HomeMy WebLinkAboutPublic Hearing to consider adoption of Resolution No. 2018-8 IPPROVED 7---0
City of Huntington Beach
File #: 18-591 MEETING DATE: 12/17/2018
REQUEST FOR CITY COUNCIL ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager
PREPARED BY: Kellee Fritzal, Deputy Director of Economic Development
Subject:
Public Hearing to consider adoption of Resolution No. 2018-84 declaring results of majority
protest proceedings and renewing the Huntington Beach Tourism Business Improvement
District (HBTBID); and, authorize appropriation of funds
Statement of Issue:
On October 15, 2018, the City Council adopted the Resolution of Intention to renew the Huntington
Beach Tourism Business Improvement District (HBTBID). All members of the HBTBID were provided
the proposed Management District Plan and the information regarding the proposed increased self-
assessment. On November 19, 2018, the required public meeting was conducted to provide an
opportunity to comment on the renewed plan. After the Public Hearing, if the Resolution is adopted
the modifications will increase the assessment from 3% to 4%, as approved by assessed lodging
businesses, and the early termination of the Grant Agreement. The renewed HBTBID will be
effective on February 1, 2019.
Financial Impact:
The estimated ongoing impact for Fund 709 is $1,000,000 in additional revenue per year due to the
additional 1% self-assessment. As the first six months for Fiscal Year 2018/19 have passed, there is
a pro-rated impact of $500,000 in the current fiscal year. This is a pass-through assessment, and as
such, an appropriation increase is requested in business unit 70980101. In addition, there will be a
slight increase in General Fund revenue due to the City's 1% Administration fee ($10,000).
Recommended Action:
A) Public Hearing and adoption of Resolution No. 2018-84, "A Resolution of the City Council of the
City of Huntington Beach Declaring Results of Majority Protest Proceedings and Renewing the
Huntington Beach Tourism Business Improvement District (HBTBID);" and,
B) Approve a Budget Appropriation of $500,000 in FY 2018/19 for the increased 1% pass-through in
Fund 709.
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File #: 18-591 MEETING DATE: 12/17/2018
Alternative Action(s):
Do not adopt the Resolution and direct staff as necessary.
Analysis:
In California, TBIDs 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 TBIDs and other special benefit
assessment districts is that funds raised are returned to the private non-profit corporation governing
the TBID.
The HBTBID funds the marketing and sales promotion efforts for Huntington Beach's overall
destination brand awareness including Huntington Beach 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 lodging businesses. The early-renewed HBTBID includes all
lodging businesses located within the boundaries of the City of Huntington Beach.
The City of Huntington Beach created the HBTBID on September 15, 2014 by resolution for a five-
year (5) term which ends on September 30, 2019. Visit Huntington Beach (VHB) is proposing to
renew the HBTBID in order to continue a revenue source devoted to marketing Huntington Beach as
a leisure, meetings and events destination. The proposal is to increase the current 3% assessment
to a 4% assessment.
In addition to the HBTBID, the City and VHB entered into a separate agreement, in which 1% of the
10% of the City's Transient Occupancy Tax rate is retained by VHB for public relations services. The
Agreement will expire on September 30, 2021. Visit Huntington Beach is proposing to terminate the
Agreement as part of the renewal of the HBTBID. This action would result in the City retaining the
1% (approximately $1 million), which would be additional revenue to the General Fund.
MANAGEMENT DISTRICT PLAN
The Management District Plan (Attachment 2) includes the proposed boundary of the HBTBID, a
service plan and budget and a proposed means of governance. The HBTBID will include all lodging
businesses, existing and in the future, available for public occupancy within the boundaries of the
City of Huntington Beach.
The renewed HBTBID will have a nine (9) year and five (5) month term, beginning February 1 , 2019
through June 30, 2028. The assessment will be implemented beginning February 1, 2019. Once per
year beginning on the anniversary of HBTBID renewal there is a thirty (30) day period in which
business owners paying fifty percent (50%) or more of the assessment may protest and begin
proceedings to terminate the HBTBID.
The City will be responsible for collecting the assessment on a monthly basis from each lodging
business located in the HBTBID boundaries. The City shall forward the assessments to Visit
Huntington Beach, which will have the responsibility of managing HBTBID programs as provided in
this Management District Plan. The City shall be paid a fee equal to one percent (1%) of the amount
of assessment collected to cover its costs of collection and administration.
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File #: 18-591 MEETING DATE: 12/17/2018
HBTBID RENEWAL PROCESS
To commence the renewal process, the City received written approval petitions from 11 business
owners in the renewed district who pay more than eighty-five percent (85%) of the assessments
proposed to be levied. The City mailed written notices to the owners of all businesses proposed to
be within the HBTBID.
As required, the City Council held a Public Meeting on November 19, 2018 to allow public testimony
on the renewal of the HBTBID and levy of assessments. No Council action was required at the
meeting.
At tonight's public hearing, if written protests are received from the owners of businesses in the
renewed HBTBID which will pay more than fifty percent (50%) 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. As a result, the Council can
take no action.
At the conclusion of the public hearing to renew the HBTBID, the Council may adopt, revise, change,
reduce, or modify the proposed assessment or the type or types of improvements and activities to be
funded with the revenues from the assessments. Proposed assessments may only be revised by
reducing any or all of them.
If the Council, following the public hearing, decides to establish the renewed HBTBID, the Council
shall adopt a resolution of formation.
On January 21, 2019, the City Council will be asked to modify the current HBTBID's Management
District Plan to change the term to end on January 31 , 2019, terminate the Grant Agreement for TOT,
and enter into a new Memorandum of Understanding.
Environmental Status:
Not Applicable
Strategic Plan Goal:
Strengthen economic and financial sustainability
Attachment(s):
1. Resolution No. 2018-84 "A Resolution of the City Council of the City of Huntington Beach
declaring results of majority protest proceedings and renewing the Huntington Beach Tourism
Business Improvement District (HBTBID)"
2. Management District Plan
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RESOLUTION NO. 2018-84
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON
BEACH DECLARING RESULTS OF MAJORITY PROTEST PROCEEDINGS
AND RENEWING THE HUNTINGTON BEACH TOURISM BUSINESS
IMPROVEMENT DISTRICT (HBTBID)
WHEREAS, the Property and Business Improvement District Law of 1994 (Streets and
Highways Code §36600 et. seq.) authorizes the City to renew business improvement districts upon
petition by a weighted majority of the business owners located within the boundaries of the district;
and
WHEREAS, lodging business owners who will pay more than fifty percent (50%) of the
renewed assessment, as weighted according to the amount of the assessment to be paid by the
petitioner, within the boundaries of the HBTBID have petitioned the City Council to renew the
HBTBID; and
WHEREAS, included with the petitions was a Management District Plan (Plan) summary
that describes the renewed assessment to be levied on lodging businesses within the HBTBID to
pay for tourism enhancement programs, and other improvements and activities set forth in the
Plan; and
WHEREAS, the assessed lodging businesses within the HBTBID will receive a specific
benefit from the activities and improvements set forth in the Plan; and
WHEREAS, on October 15, 2018 at 6:00 PM at 2000 Main Street, Huntington Beach, CA
92684, the City Council adopted a Resolution of Intention, Resolution No. 2018-59; and
WHEREAS, the public meeting and public hearing to consider the renewment of the
HBTBID have been properly noticed in accordance with Streets and Highways Code §36623; and
WHEREAS, on November 19, 2018 at 6:00 PM at 2000 Main Street, Huntington Beach,
CA 92684, the City Council held a public meeting regarding the renewal of the HBTBID, and the
City Council heard and received objections and protests, if any,to the renewal of the HBTBID and
the levy of the renewed assessment; and
WHEREAS, on December 17, 2018 at 6:00 PM at 2000 Main Street, Huntington Beach,
CA 92684, the City Council held a public hearing regarding the renewal of the HBTBID, and the
City Council heard and received all objections and protests, if any, to the renewal of the HBTBID
and the levy of the renewed assessment; and
WHEREAS, the City Clerk has determined that there was no majority protest. A majority
protest is defined as written protests received from owners of businesses in the renewed HBTBID
which would pay fifty percent (50%) or more of the assessments renewed to be levied. Protests
are weighted based on the assessment renewed to be levied on each lodging business; and
RESOLUTION NO. 2018-84
WHEREAS, the City bears the burden of proving by a preponderance of the evidence that
an assessment imposed for a specific benefit or specific government service is not a tax, that the
amount is no more than necessary to cover the costs to the City in providing the specific benefit
or specific government service, and that the manner in which those costs are allocated to a payor
bear a fair or reasonable relationship to the, specific benefits or specific government services,
received by the payor.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL THAT:
1. The recitals set forth herein are adopted by the City Council as findings and they
are true and correct.
2. The HBTBID is hereby renewed for a nine (9) and five (5) months year term,
beginning February 1, 2019 through June 30, 2028.
3. The Plan dated October 9, 2018 is hereby adopted and approved.
4. The activities to be provided to benefit businesses in the HBTBID 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 HBTBID; to provide activities or
improvements outside the HBTBID; or for any purpose other than the purposes specified in this
Resolution, the Resolution of Intention, and the Plan. Notwithstanding the foregoing,
improvements and activities that must be provided outside the HBTBID boundaries to create a
specific benefit to the assessed businesses may be provided, but shall be limited to marketing or
signage pointing to the HBTBID.
5. The City Council finds as follows:
a) The activities funded by the assessment will provide a specific benefit to assessed
businesses within the HBTBID that is not provided to those not paying the assessment.
b) The assessment is a charge imposed for a specific benefit conferred or privilege
granted directly to the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of conferring the benefit or granting
the privilege.
c) The assessment is a charge imposed for a specific government service or product
provided directly to the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of providing the service or product.
d) Assessments imposed pursuant to the HBTBID are levied solely upon the assessed
business, and the business owner is solely responsible for payment of the assessment when
due. If the owner chooses to collect any portion of the assessment from a transient, that
portion shall be specifically called out and identified for the transient in any and all
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18-6918/193095
RESOLUTION NO. 2018-84
communications from the business owner as the "HBTBID Assessment" or "Tourism
Assessment" as specified in the Plan.
6. The assessments levied for the HBTBID shall be applied towards tourism
enhancement programs to market Huntington Beach lodging businesses as tourist, meeting and
event destinations, and other improvements and activities as set forth in the Plan.
7. Assessments levied on lodging businesses pursuant to this resolution shall be levied
on the basis of benefit. Because the services provided are intended to increase room rentals, an
assessment based on room rentals is the best measure of benefit.
8. The assessments for the entire HBTBID will total approximately $5,000,000
annually. The initial `year' of operation will be a partial year consisting of five (5) months, for
which the anticipated budget is $2,083,333.
9. Bonds shall not be issued to fund the HBTBID.
10. The HBTBID shall include all lodging business located within the boundaries of
the City of Huntington Beach. A boundary map is attached hereto and incorporated herein by
reference.
11. The assessments shall be used for the purposes set forth above and any funds
remaining at the end of any year may be used in subsequent years in which the HBTBID
assessment is levied as long as they are used consistent with the requirements set forth herein.
12. The assessments to fund the activities and improvements for the HBTBID will be
collected by the City on a monthly basis, and in accordance with Streets and Highways Code
§36631.
13. The City Council, through adoption of this Resolution and the Plan, has the right
pursuant to Streets and Highways Code §36651, to identify the body that shall implement the
renewed program, which shall be the Owners' Association of the HBTBID as defined in Streets
and Highways Code §36612. The City Council has determined that Visit Huntington Beach shall
be the HBTBID Owners' Association.
14. Visit Huntington Beach, pursuant to Streets and Highways Code §36650, shall
cause to be prepared a report for each fiscal year, except the first year, for which assessments are
to be levied and collected to pay the costs of the improvement and activities described in the report.
The first report shall be due after the first year of operation of the HBTBID.
15. The HBTBID renewed pursuant to this resolution will be subject to any
amendments to the Property and Business Improvement District Law of 1994 (California Streets
and Highways Code §36600 et. seq.).
16. The City Clerk, or his or her designee, is directed to take all necessary actions to
complete the renewal of the HBTBID and to levy the assessments.
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18-6918/193095
RESOLUTION NO. 2018-84
17. This Resolution shall take effect immediately upon its adoption by the City Council.
PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular
meeting thereof held on the 17th day of December ,
2018.
Mayor
REVIEWED AND APPROVED: INITIATED AND APPROVED:
,kl
City( ana er Deputy Direct of Economic Development
APPROVED AS O FORM:
C' Attorney MN
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18-6918/193095
RESOLUTION NO. 2018-84
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Res. No. 2018-84
STATE OF CALIFORNIA
COUNTY OF ORANGE ) ss:
CITY OF HUNTINGTON BEACH )
I, ROBIN ESTANISLAU, the duly elected, qualified City Clerk of the
City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do
hereby certify that the whole number of members of the City Council of the City of
Huntington Beach is seven; that the foregoing resolution was passed and adopted
by the affirmative vote of at least a majority of all the members of said City Council
at a Regular meeting thereof held on December 17, 2018 by the following vote:
AYES: Brenden, Carr, Semeta, Peterson, Posey, Delgleize, Hardy
NOES: None
ABSENT: None
RECUSE: None
r
City Clerk and ex-officio Clerk of the
City Council of the City of
Huntington Beach, California
Esparza, Patty
From: Fritzal, Kellee
Sent: Thursday, December 13, 2018 5:41 AM
To: Estanislau, Robin; Esparza, Patty
Subject: Fwd: HBTBID reso 2018-84 question
Sent from my iPhone
Begin forwarded message:
From: Gina from Civitas <greednao civitasadvisors.com>
Date: December 12, 2018 at 5:20:55 PM PST
To: "Fritzal, Kellee" <KFritzalgsurfcity-hb.org>
Subject: Re: FW: HBTBID reso 2018-84 question
Kellee,
This is just saying that the City Clerk will follow the protocol/process they normally take
in order to file and complete the resolution, i.e. get it signed, etc.
Does this help?
Gina
On Tue, Dec 11, 2018 at 12:54 PM Fritzal, Kellee <KFritzal a,surfcity-hb.org> wrote:
Can you answer below. Sorry to bother
From: Esparza, Patty
Sent: Tuesday, December 11, 2018 12:52 PM
To: Fritzal, Kellee <KFritzalna surfcity-hb.org>
Cc: Estanislau, Robin<Robin.Estanislau2surfcity-hb.org>
Subject: HBTBID reso 2018-84 question
Hi Kellee:
On page3 of this resolution, at the bottom of the page, #16 states: "The City Clerk, or his or her
designee, is directed to take all necessary actions to complete the renewal of the HBTBID and
to levy the assessments."
Can you explain exactly what action we need to take to comply with this resolution?
1
Thanks,
Patty Esyarza, OW
Assistant City Clerk
City of I Imitington Beach
2000 Main Street
I[witiiiggitoti Beach,, CA 92648
(714) 536-52160
WIN
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KsI" m 95-1-285-1461 I TAS p " -V
d: 212-236-2336
a: 633 5th Stieet. Suite 1800, Los Angele--. C/--,,C,,, 7
www.civitasadvisors.com a: greed(mcivitasadvisors.com
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HUNTINGTON
BEACH
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HUNTINGTON BEACH
TOURISM BUSINESS IMPROVEMENT DISTRICT
MANAGEMENT DISTRICT PLAN
Prepared pursuant to the Property and Business Improvement District Law of ,
1994, Stjrgfts and Highways Code section 36600 et seq.
CONTENTS
1. OVERVIEW ........................................................................................................................................2
II. BACKGROUND ................................................................................................................................3
III. IMPETUS TO RENEW THE HBTBID........................................................................................4
IV. ACCOMPLISHMENTS.....................................................................................................................6
V. BOUNDARY.......................................................................................................................................9
VI. BUDGET AND SER\TICES...........................................................................................................10
A. Annual Service Plan.......................................................................................................... 10
B. Annual Budget.................................................................................................................. 13
C. California Constitutional Compliance .............................................................................. 13
D. Assessment........................................................................................................................ 14
E. Penalties and Interest ........................................................................................................ 15
F. Time and Manner for Collecting Assessments................................................................. 15
VII. GOVERNANCE...............................................................................................................................16
A. Owners' Association......................................................................................................... 16
B. Brown Act and California Public Records Act Compliance ............................................ 16
C. Annual Report................................................................................................................... 16
APPENDIX1 —LAW....................................................................................................................................17
APPENDIX 2—ASSESSED BUSINESSES.............................................................................................28
Prepared by
Civitas
L di
C I V5 I TAS
Pd PTNEPSHIPS • PROGRESS • PROSPERITY
(800)999-7781
www.civitasadvisors.com
788
I. OVERVIEW
Developed by Visit Huntington Beach (VHB) and Huntington Beach lodging businesses,the renewed
Huntington Beach Tourism Business Improvement District (HBTBID) is an assessment district that
will continue to provide specific benefits to payors,by funding marketing and sales promotion efforts
for assessed lodging businesses. The HBTBID was formed 1112014 for a five (5) year term; assessed
lodging businesses now wish to renew it for an additional nine (9) years and five (5) months.
Location: The renewed HBTBID includes all lodging businesses located within the boundaries
of the City of Huntington Beach, as shown on the map in Section V.
Services: The HBTBID is designed to provide specific benefits directly-to payors by increasing
room night sales. Tourism enhancement programs will increase overnight tourism
and market payors as tourist,meeting and event destinations, thereby increasing room
night sales.
Budget.- The total HBTBID annual budget for each full year of operation is anticipated to be
approximately $5,000,000. The initial "year" of operation will be a partial year
consisting of five (5) months, for which the anticipated budget is $2,083,333.
Cost: The annual assessment rate is four percent (4%) of gross short-term room rental
revenue. Based on the benefit received, assessments will not be collected on: stays of
more than thirty (30) consecutive days; stays by any federal or State of California
officer or employee when on official business; and stays by any officer or employee
for a foreign government who is exempt by reason of express provision of federal law
or international treaty.
Collection: The City will be responsible for collecting the assessment on a monthly basis (including
any delinquencies, penalties and interest) from each lodging business located in the
boundaries of the HBTBID. The City shall take all reasonable efforts to collect the
assessments from each lodging business.
Duration: The renewed HBTBID will have a nine (9) year and five (5) month life, beginning
February 1,2019 through June 30, 2028. Once per year, beginning on the anniversary
of HBTBID renewal, there is a thirty, (30) day period in which owners paying fifty
percent (50%) or more of the assessment may protest and initiate a City Council
hearing on HBTBID termination. The proposed time for implementation and
completion of this Management District Plan is February 1, 2019 through June 30,
2028.
Managenent: Visit Huntington Beach will continue to serve as the HBTBID's Owners'Association.
The Owners'Association is charged with managing funds and implementing programs
in accordance with this Plan, and must provide annual reports to the City Council.
789
II. BACKGROUND
TBIDs are an evolution of the traditional Business Improvement District. The first TBID was formed
in West Hollywood, California in 1989. Since then, over one hundred California destinations have
followed suit. In recent years, other states have begun adopting the California model — Montana,
South Dakota,Washington, Colorado,Texas and Louisiana have adopted TBID laws. Several other
states are in the process of adopting their own legislation. The cities of Wichita,Kansas and Newark,
New Jersey used an existing business improvement district law to form a TBID. And, some cities,
like Portland,Oregon and Memphis,Tennessee have utilized their home rule powers to create TBIDs
without a state law.
California's TBIDs collect- Number of Districts Operating in California
ively raise over $250 million 101101
annually for local destination 100 98
ss
marketing. With compet- 80
itors raising their budgets, 80 —— - — — —and increasing rivalry for 60 63 72
visitor dollars,it is important 60 — — —that Huntington Beach 45
lodging businesses continue 40 37
to invest in stable, lodging- 24 28 31
specific marketing programs. 20 19
TBIDs utilize the efficiencies 1 z a 6 9
0
of private sector operation in �' NJ N N N N N N N N N N N N N N T N N N N
p p tD W 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
the market-based promotion ib Lnn o P " w A c0„ m -4 000 o o rev w a u rn j o
of tourism districts. TBIDs
allow lodging business owners to organize their efforts to increase room night sales. Lodging business
owners within the TBID pay an assessment and those funds are used to provide services that increase
room night sales.
In California, TBIDs are formed pursuant to the Property and Business Improvement District Law
of 1994. This law allows for the creation of a benefit assessment district to raise funds within a specific
geographic area. The key difference between TBIDs and other benefit assessment districts is that funds raised are
returned to the41ivate non 4rofit corporation governing the district.
There are many benefits to TBIDs:
• Funds must be spent on services and improvements that provide a specific benefit only to those
who pay;
• Funds cannot be diverted to general government use;
• TBIDs are customized to fit the needs of payors in each destination;
• TBIDs allow for a wide range of services;
• TBIDs are designed, created and governed by those who will pay the assessment; and
• TBIDs provide a stable,long-term funding source for tourism promotion.
790
III. IMPETUS TO RENEW THE HBTBID
The existing HBTBID was established in 2014 with an assessment rate of three percent (3%) on
overnight lodging revenues in Huntington Beach. While the HBTBID has been successful, there is
still opportunity for growth in overnight visitation and room night sales revenue, especially during
non-peak periods. Currently, the City of Huntington Beach provides VHB with funding from
Transient Occupancy Tax revenues, equal to one percent (1%) of overnight lodging revenues in
Huntington Beach, pursuant to an MOU between the City and VHB. The City and VHB intend to
terminate the MOU and enter a new. It is the intent of VHB to develop a long-term agreement with
the City that includes the City retaining 100% of all TOT revenues. The assessment rate in the
renewed HBTBID will be increased to four percent (4%) to ensure that tourism promotion funding
is not decreased during the term of the renewed HBTBID. There are several reasons to renew the
HBTBID. The most compelling reasons are:
L The Need to Maintain/Increase Competitiveness, Occupancy and Overall Visitation
As the number of overnight accommodations grow in Orange County, as well as in competitive
California cities and counties, it is crucial that Huntington Beach maintains and increases its
competitiveness, occupancy levels and visitation from targeted markets.
These goals can be accomplished by increasing the HBTBID assessment from three percent (3%) to
four percent (4%), which will continue to generate approximately $5,000,00 in dedicated HBTBID
funding for improvements and activities to increase room rentals for assessed lodging businesses
located within the renewed HBTBID. Additional HBTBID funds will be used to implement new
Tourism Enhancement Programs above and beyond those that are currently provided with the
existing funding level:
1. Increase funding for destination sales and marketing programs, which will target key visitor
markets,including markets that generate substantial o-,Ternight visitation to Huntington Beach
throughout the year, especially during non-peak seasons; and
2. Increase funding for the innovative HBTBID Visitor Services Enhancements program that
adds new and/or repurposed projects to Huntington Beach's current brand offerings, which
will increase year around overnight visitation by improving the overall HBTBID brand
experience, the number of reasons for visitors to stay longer, and offer more reasons for
visitors to return more often to Huntington Beach.
Z. An Opportunity for Increasing City Revenues
As an indirect result of the renewed HBTBID, it is expected that as occupancy rates and overall
visitation numbers increase, so too will the City's Transient Occupancy Tax revenue. Greater
occupancy rates will also generate an indirect increase in sales tax revenues from tourist spending.
3. Stable Funding for Destination Marketing
The current HBTBID was formed pursuant to the Property and Business Improvement District Law
of 1994. The law allows a district to be renewed for up to ten (10) years without the need for City
Council's annual approval to continue levying the assessment. Stakeholders have elected to renew the
HBTBID for a nine (9) year five (5) month term. The renewed term will provide stable funding for
destination marketing, visitor services enhancements, and management through June 30, 2028 and
791
align the HBTBID's fiscal year to the City's fiscal rear. This may provide stable funding for destination
marketing,visitor services enhancements, and management.
Many of Huntington Beach's competitors are at or exceeding the level of funding available for
destination marketing in Huntington Beach. The table below lists the funding raised by tourism
improvement districts for several other competitors.
Location Amount Raised Assessment Rate TOT Total Guest
Rate Charge
Costa Mesa 53,350,000 3% room revenue 8% 110/0
Laguna Beach 52,040,000 2% room revenue 12% 14%
Irvine $3,100,000 2% room revenue 8% 10%
Anaheim $19,830,000 2%room revenue 15% 17%
Long Beach $6,000,000 3%room revenue 12% 15%
Torrance $1,090,000 1%room revenue 11% 12%
Santa Moiuca S4,130,000 $1.50 - S5.25 per night 14% 14% + 55.25
Oceanside $690,000 1.5%room revenue 10% 11.5%
Santa Barbara 53,770,000 $0.75 - $4.00 per right 14% 14% + 54.00
Newport Beach $8,430,000 3%room revenue 10% 13%
-As of September 2018
792
IV. ACCOMPLISHMENTS
Assessed Lodging Business Revenue
Assessed lodging businesses revenue has increased 45.6% since the HBTBID assessment was
increased from 2% to 3% in 2014. Increases in assessed lodging business revenue by fiscal year are
listed below:
• FY 14-15 9.2%
• FY 15-16 9.0%
• FY 16-17 13.3%
• FY 17-18 15.1% (Oct Jul)
Marketing & Public Relations
• Produced the destination's most successful PR activation In 2015-16, garnering national and
international media exposure for the brand and numerous "best in the travel industry- "awards.
Huntington Beach's "Epic Big Board Ride" campaign resulted In:
o Tnv GL�Il\�1 LESS 1COR1 D RECORDS TM for"Largest surfboard" and "Most people
riding a surfboard at once."
o Total media coverage:
• 2,017 total placements
• 500 million impressions
• $9.6 million in immediate earned media value
• 1,306 broadcast segments
• Conducted comprehensive brand perception research stud- in leisure and group markets in
2015-16, launched updated Surf City USA brand logo,leisure "Wonder" campaign and group
"HB Collection" campaign in 2016-17 across all marketing channels—digital,print, broadcast,
display, collateral, and visitor information services.
• Re-designed a national award-winning, mobile centric responsive website in 2016-17, social
media integration and expansion initiative and transitioned entire media marketing strategy to
a robust digital based destination marketing program. The result? Qualified visitor user
sessions increased 72% from 643,365 in 2014-15 to 1,112,846 in 2017-18, with soaring hotel
overnight stay market demand and revenue increases (see above Hotel data).
• Granted highly, valued official verification on three major social media platforms (Facebook,
Tavitter, Instagram).
• Began covering events and key destination locations live on Facebook,Instagram and Twitter,
adding paid social media posting in 2017-18. Results include progressive increases in followers
and engagement from 24% — 51% across these three key social media channels annually.
• Produced video content promoting the destination that is being used by assessed lodging
businesses to help their sales initiatives.
• Launched Huntington Beacl) Velcoines You to Dream and Do campaign that includes videos and
print collateral, as well as video promotion with Matador Media to reach 13 million adventure
millennial travelers.
• Hosted over 300 journalists from top domestic and international markets from 2014-15 to
2017-18.
• Generated over S27 million in earned media value and 620 million impressions across top
travel publications (online, print and broadcast) from 2014-15 to present.
• Received numerous national and international travel industry- marketing and communications
awards from the US Travel Association, Hospitality Sales and Marketiing Association
International visit California and the Natonal Niy 'eb Marketing Association.
793
Destination Product Development
• Built the \vorld's largest surfboard and an activation event that sparked $10 million in global
media v-alue, as %v7ell as produced a lasting community- attraction, asset and point of pride.
• Led comnnunin- input sessions, which helped VHB in designing a million dollar plus
communinwide comprehensive wavfunding system. The signs are currently being installed
throughout Huntington Beach.
• Funded capital Improvements at HB International Surfing Museum.
Sales
FY 2014-1 5- to present.
• Conference/Meering leads processed b�- VHB: 1,832
• Definite contracted/booked room nights by VHB: 111,270
• Economic Impact of Groups to Huntington Beach: $111.39 million
• Highlighted Group Sales Programs
0 Launch of TIB Collection — promoting multiple hotels in Huntington Beach with their
%valkability aspect to groups that would traditional only consider a convention center.
0 2016 —Porsche Cars North A111m ca is largest group ever booked into Huntington Beach
with 3,700 contracted room nights at assessed businesses and Economic Impact of
$4.1 million.
0 2018 — Porsche Ca)w Noah 4menca in negotiations to hold multiple programs in
Huntington Beach at assessed businesses for a total of 4,100 room nights in 2019
Service
• 2016 Destinations International \VOW' Award for Surf Cin- USA Ambassador Program.
• 2018 Orange County Certified Tourism ambassador (CT,�) Company- of the Year.
• Launched Nighttime Ambassador Program to aid the Huntington Beach Police Department
on busy evenings in do,\-,7ntown during Spring Break and summer.
• Took over adinmisuation of Daytime Ambassador Program to provide 7 days a week roN-ing
hospitality sei-vices to guests in downtotivn Huntington Beach.
• Expanded Surf Cite USA Shuttle from events only- to include sunnmer weekends.
Summer weekend Coastal Loop shuttle passenger count by rear:
0 2015: -548 passengers
0 2016: 93-5- passengers
0 2017: 639 passengers
0 2018: 1,273 passengers («-it1n one more'vveekend to go)
• Since 2014, hosted 10 Partner Information 1\Ieerings each year for a total of 140 businesses.
• In 2017, launched complitnentan- Event Information Booth service to provide visitor
iinfornnation to attendees at 20 ev-ents,including the Fastpitch Softball Tournament in Central
Park, Surf Cin- USA Marathon, Airshow, and ANTP Championships. In 2017, launched the
Surf Cirn USA Volunteer Program to help staff Event Information Booths.
Advocacy & Community Support
• In 2017, launched the summer PCH Cleanup. This roadside cleanup focuses on the gatewaN
to Huntington Beach from the south, between Brookhurst and Beach Blvd along PCH.
0 2017 & 2018: 268 volunteers picked up 1,430 pounds of trash.
® Developed guidelines for rie-w Connmunin- Events Sponsorship Initiative to launch 2018-19.
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Administration
• Implemented the CRM (Customer Relationship Management) system for better tracking of
assessed business data.
• r nnualli,send at least one VHB employee to the Robert Mayer Huntington Beach Leadership
Academy program.
• Implemented Blackbaud software for improjTed accounting, budgeting, and transparency.
• Established a Reserve Policy consistent with industry practices.
• Unqualified audits each year from 2014-15 to present.
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V. BOUNDARY
The HBTBID will include all lodging businesses, existing and in the future, available for public
occupancy within the boundaries of the City of Huntington Beach.
Lodging business means: any structure, or any portion of any structure which is occupied or intended
or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any
hotel,inn, tourist home or house,motel, studio hotel, bachelor hotel, lodging house, rooming house,
at a fixed location, or other similar structure or portion thereof.
The boundary, as shown in the map below, currently includes twenty-three (23) lodging businesses.
A complete listing of lodging businesses within the renewed HBTBID can be found in Appendix 2.
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CITY OF
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VI. BUDGET AND SERVICES
A. Annual Service Plan
Assessment funds will be spent to provide specific benefits conferred or privileges granted directly to
the payors that are not provided to those not charged, and which do not exceed the reasonable cost
to the City of conferring the benefits or granting the privileges. The privileges and services provided
with the HBTBID funds are tourism enhancement programs available only to assessed lodging
businesses.
A service plan budget has been developed to deliver services that benefit the assessed lodging
businesses. A detailed annual budget will be developed and approved by VHB. The table below
illustrates the initial annual budget allocations. The total initial full year budget is $5,000,000. Fiscal
year 2019 covers the five (5) month period from February to June 2019, resulting in a lower budget
for the first five (5) months of HBTBID operation.
Initial Annual Budget - $5,000,000
Contingency/
Reserve, $400,000, City Admin. Fee,
$50,000, 1%
8%
Administration,
$950,000, 19%
Tourism
Enhancement
Programs,
$3,600,000, 72%
Although actual revenues will fluctuate due to market conditions, the proportional allocations of the
budget shall remain the same. However, the City and the VHB Board shall have the authority to
adjust budget allocations between the categories by no more than fifteen percent (15%) of the total
budget per year. Annually, VHB will meet with the City Manager and designated staff to review
accomplishments and funding priorities for the following year. A description of the proposed
improvements and activities for the initial year of operation is below. The same activities are proposed
for subsequent years. In the event of a legal challenge against the HBTBID, any and all assessment
funds may be used for the costs of defending the HBTBID.
Each budget category includes all costs related to providing that service,in accordance with Generally
Accepted Accounting Procedures (GAAP). For example, the Tourism Enhancement Programs
budget includes the cost of staff time dedicated to overseeing and implementing the tourism
enhancement programs. Staff time dedicated purely to administrative tasks is allocated to the
administration portion of the budget. The costs of an individual staff member may be allocated to
multiple budget categories,as appropriate in accordance with GAAP. The staffing levels necessary to
provide the services below will be determined by the VHB on an as-needed basis.
797
Tourism Enhancement Programs
The Tourism Enhancement Program will promote and provide activities and improvements to
assessed lodging businesses through the implementation of two sub-programs: sales and marketing
and visitor services enhancements. A summary of each sub-program is provided below:
Sales &Marketina
The sales and marketing program will promote assessed lodging businesses as tourist,meeting,
and event destinations. The sales and marketing program will have a central theme of
promoting the Huntington Beach destination brand as a desirable place for overnight visits.
The program will have the goal of increasing overnight visitation and room night sales at
assessed lodging businesses, and may include the following activities which are designed to
drive overnight visitation and room sales to assessed lodging businesses:
• Increased advertising and promotional programs in print, online, social media, and
television targeted at potential visitors to drive overnight visitation and room sales;
• Website enhancements and updates;
• Strategic advertising and marketing agency support;
• Contract with third party marketing and sales partners;
• Public relations, sales blitzes, missions, and calls;
• Familiarization tours targeting key decision makers;
• Preparation and production of collateral promotional materials such as visitor guides,
brochures, flyers, and maps;
• Video development for destination experiences and visuals;
• Attendance at professional industry conferences and affiliation events;
• Lead generation activities designed to attract tourists, leisure visitors, and group events
to Huntington Beach;
• Partnerships with targeted special events that attract overnight visitors; and
• Cooperation with local agencies and film commission programs that attract overnight
visitors.
Visitor SerViGes Enhancements
The Visitor Sei-vices Enhancements (VSE) program will provide funding for programs and
initiatives based on criteria to be developed by VHB and reviewed and approved with the Cir .
The focus for the VSE program will be on the entire destination brand footprint to ensure a
consistent brand experience throughout Huntington Beach. VSE may include the following
programs which are designed to drive overnight visitation and room sales to assessed lodging
businesses:
• A long-term ambassador and/or security program with trained staff that supplement
the current level of police presence to improve the overall destination experience and
encourage overnight visitation or a fulltime dedicated police officer to ensure tourism
safety;
• Welcome center and kiosk improvements including new technology-driven visitor
information enhancements;
• Pedestrian improvements linking the hotels and Downtown;
• Brand-centric visitor services training program for both public and private sector staff;
and
• A Trolley or transportation program connecting hotels to downtown Huntington
Beach, The Pier, or other attractions
798
Surf City USA Destination Product Development
The Destination Product Development (DPD) program will provide funding to assist in the
building or financing of well-vetted capital improvement projects which attract overnight
visitors to assessed businesses. The program costs may be allocated up to ten percent (10.0%)
of the annual budget. Working collaboratively with the City Manager, VHB will develop
specific DPD funding criteria and an award process. The City working with VHB, shall have
equal input to make recommendations to the VHB Board for final project approval. Both the
funding and awarding criteria will be developed in collaboration with the City Manager's office
and other key community stakeholder groups. These DPD projects may include:
• Comprehensive and integrated wayfinding signage system enhancements including
signage to parking decks and lots;
• Art and cultural projects, to attract overnight visitors;
• Gateway enhancements including Pacific Coast Highway, to attract overnight visitors;
• Enhancements to wetlands experiences which attract overnight visitors, such as the
Bolsa Chica Ecological Reserve and the Huntington Beach Wetlands (between
Newland Street and the Santa Ana River) that expose visitors to the value of the vital
ecosystems;
• Improvements to existing parks and sports facilities utilized by overnight visitors;
• Safe and fun entertainment complex for young teens and adults utilized by overnight
visitors;
• Live music venue which attracts overnight visitors;
• Infrastructure improvements that enhance Huntington Beach's competitive position
to attract desirable special events year-round and attract overnight visitors;
• Partnership with the City on mutually agreed upon projects that promote overnight
visitor stays to Huntington Beach. Examples may include: Huntington Beach
International Surfing Museum,and summer beach restroom porter cleaning assistance;
• Destination product development research and master planning;
• Infrastructure improvements that enhance Huntington Beach's competitive position
to attract desirable special events year-round and attract overnight visitors; and
• Improvements to the Citv's downtown parking deck that make the overnight visitor
experience more desirable.
Administration
The administration and operations portion of the budget shall be utilized for administrative staffing
costs, office costs, advocacy, and other general administrative costs such as insurance, legal, and
accounting fees.
Contingency/Reserve
The budget includes a contingency line item to account for uncollected assessments, if any. If there
are contingency funds collected, they may be held in a reserve fund or utilized for other program,
administration,or renewal costs at the discretion of the VHB Board. Policies relating to contributions
to the reserve fund,the target amount of the reserve fund, and expenditure of monies from the reserve
fund shall be set by the VHB Board.
City Administration Fee
The City of.Huntington Beach shall retain a fee equal to one percent(1%) of the amount of assessment
collected to cover its costs of collection and administration.
799
B. Annual Budget
The total nine (9) year and five (5) month improvement and service plan budget is projected at
approximately S5,000,000 annually, or $47,083,333 cumulatively through 2028. This amount may
fluctuate as sales and revenue increase or decrease at assessed lodging businesses, but is not expected
to change significantly over the term.
C. California Constitutional Compliance
The HBTBID assessment is not a property-based assessment subject to the requirements of
Proposition 218. Courts have found Proposition 218 limited the term `assessments' to levies on real
property.' Rather, the HBTBID assessment is a business-based assessment, and is subject to
Proposition 26. Pursuant to Proposition 26 all levies are a tax unless they fit one of seven exceptions.
Two of these exceptions apply to the HBTBID, a "specific benefit" and a "specific government
service." Both require that the costs of benefits or services do not exceed the reasonable costs to the
City of conferring the benefits or providing the services.
1. Specific Benefit
Proposition 26 requires that assessment funds be expended on, "a specific benefit conferred or
privilege granted directly to the payor that is not provided to those not charged, and which does not
exceed the reasonable costs to the local government of conferring the benefit or granting the
privilege." The activities and improvements in this Plan are designed to provide targeted benefits
directly to assessed lodging businesses, and are intended only to provide benefits and services directly
to those businesses paring the assessment. These services are tailored not to serve the general public,
businesses in general, or parcels of land, but rather to serve the specific lodging businesses within the
HBTBID. The activities described in this Plan are specifically targeted to increase room night sales
for assessed lodging businesses within the boundaries of the HBTBID, and are narrowly tailored.
HBTBID funds will be used exclusively to provide the specific benefit of increased room night sales
directly to the assessees. Assessment funds shall not be used to feature non-assessed lodging
businesses in HBTBID programs, or to directly generate sales for non-assessed businesses. The
activities paid for from assessment revenues are business services constituting and providing specific
benefits to the assessed businesses.
The assessment imposed by this HBTBID is for a specific benefit conferred directly to the payors that
is not provided to those not charged. The specific benefit conferred directly to the payors is an
increase in room night sales. The specific benefit of an increase in room night sales for assessed
lodging businesses will be provided only to lodging businesses paying the HBTBID assessment, with
tourism enhancement programs promoting lodging businesses paying the HBTBID assessment. The
tourism enhancement programs will be designed to increase room night sales at each assessed lodging
businesses. Because they are necessary to provide the tourism enhancement programs that specifically
benefit the assessed lodging businesses, the administration and contingency/reserve programs also
provide the specific benefit of increased room night sales to the assessed lodging businesses.
Although the HBTBID, in providing specific benefits to payors, may produce incidental benefits to
non-paying businesses, the incidental benefit does not preclude the services from being considered a
specific benefit. The legislature has found that, "A specific benefit is not excluded from classification
as a `specific benefit' merely because an indirect benefit to a nonpayor occurs incidentally and without
cost to the payor as a consequence of providing the specific benefit to the payor.
' Jarvis v. the City of Smi Diego 72 Cal App.4`h 230
'- Cal. Const. art XIII C § 1(e)(l)
3 Government Code § 53758(a)
800
2. Specific Government Service
The assessment may also be utilized to provide, "a. specific government service or product provided
directly to the payor that is not provided to those not charged, and which does not exceed the
reasonable costs to the local government of providing the service or product."' The legislature has
recognized that marketing and promotions services like those to be provided by the HBTBID are
government services within the meaning of Proposition 26'. Further, the legislature has determined
that "a specific government service is not excluded from classification as a `specific government
service' merely because an indirect benefit to a nonpayor occurs incidentally and without cost to the
payor as a consequence of providing the specific government service to the pay-or."'
3. Reasonable Cost
HBTBID services will be implemented carefully to ensure they do not exceed the reasonable cost of
such services. The full amount assessed will be used to provide the services described herein. Funds
will be managed by the VHB, and reports submitted on an annual basis to the City. Only assessed
lodging businesses will be featured in marketing materials, receive sales leads generated from
HBTBID-funded activities, be featured in lodging-specific advertising campaigns, and benefit from
other HBTBID-funded programs. Non-assessed lodging businesses will not receive these, nor any
other, HBTBID-funded services and benefits.
The HBTBID-funded programs are all targeted directly at and feature only assessed businesses. It is,
however, possible that there will be a spill over benefit to non-assessed businesses. If non-assessed
lodging businesses receive incremental room nights, that portion of the promotion or program
generating those room nights shall be paid with non-HBTBID funds. HBTBID funds shall only be
spent to benefit the assessed businesses, and shall not be spent on that portion of any program which
directly generates incidental room nights for non-assessed businesses.
D. Assessment
The annual assessment rate is four percent (4%) of gross short-term room rental revenue. Based on
the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive
days; stays by any federal or State of California officer or employee when on official business; and
stays by any officer or employee for a foreign government who is exempt by reason of express
provision of federal law or international treaty.
The term "gross room rental revenue" as used herein means: the consideration charged, whether or
not received, for the occupancy of space in a lodging business valued in money,whether to be received
in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of
any kind or nature, without any deduction therefrom whatsoever. Gross room rental revenue shall
not include any federal, state or local taxes collected,including but not limited to transient occupancy
taxes.
The assessment is levied upon and a direct obligation of the assessed lodging business. However, the
assessed lodging business may, at its discretion, pass the assessment on to transients. The amount of
assessment,if passed on to each transient, shall be disclosed in advance and separately stated from the
amount of rent charged and any other applicable taxes, and each transient shall receive a receipt for
payment from the business. If the HBTBID assessment is identified separately it shall be disclosed
4 Cal. Const. art XI1I C§ 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)
801
as the "HBTBID Assessment." As an alternative, the disclosure may include the amount of the
HBTBID assessment and the amount of the assessment imposed pursuant to the California Tourism
Marketing Act,Government Code§13995 et seq. and shall be disclosed as the "Tourism Assessment."
The assessment is imposed solely, upon, and is the sole obligation of the assessed lodging business
even if it is passed on to transients. The assessment shall not be considered revenue for any purpose,
including calculation of transient occupancy taxes.
Bonds shall not be issued.
E. Penalties and Interest
The HBTBID shall reimburse the City of Huntington Beach for any, costs associated with collecting
unpaid assessments. If sums in excess of the delinquent HBTBID assessment are sought to be
recovered in the same collection action by the City, the HBTBID shall bear its pro rata share of such
collection costs. assessed businesses which are delinquent in paying the assessment shall be
responsible for paying:
1. Original Delingueng: Any lodging business that fails to remit any assessment imposed within
the time required shall pay a penalty of ten percent (10%) of the amount of the assessment in
addition to the amount of the assessment.
2. Continued Delinquenc3,: Any lodging business that fails to meet any delinquent remittance on or
before a period of thim, (30) days following the date on which the remittance first became
delinquent shall pay a second penalty of ten percent (10%) of the amount of the assessment
in addition to the amount of the assessment and the ten percent (10%) penalty first unposed.
3. Fraud: If the City deterinines that the non-payment of any remittance due is due to fraud, a
penalty- of twenty--five percent (25%) of the amount of the assessment shall be added thereto
in addition to the penalties stated in subparagraphs 1 and 2 of this subsection E.
4. Interest: In addition to the penalties imposed, any lodging business that fails to remit any
assessment imposed shall pay interest at the rate of one-half of one percent(0.5%) per month,
or fraction thereof, on the amount of the assessment, exclusive of penalties, form the date on
which the remittance first became delinquent until paid.
5. Penalties Merged will) Assessment: Every penalty imposed and such interest as accrues shall
become a part of the assessment herein required to be paid.
6. Cit l not Responsible for Uncollected Amounts: The City shall not be responsible for uncollected
amounts.
F. Time and Manner for Collecting Assessments
The HBTBID assessment will be implemented beginning February 1, 2019 and will continue for nine
(9) years and five (5) months through June 30, 2028. The City will be responsible for collecting the
assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging
business. The City shall take all reasonable efforts to collect the assessments from each lodging
business. The City shall forward the assessments collected to VHB.
802
VII. GOVERNANCE
A. Owners' Association
The City Council, through adoption of this Management District Plan, has the right, pursuant to
Streets and Highways Code §36651, to identif T the body that shall implement the proposed program,
which shall be the Owners' Association of the HBTBID as defined in Streets and Highways Code
§36612. The City Council has determined that Visit Huntington Beach will continue to seive as the
Owners' Association for the HBTBID, upon execution of a renewed contract between the City, and
VHB.
B. Brown Act and California Public Records Act Compliance
An Owners'Association is a private entinT and may not be considered a public entity for any purpose,
nor may its board members or staff be considered to be public officials for any purpose.The Owners'
Association is,however, subject to government regulations relating to transparency, namely the Ralph
M. Brown Act and the California Public Records Act. These regulations are designed to promote
public accountabilin7. The Owners' Association acts as a legislative body under the Ralph M. Brown
Act (Government Code 554950 et seq.). Thus, meetings of the VHB board and certain committees
must be held in compliance with the public notice and other requirements of the Brown Act. The
Owners'Association is also subject to the record keeping and disclosure requirements of the California
Public Records Act. Accordingly, the Owners' Association shall publicly report any action taken and
the vote or abstention on that action of each member present for the action.
C. Annual Report
The VHB shall present an annual report at the end of each year of operation to the City Council
pursuant to Streets and Highways Code §36650 (see Appendix 1). The annual report shall include:
• Any proposed changes in the boundaries of the improvement district or in any benefit zones
or classification of businesses within the district.
• The improvements and activities to be provided for that fiscal year.
• An estimate of the cost of providing the improvements and the activities for that fiscal N-ear.
• The method and basis of levying the assessment in sufficient detail to alloy each business
owner to estimate the amount of the assessment to be levied against his or her business for
that fiscal year.
• The estimated amount of any surplus or deficit revenues to be carried over from a previous
fiscal year.
• The estimated amount of any contributions to be made from sources other than assessments
levied pursuant to this part.
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APPENDIX 1 - LAW
***THIS DOCUMENT IS CURRENT THROUGH THE 2018 SUPPLEMENT ***
(ALL 2017 LEGISLATION)
STREETS AND HIGHWAYS CODE
DIVISION 18. PARKING
PART 7. PROPERTY AND BUSINESS IMPROVEMENT DISTRICT LAW OF 1994
CHAPTER 1. General Provisions
ARTICLE 1.Declarations
36600. Citation of part
This part shall be known and may be cited as the"Property and Business Improvement District Law of 1994."
36601. Legislative findings and declarations; Legislative guidance
The Legislature finds and declares all of the following:
(a)Businesses located and operating within business districts in some of this state's communities are
economically disadvantaged, are underutilized, and are unable to attract customers due to inadequate
facilities, services, and activities in the business districts.
(b)It is in the public interest to promote the economic revitalization and physical maintenance of business
districts in order to create jobs, attract new businesses, and prevent the erosion of the business districts.
(c)It is of particular local benefit to allow business districts to fund business related improvements,
maintenance, and activities through the levy of assessments upon the businesses or real property that receive
benefits from those improvements.
(d)Assessments levied for the purpose of conferring special benefit upon the real property or a specific
benefit upon the businesses in a business district are not taxes for the general benefit of a city,even if property,
businesses, or persons not assessed receive incidental or collateral effects that benefit them.
(e)Property and business improvement districts formed throughout this state have conferred special benefits
upon properties and businesses within their districts and have made those properties and businesses more
useful by providing the following benefits:
(1)Crime reduction. A study by the Rand Corporation has confirmed a 12-percent reduction in the
incidence of robbery and an 8-percent reduction in the total incidence of violent crimes within the
30 districts studied.
(2)Job creation.
(3)Business attraction.
(4) Business retention.
(5)Economic growth.
(6)New investments.
(f)With the dissolution of redevelopment agencies throughout the state,property and business improvement
districts have become even more important tools with which communities can combat blight, promote
economic opportunities, and create a clean and safe environment.
(g) Since the enactment of this act, the people of California have adopted Proposition 218, which added
Article XIII D to the Constitution in order to place certain requirements and restrictions on the formation of,
and activities, expenditures, and assessments by property-based districts. Article XIH D of the Constitution
provides that property-based districts may only levy assessments for special benefits.
(h)The act amending this section is intended to provide the Legislature's guidance with regard to this act, its
interaction with the provisions of Article XIII D of the Constitution,and the determination of special benefits
in property-based districts.
(1)The lack of legislative guidance has resulted in uncertainty and inconsistent application of this
act, which discourages the use of assessments to fund needed improvements, maintenance, and
activities in property-based districts, contributing to blight and other underutilization of property.
(2)Activities undertaken for the purpose of conferring special benefits upon property to be assessed
inherently produce incidental or collateral effects that benefit property or persons not assessed.
Therefore, for special benefits to exist as a separate and distinct category from general benefits,the
804
incidental or collateral effects of those special benefits are inherently part of those special benefits.
The mere fact that special benefits produce incidental or collateral effects that benefit property or
persons not assessed does not convert any portion of those special benefits or their incidental or
collateral effects into general benefits.
(3)It is of the utmost importance that property-based districts created under this act have clarity
regarding restrictions on assessments they may levy and the proper determination of special benefits.
Legislative clarity with regard to this act will provide districts with clear instructions and courts with
legislative intent regarding restrictions on property-based assessments, and the manner in which
special benefits should be determined.
36602. Purpose of part
The purpose of this part is to supplement previously enacted provisions of law that authorize cities to levy assessments
within property and business improvement districts, to ensure that those assessments conform to all constitutional
requirements and are determined and assessed in accordance with the guidance set forth in this act.This part does not
affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or activities or
the raising of revenue for these purposes. V
36603.Preemption of authority or charter city to adopt ordinances levying assessments
Nothing in this part is intended to preempt the authority of a charter city to adopt ordinances providing for a different
method of levying assessments for similar or additional purposes from those set forth in this part. A property and
business improvement district created pursuant to this part is expressly exempt from the provisions of the Special
Assessment Investigation,Limitation and Majority Protest Act of 1931 (Division 4(commencing with Section 2800)).
36603.5.Part prevails over conflicting provisions
Any provision of this part that conflicts with any other provision of law shall prevail over the other provision of law,
as to districts created under this part.
36604. Severability
This part is intended to be construed liberally and, if any provision is held invalid, the remaining provisions shall
remain in full force and effect.Assessments levied under this part are not special taxes.
ARTICLE 2.Definitions
36606. "Activities"
"Activities"means,but is not limited to, all of the following that benefit businesses or real property in the district:
(a)Promotion of public events.
(b)Furnishing of music in any public place.
(c)Promotion of tourism within the district.
(d)Marketing and economic development, including retail retention and recruitment.
(e)Providing security,sanitation,graffiti removal,street and sidewalk cleaning,and other municipal services
supplemental to those nonnally provided by the municipality.
(f) Other services provided for the purpose of conferring special benefit upon assessed real property or
specific benefits upon assessed businesses located in the district.
36606.5. "Assessment"
"Assessment" means a levy for the purpose of acquiring, constructing, installing, or maintaining improvements and
providing activities that will provide certain benefits to properties or businesses located within a property and business
improvement district.
36607. "Business"
805
"Business" means all types of businesses and includes financial institutions and professions.
36608. "City"
"City" means a city, county, city and county, or an agency or entity created pursuant to Article 1 (commencing with
Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code, the public member agencies of which
includes only cities, counties, or a city and county, or the State of California.
36609. "City council"
"City council"means the city council of a city or the board of supervisors of a county, or the agency,commission, or
board created pursuant to a joint powers agreement and which is a city within the meaning of this part.
36609.4. "Clerk"
"Clerk"means the clerk of the legislative body.
36609.5. "General benefit"
"General benefit"means,for purposes of a property-based district,any benefit that is not a"special benefit"as defined
in Section 36615.5.
36610."Improvement"
"Improvement" means the acquisition, construction, installation, or maintenance of any tangible property with an
estimated useful life of five years or more including,but not limited to,the following:
(a)Parking facilities.
(b)Benches,booths,kiosks, display cases,pedestrian shelters and signs.
(c)Trash receptacles and public restrooms.
(d)Lighting and heating facilities.
(e)Decorations.
(f)Parks.
(g)Fountains.
(h)Planting areas.
(i)Closing, opening,widening, or narrowing of existing streets.
0)Facilities or equipment, or both,to enhance security of persons and property within the district.
(k)Ramps, sidewalks,plazas, and pedestrian malls.
(1)Rehabilitation or removal of existing structures.
36611. "Management district plan"; "Plan"
"Management district plan" or"plan"means a proposal as defined in Section 36622.
36612. "Owners' association"
"Owners' association"means a private nonprofit entity that is under contract with a city to administer or implement
improvements,maintenance, and activities specified in the management district plan. An owners' association may be
an existing nonprofit entity or a newly formed nonprofit entity.An owners' association is a private entity and may not
be considered a public entity for any purpose,nor may its board members or staff be considered to be public officials
for any purpose. Notwithstanding this section, an owners' association shall comply with the Ralph M. Brown Act
(Chapter 9(commencing with Section 54950)of Part 1 of Division 2 of Title 5 of the Government Code), at all times
when matters within the subject matter of the district are heard, discussed, or deliberated, and with the California
Public Records Act(Chapter 3.5 (commencing with Section 6250) of Division 7 of Title 1 of the Government Code),
for all records relating to activities of the district.
36614. "Property"
"Property"means real property situated within a district.
806
36614.5. "Property and business improvement district"; "District"
"Property and business improvement district," or "district," means a property and business improvement district
established pursuant to this part.
36614.6. "Property-based assessment"
"Property-based assessment"means any assessment made pursuant to this part upon real property.
36614.7. "Property-based district"
"Property-based district"means any district in which a city levies a property-based assessment.
36615. "Property owner"; "Business owner"; "Owner"
"Property owner" means any person shown as the owner of land on the last equalized assessment roll or otherwise
known to be the owner of land by the city council. "Business owner"means any person recognized by the city as the
owner of the business."Owner"means either a business owner or a property owner.The city council has no obligation
to obtain other information as to the ownership of land or businesses,and its determination of ownership shall be final
and conclusive for the purposes of this part. Wherever this part requires the signature of the property owner, the
signature of the authorized agent of the property owner shall be sufficient. Wherever this part requires the signature
of the business owner,the signature of the authorized agent of the business owner shall be sufficient.
36615.5. "Special benefit"
"Special benefit" means, for purposes of a property-based district, a particular and distinct benefit over and above
general benefits conferred on real property located in a district or to the public at large. Special benefit includes
incidental or collateral effects that arise from the improvements,maintenance, or activities of property-based districts
even if those incidental or collateral effects benefit property or persons not assessed. Special benefit excludes general
enhancement of property value.
36616. "Tenant"
"Tenant"means an occupant pursuant to a lease of commercial space or a dwelling unit,other than an owner.
ARTICLE 3. Prior Law
36617.Alternate method of financing certain improvements and activities; Effect on other provisions
This part provides an alternative method of financing certain improvements and activities. The provisions of this part
shall not affect or limit any other provisions of law authorizing or providing for the furnishing of improvements or
activities or the raising of revenue for these purposes. Every improvement area established pursuant to the Parking
and Business Improvement Area Law of 1989(Part 6(commencing with Section 36500) of this division)is valid and
effective and is unaffected by this part.
CHAPTER 2.Establishment
36620.Establishment of property and business improvement district
A property and business improvement district may be established as provided in this chapter.
36620.5. Requirement of consent of city council
A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of
that city.A city may not form a district within the unincorporated territory of a county without the consent of the board
807
of supervisors of that county. A city may not form a district within the territorial jurisdiction of another city without
the consent of the city council of the other city.
36621. Initiation of proceedings; Petition of property or business owners in proposed district
(a)Upon the submission of a written petition, signed by the property or business owners in the proposed
district who will pay more than 50 percent of the assessments proposed to be levied, the city council may
initiate proceedings to form a district by the adoption of a resolution expressing its intention to form a district.
The amount of assessment attributable to property or a business owned by the same property or business
owner that is in excess of 40 percent of the amount of all assessments proposed to be levied, shall not be
included in determining whether the petition is signed by property or business owners who will pay more
than 50 percent of the total amount of assessments proposed to be levied.
(b)The petition of property or business owners required under subdivision (a) shall include a summary of
the management district plan. That summary shall include all of the following:
(1)A map showing the boundaries of the district.
(2)Infonnation specifying where the complete management district plan can be obtained.
(3)Information specifying that the complete management district plan shall be furnished upon
request.
(c)The resolution of intention described in subdivision(a) shall contain all of the following:
(1)A brief description of the proposed improvements, maintenance, and activities, the amount of
the proposed assessment, a statement as to whether the assessment will be levied on property or
businesses within the district, a statement as to whether bonds will be issued, and a description of
the exterior boundaries of the proposed district,which may be made by reference to any plan or map
that is on file with the clerk.The descriptions and statements do not need to be detailed and shall be
sufficient if they enable an owner to generally identify the nature and extent of the improvements,
maintenance, and activities, and the location and extent of the proposed district.
(2)A time and place for a public hearing on the establishment of the property and business
improvement district and the levy of assessments, which shall be consistent with the requirements
of Section 36623.
36622. Contents of management district plan
The management district plan shall include,but is not limited to, all of the following:
(a)If the assessment will be levied on property, a map of the district in sufficient detail to locate each parcel
of property and, if businesses are to be assessed, each business within the district. If the assessment will be
levied on businesses,a map that identifies the district boundaries in sufficient detail to allow a business owner
to reasonably determine whether a business is located within the district boundaries. If the assessment will
be levied on property and businesses,a map of the district in sufficient detail to locate each parcel of property
and to allow a business owner to reasonably determine whether a business is located within the district
boundaries.
(b)The name of the proposed district.
(c)A description of the boundaries of the district, including the boundaries of benefit zones, proposed for
establishment or extension in a manner sufficient to identify the affected property and businesses included,
which may be made by reference to any plan or map that is on file with the clerk. The boundaries of a
proposed property assessment district shall not overlap with the boundaries of another existing property
assessment district created pursuant to this part.This part does not prohibit the boundaries of a district created
pursuant to this part to overlap with other assessment districts established pursuant to other provisions of law,
including,but not limited to,the Parking and Business Improvement Area Law of 1989(Part 6(commencing
with Section 36500)). This part does not prohibit the boundaries of a business assessment district created
pursuant to this part to overlap with another business assessment district created pursuant to this part. This
part does not prohibit the boundaries of a business assessment district created pursuant to this part to overlap
with a property assessment district created pursuant to this part.
(d)The improvements,maintenance, and activities proposed for each year of operation of the district and the
maximum cost thereof If the improvements,maintenance,and activities proposed for each year of operation
are the same, a description of the first year's proposed improvements, maintenance, and activities and a
statement that the same improvements, maintenance, and activities are proposed for subsequent years shall
satisfy the requirements of this subdivision.
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(e)The total annual amount proposed to be expended for improvements, maintenance,or activities, and debt
service in each year of operation of the district. If the assessment is levied on businesses, this amount may
be estimated based upon the assessment rate.If the total annual amount proposed to be expended in each year
of operation of the district is not significantly different, the amount proposed to be expended in the initial
year and a statement that a similar amount applies to subsequent years shall satisfy the requirements of this
subdivision.
(f)The proposed source or sources of financing, including the proposed method and basis of levying the
assessment in sufficient detail to allow each property or business owner to calculate the amount of the
assessment to be levied against his or her property or business. The plan also shall state whether bonds will
be issued to finance improvements.
(g)The time and manner of collecting the assessments.
(h)The specific number of years in which assessments will be levied. In a new district,the maximum number
of years shall be five. Upon renewal, a district shall have a term not to exceed 10 years. Notwithstanding
these limitations,a district created pursuant to this part to finance capital improvements with bonds may levy
assessments until the maximum maturity of the bonds. The management district plan may set forth specific
increases in assessments for each year of operation of the district.
(i)The proposed time for implementation and completion of the management district plan.
(j)Any proposed rules and regulations to be applicable to the district.
(k) (1)A list of the properties or businesses to be assessed, including the assessor's parcel numbers for
properties to be assessed, and a statement of the method or methods by which the expenses of a
district will be imposed upon benefited real property or businesses, in proportion to the benefit
received by the property or business,to defray the cost thereof.
(2)In a property-based district, the proportionate special benefit derived by each identified parcel
shall be determined exclusively in relationship to the entirety of the capital cost of a public
improvement,the maintenance and operation expenses of a public improvement, or the cost of the
activities. An assessment shall not be imposed on any parcel that exceeds the reasonable cost of the
proportional special benefit conferred on that parcel. Only special benefits are assessable, and a
property-based district shall separate the general benefits,if any,from the special benefi is conferred
on a parcel. Parcels within a property-based district that are owned or used by any city, public
agency,the State of California,or the United States shall not be exempt from assessment unless the
governmental entity can demonstrate by clear and convincing evidence that those publicly owned
parcels in fact receive no special benefit.The value of any incidental,secondary,or collateral effects
that arise from the improvements, maintenance, or activities of a property-based district and that
benefit property or persons not assessed shall not be deducted from the entirety of the cost of any
special benefit or affect the proportionate special benefit derived by each identified parcel.
(1)In a property-based district, the total amount of all special benefits to be conferred upon the properties
located within the property-based district.
(m)In a property-based district,the total amount of general benefits, if any.
(n)In a property-based district, a detailed engineer's report prepared by a registered professional engineer
certified by the State of California supporting all assessments contemplated by the management district plan.
(o)Any other item or matter required to be incorporated therein by the city council.
36623. Procedure to levy assessment
(a) If a city council proposes to levy a new or increased property assessment, the notice and protest and
hearing procedure shall comply with Section 53753 of the Government Code.
(b)If a city council proposes to levy a new or increased business assessment, the notice and protest and
hearing procedure shall comply with Section 54954.6 of the Government Code, except that notice shall be
mailed to the owners of the businesses proposed to be assessed. A protest may be made orally or in writing
by any interested person. Every written protest shall be filed with the clerk at or before the time fixed for the
public hearing. The city council may waive any irregularity in the form or content of any written protest. A
written protest may be withdrawn in writing at any time before the conclusion of the public hearing. Each
written protest shall contain a description of the business in which the person subscribing the protest is
interested sufficient to identify the business and, if a person subscribing is not shown on the official records
of the city as the owner of the business,the protest shall contain or be accompanied by written evidence that
the person subscribing is the owner of the business or the authorized representative. A written protest that
does not comply with this section shall not be counted in determining a majority protest. If written protests
are received from the-owners or authorized representatives of businesses in the proposed district that will pay
809
50 percent or more of the assessments proposed to be levied and protests are not withdrawn so as to reduce
the protests to less than 50 percent, no further proceedings to levy the proposed assessment against such
businesses, as contained in the resolution of intention, shall be taken for a period of one year from the date
of the finding of a majority protest by the city council.
(c) If a city council proposes to conduct a single proceeding to levy both a new or increased property
assessment and a new or increased business assessment,the notice and protest and hearing procedure for the
property assessment shall comply with subdivision(a), and the notice and protest and hearing procedure for
the business assessment shall comply with subdivision (b). If a majority protest is received from either the
property or business owners, that respective portion of the assessment shall not be levied. The remaining
portion of the assessment may be levied unless the improvement or other special benefit was proposed to be
funded by assessing both property and business owners.
36624. Changes to proposed assessments
At the conclusion of the public hearing to establish the district,the city council may adopt,revise, change,reduce,or
modify the proposed assessment or the type or types of improvements, maintenance, and activities to be funded with
the revenues from the assessments.Proposed assessments may only be revised by reducing any or all of them. At the
public hearing, the city council may only make changes in, to, or from the boundaries of the proposed property and
business improvement district that will exclude territory that will not benefit from the proposed improvements,
maintenance, and activities. Any modifications, revisions, reductions, or changes to the proposed assessment district
shall be reflected in the notice and map recorded pursuant to Section 36627.
36625.Resolution of formation
(a) If the city council, following the public hearing, decides to establish a proposed property and business
improvement district,the city council shall adopt aresolution of formation that shall include,but is not limited
to, all of the following:
(1)A brief description of the proposed improvements, maintenance, and activities, the amount of
the proposed assessment, a statement as to whether the assessment will be levied on property,
businesses,or both within the district,a statement on whether bonds will be issued,and a description
of the exterior boundaries of the proposed district, which may be made by reference to any plan or
map that is on file with the clerk. The descriptions and statements need not be detailed and shall be
sufficient if they enable an owner to generally identify the nature and extent of the improvements,
maintenance,and activities and the location and extent of the proposed district.
(2)The number, date of adoption,and title of the resolution of intention.
(3)The time and place where the public hearing was held concerning the establishment of the
district.
(4)A determination regarding any protests received. The city shall not establish the district or levy
assessments if a majority protest was received.
(5)A statement that the properties,businesses,or properties and businesses in the district established
by the resolution shall be subject to any amendments to this part.
(6)A statement that the improvements, maintenance, and activities to be conferred on businesses
and properties in the district will be funded by the levy of the assessments. The revenue from the
levy of assessments within a district shall not be used to provide improvements, maintenance, or
activities outside the district or for any purpose other than the purposes specified in the resolution
of intention, as modified by the city council at the hearing concerning establishment of the district.
Notwithstanding the foregoing, improvements and activities that must be provided outside the
district boundaries to create a special or specific benefit to the assessed parcels or businesses may
be provided,but shall be limited to marketing or signage pointing to the district.
(7)A finding that the property or businesses within the area of the property and business
improvement district will be benefited by the improvements,maintenance, and activities funded by
the proposed assessments, and, for a property-based district, that property within the district will
receive a special benefit.
(8)In a property-based district, the total amount of all special benefits to be conferred on the
properties within the property-based district.
(b)The adoption of the resolution of formation and, if required, recordation of the notice and map pursuant
to Section 36627 shall constitute the levy of an assessment in each of the fiscal years referred to in the
management district plan.
810
36626.Resolution establishing district
If the city council, following the public hearing, desires to establish the proposed property and business improvement
district, and the city council has not made changes pursuant to Section 36624, or has made changes that do not
substantially change the proposed assessment, the city council shall adopt a resolution establishing the district. The
resolution shall contain all of the information specified in Section 36625.
36627.Notice and assessment diagram
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625 or
Section 36626,the clerk shall record a notice and an assessment diagram pursuant to Section 3114.No other provision
of Division 4.5 (commencing with Section 3100) applies to an assessment district created pursuant to this part.
36628. Establishment of separate benefit zones within district; Categories of businesses
The city council may establish one or more separate benefit zones within the district based upon the degree of benefit
derived from the improvements or activities to be provided within the benefit zone and may impose a different
assessment within each benefit zone. If the assessment is to be levied on businesses,the city council may also define
categories of businesses based upon the degree of benefit that each will derive from the improvements or activities to
be provided within the district and may impose a different assessment or rate of assessment on each category of
business, or on each category of business within each zone.
36628.5.Assessments on businesses or property owners
The city council may levy assessments on businesses or on property owners, or a combination of the two,pursuant to
this part. The city council shall structure the assessments in whatever manner it determines corresponds with the
distribution of benefits from the proposed improvements, maintenance, and activities, provided that any property-
based assessment conforms with the requirements set forth in paragraph(2)of subdivision(k)of Section 36622.
36629. Provisions and procedures applicable to benefit zones and business categories
All provisions of this part applicable to the establishment,modification,or disestablishment of a property and business
improvement district apply to the establishment, modification, or disestablishment of benefit zones or categories of
business. The city council shall,to establish,modify,or disestablish a benefit zone or category of business, follow the
procedure to establish,modify,or disestablish a property and business improvement district.
36630.Expiration of district; Creation of new district
If a property and business improvement district expires due to the time limit set pursuant to subdivision(h)of Section
36622,a new management district plan may be created and the district may be renewed pursuant to this part.
CHAPTER 3.Assessments
36631.Time and manner of collection of assessments; Delinquent payments
The collection of the assessments levied pursuant to this part shall be made at the time and in the manner set forth by
the city council in the resolution levying the assessment.Assessments levied on real property may be collected at the
same time and in the same manner as for the ad valorem property tax, and may provide for the same lien priority and
penalties for delinquent payment.All delinquent payments for assessments levied pursuant to this part may be charged
interest and penalties.
36632.Assessments to be based on estimated benefit; Classification of real property and businesses;Exclusion
of residential and agricultural property
(a)The assessments levied on real property pursuant to this part shall be levied on the basis of the estimated
benefit to the real property within the property and business improvement district. The city council may
811
classify properties for purposes of determining the benefit to property of the improvements and activities
provided pursuant to this part.
(b)Assessments levied on businesses pursuant to this part shall be levied on the basis of the estimated benefit
to the businesses within the property and business improvement district. The city council may classify
businesses for purposes of determining the benefit to the businesses of the improvements and activities
provided pursuant to this part.
(c)Properties zoned solely for residential use, or that are zoned for agricultural use, are conclusively
presumed not to benefit from the improvements and service funded through these assessments, and shall not
be subject to any assessment pursuant to this part.
36633.Time for contesting validity of assessment
The validity of an assessment levied under this part shall not be contested in any action or proceeding unless the action
or proceeding is commenced within 30 days after the resolution levying the assessment is adopted pursuant to Section
36626. Any appeal from a final judgment in an action or proceeding shall be perfected within 30 days after the entry
of judgment.
36634. Service contracts authorized to establish levels of city services
The city council may execute baseline service contracts that would establish levels of city services that would continue
after a property and business improvement district has been formed.
36635.Request to modify management district plan
The owners' association may, at any time, request that the city council modify the management district plan. Any
modification of the management district plan shall be made pursuant to this chapter.
36636.Modification of plan by resolution after public hearing; Adoption of resolution of intention
(a)Upon the written request of the owners' association,the city council may modify the management district
plan after conducting one public hearing on the proposed modifications. The city council may modify the
improvements and activities to be funded with the revenue derived from the levy of the assessments by
adopting a resolution determining to make the modifications after holding a public hearing on the proposed
modifications. If the modification includes the levy of a new or increased assessment, the city council shall
comply with Section 36623. Notice of all other public hearings pursuant to this section shall comply with
both of the following:
(1)The resolution of intention shall be published in a newspaper of general circulation in the city
once at least seven days before the public hearing.
(2)A complete copy of the resolution of intention shall be mailed by first class mail,at least 10 days
before the public hearing, to each business owner or property owner affected by the proposed
modification.
(b)The city council shall adopt a resolution of intention which states the proposed modification prior to the
public hearing required by this section. The public hearing shall be held not more than 90 days after the
adoption of the resolution of intention.
36637.Reflection of modification in notices recorded and maps
Any subsequent modification of the resolution shall be reflected in subsequent notices and maps recorded pursuant to
Division 4.5 (commencing with Section 3100), in a manner consistent with the provisions of Section 36627.
CHAPTER 3.5. Financing
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments
(a)The city council may, by resolution, determine and declare that bonds shall be issued to finance the
estimated cost of some or all of the proposed improvements described in the resolution of formation adopted
pursuant to Section 36625, if the resolution of formation adopted pursuant to that section provides for the
issuance of bonds,under the Improvement Bond Act of 1915 (Division 10(commencing with Section 8500))
812
or in conjunction with Marks-Roos Local Bond Pooling Act of 1985 (Article 4 (commencing with Section
6584) of Chapter 5 of Division 7 of Title l of the Government Code). Either act, as the case may be, shall
govern the proceedings relating to the issuance of bonds, although proceedings under the Bond Act of 1915
may be modified by the city council as necessary to accommodate assessments levied upon business pursuant
to this part.
(b)The resolution adopted pursuant to subdivision(a) shall generally describe the proposed improvements
specified in the resolution of formation adopted pursuant to Section 36625, set forth the estimated cost of
those improvements, specify the number of annual installments and the fiscal years during which they are to
be collected.The amount of debt service to retire the bonds shall not exceed the amount of revenue estimated
to be raised from assessments over 30 years.
(c)Notwithstanding any other provision of this part, assessments levied to pay the principal and interest on
any bond issued pursuant to this section shall not be reduced or terminated if doing so would interfere with
the timely retirement of the debt.
CHAPTER 4.Governance
36650.Report by owners' association;Approval or modification by city council
(a)The owners' association shall cause to be prepared a report for each fiscal year, except the first year, for
which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and
activities described in the report. The owners' association's first report shall be due after the first year of
operation of the district.The report may propose changes,including,but not limited to,the boundaries of the
property and business improvement district or any benefit zones within the district,the basis and method of
levying the assessments, and any changes in the classification of property, including any categories of
business,if a classification is used.
(b)The report shall be filed with the clerk and shall refer to the property and business improvement district
by name,specify the fiscal year to which the report applies,and,with respect to that fiscal year,shall contain
all of the following information:
(I)Any proposed changes in the boundaries of the property and business improvement district or in
any benefit zones or classification of property or businesses within the district.
(2)The improvements,maintenance, and activities to be provided for that fiscal year.
(3)An estimate of the cost of providing the improvements,maintenance,and activities for that fiscal
year.
(4)The method and basis of levying the assessment in sufficient detail to allow each real property
or business owner, as appropriate,to estimate the amount of the assessment to be levied against his
or her property or business for that fiscal year.
(5)The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal
year.
(6)The estimated amount of any contributions to be made from sources other than assessments
levied pursuant to this part.
(c)The city council may approve the report as filed by the owners' 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.
The city council shall not approve a change in the basis and method of levying assessments that would impair
an authorized or executed contract to be paid from the revenues derived from the levy of assessments,
including any commitment to pay principal and interest on any bonds issued on behalf of the district.
36651.Designation of owners' association to provide improvements, maintenance,and activities
The management district plan may, but is not required to, state that an owners' association will provide the
improvements,maintenance, and activities described in the management district plan. If the management district plan
designates an owners' association,the city shall contract with the designated nonprofit corporation to provide services.
CHAPTER 5.Renewal
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit
813
(a)Any district previously established whose term has expired,or will expire,may be renewed by following
the procedures for establishment as provided in this chapter.
(b)Upon renewal, any remaining revenues derived from the levy of assessments, or any revenues derived
from the sale of assets acquired with the revenues,shall be transferred to the renewed district.If the renewed
district includes additional parcels or businesses not included in the prior district, the remaining revenues
shall be spent to benefit only the parcels or businesses in the prior district. If the renewed district does not
include parcels or businesses included in the prior district,the remaining revenues attributable to these parcels
shall be refunded to the owners of these parcels or businesses.
(c)Upon renewal, a district shall have a term not to exceed 10 years, or, if the district is authorized to issue
bonds,until the maximum maturity of those bonds.There is no requirement that the boundaries,assessments,
improvements, or activities of a renewed district be the same as the original or prior district.
CHAPTER 6.Disestablishment
36670. Circumstances permitting disestablishment of district; Procedure
(a)Any district established or extended pursuant to the provisions of this part,where there is no indebtedness,
outstanding and unpaid, incurred to accomplish any of the purposes of the district, may be disestablished by
resolution by the city council in either of the following circumstances:
(1)If the city council finds there has been misappropriation of funds,malfeasance,or a violation of
law in connection with the management of the district,it shall notice a hearing on disestablishment.
(2) During the operation of the district,there shall be a 30-day period each year in which assessees
may request disestablishment of the district. The first such period shall begin one year after the date
of establishment of the district and shall continue for 30 days. The next such 30-day period shall
begin two years after the date of the establishment of the district.Each successive year of operation
of the district shall have such a 30-day period.Upon the written petition of the owners or authorized
representatives of real property or the owners or authorized representatives of businesses in the
district who pay 50 percent or more of the assessments levied,the city council shall pass a resolution
of intention to disestablish the district. The city council shall notice a hearing on disestablishment.
(b)The city council shall adopt a resolution of intention to disestablish the district prior to the public hearing
required by this section.The resolution shall state the reason for the disestablishment, shall state the time and
place of the public hearing, and shall contain a proposal to dispose of any assets acquired with the revenues
of the assessments levied within the property and business improvement district. The notice of the hearing
on disestablishment required by this section shall be given by mail to the property owner of each parcel or to
the owner of each business subject to assessment in the district, as appropriate. The city shall conduct the
public hearing not less than 30 days after mailing the notice to the property or business owners. The public
hearing shall be held not more than 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district;
Calculation of refund; Use of outstanding revenue collected after disestablishment of district
(a)Upon the disestablishment or expiration without renewal of a district, any remaining revenues, after all
outstanding debts are paid,derived from the levy of assessments, or derived from the sale of assets acquired
with the revenues,or from bond reserve or construction funds,shall be refunded to the owners of the property
or businesses then located and operating within the district in which assessments were levied by applying the
same method and basis that was used to calculate the assessments levied in the fiscal year in which the district
is disestablished or expires. All outstanding assessment revenue collected after disestablishment shall be
spent on improvements and activities specified in the management district plan.
(b)If the disestablishment occurs before an assessment is levied for the fiscal year,the nriethod and basis that
was used to calculate the assessments levied in the immediate prior fiscal year shall be used to calculate the
amount of any refund.
814
APPENDIX 2 —ASSESSED BUSINESSES*
Business Name Address City, State, ZIP
777 Motor Inn 16240 Pacific Coast Hwy. Huntington Beach, CA 92649
Beach Inn Motel 18112 Beach Blvd. Huntington Beach, CA 92648
Best Western Harbour Inn & 16912 Pacific Coast Hwy. Sunset Beach, CA 90742
Suites
Best Western Surf City 19360 Beach Blvd. Huntington Beach, CA 92648
Comfort Suites Huntington Beach 16301 Beach Blvd. Huntington Beach, CA 92647
Extended Stay America 5050 Skylab Rd. Huntington Beach, CA 92647
Hotel Europa 7561 Center Ave. #46 Huntington Beach, CA 92647
Huntington Beach Inn 800 Pacific Coast Hwy. Huntington Beach, CA 92648
Huntington Suites 7971 Yorktown Ave. Huntington Beach, CA 92648
Huntington Surf Inn 720 Pacific Coast Hwy. Huntington Beach, CA 92648
Hyatt Regency Huntington Beach 21500 Pacific Coast Hwy. Huntington Beach, CA 92648
Resort and Spa
Kimpton Shorebreak Hotel 500 Pacific Coast Hwy. Huntington Beach, CA 92648
Ocean Surf Inn & Suites 16555 Pacific Coast Hwy. Sunset Beach, CA 90742
Oceanview Motel 16196 Pacific Coast Hwy. Huntington Beach, CA 92649
Pasea Hotel & Spa 21080 Pacific Coast Hwy. Huntington Beach, CA 92648
Quality Inn & Suites Huntington 17251 S. Beach Blvd. Huntington Beach, CA 92647
Beach
Springhill Suites by Marriott 7872 Edinger Ave. Huntington Beach, CA 92647
Starlight Inn 18382 Beach Blvd. Huntington Beach, CA 92648
Sun n Sands Inn 1102 Pacific Coast Hwy. Huntington Beach, CA 92648
Surf City Inn 16220 Pacific Coast Hwy. Huntington Beach, CA 92649
The Hotel Huntington Beach 7667 Center Ave. Huntington Beach, CA 92647
The Waterfront Beach Resort, a 21100 Pacific Coast Hwy. Huntington Beach, CA 92648
Hilton Hotel
Travelodge Ocean Front 17205 Pacific Coast Hwy. Sunset Beach, CA 90742
*As of September 2018
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12/19/2018
IPA
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City l HBTBID Public Hearing VISIT
HUNTINGTON
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\Rob,gk a Beach/ December 17,2018 BE
ACH
Historyof • Beach• The Huntington Beach Hotel/Motel Business Improvement District
(HBHMBID)was initially established in 2002 pursuant to the Parking and
Business Improvement Area Law of 1989
• Required an annual levy
• 1%assessment from 2002-2009; Increased to 2%in 2010
• In 2014,the HBHMBID was converted to the Huntington Beach Tourism
Business Improvement District (HBTBID) pursuant to the Property and
Business Improvement District Law of 1994('94 Law)
• Law allows for a maximum S year term on the outset and up to 10
year term upon renewal
• 3%assessment
COMMUNICATION
Meeft Dom•
1
Agenda Kem No.: /�—
12/19/2018
HBTBID Assessment • • •
• HBTBID Assessment modified from 3%to 4%and paid by overnight hotel guests, not
residents.
• Hotel check out rate for overnight guests would increase slightly from 13%to 14%(10%TOT
and 4%HBTBID).
• HBTBID District would be reauthorized for 9 1/2 years and will be aligned with the City's new
Fiscal Year(July-June).
• A new Management District Plan(MDP)Agreement has been developed and approved for 7
1/2 years.
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CALIFORNIAA.
TERMS
San Diego San Diego Tourism Marketing District 39 years,6 months 2007 2012
Anaheim Tourism Improvement District of
Anaheim 2010 30 years 2010 -
San Francisco Tourism Improvement
San Francisco District 15 years 2008 -
Newport Beach Tourism Business
Newport Beach Improvement District 10 years 2009 2014
West Hollywood Business Improvement
West Hollywood Area 10 years 1989 2018
Los Angeles Los Angeles Tourism Marketing District 9 years,9 months 2011 2016
Santa Monica Santa Monica Tourism Marketing District 9 years,6 months 2012 2018
Huntington Beach Tourism Business
Huntington Beach Improvement District 9 years,6 months 2014 In Process
Santa Barbara South Coast Tourism
Santa Barbara Business Improvement Distnct 6 years 2011 2015
2
12/19/2018
HBTBID Assessment Modification
The Management District Plan expenditure category's would be modified to allow for
greater flexibility as sales and marketing trends/best practices change over time. Over
70%of all future HBTBID Assessments would be spent on Tourism Enhancement
Programs, including the desired targeted amount annually of$250,000/year for Visitor
Services Enhancements.
HBTBID Assessment Modification
Category Current District Renewed District
Sales and Marketing 54.2% 71.7%
Destination Product Development 12.5%
Administration 19.2% 19.2%
Visitor Services Enhancements 5%
Shortfall/Opportunity 8.1% 8.1%
City Administration Fee 1% 1%
Total Annual Budget 100% 100%
3
12/19/2018
Visit Huntington Beach the current TOT agreement, Visit Huntington Beach receives 10%of the total 100%
of Transient Occupancy Tax (TOT) revenue.
In the proposed new MOU/Agreement, Visit Huntington Beach be provided seed
money for certain programs for three (3)years, International Surf Museum, 2019 IPW
Huntington Beach Ceremony, and 2020 Amgen Tour of California final.
Will be considered at the January 22, City Council Meeting.
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Questions
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