City Council
Report
City Council Meeting: October 27, 2026
Agenda Item: 4.K
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To: Mayor and City Council
From: Oliver Chi, City Manager, Office of Economic Development Subject: Adoption of Resolution Declaring the City Council's Intention to Renew the Santa Monica Tourism Marketing District and Fixing the Time and Place for a Public Meeting and a Public Hearing to Consider the Renewal Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Adopt a Resolution declaring the City Council’s intention to renew the Santa Monica Tourism Marketing District, and setting a public meeting and public hearing on the proposed renewal and assessments.
Discussion
On December 11, 2012, Council adopted Resolution No. 10722 (CCS) establishing the creation of the Santa Monica Tourism Marketing District (SMTMD) for an initial five (5) year term. Council renewed the SMTMD on November 1, 2016 by Resolution No. 11005 (CCS) for an additional nine and one-half (9.5) year term, which ends on June 30, 2027.
The SMTMD is a benefit assessment district that creates a revenue source to help fund sales and marketing efforts for certain Santa Monica lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed businesses. The SMTMD is operated through Santa Monica Travel and Tourism, a private non-profit 501(c)(4) 2 of 8
based in Santa Monica, California, that promotes the city as a travel and tourism destination.
Adoption of the proposed Resolution of Intention (Attachment B) would result in a public meeting on November 17, 2026 and a public hearing on January 12, 2027 on the renewal of the SMTMD and the levy of assessments on certain lodging businesses.
Proposed exemptions from the levy of assessments are consistent with the proposed amendments to Chapter 6.68, Tax on Transients for Occupancy, subject to voter approval as Measure TT in the November 3, 2026 General Election. Should Measure TT not pass, changes may be required, and an amended Resolution of Intention with a modified schedule may return to Council.
The renewed SMTMD, if adopted, would extend the SMTMD by an additional nine and one-half (9.5) year term, beginning July 1, 2027 and ending December 31, 2036. It will include all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of City of Santa Monica with an average daily rate of $100 or more. Lodging business owners would like to pursue renewal of the SMTMD in order to continue a revenue source devoted to marketing Santa Monica as a tourist, meeting and event destination. If renewed, the SMTMD would generate approximately $6,500,000 on an annual basis for promotion of travel and tourism specific to Santa Monica. This public-private partnership is intended to complement, not replace, the City's investment, with the goal of maximizing economic development for Santa Monica.
TOURISM MARKETING DISTRICTS
Tourism Marketing Districts (TMDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow assessed business owners to organize their efforts to increase tourism. Business owners located within the TMD-designated boundaries fund the TMD, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TMD.
TMD benefits:
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• 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; and
• 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 (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 TMDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TMD, which for Santa Monica, is Santa Monica Travel and Tourism.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment C) includes the proposed boundary of the SMTMD, a service plan and budget and a proposed means of governance. The SMTMD will include all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of City of Santa Monica with an average daily rate of $100 or more.
The annual assessment is a fixed amount per occupied room per night. The assessment is based on the businesses’ average daily rate, based on the previous year’s performance. Lodging businesses with an average daily rate less than $100 will not be included in the district or assessed. Average daily rate figures shall be updated annually.
Based on the benefit received, assessments will not be collected on: stays of thirty-one (31) or more consecutive days by the same natural person; stays paid by any Federal, State of California, or City, official or employee when on official business provided that an exempt certificate is executed at the time of registration; stays associated with occupancy by a natural person who has occupied, or had the right to occupy, a room or rooms in a lodging business for at least thirty-one (31) consecutive days, where any 4 of 8
portion of the room rental is paid by a person other than a natural person and the occupancy is necessitated by (i) displacement from a residence caused by fire, natural disaster, or other casualty, (ii) extended medical treatment, or (iii) other comparable circumstances beyond the natural person's control; stays paid to any hospital, medical clinic, convalescent home or home for aged people; and stays paid by any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the assessment herein by reason of Federal, State, or local law or regulation. These exemptions are consistent with the proposed amendments to Chapter 6.68, Tax on Transients for Occupancy, subject to voter approval as Measure TT in the November 3, 2026 General Election. Should Measure TT not pass, changes may be required, and an amended Resolution of Intention may return to Council.
Initial assessment rates for July 1, 2027 – December 31, 2027 are:
Tier Average Daily
Rate
Assessment Per Occupied Room Per
Night
1 $300 and above $7.50
2 $200 - $299.99 $6.50
3 $100 - $199.99 $2.40
Assessment rates may be subject to an annual increase of no more than twenty-five cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten cents ($0.10) per year for Tier 3 lodging businesses. The table below demonstrates the maximum with the assumption that the rates will be increased by the maximum amounts for each category in each year of the SMTMD’s nine and one-half (9.5) year term. The maximum assessment rate for each category is:
Year
Tier 3
$100 - $199.99
Tier 2
$200 - $299.99
Tier 1
$300 and Above
July 2027- Dec
2027
$2.40 $6.50 $7.50
2028 $2.50 $6.75 $7.75
2029 $2.60 $7.00 $8.00
2030 $2.70 $7.25 $8.25
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2031 $2.80 $7.50 $8.50
2032 $2.90 $7.75 $8.75
2033 $3.00 $8.00 $9.00
2034 $3.10 $8.25 $9.25
2035 $3.20 $8.50 $9.50
2036 $3.30 $8.75 $9.75
*The initial “year” is July 1, 2027 through December 31, 2027 The renewed SMTMD will have a nine and one-half (9.5) year term, beginning July 1, 2027 or as soon as possible thereafter, and ending nine and one-half (9.5) years from its start date.
The City will be responsible for collecting the assessment on a monthly basis from each assessed business. The City will receive an administrative fee, to be negotiated with Santa Monica Travel & Tourism, to cover the costs of administering the SMTMD assessment. Currently, the City receives approximately $30,000 per year for this work.
Under the revised structure, the City would receive up to one percent (1%) of the total amount collected, which more accurately reflects the staff time and resources required for administration. The City shall forward the assessment proceeds, less the City’s administration fee, to Santa Monica Travel & Tourism, which will have the responsibility of managing SMTMD programs as provided in the Management District Plan.
OVERVIEW OF SMTMD RENEWAL PROCESS
October 27, 2026 RESOLUTION OF INTENTION
Upon the submission of a written petition, signed by the business owners in the renewed SMTMD who will pay more than fifty percent (50%) of the assessments proposed to be levied, the City Council (Council) may initiate proceedings to renew the SMTMD by the adoption of a resolution expressing its intention to renew the SMTMD.
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Petition Status: Petitions in favor of SMTMD renewal were submitted by assessed businesses, which represent more than fifty percent (50%) of the total SMTMD assessment. This majority petition allows the Council to initiate proceedings for SMTMD renewal at the October 27, 2026 meeting.
No later than
November 7, 2026 NOTICE
The City will mail a joint notice of the November 17, 2026 public meeting and January 12, 2027 public hearing to the owners of all businesses proposed to be assessed, no later than November 7, 2026. This provides at least ten (10) days’ notice of the public meeting and at least forty-five (45) days’ notice of the public hearing. Written protests must be received by the City Clerk by the scheduled time of the public hearing.
November 17, 2026 PUBLIC MEETING
Allow public testimony on the renewal of the SMTMD and levy of assessments. No Council action required.
January 12, 2027 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the renewed SMTMD which will pay fifty percent (50%) or more of the assessments proposed to be levied, and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Council.
If the Council, following the public hearing, decides to establish the renewed SMTMD, the Council shall adopt a resolution of formation.
ALTERNATIVES
The Council could choose not to adopt the Resolution of Intention. Staff does not recommend this option.
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Environmental Review
The recommended action is exempt from the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines (Common Sense Exemption). Adoption of the Resolution of Intention initiates the public notice and hearing process for the proposed renewal of the Santa Monica Tourism Marketing District. It does not renew the district, levy assessments, or authorize construction or other physical changes to the environment. Council retains discretion to determine whether to renew the district following the public hearing. Accordingly, it can be seen with certainty that there is no possibility that the recommended action may have a significant effect on the environment.
Past Council Actions
Meeting Date Description
12/11/2012 Council adopted Resolution No. 10722 (CCS) establishing the Santa Monica Tourism Marketing District (SMTMD).
11/01/2016
(attachment A)
Council adopted Resolution 11005 (CCS) extending the
SMTMD by nine and one-half years beginning on January 1, 2018 through June 30, 2027.
Financial Impacts and Budget Actions
There are no immediate financial impacts or budget actions necessary as a result of the recommended action. If renewed, the SMTMD would collect assessments of approximately $6.5 million annually to fund programs and services to promote travel and tourism specific to Santa Monica. Since SMTMD programs are intended to increase visitation to the City, it is anticipated that there would be a positive though indeterminate impact on the City’s transient occupancy tax and sales tax revenues.
The City would retain up to one percent (1%), or approximately $65,000, of the SMTMD assessments as an administration fee to cover the City’s costs associated with the monthly collection and transfer of the SMTMD assessments. The administration fee would be deposited in the revenue account 01300004.415630. Budget adjustments would be incorporated in the FY 2027-29 Biennial Budget. 8 of 8
Prepared By: Jennifer Taylor, Economic Development Manager Approved Forwarded to Council
Attachments:
A. Renewal of SMTMD Staff Report 11.1.2016 Council
B. Resolution of Intention SMTMD 102126
C. Management District Plan SMTMD Redline
D. 2026 Levine
E. 2026 Oaks