SR 06-26-2018 3I
City Council
Report
City Council Meeting: June 26, 2018
Agenda Item: 3.I
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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 FY 2018-19 Budget and Work Plan
Recommended Action
Staff recommends that the City Council receive and approve the Santa Monica Tourism
Marketing District’s Fiscal Year 2018-19 Budget and Work Plan.
Executive Summary
Santa Monica has historically been a magnet for visitors drawn by our coastline location
and unique array of attractions. Funding for tourism marketing is provided primarily
through a share of the revenue derived from visitor taxes and a voluntary assessment
on local hotels. The assessment revenues from the Santa Monica Tourism Marketing
District (SMTMD) have been invested in expanding Santa Monica’s international brand
recognition and broadening target markets since its inception in 2013. The attached
Annual Report summarizes the SMTMD’s proposed programs and activities for Fiscal
Year 2018-19, including the SMTMD budget, hotel report, and marketing plan. Staff
recommends that Council receive and approve the Annual Report, in compliance with
State law governing tourism marketing districts.
Background
In California, Tourism Marketing Districts are formed pursuant to the Property and
Business Improvement District Law of 1994. The law allows for the creation of special
benefit assessment districts to raise funds within a specific geographic area to achieve
a number of objectives including stabilizing funding for tourism promotion, increasing a
city’s transient occupancy tax revenues, and remaining competitive by growing market
share of visitors.
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The Santa Monica Tourism Marketing District (SMTMD) was initiated by Santa Monica
hotels and Santa Monica Travel and Tourism (SMTT). In 2012, Council adopted the
creation of the SMTMD, providing for an initial five-year term that commenced
January 1, 2013 through December 31, 2017. In 2016, Council approved the renewal of
the SMTMD, providing an extension of the tourism marketing district for nine-and-one-
half years with a term beginning January 1, 2018 and ending June 30, 2027.
Under California law, Streets and Highways Code Section 36650, the SMTMD is
required to prepare Annual Reports providing the following information:
Any proposed changes to the boundaries of the tourism marketing district or to
any benefit zones or classification within the district.
The improvements, maintenance, and activities to be provided for that fiscal year.
An estimate of the cost of providing the improvements, maintenance, and
activities for that fiscal year.
The method and basis of levying the assessment in sufficient detail to allow each
real property or business owner, as appropriate, to estimate the amount of the
assessment to be levied against his or her property or business for that fiscal
year.
The estimated amount of any surplus or deficit in 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.
Discussion
In accordance with California law, the SMTMD has submitted the 2018-19 SMTMD
Annual Report (Attachment A) for Council approval. The report includes a proposed
work plan and budget. The goals of the SMTMD are to develop Santa Monica as a
brand, promote Santa Monica as a tourism destination, and increase lodging stays
through marketing and promotional efforts. Key achievements that were a direct result
of the SMTMD assessment funding are detailed in the Annual Report. Most notably, the
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SMTMD funds were invested in enhancing 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 has shown an increase in international visitors, who are more likely to
stay longer, spend more money locally, and use alternative forms of transportation once
they arrive.
The operating budget for the SMTMD fluctuates with market conditions such as the
number of room night sales and is adjusted annually to reflect expenditure plans. The
following overview summarizes the proposed SMTMD budget for FY 2018-19:
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SMTMD Reporting Year FY 2018-19
Revenues
Estimated TMD Assessments $5,085,700
Bank Interest 1,400
Total Revenues* $5,087,100
Expenditures
Cost of Programs $3,315,478
Travel Industry Sales 1,448,337
Marketing 1,476,780
Visitor Services 65,361
Client Services/MICE 325,000
General and Administrative Services $ 498,000
Salaries and Benefits $1,019,337
Contingency Fund $ 254,285
Total Expenses $5,087,100
Estimated Carry-over from Previous Fiscal Year $ 524
Estimated In-Kind Contributions $ 125,000
* This does not include $2,765,996 funding that the City will provide SMTT for FY 2018-19. The funding is provided
under a services agreement authorized by Council on November 1, 2016 to continue SMTT’s tourism and marketing
programs, operate Visitor Centers, produce collateral materials, create brand awareness, and promote Santa Monica
through print and social media outlets.
The FY 2018-19 Annual Report was presented and approved by the SMTT Board of
Directors on March 14, 2018 and by the Tourism Marketing District Committee on
March 26, 2018, in accordance with the adopted SMTMD Management District Plan.
As stipulated by State Law, Council may approve the report as filed by the SMTMD or
may modify any particular section contained in the annual report and approve
it as modified. Because the proposed changes in the assessment formulas in the
Annual Report were previously approved in the formal renewal of the SMTMD, staff
recommends approval of the attached Annual Report as prepared by the SMTMD.
Financial Impacts and Budget Actions
The Santa Monica Tourism Marketing District is self-supporting and there is no budget
or fiscal impact resulting from the approval of the SMTMD’s Annual Report for
FY 2018-19.
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Prepared By: Nia Tang, Senior Development Analyst
Approved
Forwarded to Council
Attachments:
A. 2018-19 SMTMD Annual Report