COUNCIL AGENDA REPORT
TO: Mayor and City Council
FROM: Chuen Wu, Assistant City Manager
DATE: June 17, 2025
SUBJECT: Adoption of a Resolution Approving the Fiscal Year 2025 -26 Santa Maria Valley Tourism Marketing District Annual Report
Description:
The City Council will consider approving the Santa Maria Valley Tourism Marketing District Annual Report which includes a 0.5 percent assessment rate increase.
RECOMMENDATION:
Adopt a Resolution approving the Santa Maria Tourism Marketing District Annual Report which includes a 0.5 percent assessment rate increase.
BACKGROUND:
On January 19, 2016, the City Council approved the formation of a Tourism Improvement District (TID) by Resolution Number 2016-04. It levied an annual assessment rate of two percent of gross-term room rental revenue to pay for the TID. The City Council designated the Santa Maria Valley Chamber of Commerce as the non-profit to administer the TID for the first five years. The Council-approved Management District Plan states that the owner’s association must prepare an annual report each fiscal year.
On November 3, 2020, the Council voted to rename the TID to the Santa Maria Valley Tourism Marketing District (SMVTMD) , renew the SMVTMD for seven more years with the term sta rting February 1, 2021 , and ending January 31, 2028, and expand the boundaries to include the City of Guadalup e and the unincorporated area of Santa Barbara County. This renewal would continue the revenue source devoted to marketing the Santa Maria Valley as a tourist, meeting, and event destination.
DISCUSSION:
Tourism Marketing Districts
Tourism Marketing Districts (TMDs) utilize the efficiencies of the private sector to operate 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.
2 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. 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 Management District Plan for SMVTMD is a proposed means of governance. It includes the Property and Business Improvement District Law of 1994 (PBIDL). Per section 36650 of the PBIDL , the owner’s association is required to prepare a report for each fiscal year, file with the Clerk, and receive City Council approval.
Increase to Assessment Rate
The annual assessment rate is currently two percent of gross short-term rental revenue.
Per the SMVTMD Management Plan, the TMD has the authority to increase the assessment rate to a maximum of four percent of gross room rental revenue within the term of the district, not to exceed 0.5 percent in any giv en year. Upon the vote of the District’s Board at the May 27, 2025 , meeting, the assessment rate for fiscal year 2025/2026 is a total of 2.5 percent of gross room rental revenue, thereby increasing the assessment by 0.5 percent. Based on the benefit receiv ed, the following stays shall not be subject to assessment: stays of more than 30 consecutive days; stays by any office r or employee of a foreign government who is exempt by reason of express provision of Federal Law or international treaty; stays by any p erson who is allowed the right of occupancy by the operator of a lodging business without rent (such as an onsite manager); and stays in any vacation rental unit.
Alternatives
The City Council may approve the report as filed by the owner’s association or may modify any particular contained in the report and approve it as modified. Any modification shall be made pursuant to Sections 36635 and 36636 of the Property and Business Improvement District Law of 1994.
ATTACHMENT(S):
A. Resolution
B Santa Maria Valley Tourism District FY 2025-26 Annual Report