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SR 06-25-2019 3C City Council Report City Council Meeting: June 25, 2019 Agenda Item: 3.C 1 of 4 To: Mayor and City Council From: Andy Agle, Director, Housing and Economic Development, Economic Development Division Subject: SMTT FY19-20 Work Plan and Budget Recommended Action Staff recommends that the City Council receive and approve the Santa Moni ca Tourism Marketing District Fiscal Year 2019-20 Annual Report. Summary The visitor industry has long been a cornerstone of Santa Monica’s economic diversity and vitality and a major contributor to the tax base that supports services to the entire community. Given the importance of branding and marketing in a competitive global marketplace, local hotels, in partnership with Santa Monica Travel and Tourism (SMTT), initiated efforts to establish the Santa Monica Tourism Marketing District (SMTMD) in 2012. Funding for the marketing programs and activities of the SMTMD are solely derived from assessments and revenues collected from hotels operating within the boundaries of the SMTMD. The attached 2019 -20 SMTMD Annual Report (Annual Report) summarizes the SMTMD’s proposed programs and activities for FY 2019-20, including the SMTMD budget, hotel report, and marketing plan. Staff recommends that Council review and approve the Annual Report in accordance with State laws governing tourism marketing districts. Discussion The SMTMD was formed pursuant to California law, which 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 pr omotion, increasing a city’s transient occupancy tax revenues, and remaining competitive by growing market share of visitors. Under the Streets and Highway Code Section 36650, 2 of 4 the SMTMD is required to prepare annual reports providing the following informat ion: • 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 contributions to be made from sources other than assessments levied pursuant to this part. In accordance with Section 36650, the SMTMD has submitted its FY 2019 -20 Annual Report (Attachment A) including work plan and budget for Council approval. The following overview summarizes the proposed expenditu res to be funded with SMTMD assessments in the upcoming fiscal year. SMTMD Reporting Year FY 2019-20 Revenues Estimated TMD Assessments $5,490,703 Bank Interest 1,400 Total Revenues* $5,492,103 Expenditures Cost of Programs $3,563,951 General and Administrative Services $ 582,000 Salaries and Benefits $1,071,617 Contingency Fund $ 274,535 Total Expenses $5,492,103 Estimated Carry-over from Previous Fiscal Year $ 151,515 Estimated In-Kind Contributions $ 335,000 3 of 4 * This does not include $2,765,996 in City funding included in the FY 2019-20 Proposed Budget for a services agreement with SMTT that the City provides SMTT annually to continue SMTT’s tourism and marketing programs, operate Visitors Centers, produce collateral materials, create brand awareness, and promote Santa Monica through print and social media. The SMTMD expenditures and services focus on enhancing Santa Monica as a brand, marketing and promoting Santa Monica as a tourism destination, increasing occup ancy during soft seasons, establishing partnerships within the tourism community and with private and government entities to position Santa Monica as a filming destination, and expanding a presence in emerging markets such as India and China. The key strategies and objectives are summarized in the Annual Report. In accordance with the adopted SMTMD Management District Plan, the proposed FY 2019-20 budget was approved by the Tourism Marketing District Committee on March 4, 2019 and the SMTT Board of Directors on March 13, 2019. Council may approve the annual report or may modify any particular section contained in the annual report and approve it as modified. As the assessment formulas in the SMTMD remain as approved in 2017, staff recommends Council ap proval of the attached FY 2019-20 SMTMD Annual Report. Past Council Actions Meeting Date Description 12/11/2012 Council adopted Resolution No. 10722 (CCS) establishing the Santa Monica Tourism Marketing District (SMTMD). 11/1/2016 Council adopted Resolution 11005 (CCS) extending the SMTMD by nine and one-half years beginning in January 1, 2018 through June 30, 2027. 12/12/17 Council approved the Annual Report for FY 2017-18 (Calendar Year 2018) representing the first report for the SMTMD renewal term. 6/26/18 Council approved the Annual Report for FY 2018-19 (Calendar Year 2019) representing the second report for the SMTMD renewal term. 4 of 4 Financial Impacts and Budget Actions There is no immediate financial impact or budget action necessary as a re sult of the recommended action. Prepared By: Nia Tang, Senior Development Analyst Approved Forwarded to Council Attachments: A. Attachment A - SMTMD 2019-20 Annual Report.