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Home My WebLink AboutCity Council Study Session - 7-7-14 - Visit Huntington Beach a + a _. -eL: _ ��f'I 11 l �••y **VISIT HUNTINGTON SurfCifWUSA® Visit Huntington Beach (VHB) seeks City Council approval to: Increase the current Huntington Beach Hotel Motel Business Improvement District (HBHMBID) assessment from 2% to 3%. This assessment is not a tax, but an assessment that overnight visitors pay when they patronize our overnight accommodations r Visit Huntington Beach seeks City Council approval too. • Form the District under the 1994 Parking Business & Improvement Area Law. The current District was formed in 2002 under the 1989 Parking & Business Improvement Area Law. Assessment was initially 1 % and changed to 2 % in 2010 . � R Visit Huntington Beach seeks City Council approval to ,m Change ' name of • m HBHMBID to the Huntington Beach TourismBusiness • • Organization of i will remain the same . 001 WM -4 ♦ VBH and the City of HB have enjoyed an excellent relationship for many years VISIT � HUNTINGTON SurfCityUSA' • Contractual agreements to market and sell Surf City USA to target markets, media, meeting planners, film makers, domestic leisure travelers, int' I travel trade, advertising, website and social media • Partnerships on a variety of programs ( HB Centennial, Fire Rings, Int' I Surf Museum, Welcome Center Kiosk at the Pier, 100 Fears of Surfing) MOW _ e E Return -On- Investment is working! Since the creation of the current HBHMBID, and the partnership we have with the City in using one percent of the 10 percent occupancy tax, we have collectively grown the tourism industry to be a major economic development driver in HB. The return - on - investment numbers show that it's working! r City of HB/VHB Partnership Success (SMG Research: 2011=2013) • Travel spending increased 20% ($280 M to $352 M) • TOT collections to City increased $1 M dollars ($6.4 M to $7.4 M) • Number of visitors increased 20% • Annual occupancy increased from 72.4% to 76.6% (4% increase) • Average Daily Rate (ADR) increased from $211/night to $231 (9% increase). $231 was the #1 ADR in Orange County for 2013. 5. F y City of HB/VHB Partnership Success (SMG Research: 2011=2013) • Total direct, indirect and induced annual spending by visitors now totals nearly one- half a billion dollars : $ 532 M ( 2013 ) • Total number of direct, indirect and induced jobs generated by travel spending now totals 4,479 jobs ( 2013 ) Competitive Reality: Losing Ground Total Annual Budgets of HB's Key Beach Competitors • Visit • Beach • • Visit Newport Beach $7 M ($2.5 M TBID, $4 M TOT) • Visit Santa Barbara $3.5 M ($1.8 M TBID, $1 .5 M Gen Fund) • Visit Huntington Beach $2.4 M ($1 .6 M TBID, $800 K Gen Fund) "t •Y ' .l+ t • � �` \ F � \ t � 1 4, `��}ICE.} ,� Why increase the current District assessment? Y . • Need to maintain/increase HB's competitiveness, occupancy rate and overall visitation • Increase TOT receipts and other non- lodging revenues back to the City of HB • Provide long term stable funding for destination marketing under 1994 law Why increase the current District assessment? Changing to the 1994 law and increasing financial resources ($1 M per year in new revenue) allows VHB to pay an even more collaborative role with the City of Huntington to help grow our local economy • Increase VHB sales and marketing budget • Establish a dedicated Destination Product Development fund • Create a Visitor Services Enhancement program e_ q y t YY. i'. rZ Economic impact of 1 % increase over five years is substantial (SMG 2014-2019) • New incremental spending by visitors will be $119 M • Nearly $3 M in new TOT revenue generated for the City • An additional $ 700,000 in other local taxes generated • An additional 1 ,000 tourism - related jobs I E--- Leveraging new HBTIBD assessment dollars: Turning estimates into economic reality in a competitive travel world Sales & Marketing Efforts • Website and social media • Sports and film • Advertising • International brand awareness • Public relations • New coop marketing/partnership • Meetings and convention sales programs —'• + af` ' 1'111,lil�l'II'I!!�1�I'��1'llllll�l�l►�� t �. . �-.. Establish a Destination Product Development fund for new or repurposed capital improvement projects. Work collaboratively with City to establish funding criteria and award process. • Integrated Citywide Wayfinding progam • Art, culture and heritage • Rubber tire trolley service projects • Wetlands enhancements • Parks and sports facilities • Gateway and corridor improvements • Live music venue Sat _ .t�ygt A S ` Y Destination Product Development (DPD) Collaboration • DPD will be 12.5 percent of the annual HBTBID Working collaboratively with the budget. As the total number of rooms increases City Manager, VHB will develop over time, the amount of available funds for specific DPD funding criteria and an projects will increase. award process. The City, working with VHB, shall have equal input to • In no case should the funds drop below the make recommendations to the VHB 12.5% of the HBTID budget, or not be awarded Board for final project approval. to DPD projects. These funds could be banked and awarded in the future to a larger DPD project, as agreed to by both parties. Ammomw Moto ' A T i Create a Visitor Services Enhancement Fund • Longterm funding and expansion of proposed Ambassador program • Front line visitor services training program for community partners and local businesses • Pier Kiosk and Welcome Center improvements Competitive TBIDs . !. . "A TOT Rate TSki ssessment Rate . . Huntington Beach $1,589,000 2% room revenue 10% 12% Newport Beach $2,500,000 3%room revenue 10% 13% Costa Mesa $1,100,000 3%room revenue 8% 11% Laguna Beach $950,000 2%room revenue 10% 12% Irvine $1,600,000 2%room revenue 8% 10% Anaheim $9,000,000 2% room revenue 15% 17% Long Beach $4,000,000 3%room revenue 12% 15% Torrance $630,000 1% room revenue 11% 12% Santa Monica $3,350,000 $2.25-$4.25 per night 14% 14% +$4.00 Oceanside $472,500 1.5% room revenue 10% 11.5% Santa Barbara $1,800,000 $0.50- $2.00 per night 14% 14% + $2.00 4 t� r a`w,il Funding Stability Oversight r- g: California has two TID laws . . . 1989 Law � J • No petition 50% + 1 petition • 1 year term 5 or 10 year term • Annual renewal Business or property • Business only Non-profit management • Appointed advisory board Annual report • City can disestablish Payors can disestablish ♦ ■ . CIVIT The Tourism Business Improvement Districts Modification process 7/7/14 Council Workshop City Council 7/21/14 Submit signed petitions to city VHB 7/21/14 Resolution of Intention (1994 creation) City Council 7/22/14 Mail notice (1994 creation) City Clerk 8/18/14 Public Meeting (1994 creation) City Council 9/8/14 Final Hearing/ Resolution of Formation (1994 creation) City Council Resolution of Intention (1989 termination) 9/22/14 City Council First reading of Ordinance (1989 termination) New assessment goes into effect (9/30 existing assessment 10/1/14 Hotels ceases) 10/6/14 Public Hearing/ Ordinance Disestablishing (1989 termination) City Council 11/1/14 Existing district termination date (1989 Act termination) 010 _ � •y 3 stir I � I � � � HUNTINGTON I , I SurfCit�USA® Back up slides • TID • Budget numbers Current FY 13-14 Budget $2,574,339 $1,800,000 $1,600,000 �- - - $1,400,000 -. i $1,200,000 --- - - - - - - - ------ - --- -- - - -- -._ - _. $1,000,000 - Actual $800,000 -- $1,589,000 $600,000 $400,000 $787,000 - - $200,000 - - 5197,180 IIRIIMRIO TOT Rewrve x k - 'fro 7•_. c c.. Budget with proposed 1% increase effective October 1, 2014, $3,314,666 $3,0 W,W 0 $2,500,000 $2,000,W O $1,SW,WO ::. Proposed $2,491,6� :. $1,000,000 $500,000 -- HBHMBID TOT HUNTINGTON .... CALIFORNIA Budget Categories based on 3% HBHMBID 1400000 -- 1200000 1000000 800000 - ■Proposed 600000 400000 200000 $24,000 0 Sales&Marketing Administration Destination Product Contingency/Renewal Visitor Services City Collection Cost HUNTINGT Dev. Enhancements • _ The TID Revolution Laws Now • Texas jDistricits Now • New Jersey A 83 Calfornia • 2 states in Rapid 10 Montana process A expansion • 10 _ Slow initial in last Washington growth decade • 1 Oregon Started in • 1 Texas West • 1 New Jersey Hollywood, • 5 south 1992 Dakota N saga NOTLL Hotels pay an assessment. . . w Collected by the local government. . . � all uu o, And managed by the DMO . Rio M � I i r s ' . yors Government C I V I T A S