SR 10-25-2016 9A
Ci ty Council
Report
City Council Meeting : October 25, 2016
Agen da Item: 9.A
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To: Mayor and City Council
From: Andy Agle, Director , Housing and Economic Development, Economic
Development Division
Subject: Public Meeting on the Renewal of the Santa Monica Tourism Marketing
District
Recommended Action
Staff recommends that the City Council:
1) Review the revisions to the proposed Santa Monica Tourism Marketing
District (SMTMD) Management Dis trict Plan renewal ; and
2) Hold a public meeting and receive comments regarding the proposed renewal
of the SMTMD .
Executive Summary
As the succ ess of a diversity of lodging options i s important in S anta Monica , Santa
Monica Travel and Tourism revised the proposed Santa Monica Tourism Marketing
District (SMTMD) Management District Plan by reducing the proposed assessments for
the lowest -cost lodgi ng options . Council now has the opportunity to consider the
revise d Management District Plan and receive additional public input regarding the
renewal. This is the second step in the three -step process for renewing the SMTMD.
The final hearing and Resol ution of Renewal to levy the assessment is scheduled for
November 1, 2016.
Background
At its meeting on August 23, 2016 (Attachment A), Council received public input
regarding the proposed renewal of the Santa Monica Tourism Marketing District
(SMTMD), ac cepted petitions from qualified lodging businesses, and adopted
Resolution No. 10987 (CCS) declaring its intention to consider renew al of the SMTMD
and setting a public meeting to receive additional testimony on the proposed renewal.
Following the adoptio n of the Resolution of Intention, the City mailed formal notices with
cop ies of the Resolution (Attachment B ) to inform the affected lodging businesses of the
opportunity to provide written protest and public input concerning the proposed renewal
of the SM TMD. T he Ci ty Clerk’s office received one letter of protest (Attachment C ) in
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response to the notice.
Discussion
The proposed SMTMD renewal was initiated by the Santa Monica Travel and Tourism
in conjunction with Santa Monica hotels for the purpose of ex tending a self -assessment
on qualifying hotels to generate additional revenues for tourism promotion and
marketing. At the Council meeting on August 23, 2016 (Attachment A), speakers
representing the lodging businesses with average daily rates of $100 to $199.99 (“Tier
3”) provided input regarding the proposed assessments. Specifically , it was requested
that the assessment formula for the Tier 3 businesses be reevaluated to address equity
concerns.
Based on the input received, the SMTMD Manage ment Di strict Plan has been revised
with the following proposed changes to the assessment rate for Tier 3 lodging
businesses :
Tier Average Daily Rate Assessment Per Occupied Room Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 - $199.99 $3.25 1.50
The Tier 3 assess ment rate would be reset to begin at $1.50 rather than the
current rate of $3 .25 per occupied room , per night. Th e proposed change would
take effect on January 1, 2018 , to coincide with the commencement of the
SMTMD r enewal period.
The Tier 3 assessment rate may be subject to an annual increase of no more
than ten cents ($.10) per year rather than twenty -five cents ($.25) per year.
Th e proposed change would also take effect on January 1, 2018 to coincide with
the c ommencement of the proposed SMTMD renewal period.
There are currently 36 lodging businesses in operation in Santa Monica with two new
hotels under construction , the Courtyard by Marriott and Hampton Inn & Suites, both of
which are anticipated to open in January 2017. These two new hotels are expected to
be in the Tier 2 assessment category. In 2016, 11 lodg ing businesses were in Tier 1 , 10
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in Tier 2 , and 11 in Tier 3. Lodging businesses with an average daily room rate less
than $100 are not included in the SMTMD nor assessed. Assessment rates are derived
from the previous year’s average daily room rate.
The SMTMD budget impact of the proposed changes to the Tier 3 assessment rate is
estimated to be approximately $320,000 annually, resulting in an ant icipated annual
SMTMD operational budget of $4,130,000 , rather than $4,450,000 , for the
commencement of the SMTMD renewal period . In summary, t he total service plan
budget for the nine and one -half years of the SMTMD is projected to be approximately
$57 mi llion if the maximum assessment rates are adopted annually . The SMTMD
anticipates the proposed changes in the Tier 3 assessment could be implemented
without noticeably significant i mpacts to future marketing and promotional programs.
There are no additiona l changes to the proposed SMTMD Management District Plan.
Th e SMTMD representative of the Tier 3 lodging business es is supportive of the
proposed changes. On September 28, 2016, the SMTMD Committee and the Santa
Monica Travel and Tourism Boa rd of Director s unanimously voted to support the
m odifications to the proposed SMTMD Man agement District Plan . A clean version of the
revised SMTMD Management District Plan for January 1, 2018 through June 30, 2027 ,
incorporating the proposed changes to the Tier 3 asses sment and SMTMD budget , is
provided in Attachment D and a redlined version comparing the revisions from the
previous ly proposed SMTMD Management District Plan is provided in Attachment E .
The next step in the SMTMD renewal process is a final public hearin g scheduled for
November 1, 2016. At th at meeting, Council w ould consider adopt ing a Resolution
renewing the SMTMD, if there is no majority protest. A majority protest is defined as
written protests received from owners of the lodging business within the proposed
district which would pay 50 percent or more of the estimated total assessment of the
entire SMTMD. Protests are weighted based on the assessment proposed to be levied
on each lodging business.
Financial Impacts and Budget Actions
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There is no fi scal impact related to considering the revised SMTMD Management
District Plan and holding a public hearing to receive additional testimony on the renewal
of the SMTMD.
Prepared By: Nia Tang, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. Attachment A - August 23, 2016 Staff Report
B. Attachment B - SMTMD Notice 8 -24 -16
C. Attachment C - Written Pro tests Received
D. Attachment D - SMTMD MDP 9 -29 -16
E. Attachment E - SMTMD MDP 9 -16 -16 Redline
NOTICE OF PUBLIC MEETING AND PUBLIC HEARING CONCERNING THE RENEWAL OF THE SANTA
MONICA TOURISM MARKETING DISTRICT AND LEVY OF AN ASSESSMENT ON CERTAIN LODGING
BUSINESSES WITHIN THE DISTRICT
NOTICE IS HEREBY GIVEN that on August 23, 2016, the City Council (the “Council”) of the City of Santa
Monica (the “City”) adopted a Resolution of Intention to renew the Santa Monica Tourism Marketing
District (the “SMTMD”) and to levy an assessment on certain lodging businesses within the SMTMD as
set forth in the attached Resolution of Intention.
NOTICE IS HEREBY FURTHER GIVEN that at 5:30 PM on October 25, 2016, at the City of Santa Monica
Council Chambers, 1685 Main Street, Room 213, Santa Monica, CA 90407, a public meeting shall be
held pursuant to Government Code section 54954.6 to allow public testimony regarding the renewal
of the SMTMD and the levy of assessments therein as set forth in the enclosed Resolution of Intention
and pursuant to Government Code section 54954.6.
NOTICE IS HEREBY FURTHER GIVEN that at 5:30 PM on November 1, 2016 at the City of Santa Monica
Council Chambers, 1685 Main Street, Room 213, Santa Monica, CA 90407, has been set as the time and
place for a public hearing at which time the Council proposes to renew the SMTMD and to levy the
proposed assessment as set forth in the Resolution of Intention.
Boundaries: The renewed SMTMD includes all lodging business located within the boundaries of the
City of Santa Monica with an average daily rate of $100 or more.
Assessment: The assessment is a fixed amount per occupied room per night. The assessment is based
on the businesses’ average daily rate, based on the previous year’s performance.
Average daily rate figures shall be updated annually. Based on the benefit received,
assessments will not be collected on: stays of more than thirty (30) consecutive days;
and stays paid by any Federal, State of California, or City of Santa Monica, official or
employee when on official business provided that an exempt certificate is executed at
the time of registration. Lodging businesses with an average daily rate less than $100
will not be included in the District or assessed. Assessment rates are:
Average Daily Rate Assessment Per Occupied Room Per Night
$100 ‐ $199.99 $3.25
$200 ‐ $299.99 $4.25
$300 and above $5.25
Assessment rates may be subject to an annual increase of no more than twenty ‐five cent
($0.25) per year. The table below demonstrates the maximum with the assumption that
the rates will be increased by $0.25 for each category in each year of the SMTMD’s nine
and one ‐half (9.5) year term, as it is a required disclosure, it is not the anticipated course
of action. The maximum assessment rate for each category is:
Year $100 ‐ $199.99 $200 ‐ $299.99 $300 and Above
2018* $3.25 $4.25 $5.25
2018 ‐19 $3.50 $4.50 $5.50
2019 ‐20 $3.75 $4.75 $5.75
2020 ‐21 $4.00 $5.00 $6.00
2021 ‐22 $4.25 $5.25 $6.25
2022 ‐23 $4.50 $5.50 $6.50
2023 ‐24 $4.75 $5.75 $6.75
2024 ‐25 $5.00 $6.00 $7.00
2025 ‐26 $5.25 $6.25 $7.25
2026 ‐27 $5.50 $6.50 $7.50
*The initial “year” is January 1, 2018 through June 30, 2018
Budget: The total SMTMD annual budget for each full year of operation is anticipated to be
approximately $4,450,000. The initial “year” of operation will be a partial year
consisting of six months, for which the anticipated budget is $2,225,000. This budget is
expected to fluctuate as room sales and the assessment rate do.
Purpose: The SMTMD is designed to provide specific benefits directly to payors by increasing
room night sales. Marketing and sales promotions will increase overnight tourism and
market payors as tourist, meeting and event destinations, thereby increasing room night
sales.
Duration: The renewed SMTMD will have a nine and one ‐half (9.5) year life, beginning January 1,
2018 through June 30, 2027. Once per year, beginning on the anniversary of district
renewal, there is a 30 ‐day period in which owners paying more than fifty percent (50%)
of the assessment may protest and initiate a City Council hearing on district
disestablishment.
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 SMTMD. The City shall take all reasonable efforts to collect the
assessments from each lodging business.
Management: Santa Monica Travel & Tourism will continue to serve as the SMTMD’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.
Protest: Any owner of a lodging business within the proposed SMTMD that will be subject to the
assessment may protest the renewal of the SMTMD. If written protests are received
from the owners of lodging businesses in the proposed SMTMD who represent fifty
percent (50%) or more of the estimated annual assessments to be levied, the SMTMD
shall not be renewed and the assessment shall not be imposed.
You may mail a written protest to:
Office of the City Clerk
City of Santa Monica
1685 Main Street, Room 102
Santa Monica, CA 90401
You may also appear at the public meeting or hearing and submit a written protest at
that time.
Information: Should you desire additional information about this proposed SMTMD or assessment
contact:
Misti Kerns
Santa Monica Travel & Tourism
2427 Main Street
Santa Monica, CA 90405
(310) 319 ‐6263
2018 -2027
September 29 , 2016 Prepared pursuant to the Property and Business Improvement District Law of
1994, Streets and Highways Code section 36600 et seq.
SANTA MONICA TOURISM
MARKETING DISTRICT
MANAGEMENT DISTRICT PLAN
CONTENTS
I. OVERVIEW ........................................................................................................................................ 2
II. ACCOMPLISHMENTS ..................................................................................................................... 4
III. BACKG ROUND ................................................................................................................................ 6
IV. BOUNDARY ....................................................................................................................................... 7
V. BUDGET AND SERVICES ............................................................................................................. 8
A. Annual Service Plan ............................................................................................................ 8
B. Annual Budget .................................................................................................................... 9
C. Californi a Constitutional Compliance .............................................................................. 10
D. Assessment ........................................................................................................................ 13
E. Penalties and Interest ........................................................................................................ 13
F. Time and Manner for Collecting Assessments ................................................................. 14
VI. GOVERNANCE ............................................................................................................................... 15
A. Owners’ Association ......................................................................................................... 15
B. Bro wn Act and California Public Records Act Compliance ............................................ 15
C. Annual Report ................................................................................................................... 15
D. Milestone Report ............................................................................................................... 15
APPENDI X 1 – LAW .................................................................................................................................... 17
APPENDIX 2 – ASSESSED BUSINESSES ............................................................................................. 28
APPENDIX 3 – BENEFIT STUDY .......................................................................................................... 29
AP PENDIX 4 – TIER BENEFITS ............................................................................................................. 30
Prepared by
Civitas
(800)999 -7781
www.civitasadvisors.com
SMTMD Management District Plan 2
September 29 , 2016
I. OVERVIEW
Developed by Santa Monica Travel & Tourism (SMTT ), the Santa Monica Tourism Marketing District
(SMTMD ) is a n assessment district proposed to provide specific benefits to payors, by fund ing
marketing and sales promotion efforts for assessed businesses. The SMTMD was formed in 2012 for
a five (5) year term; lodging businesses now wish to renew it for an additional nine and one -half (9.5 )
years.
Location: The renewed SMTMD includes all lodging businesses located within the boundaries
of the City of Santa Monica with an average daily rate of $100 or more , as shown on
the map in section IV .
Services: The SMTMD is designed to provide specific benefits directly to payors by increasing
room night sales. Marketing and sales promotions will increase overnight tourism and
market payors as tourist, meeting and event destination s, thereby increasing room
night sales .
Budget: The total SMTMD annual budget for each full year of operation is anticipated to be
approximately $4,130 ,000. The initial “year ” of opera ti on will be a partial year
consisting of six months, for which the anticipated budget is $2,065 ,000 . This budget
is expected to fluctuate as room sales and the assessment rate do, as detailed in Section
V .
Cost: The assessment is a fixed amount per occupied room per night. The assessment is
based on the businesses’ average daily rate, based on the previous year’s performance.
Average daily rate figures shall be updated annually. Based on the benefit received,
assessments will not be collected on : stays of more th an thirty (30) consecutive days;
and stays paid by any Federal, State of California, or City of Santa Monica, official or
empl oyee when on official business provided that a n exempt certificate is executed at
the time of registration . Lodg ing businesses with an average daily rate less than $100
will not be included in the district or assessed. Assessment rates are:
Tier Average Daily
Rate
Assessment Per Occupied Room
Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 - $199.99 $1.50
Assessment rates may be subject to an annual increase of no more than twenty -five
cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten
cents ($0.10) per year for Tier 3 lodging businesses . The table below d emonstrates the
maximum with the assumption that the rates will be increased by the maximum
amounts for each category in each year of the SMTMD’s nine and one -half (9.5) year
term, as it is a required disclosure, it is not the anticipated course of action. The
maximum assessment rate for each category is:
SMTMD Management District Plan 3
September 29 , 2016
Year $100 - $199.99 $200 - $299.99 $300 and Above
2018 * $1.50 $4.25 $5.25
2 01 8 -19 $1.60 $4.50 $5.50
20 19 -20 $1.70 $4.75 $5.75
20 20 -21 $1.80 $5.00 $6.00
20 21 -22 $1.90 $5.25 $6.25
20 22 -23 $2.00 $5.50 $6.50
20 23 -24 $2.10 $5.75 $6.75
20 24 -25 $2.20 $6.00 $7.00
20 25 -26 $2.30 $6.25 $7.25
20 26 -27 $2.40 $6.50 $7.50
*The initial “year” is January 1, 2018 through June 30, 2018
Collection: T he 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 SMTMD . T he City shall take all reasonable efforts to collect the
assess ments from each lodging business.
Duration: The renewed SMTMD will have a nine and one -half (9.5 ) year life , beginning January
1, 2018 through June 30 , 2027 . Once per year , beginning on the anniversary of district
renewal , there is a 30 -day period in whi ch owners paying more than fifty percent (50%)
of the assessment may protest and initiate a City Council hearing on district
disestablishment .
Management: Santa Monica Travel & Tourism will continue to serve as the SMTMD ’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 .
SMTMD Management District Plan 4
September 29 , 2016
II. ACCOM P LISHMENTS
The SMTMD is being renewed for the following re asons:
1. The SMTMD has funded excellent marketing programs and strategies
In the first five (5) year term of the SMTMD, the District has funded:
C reation of 5 -year strategic plan for the destination with input provided by the TMD Hotel
Committee;
Focus Groups conducted in seven (7) domestic and international target markets to assess
perceptions of the destination brand;
Integrated advertising campaigns targeted to domestic target markets to drive travel during
Santa Monica’s soft season (paid search, beh avioral retargeting, display, paid social,
eNewsletter sponsorships).
Entirely redesigned SantaMonica.com, including new white labeled booking site to drive
bookings directly to assessed lodging businesses’ websites. New website recognized with
industry d esign awards for structure, concept and functionality;
Redesigned logo, brand style guide, destination photography and video; and
New and improved Official Visitor Guide and Map with award -winning publishing partner.
2. The SMTMD has funded enhanced business development program s for key
international target markets
United Kingdom, Australia and Brazil:
o Full time representation in all three markets;
o Enhanced public relations support;
o B2B and B2C integrated campaigns with performance metrics and sales analysis ;
o Brand enhancing partnerships with travel trade clientele (Visit California and Brand
USA);
o Sales and media missions including key hotel partners for targeted markets;
o Tradeshow participation; and
o Ongoing trade relationship development and trainings.
Fran ce and Germany:
o Part -time representation;
o B2B campaigns with sales and social media performance metrics;
o Tradeshow participation; and
o Ongoing trade relationship development and trainings.
3. The SMTMD has funded initiatives to increase the meetings and in centives market
Santa Monica Travel and Tourism has executed over twenty meetings and incentive (MICE) programs
with the objective of increasing qualified meetings and incentives business to the destination.
Sales missions were conducted in New York, Toro nto, Washington DC, Chicago,
Minneapolis, San Francisco, Orange County and San Diego;
SMTT exhibited at IMEX America, IncentiveWorks, and Incentive Travel Exchange,
conducting over 500 meetings with key buyers;
SMTT hosted nearly thirty (30) meeting planne rs to the destination to experience first hand
what their clients would be booking; and
SMTMD Management District Plan 5
September 29 , 2016
SMTT engaged a third party consultant to conduct focus groups with these meeting planners
to better understand future meetings and incentives business opportunity for the destination.
SMTMD Management District Plan 6
September 29 , 2016
III. BACKGROUND
TMD s are an evolution of the traditional Business Improvement District . The first TMD was formed
in Wes t Hollywood, California in 1989. Since th en, ninety -five (95) 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 TMD 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 Portla nd, Oregon and Memphis, Tennessee have utilized their home rule powers to create TMD s
without a state law.
California’s TMD s collectively raise
over $200 million for local
destination marketing. With
competitors raising their budgets,
and increasing rivalry for visitor
dollars, it is important that Santa
Monica lodging businesses
continue to invest in stable,
lodging -specific marketing
programs.
TMD s utilize the efficiencies of
private sector operation in the
market -based promotion of
tourism districts. TMD s allow
lodging business owners to
organize the ir efforts to increase room night sales. Lodging business owners within the TMD pay an
assessment and those funds are used to provide services that increase room night sales.
In California, TMD s are formed pursuant to the Property and Business Improveme nt District Law of
1994. This law allo ws for the creation of a benefit assessment district to raise funds within a specific
geographic area. The key difference between TMD s and other benefit assessment districts is that funds raised are
returned to the p rivate non -profit corporation governing the district.
There are many benefits to TMD s :
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 programs;
They are customized to fit the needs of payors in each destination ;
They allow for a wide range of services;
They are designed, created and governed by those who will pay the assessment; and
They provide a stable, long -term funding source for tourism promotion.
1 2 4 6 9 12
19 24 28 31
37
45
60 63
72
80
88
95
0
10
20
30
40
50
60
70
80
90
100
19
8
9
19
9
5
20
0
0
20
0
1
20
0
2
20
0
3
20
0
4
20
0
5
20
0
6
20
0
7
20
0
8
20
0
9
20
1
0
20
1
1
20
1
2
20
1
3
20
1
4
20
1
5
Number of Districts Operating Per Year
SMTMD Management District Plan 7
September 29 , 2016
IV. B OUNDARY
The SMTMD will include all lodging businesses, existing and in the future, available for public
occupancy within the boundaries of the City of Santa Monica with an average daily rate of $100 or
more . Lodging businesses whose average daily rate increases to $100 will be assessed upon
determination of the increase; likewise, lodging businesses whose average daily rate decreases to below
$100 will not be assessed upon determination of the decrease. Average daily rate figures shall be
up dated annually.
Lodging business means: Any public or private hotel, inn, hostelry, tourist home or house motel,
rooming house or other lodging place within the City of Santa Monica offering lodging, wherein the
owner and operator thereof, for compensati on, furnishes lodging to any transient.
The boundary , as shown in the map below, currently includes thirty -two (3 2 ) lodging business es . A
complete listing of lodging businesses within the renewed SMTMD can be found in Appendix 2.
SMTMD Management District Plan 8
September 29 , 2016
V. 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 b enefits or granting the privileges. The privileges and services provided
with the SMTMD funds are sales and marketing programs available only to assessed businesses. The
assessment rate for each Tier will be commensurate with privileges and services prov ided to assessed
businesses in each Tier as detailed in Appendix 4.
A service plan budget has been developed to deliver services that benefit the assessed businesses . A
detailed annual budget will be developed and approved by the SMTT TMD Committee and t he SMTT
Board . The table below illustrates the initial annual budget allocations for the first partial fiscal year .
The total SMTMD annual budget for each full year of operation is anticipated to be approximately
$4,130 ,000. The initial “year” of operat ing will be a partial year consisting of six months, for which
the anticipated budget is $2,065 ,000 .
Although actual revenues will fluctuate due to market conditions and assessment rate increases , the
proportional allocations of the budget shall remain the same. However, the City and the SMTT 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. A de scription 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 SMTMD , any and all assessment funds may be used for the
costs of defending the SMTMD .
Each budget category includes all costs related to providing that service, in accordance with Generally
Accepted Accounting Procedures (GAAP). For example, the sales and marketing budget includes the
cost of staff time ded icated to overseeing and implementing the sales and marketing program. Staff
time dedicated purely to administrative tasks is allocated to the administrative portion of the budget.
The costs of an individual staff member may be allocated to multiple budget categories, as appropriate
Sales & Marketing ,
$1,755,250 , 85%
Administration ,
$206,500 , 10%
Contingency/Reserve , $103,250 , 5%
FY 2018 Budget (January -June) -$2,065,000
SMTMD Management District Plan 9
September 29 , 2016
in accordance with GAAP. The staffing levels necessary to provide the services below will be
determined by SMTT on an as -needed basis. Staff costs will be allocated based on work performed.
Sales and Marketing
A sales and marketing program will promote assessed businesses as tourist , meeting , and event
destination s . The sales and marketing program will have a central theme of promoting Santa Monica
as a desirable place for overnight visits. The program will have the goal of increasing overnight
visitation and room night sales at assessed businesses, and may include the following activities:
Internet marketing efforts to increase awareness and optimize internet presence to drive
overnight visitation and room sales to asses sed businesses ;
Print ads in magazines and newspapers , television ads, and radio ads targeted at potential
visitors to drive overnight visitation and room sales to assessed businesses ;
Attendance of trade shows to promote assessed businesses ;
Sales blit zes for assessed businesses ;
Familiarization tours of assessed businesses ;
Research and analytics to promote assessed businesses;
Translation services designed to drive overnight visitation and room sales to assessed
businesses ;
Staff to implement and sup port expanded marketing and promotion efforts to promote
assessed businesses;
External public relations firms to promote assessed businesses;
Preparation and production of collateral promotional materials such as brochures, flyers and
maps featuring assess ed businesses ;
Attendance of professional industry conferences and affiliation events to promote assessed
businesses ;
Lead generation activities designed to attract tourists and group events to assessed businesses ;
Director of Sales and General Manager meetings to plan and coordinate tourism promotion
efforts for assessed businesses ; and
Development and maintenance of a website designed to promote assessed businesses.
Administration and Operations
The administration and operations portion of the budget shall be utilized for administrative staffing
costs, office costs, and othe r general administrative costs such as insurance, legal, and accounting fees.
Contingency/Re serve
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 th e Owners’ Association. 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 SMTT TMD Committee and the SMTT Board of Directors.
The reserve fund may be used for the costs of renewing the District.
B. Annual Budget
The total nine and one -half (9.5 ) year improvement and service plan budget is projected at
approximately $4,130 ,000 annually, or $57,530,913 through 2027 if the maximum assessment rate
increases are adopted . Fiscal year 2018 covers the six month period from January to June 2018,
resulting in a lower budget for the first six months of district operation. This budget is expected to
fluctuate as room sales change and if the assessment rate is increased. The initial assessment rate is:
SMTMD Management District Plan 10
September 29 , 2016
Tier Average Daily Rate Assessment Per Occupied Room Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 - $199.99 $1.50
The SMTT may increase the assessment rate by a maximum of $0.25 per year for Tier 1 and Tier 2
lodging businesses and no more than ten cent ($0.10) per year for Tier 3 lodging businesses . The
assessment rate might not increase starting in fiscal year 20 18 -19, the increases may be implemented
in later years at the discretion of the Owners’ Association. The table below demonstrates the
maximum with the assumption that the rates will be increased by the maximum amounts for each
category in each year of the SM TMD’s nine and one -half (9.5 ) year term, as it is a required disclosure,
it is not the anticipated course of action. Additionally, a three percent (3%) annual increase in the
total budget is shown, to account for estimated increased room night sales as a result of SMTMD
efforts. This three percent (3%) annual increase is a conservative estimate based on the effects of
similarly sized TMD budgets. If the maximum annual assessment increases are adopted by the SMTT
Board, the estimated annual budget will in crease as shown in the table below.
Estimated Annual Budget If Maximum Assessment Rates Are Adopted
2018 -2027
FY Sales &
Marketing Administration Contingency/Reserve Total
2018* $1,755,250 $206,500 $103,250 $2,065,000
2018 -19 $3,813,041 $448,593 $224,297 $4,485,931
2019 -20 $4,130,576 $485,950 $242,975 $4,859,501
2020 -21 $4,463,730 $525,145 $262,572 $5,251,447
2021 -22 $4,813,157 $566,254 $283,127 $5,662,537
2022 -23 $5,179,531 $609,357 $304,678 $6,093,566
2023 -24 $5,563,556 $654,536 $327,268 $6,545,360
2024 -25 $5,965,962 $701,878 $350,939 $7,018,778
2025 -26 $6,387,504 $751,471 $375,736 $7,514,710
2026 -27 $6,828,969 $803,408 $401,704 $8,034,082
Total $48,901,276 $5,753,091 $2,876,546 $57,530,913
*Fiscal year 2018 only covers a 6 month period (January – June). The estimate for the first year of operation of the
district is $4,130 ,000 which translates to approximately $344,166.67 per month. Th e subsequent years in the table
above use the $4,130 ,000 figure as a base number for all calculations.
C. California Constitutional Compliance
The SMTMD assessment is not a property -based assessment subject to the requirements of
Proposition 218. The Court has found, “Proposition 218 limited the term ‘assessments’ to levies on
real property.”1 Rather, the SMTMD 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 SMTMD , 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 Jarvis v. the City of San Diego 72 Cal App. 4 th 230
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September 29 , 2016
1. Specific Benefit
Proposition 26 requires that assessment funds be expe nded on, “a specific benefi t 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 .”2 The services in this Plan are d esigned to provide targeted benefits directly to assessed
lodging businesses , and are intended only to provide benefits and services directly to those businesses
paying the assessment . These services are tailored not to serve the general public , businesse s in
general, or parcels of land , but rather to serve the specific lodging businesses within the District . T he
activities described in this Plan are specifically targeted to increase room night sales for assessed
lodging businesses within the boundaries of the District, and are narrowly tailored. SMTMD 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 SMTMD
programs, or to directly generate sales for non -assessed businesses. The activities paid for from
assessment revenues are business services constituting and providing specific benefit s to the assessed
businesses.
The assessment imposed by this D istric t 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 district assessment, with
marketing and sales programs promoting lodging businesses paying the district assessment. The
marketing and sales programs will be designed to incr ease room night sales at each assessed lodging
businesses. Because they are necessary to provide the marketing and sales programs that specifically
benefit the assessed lodging businesses, the administration and contingency services also provide the
speci fic benefit of increased room night sales to the assessed lodging businesses.
Although the District, 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.”3
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 charg ed, and which does not exceed the
reasonable costs to the local government of providing the service or product .”4 The legislature has
recognized that marketing and promotions services like those to be provided by the SMTMD are
government services within t he meaning of Proposition 26 5 . Destination marketing services are
frequently funded and provided by local governments. In the case of the SMTMD, the district is
formed and services are overseen by the Santa Monica City Council. 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 s pecific government service to the payor.”6
2 Cal. Const. art XIII C § 1(e)(1)
3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
6 Government Code § 53758(b)
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3. Reasonable Cost
District 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 SMTT , and reports submitted on an annual basis to the C ity . Only assessed
lodging businesses will be featured in marketing materials, receive sales l eads generated from district -
funded activities, be featured in advertising campaigns, and benefit from other district -funded services.
Non -assessed lodging businesses will not receive these, nor any other, district -funded services and
benefits .
The Dis trict -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 -District funds. SMTMD funds shall only be
spent to benefit the assessed businesses, and shall not be spent on that portion of any program which
directly generates inc idental room nights for non -assessed businesses.
4. Benefit to NonPayors
The specific benefits provided by the SM TMD will only be directly provided to the assessed
businesses; they will not be directly provided to non -assessed businesses. Possible indirect benefit
does not preclude the SM TMD services from being considered a specific benefit. The legislature has
dire ctly indicated, in the context of tourism marketing districts, that services are not precluded from
classification as a specific benefit merely because an indirect benefit to a nonpayor occurs as a
consequence of providing the service and without cost to t he payor.7
Although the legislature does not require the cost of any incidental benefit to non -payors be separated
from the assessment, out of an abundance of caution a study was conducte d on benefit generated by
the SM TMD programs. The study is attache d as Appendix 3. The study found that 6.6% of marketing
programs generate incidental room night sales at non -assessed lodging businesses. Although it is not
required, the portion of programs that generate this benefit will be paid for with non -assessment
funds. Assessment funds will only fund tha t portion of the programs (93.4%) which represents a
specific benefit to the assessed businesses. For example, if a program costs $100,000 total, the
SM TMD will fund $93,400 and the remaining $6,600 will be sourced from non -assessment funds.
The amount of the assessment is no more than necessary to cover the reasonable costs of the proposed
activities, and the manner in which the costs are allocated to a business owner bear a fair share or
reasonable relationship to the businesses’ benefits received fro m the proposed activities. The benefit
study in Appendix 3 found that the benefits provided by the SM TMD do not exceed the reasonable
cost.
The programs provided with District funding receive additional non -assessment funding in the form
of grants, corpor ate sponsorships, event income, transient occupancy tax, and other funds. These
funding sources shall be equal to or exceed the amount of benefit conferred to non -payors annually
by the District’s services. These non -assessment funds will be used to pay for the benefit to non -
payors provided by the proposed services, ensuring that assessments will only be used to provide
benefits to assessed businesses .
7 AB 483 Ting (2014)
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D. Assessment
The assessment is a fixed amount per occupied room per night. The assessment is based on the
businesses’ average daily rate, based on the previous year’s performance. Average daily rate figures
shall be updated annually. Based on the benefit received, assessments will not be collected on: stays
of more than thirty (30) consecutive days; and stays paid by any Federal, State of California, or City of
Santa Monica, official or employee when on official business provided that a n exempt certificate is
executed at the time of registration . Lodging businesses with an average daily rate less than $100 will
not be included in the district or assessed. Assessment rates are:
Tier Average Daily Rate Assessment Per Occupied Room Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 -$199.99 $1.50
Assessment rates may be subject to an annual increase of no more than twenty -five cents ($0.25) per
year for Tier 1 and Tier 2 lodging businesses and no more than ten cent ($0.10) per year for Tier 3
lodging businesses . The table bel ow demonstrates the maximum with the assumption that the rates
will be increased by the maximum amount for each category in each year of the SMTMD’s nine and
one -half (9.5) year term, as it is a required disclosure, it is not the anticipated course of acti on. The
maximum assessment rate for each category is:
FY $100 - $199.99 $200 - $299.99 $300 and Above
2018 * $1.50 $4.25 $5.25
20 18 -19 $1.60 $4.50 $5.50
20 19 -20 $1.70 $4.75 $5.75
20 20 -21 $1.80 $5.00 $6.00
20 21 -22 $1.90 $5.25 $6.25
20 22 -23 $2.00 $5.50 $6.50
20 23 -24 $2.10 $5.75 $6.75
20 24 -25 $2.20 $6.00 $7.00
20 25 -26 $2.30 $6.25 $7.25
20 26 -27 $2.40 $6.50 $7.50
*Fiscal year 2018 only covers a 6 month period (January – June).
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 b e 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. The assessment shall be disclosed as the “TMD 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 purposes,
including calculation of transient occupancy taxes.
Bonds shall not be issued.
E. Penalties and Interest
If any business shall fail or refuse to remit to the City the assessment due on or before the last day of
the month in which the assessment becomes due, there shall be added to the assessment a penalty of
ten percent (10%) of the amount of the assessment. If the assessment remains delinquent and
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unpaid thereafter for a period of thirty (30) days, there shall be an additional penalty of ten percent
(10%).
F. Time and Manner for Collecting Assessments
The SMTM D assessment will be implemented beginning January 1, 2018 and will continue for nine
and one -half (9.5 ) years through June 30 , 2027 . The City will be responsible for collecting the
assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging
with an average daily rate of $100 or more . T he City shall take all reasonable efforts to collect the
assessments from each lodging business. The City shall forward the assess ments collected to the
Owners’ Association .
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September 29 , 2016
VI. 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 identify the body that shall implement the p ropos ed program,
which shall be the O wners’ A ssociation of the SMTMD as defined in Streets and Highways Code
§366612 . The City Council has determined that Santa Monica Travel & Tourism will serve as the
Owners’ Association for the SMTMD .
The SMTT standing advisory committee, known as the “TMD Hotel Committee” shall continue to
be responsible for making recommendations to the SMTT Board regarding SMTMD funds and
programs. The TMD Hotel Committee shall have between four (4) and nine (9) members , of which
at least four (4) will be representatives of assessed lodging businesses.
Annually, SMTT shall hold a joint SMTT board and TMD Hotel Committee meeting which will be
open to the public. The purpose of the annual meeting will be mutual approva l of the budget and
programs for SMTMD funds for the upcoming fiscal year.
B. Brown Act and California Public Records Act Compliance
An Owners’ A ssociation is a private entity and may not be considered a public entity for any purpose,
nor may its board memb ers or staff be considered to be public officials for any purpose. T he Owner s ’
A ssociation 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 accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown
Act (Government Code §54950 et seq.). Thus, meetings of the SMTT board and certain committees
must be held in compliance with the publi c notice and other requirements of the Brown Act. The
Owner s ’ 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
SMTT 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 year.
The method and basis of levying the assessment in sufficient detail to allow 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.
D. Milestone Report
SMTT shall prepare a five -year Milestone R eport, which will be due in May 2022 prior to the City’s
approval of the annual report for Fiscal Year 2022 -2023 . The M ilestone Report shall be submitted to
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the City and all assessed businesses. It shall include all information required in the annual report, as
well as historical program and performance data, including key performance indicators for lodging
businesses suc h as average daily rate, revenue per available room, and occupancy rates. The Milestone
Report may serve as the annual report for Fiscal Year 2022 -2023. If lodging businesses are not
satisfied with the results of the Milestone Report, they may petition t he City to disestablish the District
pursuant to Streets and Highways Code section 36650.
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APPENDIX 1 – LAW
STREETS AND HIGHWAYS CODE
Division 18. Parking
Part 7. Property and Business Improvement District Law of 1994
Cal Sts & Hy Code Div. 18, Pt. 7 Note (2015)
*** This document is current through the 2015 Supplement ***
(All 2014 legislation)
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
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 di stricts.
(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 loca l 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 purp ose of conferring special benefit upon the real property or businesses in a
business district are not taxes for the general benefit of a city, even if property 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 bligh t, 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 an d restrictions on the formation of, and activities,
expenditures, and assessments by property -based districts. Article XIII D of the Constitution provides that property -
based districts may only levy assessments for special benefits.
(h) The act amending th is 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 under utilization 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
SMTMD Management District Plan 18
September 29 , 2016
benefit s to exist as a separate and distinct category from general benefits, the 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 h ave 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 restri ctions
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 prev iously 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 th e 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.
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 th at 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 inte nded 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.
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 clean ing, and other municipal services
supplemental to those normally provided by the municipality.
(f) Other services provided for the purpose of conferring special benefit upon assessed businesses and real property
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 bene fits to properties or businesses located within a property and
business improvement district.
36607. “Business”
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September 29 , 2016
“Business” means all types of businesses and includes fina ncial 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
Sec tion 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) Benche s, 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.
(j) Facilities or equipment, or both, to enhance security of persons and property within the area.
(k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) 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 consi dered 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 t o activities of the district.
SMTMD Management District Plan 20
September 29 , 2016
36614. “Property”
“Property” means real property situated within a district.
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 owner ship
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 improv ements, 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.
366 17. Alternative 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 othe r 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 (commen cing with Section 36500) of this division) is
valid and effective and is unaffected by this part.
36620. Establishment of property and business improvement district
A prope rty and business improvement district may be established as provided in this chapter.
36620.5. Requirement of consent of city council
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A county may not form a district wit hin 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 of supervisors of that county. A city may not f orm 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 assessmen ts 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 o r 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 amoun t 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 boundarie s of the district.
(2) Information 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 s ubdivision (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 w ithin 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 he aring 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.
36 622. 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 ide ntify 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 prope rty 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 lim ited 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, maintenan ce, 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.
(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
SMTMD Management District Plan 22
September 29 , 2016
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 sour ce 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. T he 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 ap plicable 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 up on 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
determin ed 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 rea sonable 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
benefits conferred on a parcel. Parcels within a pr operty -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 o wned 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.
(l) In a property -based district, the total amount of all special benefits to be conferred upon the proper ties 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 t o 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 writ ten 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 represent ative. 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 50 p ercent 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 i ntention, shall be taken for a period
of one year from the date of the finding of a majority protest by the city council.
SMTMD Management District Plan 23
September 29 , 2016
(c) If a city council proposes to conduct a single proceeding to levy both a new or increased property assessment and
a new or increas ed 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 majorit y 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 funde d 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,
maintenan ce, 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 a resolution 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 with in
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 majo rity 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.
(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.
36626. Resolution establishing district
If the c ity 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. Notic e and assessment diagram
SMTMD Management District Plan 24
September 29 , 2016
Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625 or
Section 36626, the clerk of the city shall record a notice and an assessment diagram pursuant to Section 3114. No
o ther 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 im pose 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 b e 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.
3 6628.5. 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 de termines 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 disestabl ishment 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
bu siness, 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.
36631. Time and manner of collection of assessment; 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 paym ent. All delinquent payments for assessments levied pursuant to this part may be
charged interest and penalties.
36632. Assessments to be based on estimated benefit; Classif ication 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 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 sh all 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 activiti es 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 subjec t to any
assessment pursuant to this part.
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September 29 , 2016
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;
Modification of improvements and activities by adoption of resolution after public hearing
(a) Upon the written request of the o wners’ 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 Secti on 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.
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 resolut ion 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)) or in conjunction with
Marks -Roos Local Bond Pooling Act of 1985 (Article 4 (commencin g with Section 6584) of Chapter 5 of Division 7
of Title 1 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 revenu e estimated to be raised from assessments over
30 years.
SMTMD Management District Plan 26
September 29 , 2016
(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 w ould interfere with the timely
retirement of the debt.
36650. Report by owners’ association; Approval or modification by city council
(a) The owners’ association shall cau se 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 s hall 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 b y name,
specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the
following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any
benef it 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 fisc al 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 ch ange 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 and activitites
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.
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit
(a) Any district previously established whose term has expir ed, 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 r evenues, 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 distri ct. 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 origi nal or prior district.
36670. Circumstances permitting disestablishment of district; Procedure
SMTMD Management District Plan 27
September 29 , 2016
(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 w hich 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 business es in the area 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 resolut ion 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 dispos e 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 o r 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 th an 60 days after the adoption of the resolution of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district;
Calculatio n of refund; Use of outstanding revenue collected after disestab -lishment 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 assess ments, 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 improvement s and
activities specified in the management district plan.
(b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method and basis that was
used to calculate the assessments levied in the immediate prior fiscal year sha ll be used to calculate the amount of
any refund.
SMTMD Management District Plan 28
September 29 , 2016
APPENDIX 2 – ASSESSED BUSINESSES
BUSINESS NAME BUSINESS MAILING ADDRESS
Bayside Hotel 2001 Ocean Avenue, Santa Monica, CA 90405
Best Western Plus Gateway Hotel
Santa Monica
1920 Santa Monica Boulevard, Santa Monica, CA
90404
Cal Mar Hotel Suites 220 California Avenue, Santa Monica, CA 90403
Comfort Inn Santa Monica -West Los
Angeles
2815 Santa Monica Boulevard, Santa Monica, CA
90404
Days Inn Santa Monica/Los Angeles 3007 Santa Monica Boulev ard, Santa Monica, CA
90404
DoubleTree Suites by Hilton Hotel
Santa Monica
1707 Fourth Street, Santa Monica, CA 90401
Fairmont Miramar Hotel & Bungalows 101 Wilshire Boulevard, Santa Monica, CA 90401
Hotel Carmel 201 Broadway, Santa Monica, CA 90401
Hotel Cassa Del Mar 1910 Ocean Way, Santa Monica, CA 90405
Hotel Shangri -La at the Ocean 1301 Ocean Avenue, Santa Monica, CA 90401
Huntley Santa Monica Beach 1111 Second Street, Santa Monica, CA 90403
JW Marriott Santa Monica Le Merigot 1740 Ocean Avenu e, Santa Monica, CA 90401
Le Meridien Delfina Santa Monica 530 Pico Boulevard, Santa Monica, CA 90405
Loews Santa Monica Beach Hotel 1700 Ocean Avenue, Santa Monica, CA 90401
Ocean Lodge Hotel Corporation 1667 Ocean Avenue, Santa Monica, CA 90401
Ocean Park Inn 2452 Lincoln Boulevard, Santa Monica, CA 90405
Ocean View Hotel 1447 Ocean Avenue, Santa Monica, CA 90401
Oceana Beach Club Hotel 11766 Wilshire Boulevard, Los Angeles, CA 90025
Palihouse Santa Monica 1001 Third Street, Santa Monica, CA 90403
Rest Haven Motel 815 Grant Street, Santa Monica, CA 90405
Santa Monica Motel 2102 Lincoln Boulevard, Santa Monica, CA 90405
Santa Monica Pico Travelodge 3102 Pico Boulevard, Santa Monica, CA 90405
Sea Shore Motel 2637 Main Street, Santa Monica, CA 90405
Seaview Hotel 1760 Ocean Avenue, Santa Monica, CA 90401
Shore Hotel 1515 Ocean Avenue, Santa Monica, CA 90401
Shutters on the Beach Hotel One Pico Boulevard, Santa Monica, CA 90405
The Ambrose Hotel 1255 20 th Street, Santa Monica, CA 90404
The C ottage Santa Monica 2219 Ocean Avenue, Santa Monica, CA 90405
The Georgian Hotel 1415 Ocean Avenue, Santa Monica, CA 90401
The Hotel California 1670 Ocean Avenue, Santa Monica, CA 90401
Viceroy Santa Monica 1819 Ocean Avenue, Santa Monica, CA 90401
Wyndham Santa Monica – At The Pier 120 Colorado Avenue, Santa Monica, CA 90401
SMTMD Management District Plan 29
September 29 , 2016
APPENDIX 3 – BENEFIT STUDY
Santa Monica Destination
Marketing Funding Analysis
February 2016
Table of contents
Executive summary 3
Section 1: The vital role of destination promotion 5
Section 2: Recent performance in Santa Monica 16
Section 3: Benchmark analysis of marketing budget 21
Section 4: SMTT marketing activities and TMD benefits 30
Section 5: Conclusions 38
Executive summary
Executive summary
1. Destination marketing is fundamental to broader economic
development.
Destination marketing plays an integral and indispensable role in the
competitiveness of the local and national visitor economy, and acts as
a catalyst for broader economic development.
2. Santa Monica is a strong competitor to other key destinations
and is ‘holding ground’ when measured by room revenues and
occupancy rate .
Relative to competing regional destinations, growth in room revenues
has kept pace since 2010 . Santa Monica has enjoyed steady growth in
average room rates, which accounts for much of the recent revenue
growth. Demand growth has lagged behind that of competing
destinations and has averaged 2.6% per year since 2010.
Supply growth has been even more restrained than demand, leading
to rising occupancy rates, which reached 84% in 2014. With flat
supply, there is little room for additional demand during the peak
seasons; in this sense demand is constrained by supply.
3. Many destinations in California have formed Tourism
Marketing Districts (TMDs) to ensure reliable funding.
The recently formed TMD in Santa Monica is becoming an
increasingly important source of marketing funding and enables the
City to compete effectively with regional destinations. Nearly 100 other
destinations in California have formed similar funding mechanisms.
4. The overall SMTT budget is competitive compared to other
destinations.
The amount of funding dedicated to marketing Santa Monica as a
destination is small in absolute terms compared to much larger
destinations, such as Los Angeles and San Diego. However, adjusted
for the size of the destination, SMTT’s budget enables it to compete
effectively and is consistent with those of other destinations.
5. SMTT marketing campaigns and projects are diverse.
Recent projects have included development of a five -year strategic
plan, focus groups conducted in seven domestic and international
target markets, a redesigned website with a new booking tool that only
directs traffic to TMD hotels, a new visitor guide and map, a
redesigned logo, and integrated marketing campaigns in the U.S.,
United Kingdom, Australia, and Brazil.
With 98% of the room inventory assessed under the TMD, the vast
majority of benefits of these marketing efforts are realized by
properties that pay into the TMD. Overall, based on bookings and
sales data, TMD hotels enjoy more than 93% of the benefits of TMD
spending.
| Tourism Economics 4
Overview
Santa Monica Travel & Tourism (SMTT) engaged Tourism Economics to conduct an independent analysis of the competitiveness
of the marketing budget relative to other destinations. Below are the key findings:
1. The vital role of destination promotion
The vital role of destination
promotion
| Tourism Economics 6
Destination marketing plays an integral and
indispensable role in the competitiveness of
the local and national visitor economy by
addressing its unique challenges.
Challenge #1: The visitor economy is fragmented
The visitor economy is diverse with benefits accruing across various
industries (e.g. hotels, restaurants, retail stores, transportation,
performance venues and other attractions), and in many cases, these
establishments are operated as small businesses that lack the
capacity to conduct certain types of marketing. Moreover, certain
benefits accrue across the economy rather than to just an individual
business.
Because a visitor’s spending is spread across businesses, any single
business may not capture sufficient share of a visitor’s spending to
justify marketing to attract visitors to a destination. For example, an
individual hotel could market the attractiveness of a destination, but it
would only benefit from those additional visitors who not only choose
the destination, but also choose that particular hotel; and the hotel
would only benefit directly from the visitor’s spending at the hotel. In
other words, at the level of an individual business, the returns on
independent marketing to attract visitors to a destination can be less
compelling. However, when viewed at the level of the destination,
there is a more direct connection. The destination captures a
substantial dollar amount per visitor, and in aggregate there are
compelling returns on effective destination marketing .
Solution: destination promotion provides the scope and
strategic vision supporting a wide array of individual
businesses.
Destination promotion organizations play a role furthering the strategic
potential of the visitor economy. Destination marketing organizations
(“DMOs”) can take a long term view of the development of the
destination, and pursue tactics to help develop a visitor economy that
better fits the goals of local residents and businesses. For example,
many destinations have a mix of peak, shoulder, and low season
periods. DMOs take steps to build shoulder season and low season
demand, and help fill slower days of the week, supporting a more
stable base of spending and helping ongoing operations achieve a
“break even” level of profitability. Similarly, DMOs can play a role
helping to find solutions that balance the development of the visitor
economy with the constraints and goals of a given destination, such as
fostering the development of geographic areas with greater capacity
for growth .
The vital role of destination
promotion (continued)
| Tourism Economics 7
The fundamental motivation driving a visit is
not usually the offerings of a single
business —instead it is the destination.
Challenge #2: The primary motivator of a trip is usually the
experience of a destination, extending beyond the
offerings marketed by a single business
The fundamental motivation driving a visit to a given destination is
frequently not the offerings of a single business —instead it is the
destination, including a range of attractions and the overall experience
of a place. This experience comprises a visitor’s interaction with, and
patronage of, numerous businesses and local experiences: hotels and
other accommodations; restaurants; shopping and galleries;
conferences; performances and other events; family activities; sports
and other recreation; and cultural sites and attractions.
Marketing efforts that focus on only one sub -sector of the visitor
market, such as communicating the offering of a specific hotel or other
business, do not also adequately address the core motivation for
potential visitors. Through coordinated destination promotion, local
businesses are able to represent the destination collectively, and in
doing so drive demand for all segments of the visitor economy. Stand -
alone marketing efforts would almost certainly be less effective than a
collective destination marketing campaign.
Solution: destination promotion articulates the brand
message that is consistent with consumer motivations
The same holds true in the case of group travel, such as corporate
meetings and trade conventions, for which event sponsors seek a
destination that meets multiple success criteria. While the offerings of
an individual headquarter hotel or convention facility are critically
important, in many cases the merits of a destination overall are being
considered relative to other potential options. In such situations, a
coordinated strategy —from initial marketing and touch points that build
familiarity, to the dedicated sales team that lines up the destination’s
best offer of facilities, amenities, services, and experience —augments
and rises beyond the message of a single operation.
The vital role of destination
promotion (continued)
| Tourism Economics 8
The scale of collaborative destination
marketing is more effective than what
individual businesses could accomplish.
Challenge #3: Effective marketing requires scale to reach
potential visitors across multiple markets
Effective destination marketing requires significant and consistent
funding and long term planning with the aim of gaining a sufficient
“share of voice” to be heard and make an impact. Whether in the form
of social media advertising , public relations efforts, or group sales,
scale produces efficiencies that maximize the share of funding that
goes to actual marketing and advertising, drives down per unit
advertising costs, and enables higher impact, more specialized efforts.
As a result, the larger scale of collaborative destination marketing is
more effective than what individual businesses would accomplish.
Simply put, the whole of destination marketing is greater than the sum
of individual parts .
Solution: destination promotion pools resources to provide the
economies of scale and marketing infrastructure required to
generate impact
One of the benefits of coordinated marketing facilitated by a DMO is
the ability to have a stable organization and funding base to support
destination marketing. As a result, DMOs are able to efficiently
leverage the brand, infrastructure and relationships that have been
built over time.
For example, DMOs:
Initiate efforts in geographic markets with strong potential for the
destination, giving partners the opportunity to engage in markets
they could not pursue on their own
Conduct integrated sales and marketing campaigns that create
destination brand awareness and drive visitation during need
periods
Build upon existing infrastructure, such as websites and
publications while staying on the forefront of marketing trends and
consumer behavior shifts
Employ a staff and network of innovative agency partners with
established relationships in the travel industry
Support ongoing market research, such as visitor profile and
market feasibility studies, that help individual businesses and
community organizations to better allocate their marketing
resources
Through these channels, destination promotion expands the visitor
economy and drives employment, income generation, and local tax
revenues, and helps to build the types of opportunities that are a
critical part of economic development.
Destination promotion helps
drive economic development
| Tourism Economics 9
Destination promotion supports the visitor
economy, but it also acts as a catalyst of
broader economic development.
In recent research, Tourism Economics / Oxford Economics identified
four primary channels through which destination promotion drives
broader economic development and growth.
1) Raising the destination profile
Destination promotion builds awareness, familiarity, and relationships
in commercial, institutional and individual networks that are critical in
attracting investment.
“We are learning a lot from Visit California by how they brand
California and how to take their model and apply it to economic
development.”
Brook Taylor
Deputy Director
Governor’s Office of Business and Economic Development (GO -Biz)
2) Building transport networks
By developing the visitor economy, destination promotion supports
transportation infrastructure, providing greater accessibility and supply
logistics that are important in attracting investment in other sectors.
“Air service is profoundly important to corporate investment and
location decisions... This is one of tourism’s most significant
contributions since the levels of air service at New Orleans far
exceed what local demand could support.”
Stephen Moret
Secretary
Louisiana Economic Development
3) Raising the quality of life
Visitor spending helps support a broader and higher quality set of local
amenities than an area could otherwise sustain. The cultural,
entertainment, culinary, and retail attractions that visitors support
make a place more attractive to investors.
“Traveler attractions are the same reason that CEOs choose a
place.”
Jeff Malehorn
President & CEO, World Business Chicago
4) Attracting strategic events and industries
By securing meetings and conventions, DMOs attract the very
prospects that economic development agencies target. Not only do
these events create valuable exposure among business decision
makers, they create direct opportunities for economic development
agencies to deepen connections with attendees . Further, the work of
DMOs can also attract strategic industries, such as technology, that
drive growth in a broader sense.
“Economic clusters and conventions have become synergistic”
Tom Clark
Metro Denver Economic Development Corporation
Oxford Economics (2014, November) “Destination Promotion: An Engine of
Economic Development: How destination promotion drives economic development.”
Produced in connection with Destination & Travel Foundation.
Link to http ://www.oxfordeconomics.com/engine
Destination promotion helps
drive economic development
| Tourism Economics 10
The four channels of catalytic impacts
generate benefits that extend beyond direct
effects of driving visitation.
Oxford Economics (2014, November) “Destination Promotion: An Engine of
Economic Development: How destination promotion drives economic development.”
Produced in connection with Destination & Travel Foundation.
Link to http ://www.oxfordeconomics.com/engine
Destination marketing supports economic development through four
catalytic channels, extending its impact well beyond the effects of
visitor spending. Destination marketing raises the profile of a city
among potential investors, builds transport accessibility, raises the
quality of life for residents, and attracts major events that build
awareness. Raising the destination profile can also help to attract
businesses in strategic industries that drive growth.
As a result, cities that succeed as destinations are more likely to
succeed in broader economic terms.
Case study 1: Colorado cuts
state funding
| Tourism Economics 11
Within two years, Colorado lost 30% of its
U.S. visitor market share.
Changes in promotion budgets in other U.S. destinations provide case
study examples of what has happened when destination marketing
spending is increased or reduced. We have summarized several of
these case studies in this section, beginning with Colorado, which
represents a powerful example of the impact of a dramatic reduction in
destination marketing spending:
Prior to 1993, the Colorado Tourism Board (CTB) had a $12
million marketing budget, funded by a 0.2% tax on most tourism
spend.
Within two years of repealing its tourism funding in 1993, Colorado
lost 30% of its US visitor market share, which translated into the
equivalent of over $1.4 billion annually in lost revenues. By the
late 1990s, this had escalated to $2.4 billion a year.
After having moved from 14th to 1st position in the states’ summer
resorts category, Colorado slipped to 17th in 1994. It also shifted
back to being more of a regional drive destination opposed to
being a national fly -in venue and attracting fewer international
visitors.
The subsequent establishment of the Colorado Travel & Tourism
Authority, which was an attempt to market the state with private
sector funding in co -operation with the CTB, failed. This was
attributed to the fact that private sector companies had separate
priorities.
The new Colorado Tourism Office opened with a $5 million
budget, and in 2003 approved funding for tourism promotion
increased to $9 million. A campaign conducted from October 2003
through December 2004 resulted in 5.3 million incremental visits,
representing 17 % of total visitation to the state. In 2004, this
generated $1.4 billion of additional spend and $89.5 million in
state and local taxes.
These estimates are equivalent to an implied visitor spending
return -on -investment (ROI) per marketing dollar of $140 (i.e. each
dollar change in marketing spending resulted in a change in visitor
spending of $140).
Case study 2: San Diego TMD
funding frozen by litigation
| Tourism Economics 12
San Diego market share declined when
tourism marketing was curtailed in 2013.
A series of events in San Diego resulted in a temporary reduction in
tourism marketing spending, providing a case study of short -term
impacts :
The San Diego Tourism Marketing District (SDTMD) was
established in 2008 with the support of the lodging sector to
provide stable funding for marketing and promotion based on a
hotel room assessment. For example, in FY2012, the SDTMD
allocated more than $25 million in assessment funds.
In 2013, funds intended for the SDTMD were held in limbo through
much of the calendar year, curtailing funding to local tourism
marketing groups.
The San Diego Tourism Authority (SDTA), the region’s primary
destination marketing organization, was one of the groups
impacted. SDTA depends largely on SDTMD funding and was
forced to cancel its important spring 2013 advertising campaign.
Later, as the funding challenges persisted, SDTA laid off 40% of
its staff in July 2013 and prepared to function as a bare -bones
operation with only 15% of the funding that it previously received
from SDTMD.
Ultimately, in late -November 2013, the local city council released
a portion of the funds previously being withheld and the SDTA
restored its advertising in January 2014. As a result, the cutbacks
in destination marketing were largely contained in calendar year
2013, and San Diego tourism marketing resumed strongly in 2014.
The impact of the reduced funding was reflected in the
performance of the San Diego hotel industry, as room demand
leveled off in 2013, and occupancy rates and price levels
increased more slowly than in competing markets. Overall, the
city’s performance trailed other regional and national destinations
that had maintained funding levels and marketing programs .
Further, occupancy tax revenues that would have been generated
during this time were lost.
The graph below shows San Diego’s reduced hotel room demand
market share relative to a competitive set (Los Angeles, San
Francisco, Anaheim, Phoenix and Seattle) and top 25 US metro
markets during the period of reduced funding, and subsequent
recovery when marketing was restored.
3.80
3.84
3.88
3.92
3.96
4.00
15.6
15.7
15.8
15.9
16.0
11 12 13 14
Comp set (L)
Top 25 (R)
San Diego room demand market share
San Diego's % of total room nights, relative to...
Sources: STR,Tourism Economics
Defunding of
SDTA
Case study 3: Pure Michigan
success
| Tourism Economics 13
Michigan successfully invested in
destination marketing as part of a strategy
to ignite growth.
“Pure Michigan” is a nationally recognized advertising campaign. L ess
appreciated are the important decisions the state took during a period
of economic recession to expand the campaign as an investment in
future growth.
Bill Siegel, CEO of Longwoods, recently summarized this success
story in a widely cited paper, “The Power of Destination Marketing”
(link ). The following highlights key points:
The “Pure Michigan” campaign had its fledgling start in 2006 as a
regional campaign in an environment of relatively low funding. In
preceding years, Michigan’s state tourism budget had declined,
falling to as little as $7.9 million in FY2005 according to US Travel
data. For several years, as the campaign ran in regional markets
research demonstrated that it was building equity in the
marketplace, improving Michigan’s image and generating positive
financial returns.
In 2009, with the national economy still in recession, and
Michigan’s manufacturing base hit particularly hard, the state
legislature saw tourism as a potential growth opportunity, and
approved a one -time doubling of the Travel Michigan budget to
$28 million. This allowed the state to promote itself nationally for
the first time, and “Pure Michigan” was well -suited to the
opportunity.
In its first year, the national campaign dramatically increased
unaided awareness of Michigan as a place in the Midwest US
“you would really enjoy visiting”, and three out of ten national
travelers were aware of the campaign. T he campaign was
recognized by Forbes as among the 10 all -time best travel
campaigns, and Michigan moved to 2 nd place among competitors
after the campaign, from 9 th place before the campaign.
The summer 2009 campaign has been estimated to have
generated almost two million additional trips to Michigan. As a
result, based on a $12.2 million media budget, the campaign is
estimated to have generated $588 million of incremental visitor
spending and $41.0 million of state taxes, equivalent to $3.36 of
state taxes per ad dollar.
In total from 2006 to 2014, Longwoods estimated that “Pure
Michigan” results generated 22.4 million out -of -state trips to
Michigan and $6.6 billion of visitor spending at Michigan
businesses.
Michigan built on the initial success by maintaining annual funding
slightly ahead of $30 million. Since then, “Pure Michigan” has become
the singular brand for Michigan, with the state expanding its use
across multiple lines of business to promote state objectives, such as
economic development.
Destination marketing ROI in
other markets
| Tourism Economics 14
Many state and local DMOs conduct periodic assessments of
marketing effectiveness. There are several goals of these studies,
including understanding how specific marketing campaigns are
perceived by households, how effective the campaigns are in having
an impact on households’ intent to travel to a given destination, and
which target markets are showing differing level of responsiveness to
marketing. Frequently these studies include a specific analysis of the
ROI of marketing spending in the form of a quantitative assessment of
the level of incremental visitor spending and tax revenues that are
attributable to destination marketing.
These studies use a variety of methods, and are measuring the impact
of a range of different campaigns across different situations. For
example, a specific study may look at incremental visitors attracted by
a state -level marketing campaign conducted by a state that attracts
travelers from a range of national markets, while another study may
focus on the results of a more targeted regional campaign carried out
by a city -level DMO. While the results of a specific study pertain most
directly to the situation that was analyzed, and the corresponding
assumptions, it is appropriate to consider broader inferences from the
research.
We analyzed recent studies that included an estimate of the
incremental visitor spending attributable to advertising campaign
spending. For example, in a fairly typical approach, a study would:
use a survey to analyze the effect of a specific advertising
campaign on households’ travel to a given destination, such as by
analyzing the impact on actual travel among those that had
observed the advertising or by analyzing the impact on
households’ intentions to travel;
project that effect to the broader set of households in the
marketing area to estimate the number of incremental visits
attributable to the campaign;
apply typical levels of spending per visitor to estimate incremental
visitor spending; and,
compare incremental visitor spending to the level of advertising
spending to estimate the ROI.
We summarized the estimates of incremental visitor spending per
dollar of advertising campaign spending from these studies in the table
on the following page.
Destination marketing ROI in
other markets
| Tourism Economics 15
Estimates of incremental visitor spending per dollar of advertising
campaign spend from the set of studies we analyzed is summarized in
the adjacent table, supporting the following observations:
The results range from as low as $12 for an analysis conducted
for Syracuse, NY to as high as $326 for the average of several
analyses conducted for California.
F or state campaigns, visitor spending gains per dollar of
advertising spending typically range between $100 and $200.
Overall , we observe that recent marketing campaigns by
destination marketing organizations at the state level have
generated approximately $148 of incremental visitor spending per
dollar of advertising spending.
Marketing ROI Matrix
Region Timing
Visitor spending
per ad dollar
States
California Average 2009 to 2013 $326
Arizona Average 2007, '11, '12, '15 221
Georgia Average 2011 and 2012 211
Colorado 2012 200
Florida 2011 177
Maryland 2012 160
Wyoming Average 2012, '13, '14 156
Kentucky 2014 151
Missouri 2013 131
North Dakota Average 2010, '12, '14 101
Utah Average 2010, '11, '13 83
Virginia 2006 71
Michigan 2009/10 54
New Mexico 2012 29
Metros and regions
Philadelphia, PA 2009/10 $100
Branson, MO 2012 79
Kansas City, MO 2013 65
Springfield, MO 2011 61
Finger Lakes Wine Country, NY 2012 44
Washington, DC 2013 27
San Diego, CA 2013 19
Syracuse, NY 2008 12
Average of states $148
Average of metros and regions $51
Sources: Local studies compiled by Tourism Economics
2. Santa Monica recent performance
Room demand growth in Santa
Monica has moderated
| Tourism Economics 17
A lack of supply growth is constraining
demand and boosting prices.
Santa Monica’s recovery in room demand was robust from 2010 to
2012, averaging nearly 5% growth per year. Demand has moderated
since then, slowing to 0.6% per year on average. Overall, demand was
about 8% higher in 2014 than it was in 2008. The supply of available
rooms has grown less; overall, the inventory of rooms is 4.4% higher
than 2008 levels, which is average annual growth less than 1%, with
virtually no change in the last two years.
The supply and demand fundamentals in Santa Monica – restrained
demand growth with little change in supply – have boosted occupancy
rates to 84% in 2014, which in turn pushes up average room rates.
These price increases account for most of the recent growth in room
revenues, especially since 2013.
-25
-20
-15
-10
-5
0
5
10
15
20
2009 2010 2011 2012 2013 2014
ADR
Demand
Total Revenues
Price Growth is Driving Revenues
Contribution to % change by component
Sources: STR , Tourism Economics
90
92
94
96
98
100
102
104
106
108
110
2008 2009 2010 2011 2012 2013 2014
Supply
Demand
Demand Outpaced in the Recovery
12 -month moving sum, index June 2008 = 100
Sources: STR , Tourism Economics
Supply is constraining further
expansion
| Tourism Economics 18
Occupancy peaks near 95% during high
season.
In order to allow room demand to
expand further or for overall
occupancy to move higher,
additional supply will have to
come online or some demand will
need to spill over into the
shoulder season.
At peak occupancy rates of
nearly 95%, roughly 250 rooms
would be available in Santa
Monica.
Tighter occupancy rates during
peak season drives prices which
also exhibit significant seasonal
variation.
55
60
65
70
75
80
85
90
95
100
2008 2009 2010 2011 2012 2013 2014
Seasonal
12-month moving avg
Occupancy has Little Headroom in Summer
Occupancy rate, %
Sources: STR , Tourism Economics
Room revenues are expanding
in Santa Monica
| Tourism Economics 19
Room revenues growth in Santa Monica is
keeping pace with regional competitors,
while room demand lags.
Downtown Los Angeles and Santa Barbara are leading growth in room
revenues among key competitors. However, with average annual
growth of 10.8% in revenues, Santa Monica is keeping pace with or
exceeding revenue growth in other destinations. Total room revenues
reached $336 million in 2014, 50% higher than total revenues in 2010.
Room -night demand in Santa Monica has expanded at an average
annual pace of 2.6% since 2010. This growth lags behind other key
regional competitors. The lack of room demand growth, especially in the
last two years, appears to be driven by supply constraints.
90
100
110
120
130
140
150
160
170
2010 2011 2012 2013 2014
Beverly Hills (+10.5)
Downtown LA (+13.2)
Monterey (+9.1)
Santa Barbara (+13.3)
Santa Monica (+10.8)
West Hollywood (+10.0)
Room Revenues are Keeping Pace
Indexed, 2010=100, avg % change in parentheses
Sources: STR , Tourism Economics
95
100
105
110
115
120
125
130
135
2010 2011 2012 2013 2014
Beverly Hills (+4.8)
Downtown LA (+6.4)
Monterey (+6.9)
Santa Barbara (+7.1)
Santa Monica (+2.6)
West Hollywood (+4.2)
Demand is flattening out
Room -nights Indexed, 2010=100, avg % change in parentheses
Sources: STR , Tourism Economics
Strong occupancy rates drive
prices
| Tourism Economics 20
Occupancy reached 84.0% in 2014.
Price growth in Santa Monica leads other destinations and has
averaged 8% per year since 2010. In level terms, Santa Monica’s price
premium is clear at $308 per room -night in 2014 on average. Room
rates in only two regional competitors were higher, in Santa Barbara
and Beverly Hills.
Occupancy tightened across markets since 2010, including Santa
Monica. The Santa Monica occupancy rate was 84.0% in 2014, 5.3
percentage points higher than four years earlier. Occupancy appears to
be “maxing out” and changed little over the last three years.
60
65
70
75
80
85
2010 2011 2012 2013 2014
Beverly Hills (+9.5)
Downtown LA (+10.8)
Monterey (+12.8)
Santa Barbara (+7.3)
Santa Monica (+5.3)
West Hollywood (+11.4)
Occupancy Rate
%, 4 -year change in occupancy ppts in parentheses
Sources: STR , Tourism Economics
95
100
105
110
115
120
125
130
135
140
2010 2011 2012 2013 2014
Beverly Hills (+5.5)
Downtown LA (+6.3)
Monterey (+2.1)
Santa Barbara (+5.9)
Santa Monica (+8.0)
West Hollywood (+5.6)
Average Daily Rate
Indexed, 2010=100, average annual growth in parentheses
Sources: STR , Tourism Economics
3 . Benchmark analysis of marketing funding
Methodology
| Tourism Economics 22
Approach
To evaluate the level of destination marketing funding in Santa Monica, we conducted a
benchmark analysis relative to other destinations. This analysis helped to quantify the
level of destination marketing, including funding from TMDs, that other destinations with
broadly similar characteristics are carrying out on an ongoing basis.
This benchmark analysis consisted of several steps in which we:
1.Identify a set of competing destinations;
2.Calculate comparative measures such as destination marketing organization (DMO)
funding per hotel room; and
3.Benchmark current Santa Monica Travel & Tourism funding to its competitors .
A benchmark analysis was conducted to
assess how Santa Monica Travel & Tourism
funding compares to key regional
competitors.
The TMD model is expanding
| Tourism Economics 23
Destinations across California are
increasingly using the TMD model to
ensure more stable funding.
Since their inception, Tourism
Marketing Districts have
expanded rapidly. By 2015, a
total of 96 destinations in
California had designated
marketing districts to ensure
reliable and effective sources of
funding, often in addition to
existing DMO funding.
The combined budgets of these
nearly 100 TMDs in California
was nearly $200 million and
represents intense competition
among destinations.
As other destinations develop
and expand marketing funding
mechanisms, Santa Monica will
need to keep pace in order
ensure it can compete effectively
and at least maintain market
share.
0
20
40
60
80
100
1990 1995 2000 2005 2010 2015
Rapid Expansion of California TMDs
Source:Civitas
TMD funding is critical to
compete
| Tourism Economics 24
Total funding available to promote Santa
Monica is now $7.0 million.
The Tourism Marketing District in
Santa Monica was implemented
in 2013, and since then the
district has effectively doubled
the amount of funding available
to promote Santa Monica and
hotels within the district.
With TMD funding accounting for
between $3.0 and $4.0 million in
each of the last two years, the
total budget is now $7.0 million.
In Fiscal 2015 the TMD
accounted for 57% of total
funding and included 98% of
rooms in the hotel inventory.
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
2011 2012 2013 2014 2015
TMD
Non-TMD
TMD is a Key Source of Funding
$ millions
Source: Santa Monica Travel & Tourism
Comparing budgets
| Tourism Economics 25
Santa Monica ranks 6th out of 15
destinations, in terms of absolute budget.
The annual level of DMO funding
ranged from a low of $0.6 million
in Coronado to a high of $46
million in Los Angeles. In
absolute budget size, Santa
Monica ranks 6th out of 15
destinations.
The average funding of the
competitive set is $10.3 million.
The competitive set was selected
as competitors that offer a similar
experience, located in the same
region of California or close by,
and could draw from the same
pool of potential visitors.
Rank Geography DMO Budget, $mils Budget Year
1 Los Angeles LA TCB 45.7 FY15
2 San Diego SD TMD 33.5 FY15
3 Anaheim Anaheim/OC VCB 14.8 FY15
4 Palm Springs Palm Springs CVB 13.1 FY15
5 Long Beach Long Beach CVB 8.7 FY14*
6 Santa Monica Santa Monica TT 7.0 FY15
7 Newport Beach Newport Beach Inc.6.9 FY15
8 Monterey Monterey Co DMO 6.9 FY15
9 West Hollywood WH Marketing Corp 4.4 FY15
10 Huntington Beach H. Beach MVB 3.6 FY15
11 Beverly Hills Beverly Hills CVB 3.3 FY14*
12 Pasadena PCOC CVB 2.6 FY15
13 Santa Barbara Santa Barbara CVB 2.2 FY14
14 Carlsbad Carlsbad CVB 0.6 FY15
15 Coronado Coronado TID 0.6 FY15
Group average 10.3
*Note: FY14 budget data are the most recent available data for some DMOs
DMO Budgets
Characteristics of benchmark
destinations: hotel supply
| Tourism Economics 26
Measured by the hotel room inventory,
Santa Monica ranks 7th out of 15
destinations in the competitive set, in terms
of size of the industry.
Size of the destination can be
measured by the inventory of
hotel rooms. Los Angeles and
San Diego are the largest in the
competitive set with more than
30,000 rooms (including only the
downtown business districts).
The smallest competing
destination is Santa Barbara with
1,200 hotel rooms.
Santa Monica’s room inventory of
just under 3,600 rooms ranks 7 th
out of 15 competitors, but is
closer in size to the smaller
competitors since the group
average is highly skewed by Los
Angeles and San Diego.
Rank Rooms, ths
1 Los Angeles 37.6
2 San Diego 34.0
3 Anaheim 15.6
4 Palm Springs 14.4
5 Long Beach 6.1
6 Carlsbad 4.1
7 Santa Monica 3.6
8 Newport Beach 3.2
9 Pasadena 2.8
10 West Hollywood 2.8
11 Beverly Hills 2.3
12 Monterey 2.2
13 Huntington Beach 1.8
14 Coronado 1.6
15 Santa Barbara 1.2
Group average 8.9
Room Inventory 2014-15
Funding metrics
| Tourism Economics 27
Benchmarks illustrate that Santa Monica is
competitively funded relative to other
regional destinations.
1.2
1.6
1.8
2.2
2.3
2.8
2.8
3.2
3.6
4.1
6.1
14.4
15.6
34.0
37.6
0 10 20 30 40
Santa Barbara
Coronado
Huntington Beach
Monterey
Beverly Hills
West Hollywood
Pasadena
Newport Beach
Santa Monica
Carlsbad
Long Beach
Palm Springs
Anaheim
San Diego
Los Angeles
Total hotel rooms
Thousands
Sources: STR;DMAI; Tourism Economics
0.6
0.6
2.2
2.6
3.3
3.6
4.4
6.9
6.9
7.0
8.7
13.1
14.8
33.5
45.7
0 10 20 30 40 50
Coronado
Carlsbad
Santa Barbara
Pasadena
Beverly Hills
Huntington Beach
West Hollywood
Monterey
Newport Beach
Santa Monica
Long Beach
Palm Springs
Anaheim
San Diego
Los Angeles
DMO total funding
Millions
Sources: STR,DMAI; Tourism Economics
Funding metrics (continued)
| Tourism Economics 28
Destination marketing funding tends to
increase with the size of the industry.
Carlsbad
Newport Beach
Long Beach Anaheim
San Diego
Coronado
Monterey
Santa Barbara
Los Angeles
Palm Springs
$0
$5
$10
$15
$20
$25
$30
$35
$40
$45
$50
0 5 10 15 20 25 30 35 40
DMO funding compared to hotel inventory
Source: STR;DMAI; Tourism Economics
$ millions
Hotel rooms, ths
Santa Monica in red
Group :
West Hollywod
Pasadena
Huntington Beach
Beverly Hills
Group
Funding metrics (continued)
| Tourism Economics 29
As the room inventory increases,
economies of scale drive per room funding
down . On this basis, DMO funding in Santa
Monica’s budget is competitive with other
regional destinations.
Carlsbad
Huntington Beach
Newport Beach
Long Beach
Anaheim
San Diego
Coronado
Monterey
Santa Barbara
West Hollywood
Beverly Hills
Los Angeles
Palm Springs
Pasadena
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
0 5 10 15 20 25 30 35 40
DMO funding per room compared to hotel inventory
Source: STR;DMAI; Tourism Economics
Funding per room
Hotel rooms, ths
Santa Monica in red
4. SMTT marketing activities and TMD benefits
Summary of SMTT marketing
activities
| Tourism Economics 31
In fiscal 2015, total marketing funding amounted to $7.0 million that made possible numerous
projects promoting Santa Monica as a destination. Recent TMD -funded activities and projects
included:
Strategic plan : development of a 5 -year strategic plan with input from a TMD hotel committee
Focus groups : conducted in seven domestic and international markets to assess perceptions of the
destination brand
Targeted marketing : integrated advertising campaigns intended to drive travel during Santa Monica’s soft
season; the campaign included paid search and behavioral retargeting
SantaMonica.com : a redesigned website with a new booking engine that drives traffic directly to TMD
member hotels.
New marketing materials : a redesigned logo, a brand style guide, destination photography and video
Visitor literature : a new visitor guide and destination map
International marketing : integrated marketing campaigns in the United Kingdom, Australia, and Brazil. In
Brazil for example, expanded marketing efforts included exposure in Marie Claire, Glamour, and other
news media.
SMTT international marketing
| Tourism Economics 32
Enhanced business development and international marketing efforts were made possible by
TMD funds in 2015.
These efforts included in the United Kingdom, Australia, and Brazil:
Full -time representation
Enhanced public relations support
B2B and B2C campaigns
Brand enhancing partnerships
Sales and media missions including local hotel partners
Tradeshow participation
And in France and Germany :
Part -time representation
B2B campaigns
Tradeshow participation
Ongoing trade relationship development and trainings
Proportional benefits: payors
benefit from TMD funding
| Tourism Economics 33
The benefits of TMD funding accrue overwhelmingly to TMD hotels. TMD marketing efforts
draw visitors to Santa Monica, and there is potential for some non -payors in Santa Monica or in
neighboring cities to benefit, however that share is estimated to be small. Assuming benefits
are distributed evenly across the hotel inventory, the TMD share of the room inventory is used
as a proxy for the benefits of sales efforts. We estimate that more than 90% of marketing
benefits and visitor services accrue to TMD hotels, based on web referrals and room inventory
data. Admin benefits are assumed to be distributed based on the benefit shares of sales,
marketing, and visitor services. Overall, TMD payors enjoy an estimated 93% of the benefits of
TMD spending.
Tourism Marketing District Benefits by Component
Amount, $ths
(2 yr avg)
Budget
share, %
TMD
benefit
share, %Source/note
Tourism industry sales 1,062.5 28.8%98.0%Room inventory data
Marketing 1,421.7 38.5%90.5%Web referrals, room inventory data
Visitor services 76.8 2.1%90.5%Web referrals, room inventory data
Admin, salaries, contingency 1,130.4 30.6%93.0%Average of above shares
Total 3,691.5 100.0%93.4%Overall weighted average
Website referrals and hotel
bookings
| Tourism Economics 34
The SantaMonica.com website serves as a
key source of information, and the Jack
Rabbit booking tool refers visitors directly to
TMD hotel websites and facilitates
bookings.
The redesigned
SantaMonica.com website
provides information on what
visitors can do in the City, where
to go, the different neighborhoods
and sites, and where to shop and
enjoy the City’s restaurants.
A key feature of the website is to
provide a comprehensive list of
accommodation options in Santa
Monica searchable by price and
location. A visitor to the website
can also click through directly to
a hotel’s website or click the
“Book Direct” button to book at
TMD hotels. The Jack Rabbit
booking tool directs traffic only to
TMD member hotels.
Website referrals and hotel
bookings
| Tourism Economics 35
The Jack Rabbit booking tool resulted in
more than 19,500 click -through referrals to
hotels in the TMD in 2015, including 1,700
mobile referrals.
The SantaMonica.com website
facilitates booking at the TMD
hotels in several ways; visitors
can click through to a hotel’s
website, click to obtain a phone
number, click on the hotel’s
picture icon, or use the
BookDirect button.
Most website referrals are made
as visitors click on the link with
the hotel’s title or through the
BookDirect button.
From May to December 2015, a
total of 19,526 website referrals
were made to TMD hotels
through the Jack Rabbit booking
tool, including more than 1,700
referrals from mobile devices.
100% of all website referrals went
to hotels assessed under the
TMD.
0
2
4
6
8
10
12
14
16
18
20
Get Phone link
Mobile referrals
Picture link
Book Direct button
Website
Title link
Hotel Referrals from SantaMonica.com
From May to December 2015, thousands
Source: Santa Monica Travel & Tourism
Publicity value
| Tourism Economics 36
The estimated value of publicity resulting
from Santa Monica’s earned media
exposure and public relations increased
more than five -fold after the creation of the
TMD.
The estimated value of publicity
of Santa Monica’s exposure in
print media increased to nearly
$11 million in 2014, after one
year of the TMD. With an
investment of $0.3 million, this
corresponds to an return on
investment (ROI) of more than
37 -to -1.
The publicity value was more
than five times that in 2013 at
$1.8 million.
Highlights of Santa Monica’s
publicity and exposure included
coverage in Forbes, Qantas
magazine, National Geographic,
Men’s Health, Top Santé
(France), Viaje Mais (Brazil), The
New Zealand Herald, InStyle
Australia, Le Figaro (France),
Woman Magazine, and Elle.
1.8
10.8
0
2
4
6
8
10
12
2013 2014
Estimated Publicity Value
$ millions
Source: Santa Monica Travel & Tourism
Publicity value (continued)
| Tourism Economics 37
Santa Monica received coverage in a
variety of print media, including
international coverage.
5 . Conclusions
| Tourism Economics 39
1.James
1.Destination promotion is a critical economic development function and should
be prioritized .
2.Santa Monica is a strong competitor to other key destinations and is ‘holding
ground’ when measured by room revenues and occupancy rate.
3.The Santa Monica Travel & Tourism budget is consistent with competing
destinations when adjusted for size of the tourism market. While recent
performance has been solid, additional marketing funding would generate more
demand and visitor spending in Santa Monica.
4.Many California destinations are creating TMDs in order to increase and ensure
a stable source of marketing funding, and in order to maintain market share
Santa Monica will need to keep pace with competitors’ marketing efforts.
5.The vast majority of Santa Monica’s hotels are in the TMD and realize the
benefits of SMTT’s diverse marketing campaigns. Overall, TMD hotels enjoy an
estimated 93% of the benefits of TMD spending.
Conclusions
Methods and data sources
| Tourism Economics 40
Budget data were compiled by Tourism Economics from several
sources, including non -profit Form 990s filed with the IRS, the DMAI
Organization and Financial Survey of DMOs, and information gathered
directly from the respective DMOs, including marketing plans, annual
reports, financial statements, and through direct correspondence. The
benchmarking of DMOs was done with fiscal 2015 data for most
destinations. For Beverly Hills and Santa Barbara, the most recent
data available were for fiscal year 2014.
Lodging industry metrics are based on Smith Travel Research (STR)
data and capture supply, demand, revenues, occupancy, and average
daily rates. For some geographies, adjustments were made to industry
metrics to capture the primary area covered by marketing efforts.
Estimates of benefits accruing to TMD and non -TMD properties were
developed based on sales and bookings information provided by the
client, STR data on room inventory in Santa Monica and the
surrounding cities, and detailed TMD budget information. The amount
of benefit captured by TMD hotels was estimated for each budget
category. The overall benefit is a weighted average of the benefits
captured for each spending category.
About Tourism Economics
| Tourism Economics 41
Tourism Economics is an Oxford Economics company with a singular
objective: combine an understanding of tourism dynamics with
rigorous economics in order to answer the most important questions
facing destinations, developers, and strategic planners. By combining
quantitative methods with industry knowledge, Tourism Economics
designs custom market strategies, destination recovery plans, tourism
forecasting models, tourism policy analysis, and economic impact
studies.
With over four decades of experience of our principal consultants, it is
our passion to work as partners with our clients to achieve a
destination’s full potential.
Oxford Economics is one of the world’s leading providers of economic
analysis, forecasts and consulting advice. Founded in 1981 as a joint
venture with Oxford University’s business college, Oxford Economics
enjoys a reputation for high quality, quantitative analysis and
evidence -based advice. For this, its draws on its own staff of 30
highly -experienced professional economists; a dedicated data analysis
team; global modeling tools, and a range of partner institutions in
Europe, the US and in the United Nations Project Link. Oxford
Economics has offices in London, Oxford, Dubai, Philadelphia, and
Belfast.
SMTMD Management District Plan 30
September 29 , 2016
APPENDIX 4 – TIER BENEFITS
2018 -2027
August 10 September
16 , 2016
Prepared pursuant to the Property and Business Improvement District Law of
1994, Streets and Highways Code section 36600 et seq.
SANTA MONICA TOURISM
MARKETING DISTRICT
MANAGEMENT DISTRICT PLAN
CONTENTS
I. OVERVIEW ........................................................................................................................................ 2
II. ACCOMPLISHMENTS ..................................................................................................................... 4
III. BACKG ROUND ................................................................................................................................ 6
IV. BOUNDARY ....................................................................................................................................... 7
V. BUDGET AND SERVICES ............................................................................................................. 8
A. Annual Service Plan ............................................................................................................ 8
B. Annual Budget .................................................................................................................... 9
C. Californi a Constitutional Compliance .............................................................................. 10
D. Assessment ........................................................................................................................ 13
E. Penalties and Interest ........................................................................................................ 14
F. Time and Manner for Collecting Assessments ................................................................. 14
VI. GOVERNANCE ............................................................................................................................... 15
A. Owners’ Association ......................................................................................................... 15
B. Brown Act and California Public Records Act Compliance ............................................ 15
C. Annual Report ................................................................................................................... 15
D. Milestone Report ............................................................................................................... 15
APPENDIX 1 – LAW .................................................................................................................................... 17
APPENDIX 2 – ASSESSE D BUSINESSES ............................................................................................. 28
APPENDIX 3 – BENEFIT STUDY .......................................................................................................... 29
APPENDIX 4 – TIER BE NEFITS ............................................................................................................. 30
Prepared by
Civitas
(800)999 -7781
www.civitasadvisors.com
SMTMD Management District Plan 2
August 10 September 16 , 2016
I. OVERVIEW
Developed by Santa Monica Travel & Tourism (SMTT ), the Santa Monica Tourism Marketing District
(SMTMD ) is a n assessment district proposed to provide specific benefits to payors, by fund ing
marketing and sales promotion efforts for assessed businesses. The SMTMD was formed in 2012 for
a five (5) year term; lodging businesses now wish to renew it for an additiona l nine and one -half (9.5 )
years.
Location: The renewed SMTMD includes all lodging businesses located within the boundaries
of the City of Santa Monica with an average daily rate of $100 or more , as shown on
the map in section IV .
Services: The SMTMD is designed to provide specific benefits directly to payors by increasing
room night sales. Marketing and sales promotions will increase overnight tourism and
market payors as tourist, meeting and event destination s, thereby increasing room
night sales .
Budget: The total SMTMD annual budget for each full year of operation is anticipated to be
approximately $4,450 130 ,000. The initial “year ” of operati on will be a partial year
consisting of six months, for which the anticipated budget is $2,225 065 ,000 . This
budget is expected to fluctuate as room sales and the assessment rate do, as detailed in
Section V .
Cost: The assessment is a fixed amount per occupied room per night. The assessment is
based on the businesses’ average daily rate, based on the pre vious year’s performance.
Average daily rate figures shall be updated annually. Based on the benefit received,
assessments will not be collected on : stays of more th an thirty (30) consecutive days;
and stays paid by any Federal, State of California, or City of Santa Monica, official or
empl oyee when on official business provided that a n exempt certificate is executed at
the time of registration . Lodging businesses with an average daily rate less than $100
will not be included in the district or assessed. Assessment rates are:
Tier Average Daily
Rate
Assessment Per Occupied Room
Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 - $199.99 $3 .25 1.50
Assessment rates may be subject to an annual increase of no more than twenty -five
cents ($0.25) per year for Tier 1 and Tier 2 lodging businesses and no more than ten
cents ($0.10) per year for Tier 3 lodging businesses . The tab le below demonstrates the
maximum with the assumption that the rates will be increased by $0.25 the maximum
amounts for each category in each year of the SMTMD’s nine and one -half (9.5) year
term, as it is a required disclosure, it is not the anticipated co urse of action. The
maximum assessment rate for each category is:
Year $100 - $199.99 $200 - $299.99 $300 and Above
Formatted Table
SMTMD Management District Plan 3
August 10 September 16 , 2016
2018 * $3.25 1.50 $4.25 $5.25
2 01 8 -19 $3.50 1.60 $4.50 $5.50
20 19 -20 $3.75 1.70 $4.75 $5.75
20 20 -21 $4.00 1.80 $5.00 $6.00
20 21 -22 $4.25 1.90 $5.25 $6.25
20 22 -23 $4.50 2.00 $5.50 $6.50
20 23 -24 $4.75 2.10 $5.75 $6.75
20 24 -25 $5.00 2.20 $6.00 $7.00
20 25 -26 $5.25 2.30 $6.25 $7.25
20 26 -27 $5.50 2.40 $6.50 $7.50
*The initial “year” is January 1, 2018 through June 30, 2018
Collection: T he 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 SMTMD . T he City shall take all reasonable efforts to collect the
assessments from each lodging business.
Duration: The renewed SMTMD will have a nine and one -half (9.5 ) year life , beginning January
1, 2018 through June 30 , 2027 . Once per year , beginning on the anniversary of district
renewal , there is a 30 -day period in which owners paying more than fifty percent (50%)
of the assessment may protest and initiate a City Council hearing on district
disestablishment .
Management: Santa Monica Trav el & Tourism will continue to serve as the SMTMD ’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 .
SMTMD Management District Plan 4
August 10 September 16 , 2016
II. ACCOM P LISHMENTS
The SMTMD is being renewed for the following reasons:
1. The SMTMD has funded excellent marketing programs and strategies
In the first five (5) year term of the SMTMD, the District has funded:
C reation of 5 -year strategic plan for the destination with inpu t provided by the TMD Hotel
Committee;
Focus Groups conducted in seven (7) domestic and international target markets to assess
perceptions of the destination brand;
Integrated advertising campaigns targeted to domestic target markets to drive travel during
Santa Monica’s soft season (paid search, behavioral retargeting, display, paid social,
eNewsletter sponsorships).
Entirely redesigned SantaMonica.com, including new white labeled booking site to drive
bookings directly to assessed lodging businesses’ webs ites. New website recognized with
industry design awards for structure, concept and functionality;
Redesigned logo, brand style guide, destination photography and video; and
New and improved Official Visitor Guide and Map with award -winning publishing partner.
2. The SMTMD has funded enhanced business development program s for key
international target markets
United Kingdom, Australia and Brazil:
o Full time representation in all three markets;
o Enhanced public relations support;
o B2B and B2C integrated campaigns with performance metrics and sales analysis;
o Brand enhancing partnerships with travel trade clientele (Visit California and Brand
USA);
o Sales and media missions including key hotel partners for targeted markets;
o Tradeshow participation; and
o Ongoi ng trade relationship development and trainings.
France and Germany:
o Part -time representation;
o B2B campaigns with sales and social media performance metrics;
o Tradeshow participation; and
o Ongoing trade relationship development and trainings.
3. The SMTMD h as funded initiatives to increase the meetings and incentives market
Santa Monica Travel and Tourism has executed over twenty meetings and incentive (MICE) programs
with the objective of increasing qualified meetings and incentives business to the destina tion.
Sales missions were conducted in New York, Toronto, Washington DC, Chicago,
Minneapolis, San Francisco, Orange County and San Diego;
SMTT exhibited at IMEX America, IncentiveWorks, and Incentive Travel Exchange,
conducting over 500 meetings with key buyers;
SMTT hosted nearly thirty (30) meeting planners to the destination to experience first hand
what their clients would be booking; and
SMTMD Management District Plan 5
August 10 September 16 , 2016
SMTT engaged a third party consultant to conduct focus groups with these meeting planners
to better understand future meetings and incentives business opportunity for the destination.
SMTMD Management District Plan 6
August 10 September 16 , 2016
III. BACKGROUND
TMD s are an evolution of the traditional Business Improvement District . The first TMD was formed
in Wes t Hollywood, California in 1989. Since then, ninety -five (95) California destinations have
followed suit. In recent years, other states have begun adopting the California model – Montana,
South Dakota, Washington, Colora do, Texas and Louisiana have adopted TMD 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 c ities,
like Portla nd, Oregon and Memphis, Tennessee have utilized their home rule powers to create TMD s
without a state law.
California’s TMD s collectively raise
over $200 million for local
destination marketing. With
competitors raising their budgets,
and increasing rivalry for visitor
dollars, it is important that Santa
Monica lodging businesses
continue to invest in stable,
lodging -specific marketing
programs.
TMD s ut ilize the efficiencies of
private sector operation in the
market -based promotion of
tourism districts. TMD s allow
lodging business owners to
organize their efforts to increase room night sales. Lodging business owners within the TMD pay an
assessment and those funds are used to provide services that increase room night sales.
In California, TMD s are formed pursuant to the Property and Business Improvement District Law of
1994. This law allo ws for the creation of a benefit assessment district to raise fu nds within a specific
geographic area. The key difference between TMD s and other benefit assessment districts is that funds raised are
returned to the private non -profit corporation governing the district.
There are many benefits to TMD s :
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 programs;
They are customized to fit the needs of payors in each destination ;
They allow for a wide rang e of services;
They are designed, created and governed by those who will pay the assessment; and
They provide a stable, long -term funding source for tourism promotion.
1 2 4 6 9 12
19 24 28 31
37
45
60 63
72
80
88
95
0
10
20
30
40
50
60
70
80
90
100
19
8
9
19
9
5
20
0
0
20
0
1
20
0
2
20
0
3
20
0
4
20
0
5
20
0
6
20
0
7
20
0
8
20
0
9
20
1
0
20
1
1
20
1
2
20
1
3
20
1
4
20
1
5
Number of Districts Operating Per Year
SMTMD Management District Plan 7
August 10 September 16 , 2016
IV. B OUNDARY
The SMTMD will include all lodging businesses, existing and in the future, available for public
occupancy within the boundaries of the City of Santa Monica with an average daily rate of $100 or
more . Lodging businesses whose average daily rate increases to $100 wi ll be assessed upon
determination of the increase; likewise, lodging businesses whose average daily rate decreases to below
$100 will not be assessed upon determination of the decrease. Average daily rate figures shall be
updated annually.
Lodging busine ss means: Any public or private hotel, inn, hostelry, tourist home or house motel,
rooming house or other lodging place within the City of Santa Monica offering lodging, wherein the
owner and operator thereof, for compensation, furnishes lodging to any tr ansient.
The boundary , as shown in the map below, currently includes thirty -two (3 2 ) lodging business es . A
complete listing of lodging businesses within the renewed SMTMD can be found in Appendix 2.
SMTMD Management District Plan 8
August 10 September 16 , 2016
V. 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 th e privileges. The privileges and services provided
with the SMTMD funds are sales and marketing programs available only to assessed businesses. The
assessment rate for each Tier will be commensurate with privileges and services provided to assessed
busin esses in each Tier as detailed in Appendix 4.
A service plan budget has been developed to deliver services that benefit the assessed businesses . A
detailed annual budget will be developed and approved by the SMTT TMD Committee and the SMTT
Board . The ta ble below illustrates the initial annual budget allocations for the first partial fiscal year .
The total SMTMD annual budget for each full year of operation is anticipated to be approximately
$4,450 130 ,000. The initial “year” of operating will be a partial year consisting of six months, for which
the anticipated budget is $2,225 065 ,000 .
Although actual revenues will fluctuate due to market conditions and assessment rate increases , the
proportional allocations of the budget shall remain the same. However, the City and the SMTT 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. 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 SMTMD , any and all assessment funds may be used for the
costs of defending the SMTMD .
Each budget category includes all costs related to providing that service, in accordance with Generally
Accepted Accounting Procedures (GAAP). For example, the sales and marketing budget includes the
cost of staff time dedicated to overseeing and implementing the sales and marketing program. Staff
time dedicated purely to administrative tasks is allocated to the administrative portion of the budget.
The costs of an individual staff member may be allocated to multiple bu dget categories, as appropriate
Sales & Marketing ,
$1,755,250 , 85%
Administration ,
$206,500 , 10%
Contingency/Reserve , $103,250 , 5%
FY 2018 Budget (January -June) -$2,065,000
SMTMD Management District Plan 9
August 10 September 16 , 2016
in accordance with GAAP. The staffing levels necessary to provide the services below will be
determined by SMTT on an as -needed basis. Staff costs will be allocated based on work performed.
Sales and Marketing
A sales and marketing program will promote assessed businesses as tourist , meeting , and event
destination s . The sales and marketing program will have a central theme of promoting Santa Monica
as a desirable place for overnight visits. The program will have the goal of increasing overnight
visitation and room night sales at assessed businesses, and may include the following activities:
Internet marketing efforts to increase awareness and optimize internet presence to drive
overnight visitation and room sales to assessed businesses ;
Print ads in magazines and newspapers , television ads, and radio ads targeted at potential
visitors to drive overnight visitation and room sales to assessed businesses ;
Attendance of t rade shows to promote assessed businesses ;
Sales blitzes for assessed businesses ;
Familiarization tours of assessed businesses ;
Research and analytics to promote assessed businesses;
Translation services designed to drive overnight visitation and room sa les to assessed
busineses businesses ;
Staff to implement and support expanded marketing and promotion efforts to promote
assessed businesses;
External public relations firms to promote assessed businesses;
Preparation and production of collateral promotiona l materials such as brochures, flyers and
maps featuring assessed businesses ;
Attendance of professional industry conferences and affiliation events to promote assessed
businesses ;
Lead generation activities designed to attract tourists and group events to assessed businesses ;
Director of Sales and General Manager meetings to plan and coordinate tourism promotion
efforts for assessed businesses ; and
Development and maintenance of a website designed to promote assessed businesses.
Administration and Ope rations
The administration and operations portion of the budget shall be utilized for administrative staffing
costs, office costs, and othe r general administrative costs such as insurance, legal, and accounting fees.
Contingency/Re serve
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 th e Owners’ Association. 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 SMTT TMD Committee and the SMTT Board of Directors.
The reserve fund may be used for the costs of renewing the District.
B. Annual Budget
The total nine and one -half (9.5 ) year improvement and service plan budget is projected at
approximately $4,450 130 ,000 annually, or $63,069,404 57,530,913 through 2027 if the maximum
assessment rate increases are adopted . Fiscal year 2018 covers the six month period from January to
June 2018, resulting in a lower budget for the first six months of district operation. This budget is
SMTMD Management District Plan 10
August 10 September 16 , 2016
expected to fluctuate as room sales change and if the assessment rate is increased. The initial
assessment rate is:
Tier Average Daily Rate Assessment Per Occupied Room Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 - $199.99 $3.25 1.50
The SMTT may increase the assessment rate by a maximum of $0.25 per category per year for Tier 1
and Tier 2 lodging businesses and no more than ten cent ($0.10) per year for Tier 3 lodging businesses .
The assessment rate might not increase starting in fis cal year 20 18 -19, the increases may be
implemented in later years at the discretion of the Owners’ Association. The table below demonstrates
the maximum with the assumption that the rates will be increased by $0.25 the maximum amounts for
each category in each year of the SMTMD’s nine and one -half (9.5 ) year term, as it is a required
disclosure, it is not the anticipated course of action. Additionally, a three percent (3%) annual increase
in the total budget is shown, to account for estimated increased roo m night sales as a result of SMTMD
efforts. This three percent (3%) annual increase is a conservative estimate based on the effects of
similarly sized TMD budgets. If the maximum annual assessment increases are adopted by the SMTT
Board, the estimated an nual budget will increase as shown in the table below.
Estimated Annual Budget If Maximum Assessment Rates Are Adopted
2018 -2027
FY Sales &
Marketing Administration Contingency/Reserve Total
2018* $1,755,250 $206,500 $103,250 $2,065,000
2018 -19 $3,813,041 $448,593 $224,297 $4,485,931
2019 -20 $4,130,576 $485,950 $242,975 $4,859,501
2020 -21 $4,463,730 $525,145 $262,572 $5,251,447
2021 -22 $4,813,157 $566,254 $283,127 $5,662,537
2022 -23 $5,179,531 $609,357 $304,678 $6,093,566
2023 -24 $5,563,556 $654,536 $327,268 $6,545,360
2024 -25 $5,965,962 $701,878 $350,939 $7,018,778
2025 -26 $6,387,504 $751,471 $375,736 $7,514,710
2026 -27 $6,828,969 $803,408 $401,704 $8,034,082
Total $48,901,276 $5,753,091 $2,876,546 $57,530,913
*Fiscal year 2018 only covers a 6 month period (January – June). The estimate for the first year of operation of the
district is $4,450 130 ,000 which translates to approximately $370,833.33 344,166.67 per month. The subsequent
years in the table above use the $4,450 130 ,000 figure as a base number for all calculations.
C. California Constitutional Compliance
The SMTMD assessment is not a property -based assessment subject to the requirements of
Proposition 218. The Court has found, “Proposition 218 limited the term ‘assessments’ to levies on
real property.”1 Rather, the SMTMD 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 SMTMD , 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 Jarvis v. the City of San Diego 72 Cal App. 4 th 230
SMTMD Management District Plan 11
August 10 September 16 , 2016
1. Specific Benefit
Proposition 26 requires that assessment funds be expe nded on, “a specific benefi t 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 .”2 The services in this Plan are d esigned to provide targeted benefits directly to assessed
lodging businesses , and are intended only to provide benefits and services directly to those businesses
paying the assessment . These services are tailored not to serve the general public , businesse s in
general, or parcels of land , but rather to serve the specific lodging businesses within the District . T he
activities described in this Plan are specifically targeted to increase room night sales for assessed
lodging businesses within the boundaries of the District, and are narrowly tailored. SMTMD 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 SMTMD
programs, or to directly generate sales for non -assessed businesses. The activities paid for from
assessment revenues are business services constituting and providing specific benefit s to the assessed
businesses.
The assessment imposed by this D istrict 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 sale s for assessed
lodging businesses will be provided only to lodging businesses paying the district assessment, with
marketing and sales programs promoting lodging businesses paying the district assessment. The
marketing and sales programs will be designed t o increase room night sales at each assessed lodging
businesses. Because they are necessary to provide the marketing and sales programs that specifically
benefit the assessed lodging businesses, the administration and contingency services also provide the
specific benefit of increased room night sales to the assessed lodging businesses.
Although the District, in providing specific benefits to payors, may produce incidental benefits to
non -paying businesses, the incidental benefit does not preclude the ser vices 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 pa yor as a consequence of providing the specific benefit to the payor.”3
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 .”4 The legislature has
recognized that marketing and promotions services like those to be provided by the SMTMD are
government services wi thin the meaning of Proposition 26 5 . Destination marketing services are
frequently funded and provided by local governments. In the case of the SMTMD, the district is
formed and services are overseen by the Santa Monica City Council. Further, the legisl ature has
determined that “a specific government service is not excluded from classification as a ‘specific
2 Cal. Const. art XIII C § 1(e)(1)
3 Government Code § 53758(a)
4 Cal. Const. art XIII C § 1(e)(2)
5 Government Code § 53758(b)
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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 payor.”6
3. Reasonable Cost
District 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 SMTT , and reports submitted on an annual basis to the C ity . Only assessed
lodging businesses will be featured in marketing materials, receive sales l eads generated from district -
funded activities, be featured in advertising campaigns, and benefit from other district -funded services.
Non -assessed lodging businesses will not receive these, nor any other, district -funded services and
benefits .
The Dis trict -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 -District funds. SMTMD funds shall only be
spent to benefit the assessed businesses, and shall not be spent on that portion of any program which
directly generates inc idental room nights for non -assessed businesses.
4. Benefit to NonPayors
The specific benefits provided by the SM TMD will only be directly provided to the assessed
businesses; they will not be directly provided to non -assessed businesses. Possible indirect benefit
does not preclude the SM TMD services from being considered a specific benefit. The legislature has
dire ctly indicated, in the context of tourism marketing districts, that services are not precluded from
classification as a specific benefit merely because an indirect benefit to a nonpayor occurs as a
consequence of providing the service and without cost to t he payor.7
Although the legislature does not require the cost of any incidental benefit to non -payors be separated
from the assessment, out of an abundance of caution a study was conducte d on benefit generated by
the SM TMD programs. The study is attache d as Appendix 3. The study found that 6.6% of marketing
programs generate incidental room night sales at non -assessed lodging businesses. Although it is not
required, the portion of programs that generate this benefit will be paid for with non -assessment
funds. Assessment funds will only fund that portion of the programs (93.4%) which represents a
specific benefit to the assessed businesses. For example, if a program costs $100,000 total, the
SM TMD will fund $93,400 and the remaining $6,600 will be sourced from non -assessment funds.
The amount of the assessment is no more than necessary to cover the reasonable costs of the proposed
activities, and the manner in which the costs are allocated to a business owner bear a fair share or
reasonable relat ionship to the businesses’ benefits received from the proposed activities. The benefit
study in Appendix 3 found that the benefits provided by the SM TMD do not exceed the reasonable
cost.
The programs provided with District funding receive additional non -assessment funding in the form
of grants, corporate sponsorships, event income, transient occupancy tax, and other funds. These
funding sources shall be equal to or exceed the amount of benefit conferred to non -payors annually
by the District’s services. These non -assessment funds will be used to pay for the benefit to non -
6 Government Code § 53758(b)
7 AB 483 Ting (2014)
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payors provided by the proposed services, ensuring that assessments will only be used to provide
benefits to assessed businesses .
D. Assessment
The assessment is a fixed amount per occu pied room per night. The assessment is based on the
businesses’ average daily rate, based on the previous year’s performance. Average daily rate figures
shall be updated annually. Based on the benefit received, assessments will not be collected on: stay s
of more than thirty (30) consecutive days; and stays paid by any Federal, State of California, or City of
Santa Monica, official or employee when on official business provided that a n exempt certificate is
executed at the time of registration . Lodging businesses with an average daily rate less than $100 will
not be included in the district or assessed. Assessment rates are:
Tier Average Daily Rate Assessment Per Occupied Room Per Night
1 $300 and above $5.25
2 $200 - $299.99 $4.25
3 $100 -$199.99 $3.25 1.50
Assessment rates may be subject to an annual increase of no more than twenty -five cents ($0.25) per
year for Tier 1 and Tier 2 lodging businesses and no more than ten cent ($0.10) per year for Tier 3
lodging businesses . The table below demonstrates the maximum with the assumption that the rates
will be increased by $0.25 the maximum amount for each category in each year of the SMTMD’s nine
and one -half (9.5) year term, as it is a required disclosure, it is not the anticip ated course of action.
The maximum assessment rate for each category is:
FY $100 - $199.99 $200 - $299.99 $300 and Above
2018 * $3.25 1.50 $4.25 $5.25
20 18 -19 $3.50 1.60 $4.50 $5.50
20 19 -20 $3.75 1.70 $4.75 $5.75
20 20 -21 $4.00 1.80 $5.00 $6.00
20 21 -22 $4.25 1.90 $5.25 $6.25
20 22 -23 $4.50 2.00 $5.50 $6.50
20 23 -24 $4.75 2.10 $5.75 $6.75
20 24 -25 $5.00 2.20 $6.00 $7.00
20 25 -26 $5.25 2.30 $6.25 $7.25
20 26 -27 $5.50 2.40 $6.50 $7.50
*Fiscal year 2018 only covers a 6 month period (January – June).
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 b e 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. The assessment shall be disclosed as the “TMD 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 purposes,
including calculation of transient occupancy taxes.
Bonds shall not be issued.
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E. Penalties and Interest
If any business shall fail or refuse to remit to the City the assessment due on or before the last day of
the month in which the assessment becomes due, there shall be added to the assessment a penalty of
ten percent (10%) of the amount of the assessment. If the assessment remains delinquent and
unpaid thereafter for a period of thirty (30) days, there shall be an additional penalty of ten percent
(10%).
F. Time and Manner for Collecting Assessments
The SMTM D assessment will be implemented beginning January 1, 2018 and will continue for nine
and one -half (9.5 ) years through June 30 , 2027 . The City will be responsible for collecting the
assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging
with an average daily rate of $100 or more . T he City shall take all reasonable efforts to collect the
assessments from each lodging business. The City shall forward the assess ments collected to the
Owners’ Association .
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August 10 September 16 , 2016
VI. 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 identify the body that shall implement the p ropos ed program,
which shall be the O wners’ A ssociation of the SMTMD as defined in Streets and Highways Code
§366612 . The City Council has determined that Santa Monica Travel & Tourism will serve as the
Owners’ Association for the SMTMD .
The SMTT standing advisory committee, known as the “TMD Hotel Committee” shall continue to
be responsible for making recommendations to the SMTT Board regarding SMTMD funds and
programs. The TMD Hotel Committee shall have between four (4) and nine (9) members , of which
at least four (4) will be representatives of assessed lodging businesses.
Annually, SMTT shall hold a joint SMTT board and TMD Hotel Committee meeting which will be
open to the public. The purpose of the annual meeting will be mutual approva l of the budget and
programs for SMTMD funds for the upcoming fiscal year.
B. Brown Act and California Public Records Act Compliance
An Owners’ A ssociation is a private entity and may not be considered a public entity for any purpose,
nor may its board memb ers or staff be considered to be public officials for any purpose. T he Owner s ’
A ssociation 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 accountability. The Owners’ Association acts as a legislative body under the Ralph M. Brown
Act (Government Code §54950 et seq.). Thus, meetings of the SMTT board and certain committees
must be held in compliance with the publi c notice and other requirements of the Brown Act. The
Owner s ’ 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
SMTT 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 improvemen ts and activities to be provided for that fiscal year.
An estimate of the cost of providing the improvements and the activities for that fiscal year.
The method and basis of levying the assessment in sufficient detail to allow each business
owner to estima te 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.
D. Milestone Report
SMTT shall prepare a five -year Milestone R eport, which will be due in May 2022 prior to the City’s
approval of the annual report for Fiscal Year 2022 -2023 . The Milestone R eport shall be submitted to
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August 10 September 16 , 2016
the City and all assessed businesses. It shall include all information required in the annual report, as
well as historical program and performance data, including key performance indicators for lodging
businesses such as avera ge daily rate, revenue per available room, and occupancy rates. The Milestone
Report may serve as the annual report for Fiscal Year 2022 -2023. If lodging businesses are not
satisfied with the results of the Milestone Report, they may petition the City to disestablish the District
pursuant to Streets and Highways Code section 36650.
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APPENDIX 1 – LAW
STREETS AND HIGHWAYS CODE
Division 18. Parking
Part 7. Property and Business Improvement District Law of 1994
Cal Sts & Hy Code Div. 18, Pt. 7 Note (2015)
*** This document is current through the 2015 Supplement ***
(All 2014 legislation)
36600. Citation of part
This part shall be known and may be cited as the “Pro perty and Business Improvement District Law of 1994.”
36601. Legislative findings and declarations
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 t o 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 conf erring special benefit upon the real property or businesses in a
business district are not taxes for the general benefit of a city, even if property or persons not assessed receive
incidental or collateral effects that benefit them.
(e) Property and busine ss 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 re tention.
(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 restricti ons on the formation of, and activities,
expenditures, and assessments by property -based districts. Article XIII 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
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August 10 September 16 , 2016
benefits to exist a s a separate and distinct category from general benefits, the 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 benefi t 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 pr operty -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 guida nce 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.
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, Limitat ion 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 conf licts 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.
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 touri sm 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 normally prov ided by the municipality.
(f) Other services provided for the purpose of conferring special benefit upon assessed businesses and real property
located in the district.
366 06.5. “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
busine ss improvement district.
36607. “Business”
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“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 Co de, 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 pr operty -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.
(j) Facilities or equipment, or both, to enhance s ecurity of persons and property within the area.
(k) Ramps, sidewalks, plazas, and pedestrian malls.
(l) Rehabilitation or removal of existing structures.
36611. “Manageme nt 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 nonpro fit 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
wi th 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.
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36614. “Property”
“Property” means real property situated within a district.
36614.5. “Property and business improvement district”; “District”
“Propert y 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”
“Pro perty -based district” means any district in which a city levies a property -based assessment.
36615. “Property owner”; “Business owner”; “Owner”
“Property owner” means an y 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 require s 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 su fficient.
36615.5. “Special benefit”
“Special benefit” means, for purposes of a property -based district, a particular and distinct benefit over and above
general benef its 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 c ollateral 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.
36617. Alternative 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 activi ties 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 th is part.
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
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A county may not form a district within the territorial jurisdiction of a city without the consent of the city council of
tha t city. A city may not form a district within the unincorporated territory of a county without the consent of the
board 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 pe tition, 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 i ts 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 d etermining 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 includ e 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) Information specifying where the complete management district plan can be obtained.
(3) Information specifyi ng 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 activitie s, 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
di strict, 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 improvem ents, 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
business es, 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 pursuan t 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 pro hibit 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 pu rsuant 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, maint enance, 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 subsequen t years shall satisfy the requirements of
this subdivision.
(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 busines ses, this amount may be estimated
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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 stat ement 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 eac h 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 assessmen ts.
(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 numbe rs 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 publ ic 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 distri ct shall separate the general benefits, if any, from the special
benefits 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 f rom 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 improveme nts, 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.
(l) 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 pr operty -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 inc orporated 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 pr otest 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 Governm ent 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 t he 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 descri ption 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 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.
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(c) If a city coun cil 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 remain ing 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 im provement 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 a resolution 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
prop osed 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 acti vities 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 th e
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 th e 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 h earing
concerning establishment of 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 asses sments, 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.
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 coun cil 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 speci fied in Section 36625.
36627. Notice and assessment diagram
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Following adoption of the resolution establishing district assessments on properties pursuant to Section 36625 or
Section 36626, the clerk of the city 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 up on 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 ca tegories 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 catego ry 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 co mbination 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 prop erty -
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, mod ification, 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 busin ess improvement district.
36630. Expiration of district; Creation of new district
If a property and business improvement district expires due to the time limit set pursuan t to subdivision (h) of
Section 36622, a new management district plan may be created and the district may be renewed pursuant to this part.
36631. Time and manner of collect ion of assessment; 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
charge d interest and penalties.
36632. Assessments to be based on estimated benefit; Classification of real property and businesses;
Exclusion of residential and agricultural prop erty
(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 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 propert y 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 t hat 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.
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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, requ est 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 o f plan by resolution after public hearing; Adoption of resolution of intention;
Modification of improvements and activities by adoption of resolution after public hearing
(a) Upon the written request of the owners’ association, the city council may modif y 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
de termining 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 propo sed 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 wi th the provisions of Section 36627.
36640. Bonds authorized; Procedure; Restriction on reduction or termination of assessments
(a) The city council may, by resolution, det ermine 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 sect ion provides for the issuance of bonds,
under the Improvement Bond Act of 1915 (Division 10 (commencing with Section 8500)) 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 1 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 assessment s 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.
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(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 t he debt.
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 operati on 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 i n 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 th e report applies, and, with respect to that fiscal year, shall contain all of the
following information:
(1) Any proposed changes in the boundaries of the property and business improvement district or in any
benefit zones or classification of property or b usinesses 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 l evying 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 su rplus 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 assess ments 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 and activitites
The management district plan may, but is not required to, state that an owners’ association will provide the
improvem ents, 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.
36660. Renewal of district; Transfer or refund of remaining revenues; District term limit
(a) Any district previously established whose term has expired, or will expire, may be renewed by followin g 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 d istrict. 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 p arcels 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 dist rict 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.
36670. Circumstances permitting disestablishment of district; Procedure
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(a) Any district established or extended pursuant to the provisions of this part, where there is no indebtedness,
outstand ing 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, malfeasanc e, 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 area who pay 50 percent or more of t he 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 ass essment 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 resolutio n of intention.
36671. Refund of remaining revenues upon disestablishment or expiration without renewal of district;
Calculation of refund; Use of outstanding revenue collec ted after disestab -lishment 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 acqu ired 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 d istrict plan.
(b) If the disestablishment occurs before an assessment is levied for the fiscal year, the method 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 refu nd.
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APPENDIX 2 – ASSESSE D BUSINESSES
BUSINESS NAME BUSINESS MAILING ADDRESS
Bayside Hotel 2001 Ocean Avenue, Santa Monica, CA 90405
Best Western Plus Gateway Hotel
Santa Monica
1920 Santa Monica Boulevard, Santa Monica, CA
90404
Cal Mar Hotel Suites 220 California Avenue, Santa Monica, CA 90403
Comfort Inn Santa Monica -West Los
Angeles
2815 Santa Monica Boulevard, Santa Monica, CA
90404
Days Inn Santa Monica/Los Angeles 3007 Santa Monica Boulevard, Santa Monica, CA
90404
DoubleTree Suites by Hilton Hotel
Santa Monica
1707 Fourth Street, Santa Monica, CA 90401
Fairmont Miramar Hotel & Bungalows 101 Wilshire Boulevard, Santa Monica, CA 90401
Hotel Carmel 201 Broadway, Santa Monica, CA 90401
Hotel Cassa Del Mar 1910 Ocean Way, Santa Monica, CA 90405
Hotel Shangri -La at the Ocean 1301 Ocean Avenue, Santa Monica, CA 90401
Huntley Santa Monica Beach 1111 Second Street, Santa Monica, CA 90403
JW Marriott Santa Monica Le Merigot 1740 Ocean Avenue, Santa Monica, CA 90401
Le Meridien Delfina San ta Monica 530 Pico Boulevard, Santa Monica, CA 90405
Loews Santa Monica Beach Hotel 1700 Ocean Avenue, Santa Monica, CA 90401
Ocean Lodge Hotel Corporation 1667 Ocean Avenue, Santa Monica, CA 90401
Ocean Park Inn 2452 Lincoln Boulevard, Santa Monica, CA 90405
Ocean View Hotel 1447 Ocean Avenue, Santa Monica, CA 90401
Oceana Beach Club Hotel 11766 Wilshire Boulevard, Los Angeles, CA 90025
Palihouse Santa Monica 1001 Third Street, Santa Monica, CA 90403
Rest Haven Motel 815 Grant Street, Santa Monica, CA 90405
Santa Monica Motel 2102 Lincoln Boulevard, Santa Monica, CA 90405
Santa Monica Pico Travelodge 3102 Pico Boulevard, Santa Monica, CA 90405
Sea Shore Motel 2637 Main Street, Santa Monica, CA 90405
Seaview Hotel 1760 Ocean Avenue, Santa Monica, CA 90401
Shore Hotel 1515 Ocean Avenue, Santa Monica, CA 90401
Shutters on the Beach Hotel One Pico Boulevard, Santa Monica, CA 90405
The Ambrose Hotel 1255 20 th Street, Santa Monica, CA 90404
The Cottage Santa Monica 2219 Ocean Avenue, Santa Monica, C A 90405
The Georgian Hotel 1415 Ocean Avenue, Santa Monica, CA 90401
The Hotel California 1670 Ocean Avenue, Santa Monica, CA 90401
Viceroy Santa Monica 1819 Ocean Avenue, Santa Monica, CA 90401
Wyndham Santa Monica – At The Pier 120 Colorado Avenue, Santa Monica, CA 90401
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APPENDIX 3 – BENEFIT STUDY
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APPENDIX 4 – TIER BENEFITS