SR 12-06-2016 3L
Ci ty Council
Report
City Council Meeting : December 6, 2016
Agenda Item: 3.L
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To: Mayor and City Council
From: Andy Agle, Director , Housing and Economic Development, Economic
Development Division
Subject: Santa Monica Tourism Marketing District Annual Report Fiscal Year (FY)
2016 -17
Recommended Action
Staff recommends that the Ci ty Council approve the Santa Monica Tourism Marketing
District’s Annual Report for F Y 2016 -17 .
Executive Summary
Since its inception in 2013, the assessment revenues from the Santa Monica Tourism
Marketing District (SMTMD) have been invested in expand ing international brand
recognition and broaden ing target markets in order to enhance local benefits from
tourism while reducing external impacts. The attached Annual Report summarize s the
SMTMD’s proposed programs and activities for calendar year 2017 , inclu ding an
approved budget, hotel report , and m arketing p lan. Staff recommends that Council
approve the Annual Report , in compliance with state law governing tourism marketing
districts.
Background
In California, Tourism Marketing Districts are formed purs uant to the Property and
Business Improvement District Law of 1994. The law allows for the creation of special
benefit assessment districts whereby businesses assess themselves in order to raise
funds within a specific geographic area to achieve a variety of objectives including
stabilizing funding for tourism promotion, increasing the City’s transient occupancy tax
revenues, and remaining competitive by growing market share of visitors.
The Santa Monica Tourism Marketing District (SMTMD) was adopted by Council
in 2012. The SMTMD was initiated by Santa Monica hotels and Santa Monica Travel
and Tourism (SMTT), formerly known as the Santa Monica Convention and Visitors
Bureau. The goal s of the SMTMD are to develop Santa Monica as a brand, promote
Santa Moni ca as a tourism destination , and increase lodging stays through marketing
and promotion al efforts. Key achievements that were a direct result of SMTMD
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assessment funding are detailed in the Annual Report. Most notably, the SMTMD funds
were invested in enha ncing business development programs to broaden international
target markets of the United Kingdom, Australia, Brazil, France, and Germany , as well
as markets in North America. The additional investment in public relations media
expanded international reco gnition of Santa Monica as a destination. Visitor research
has shown that international visitors are more likely to stay longer, spend more money
locally, and use active forms of transportation once they arrive .
Implementation of the SMTMD assessments commenced on January 1, 2013 and
continues through December 31, 2017. Unlike other business assessment districts
within Santa Monica , an a nnual r eport for the SMTMD is required to be approved
by Council. The Annual Report for 2016 -17 represents the final report for the initial five -
year term of the SMTMD (Attachment A ). In November 2016, Council approved a
renewal of the SMTMD through June 2027.
Discussion
Streets and Highways Code Section 36650 specifies that Annual Reports provide the
following in formation :
The improvements, maintenance, and activities to be provided for th e coming
year .
An estimate of the cost of providing the improvements, maintenance, and
activities for the year .
The estimated amount of any surplus or deficit of revenues to be carried over
from a previous year.
The estimated amount of any contributions to be made from sources other than
assessments levied pursuant to this part.
The method and basis of levying the assessment in sufficient detail to allow each
real property o r business owner, as appropriate, to estimate the amount of the
assessment to be levied against his or her property or business for th e year.
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Any proposed changes to the boundaries of the tourism marketing district or to
any benefit zones or classificatio n within the district.
T he operating budget for the SMTMD fluctuates with market conditions and room night
sales and is adjusted annually to reflect estimated revenues and expenditures.
SMTMD assessments are based on estimates that take into account the previous year’s
assessment collections, hotel occupancy projections, and other factors in the
hotel industry. Specifically, SMTT uses the aggregate average annual available and
occupied rooms, resulting occupancy levels, average daily room rate, and REVP AR
(revenue per available room) to structure the estimated assessment revenues for each
reporting year. The following summarize s the proposed annual budget :
SMTMD Reporting Year FY 2016 -17
Revenues
Estimated TMD Assessments 4,432,320
Programs
Tra vel Industry Sales 1,276,646
Marketing 1,323,000
Visitor Services 66,721
Client Services/MICE 316,123
Total Cost of Programs 2,982,490
General and Administrative Services 314,662
Salaries a nd Benefits 914,796
Contingency Fund 220,371
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Total Expenses 4,432,320
Estimated Carry -Over from Previous
Fiscal Year 362,891
Estimated In -Kind Contributions 145,000
The FY 2016 -17 Annual Report was presented and approved by the TMD Committee
on November 8, 2016 and the Board of Santa Monica Travel and Tourism on
November 9, 2016 , in accordance with the adopted SMTMD Management District Plan.
As stipulated by State Law , the City Council may approve a report as filed by the
SMTMD or may modify any particular section contained in an annual report and
approve it as modified. However, Council may not approve a change in the basis and
method of levying assessments that would impair an authorized or executed contract to
be paid from the revenues der ived from the levy of assessments. Since there were no
proposed changes in the boundaries or assessment formulas in the FY 2016 -17
reporting year , staff recommends approval as prepared by the SMTMD.
Financial Impacts & Budget Actions
There is no imme diate financial impact or budget action necessary as a result of the
recommended action.
Prepared By: Nia Tang, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. A. SMTMD FY 2016 -17 Annual Report