protected], (916) 808-7535, Department of Finance
Attachments:
1-Description/Analysis
2-Schedule of Proceedings
3-Proposed Budget and Assessment
4-STMD Map
5-Renewal Ordinance
Description/Analysis
Issue Detail: Visit Sacramento and Sacramento area lodging businesses have proposed to renew the Sacramento Tourism Marketing District No. 2024-01 (STMD) for a new ten-year term. The STMD was formed by business owners to fund marketing and sales services for assessed lodging businesses with the intent to increase tourism and to market Sacramento lodging businesses as a tourist, meeting, and event destination. The STMD was initially formed in 2012 for a five-year term and then subsequently renewed in 2017 for a ten-year term and is set to expire in 2027.
File ID: 2024-00669 3/26/2024 Public Hearing Item 8.
The Sacramento lodging businesses have petitioned the City to renew the district early for a new ten- year term to adjust the assessment rates and district boundaries. If approved, the renewed district will deliver marketing and promotional services to each specific zone within the STMD. The proposed assessment, and services, for the renewal term are further detailed in the Management District Plan (MDP) on file with the Infrastructure Finance Division of the Finance Department, designated by the City Clerk to be the repository for documents related to business improvement districts. The map and zones of the proposed renewal area for the STMD are shown in the map attached here as Attachment 4, which is the same map that was included with the Resolution of Intent. The previously drafted MDP contained a slightly larger map, but Council is approving the map attached here as Attachment 4 for the renewal term of the STMD.
On February 6, 2024, Council approved Resolution of Intention No. 2024-0027 to renew the STMD and set March 12, 2024 and March 26, 2024 as the dates for the public meeting and public hearing, respectively, for the proposed renewal of the STMD. A Joint Notice of Public Meeting and Public Hearing was mailed to all affected businesses on February 8, 2024.
On March 12, 2024, Council held the required public meeting as a venue for public testimony and for affected business owners in the STMD to discuss the renewal proceedings. No formal action was taken by Council subsequent to the conclusion of the public meeting.
At the conclusion of this public hearing, staff recommends that Council approve the proposed assessment and improvements for the STMD renewal term shown in Attachment 3, and direct the City Clerk to tabulate the written protests submitted and not withdrawn to determine whether there was a majority protest against the proposed renewal of the STMD (i.e., whether a majority of the lodging business owners who submitted written protests are opposed to the STMD and assessment). Staff will report the results of any protests at the Council meeting on April 2, 2024. If there is no majority protest, staff will recommend that the Council adopt a resolution at the April 2, 2024 Council meeting to renew the STMD for a new ten-year term.
In addition, staff is bringing forward an uncodified ordinance (Attachment 5) to renew the STMD because, if passed, the Taxpayer Protection and Government Accountability Act (which is on the ballot for this November) requires an ordinance for adoption of all such assessments dating back to 2022.
Policy Considerations: The renewal proceedings described in this report are in accordance with the Property and Business Improvement District Law of 1994 (California Streets and Highways Code Section 36600 et seq.).
Economic Impacts: None.
Environmental Considerations: The renewal of a business improvement district does not constitute a project under the California Environmental Quality Act and is therefore exempt from review
File ID: 2024-00669 3/26/2024 Public Hearing Item 8.
pursuant to Guidelines Section 15378(b)(4).
Sustainability: Not applicable.
Commission/Committee Action: Staff is recommending that Council bypass the Law and Legislative Committee for review of the STMD renewal ordinance. The renewal ordinance is uncodified and is being brought forward because of the proposed Taxpayer Protection and Government Accountability Act, which is on the ballot for November 2024.
Rationale for Recommendation: Renewal of the STMD will create additional funds to be utilized for marketing and sales promotions specifically targeted to benefit each business zone within the STMD. The specific zones for the STMD are identified in the MDP.
Financial Considerations: The STMD is self-supporting and has no impact on the General Fund.
Financing for the STMD will be provided by the levy of an annual assessment upon lodging businesses that benefit from marketing and sales promotions. The STMD is divided into four zones, based on the special benefits received in each zone. Lodging businesses will be assessed based on a percentage of gross short-term room rental revenue for stays no longer than 30 days, varied by benefit zone. The initial annual assessment proposed for each zone is as follows: Zone 1: 3.45%, Zone 2: 2.875%, Zone 3: 2.30%, and Zone 4: 1.15%.
The STMD will not issue bonds. The total STMD assessment budget in the first year of operation is estimated to be $9.5 million (as detailed on Attachment 3). The City of Sacramento will retain 2% of the amount of assessment collected from businesses within the City to cover the costs of collection and administration. The operating budget for the STMD, which will fluctuate with market conditions and room night sales, will be adjusted annually to reflect Council approved assessments and expenditure plans. An annual report will be presented to Council pursuant to Streets and Highways Code Section 36650.
Local Business Enterprise (LBE): Not applicable.
SCHE
DULE OF PROCEEDINGS
SACRAMENTO TOURISM MANAGEMENT DISTRICT NO. 2024-01
D
ecember 20, 2023 Petition Drive Kick-off
F
ebruary 2, 2024 Receive Signed Petitions
F
ebruary 6, 2024 City Council
• Resolution of Intention to Renew
• Resolution Requesting County Consent
F
ebruary 8, 2024 Mailed Notices of Public Meeting and Public Hearing M
arch 12, 2024 City Council – Public Meeting on Renewal of STMD M
arch 12, 2024 County Board of Supervisors – Resolution Approving Renewal
M
arch 26, 2024 City Council
• Public Hearing on Renewal of STMD
• Pass for Publication Ordinance Renewing STMD
A
pril 2, 2024 City Council
• Protest Hearing Results for Renewal
• Adopt Resolution of Renewal
• Adopt Resolution of Intent to Modify Existing STMD
(Terminating It Early)
M
ay 7, 2024 Public Hearing to Adopt Resolution of Modification Terminating Existing STMD Early
J
uly 1, 2024 Renewed STMD Begins Collecting Assessment
SACRAMENTO TOURISM MARKETING DISTRICT NO. 2024-01
DISTRICT BUDGET & ANNUAL ASSESSMENT
IN RENEWAL YEAR 1
Estimated Beginning Fund Balance 0
Total Assessed to Business Owners 9,540,000
Total Resources $9,540,000
PBID
Activities
Estimated Disbursement $9,349,200
Administrative Costs
2% Per Management Plan $190,800
Total Expenditures $9,540,000
Estimated Ending Fund Balance 0
Year-Over-Year Change in Fund Balance 0
ANNUAL
ASSESSMENT
Assessment Category Assessment Rate
Zone 1 (3.45%) of gross short-term (stays no more than 30 consecutive days) sleeping room rental revenue
Zone 2 (2.875%) of gross short-term sleeping room rental revenue
Zone 3 (2.3%) of gross short-term sleeping room rental revenue Zone 4 (1.15%) of gross short-term sleeping room rental revenue
A
nnual assessment rates are based on specific benefit to the assessed businesses and do not exceed the reasonable costs of providing the services or programs.
Attachment 3
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0 10 205
Miles
MDobyns 01/03/24
Sacramento Tourism Marketing District Boundary Map
Zone 3
Zone 4
Zone 1
Zone 2
STMD Zones
Zone Number
1 2
3 4
Attachment 4
ORDINANCE NO.
Adopted by the Sacramento City Council
An Ordinance to Renew the Sacramento Tourism Marketing District No. 2024-01
BE IT ENACTED BY THE COUNCIL OF THE CITY OF SACRAMENTO:
SECTION 1. The Sacramento Tourism Marketing District 2024-01 (STMD) was initially established in 2012 under the Property and Business Improvement District Law of 1994 (California Streets and Highways Code section 36600 et seq.) (referred to as the “PBID Law”) by City Council for a five-year term. It was then renewed in 2017 for a ten-year term that is set to expire in 2027.
SECTION 2. Lodging business owners within the boundaries of the STMD have submitted petitions to the City of Sacramento to renew the STMD for a ten-year term running from July 1, 2024 through June 30, 2034. The renewed STMD includes all lodging businesses, existing and in the future, available for public occupancy, located within the boundaries of the City of Sacramento and a portion of the unincorporated area of the County of Sacramento. The STMD boundary does not include the cities of Citrus Heights, Elk Grove, Folsom, Galt, Isleton, or Rancho Cordova. The STMD has been divided up into four (4) benefit zones, as shown on the boundary map in Exhibit A. Accordingly, renewal of the District by the City Council is sought in accordance with Streets and Highways Code section 36660.
SECTION 3. Included with the petitions was a summary of the Management District Plan (MDP) that describes the proposed assessment to be levied on businesses within the STMD to pay for services including the following: 1) producing print ads, brochures, and flyers; 2) posting on social media; and 3) marketing campaigns and industry partnerships. All of these services are intended to promote the area within the STMD as a destination for tourism, conventions, meetings, and events, and increase room night sales for the assessed lodging businesses. The MDP proposes to fund these services through the levy of an assessment on lodging businesses within the STMD. The STMD MDP is on file with the Infrastructure Finance division of the Department of Finance, designated by the City Clerk to be repository of documents associated with special districts.
SECTION 4. Section 36620.5 of the PBID Law authorizes cities to renew business improvement districts that include territory within a County upon said County’s consent. The City has requested and received consent from the County of Sacramento to include territory within its jurisdiction in the proposed STMD.
SECTION 5. The annual assessment rate for the proposed renewal term of the STMD is a percentage of gross short-term sleeping room rental revenue on lodging businesses within the STMD, varied by benefit zone. Based on the benefit received, assessments will not be collected on stays of more than 30 consecutive days. Annually, the STMD Committee (Committee) may increase the assessment rate incrementally, up to the maximum allowable rates for each zone as follows: the assessment rate in Zone 1 shall not exceed 4%; the assessment rate in Zone 2 shall not exceed
3.33%; the assessment rate in Zone 3 shall not exceed 2.66%; and the assessment rate in Zone 4 shall not exceed 1.33%, as detailed in the MDP. The members of the Committee are defined in the MDP. The assessment rate may also be decreased by the Committee, but shall not drop below the initial assessment rates for each zone listed above. The amount of the proposed assessment for the entire STMD will total approximately $9,540,000 in the first renewal year.
SECTION 6. The business owners who signed the petitions will collectively pay more than 50% of the proposed assessment. On February 6, 2024, Council adopted Resolution No. 2024-0027 entitled “Resolution of Intention to Renew the Sacramento Tourism Marketing District No. 2024-01.” As part of Council’s action, the dates and times of the public meeting and public hearing, respectively, were identified as follows: March 12, 2024, at 5:00 p.m. and March 26, 2024, at 5:00 p.m., with both events taking place in the City Council chambers, New City Hall, 915 “I” Street (first floor), Sacramento, California.
The City Clerk was directed to provide notice to affected business owners in accordance with Streets and Highways Code Section 36623(b) and Government Code Section 54954.6.
SECTION 7. Staff in the Infrastructure Finance Division of the Finance Department mailed Joint Public Meeting and Public Hearing notices, on the City Clerk’s behalf, to affected business owners in the proposed STMD on February 8, 2024 and signed an affidavit confirming compliance with the legal requirement for mailing the joint notices. Relying on this affidavit, Council finds that a joint public meeting and public hearing notice was mailed to each business owner of identified parcels within the territory of the STMD, as ordered by Resolution No. 2024-0027 and as required by the PBID Law.
SECTION 8. On March 26, 2024, at the place set forth in the joint notice of public meeting and public hearing mailed to all business owners within the STMD to be renewed, Council held a public hearing on the proposed assessment. During the public hearing, Council: (1) heard all protests against the proposed assessment from business owners within the STMD; and (2) accepted testimony from all interested persons, whether or not they own businesses within the STMD. The City Clerk has received, been given custody of, and tabulated the protests submitted and not withdrawn by the owners of businesses located within the STMD. The City Clerk has reported the results of the tabulation by her written Certificate to the City Council. The Clerk’s Certificate of Results for the Business Owner Majority Protest Proceeding specifies the protests that were submitted to the City Clerk, and not withdrawn, prior to the close of the public hearing on March 26, 2024. The protest for each business is weighted according to the proportional financial obligation of each business. The weight of the total compliant protests received and not withdrawn represents less than 50% of the total assessment proposed to be levied in the STMD. Therefore, a majority protest against the proposed assessment does not exist.
SECTION 9. Businesses in the STMD will be subject to amendments to the PBID Law.
SECTION 10. Bonds will not be issued for the STMD.
SECTION 11. A description of the exterior boundaries of the proposed STMD is contained in Exhibit A attached hereto and incorporated herein.
SECTION 12. The activities to be provided to benefit businesses in the STMD 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 STMD; to provide activities or improvements outside the STMD; or for any purpose other than the purposes specified in this ordinance, the Resolution of Intention, the Resolution of Formation, the Resolution of Renewal, and the MDP. Notwithstanding the foregoing, improvements and activities that must be provided outside the STMD boundaries to create a specific benefit to the assessed businesses may be provided, but shall be limited to marketing or signage pointing to the area within the STMD.
SECTION 13. The assessments for the renewed STMD will be levied on lodging businesses within the STMD. The activities funded by the assessment will provide a specific benefit to assessed businesses within the STMD that is not provided to those not paying the assessment.
SECTION 14. The Resolution of Intention stated the City Council’s finding that the MDP satisfied all requirements of Streets and Highways Code Section 36622. The City Council hereby approves the MDP on the proposal to levy an annual assessment on lodging businesses within the STMD. The MDP is on file with the Infrastructure Finance Division of the Finance Department.
SECTION 15. The City Council hereby renews the STMD for a ten-year term beginning July 1, 2024, with an expiration date of June 30, 2034, for the territory generally described in Exhibit A, attached hereto and by this reference made a part of this ordinance.
SECTION 16. The City Council hereby confirms the assessment methodology specified in the MDP and the City Council levies the assessments detailed in the MDP on lodging businesses within the STMD to fund the activities and improvements described in the MDP. In accordance with Streets and Highways Code Section 36631 and the MDP, the assessment to fund the activities and improvements for the STMD will be collected on a monthly basis (including any delinquencies, interest, and overdue charges) from each assessed lodging business located in the boundaries of the STMD.
SECTION 17. The City Council hereby approves the annual budget and lodging business assessments for the STMD as set forth in the MDP.
SECTION 18. The City Manager or City Manager’s designee is hereby directed to take all necessary actions to complete the renewal of the STMD and levy the assessments.
SECTION 19. Upon any inconsistency between this Ordinance and the Resolution of Renewal, the Resolution of Renewal shall govern.
EXHIBIT A