COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Chuen Wu, Assistant City Manager
DATE: January 21, 2025
SUBJECT: Adoption of a Resolution Granting Consent to the County of Santa Barbara to Establish the Santa Barbara County Wine Improvement District and Include the City of Santa Maria in the Established Santa Barbara County Wine Improvement District
Description:
The City Council will consider adopting a Resolution granting consent to the County of Santa Barbara to establish the Santa Barbara County Wine Improvement District and include the City of Santa Maria in the established Santa Barbara County Wine Improvement District.
RECOMMENDATION:
Adopt a Resolutio n granting consent to the County of Santa Barbara to establish the Santa Barbara County Wine Improvement District and include the City of Santa Maria in the established Santa Barbara County Wine Improvement District.
BACKGROUND:
The Santa Barbara County Wine Improvement District (SBCWID) is a benefit assessment district pro posed to continue as a revenue source to help fund destination sales and marketing promotions for Santa Barbara County wine-tasting facilities. This approach has been used successfully in other destination areas throughout the state to increase assessed wine-tasting facility sales and revenue. The proposed SBCWID includes all wine-tasting facilities, existing and in the future, located within the boundaries of the County, which includes the unincorporated areas of the County, and the cities of Carpinteria, Santa Barbara, Goleta, Solvang, Buellton, Lompoc, Santa Maria, and Guadalupe. Because the proposed SBCWID will include the City of Santa Maria, consent must be granted by the City Council of Santa Maria for the City of Santa Maria to be included in the creation, operation, and future renewals of the SBCWID.
DISCUSSION:
Wine-tasting facility business owners decided to pursue the formation of the SBCWID to establish a revenue source devoted to promoting Santa Barbara County wine -tasting facilities. If established, the SBCWID would generate approximately $1,650,000 on an annual basis for the promotion of wine-tasting facilities specific to Santa Barbara County.
2 Wine Improvement Districts
Wine Improvement Districts (WIDs) utilize the efficiencies of private sector operation in the market-based promotion of assessed businesses. These special assessment districts allow a ssessed business owners to organize their efforts to increase promotions and engagement. Business owners within the WID fund the WID and those funds are used to provide services that are desired by and benefit the assessed businesses within the WID.
WID 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 promotion, engagement, and sales lead generation;
They are designed, created, and governed by those who will pay the assessment; and
They provide a stable funding source for the promotion of assessed businesses.
In California, WIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law) . This law allows for the creation of special benefit assessment districts to raise funds within a specific geographic area. The key difference between WIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the WID.
Management District Plan
The Management District Plan (Attachment C) includes the proposed boundary of the SBCWID, a service plan and budget , and a proposed means of governance. The SBCWID will include all wine-tasting facilities, existing and in the future, located within the boundaries of the County, which includes the unincorporated areas of the County, and the cities of Carpinteria, Santa Barbara, Goleta, Solvang, Buellton, Lompoc, Santa Maria, and Guadalupe.
The annual assessment rate is one percent of the gross sales revenue of assessed wine- tasting facilities. Based on the benefit received, assessments will not be collected on purchases made outside of the state or purchases made pursuant to contracts executed prior to March 1, 2025. Revenue generated from the SBCWID is intended only to provide programs and services for assessed businesses, all of which are located in California.
Sales made outside of the state of California are not subject to assessment due to a lack of benefits. Assessment dollars will not be spent on any programs or activities to benefit individual wine-tasting facilities outside of the state of California. Assessment dollars may be spent outside of California to elevate the notoriety of t he County as a premier winery destination with the desired outcome of increased in -person visitation to businesses paying the assessment.
3 The proposed SBCWID will have a five -year term, beginning March 1, 2025, or as soon as possible thereafter, and ending five years from its start date. The assessment will be implemented beginning March 1, 2025. Once per year beginning on the anniversary of SBCWID formation there is a 30-day period in which business owners paying 50 percent or more of the assessment may protest and begin proceedings to terminate the SBCWID.
A third -party collection agency will be responsible for collecting the assessment on a quarterly basis from each assessed wine-tasting facility. The third-party collection agency shall forward the assessments to the Santa Barbara County Vintners Association, which will have the responsibility of managing SBCWID programs as provided in the Management District Plan. The third -party collection agency shall be paid a fee of up to two percent of the amount of assessment collected to cover its costs of collection and administration.
Alternative(s)
The City Council could choose not to adopt the Resolution Granting Consent. Staff does not recommend this option.
Fiscal Considerations
None immediately. Because the SBCWID programs are intended to increase visitation to wine tasting facilities in the County, including the City of Santa Maria, there may be an increase in sales tax collections.
ATTACHMENTS
A. Resolution Granting Consent to the County of Santa Barbara B. Adopted Resolution of the County of Santa Barbara Requesting Consent from the City of Santa Maria
C. SBCWID Management District Plan