Memorandum
Date: February 7, 2023
To: The Honorable Lake County Board of Supervisors
From: Susan Parker, County Administrative Officer
Subject: PUBLIC HEARING - 9:10 AM - a) Consideration of Adoption of Resolution of Formation Declaring Results of Majority Protest Proceedings and Renewing the Lake County Tourism Improvement District; and b) Consideration of Adoption of 2024 - 2033 Lake County Tourism Improvement District Management Plan
Executive Summary:
On January 24, 2023, your Board held a public meeting to allow public testimony on the renewal of the Lake County Tourism Improvement District (LCTID) and levy of assessments. During this final public hearing, the Clerk to the Board of Supervisors will declare the results of the majority protest proceedings.
If written protests are received from the owners of businesses in the renewed LCTID which will pay more than fifty percent (50%) of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Board.
Petition Status: Petitions in favor of LCTID renewal were submitted by 44 lodging businesses, which represent 50.88% of the total LCTID assessment.
If the Board, following the public hearing, decides to establish the renewed LCTID, the Board shall adopt a resolution of formation. After which, your Board will adopt the 2024-2033 Lake County Tourism District Management Plan that the LCTID Board amended on December 7, 2022 with the two and one half percent (2.5%) assessment rate.
BACKGROUND
The LCTID is a benefit assessment district proposed to continue a revenue source to help fund marketing and sales promotion efforts for Lake County lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive additional room nights to assessed lodging businesses. The renewed LCTID includes all lodging businesses, existing and in the future, located within the boundaries of the cities of Lakeport and Clearlake (cities), and the unincorporated areas of Lake County (County).
Lodging business owners decided to pursue renewal of the LCTID in order to continue a revenue source devoted to marketing Lake County as a tourist, meeting and event destination. If renewed, the LCTID would generate approximately $386,000 on an annual basis for promotion of travel and tourism specific to Lake County.
Tourism Improvement Districts
Tourism Improvement Districts (TIDs) utilize the efficiencies of private sector operation in the market-based promotion of tourism. These special assessment districts allow lodging business owners to organize their efforts to increase tourism. Lodging business owners within the TID fund the TID, and those funds are used to provide services that are desired by and benefit the lodging businesses within the TID.
TID benefits:
Ø Funds cannot be diverted for other government programs;
Ø They are customized to fit the needs of each destination;
Ø They allow for a wide range of services; including: destination marketing, tourism promotion, and sales lead generation;
Ø They are designed, created and governed by those who will pay the assessment; and
Ø They provide a stable funding source for tourism promotion.
In California, TIDs are primarily formed pursuant to the Property and Business Improvement District Law of 1994 (94 Law). This law allows for the creation of a special benefit assessment districts to raise funds within a specific geographic area. The key difference between TIDs and other special benefit assessment districts is that funds raised are returned to the private non-profit corporation governing the TID.
MANAGEMENT DISTRICT PLAN
The initial Management District Plan dated September 8, 2022, included a proposed assessment rate of three percent (3%). However, during the petition drive lodging business owners indicated a greater level of support for an assessment rate of two and one-half of one percent (2.5%). The 94 law allows for the proposed assessment to be revised only by reducing, and only at the final hearing, so the attached Management District Plan dated December 7, 2022, has been revised to reduce the proposed assessment rate to two and one-half of one percent (2.5%).
The Management District Plan dated December 7, 2022 (Attachment 1) includes the proposed boundary of the LCTID, a service plan and budget and a proposed means of governance. The LCTID will include all lodging businesses, existing and in the future, located within the boundaries of the cities of Lakeport and Clearlake (cities), and the unincorporated areas of Lake County (County).
The annual assessment rate is two and one half percent (2.5%) of gross short-term room rental revenue. Based on the benefit received, assessments will not be collected on: stays of more than thirty (30) consecutive days; stays by any federal or state officer or employee when on official business; stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; and stays at a campsite in a unit of the state park system or any facility operated by a local government entity. During the ten (10) year term, the assessment rate may be increased annually by the LCTID Owners’ Association upon approval from the Board of Supervisors by a maximum of one half of one percent (0.5%) of gross room rental revenue per year. The total assessment rate may not exceed five percent (5%). The assessment rate may also be decreased, but shall not drop below the initial assessment rate of two and one half percent (2.5%). Any proposed assessment rate increase or decrease approved by the Owners' Association shall be included in the annual report, and shall not be effective until approved by the Board of Supervisors.
The LCTID will have a ten (10) year life, beginning January 1, 2024, or as soon as possible thereafter, and end ten (10) years from its start date. Once per year beginning on the anniversary of LCTID renewal there is a thirty (30) day period in which business owners paying fifty percent (50%) or more of the assessment may protest and begin proceedings to terminate the LCTID.
The County and cities will be responsible for collecting the assessment on a monthly or quarterly basis (including any delinquencies, penalties and interest) from each lodging business located in the boundaries of the LCTID. The County and cities shall take all reasonable efforts to collect the assessments from each lodging business. The County and cities shall be paid a fee equal to two percent (2%) of the amount of assessment collected to cover its costs of collection and administration.
LCTID renewal PROCESS
December 13, 2022 RESOLUTION OF INTENTION HEARING (COMPLETED)
Upon the submission of a written petition, signed by the business owners in the renewed LCTID who will pay more than fifty percent (50%) of the assessments proposed to be levied, the Board of Supervisors may initiate proceedings to renew a district by the adoption of a resolution expressing its intention to renew a district.
Petition Status: Petitions in favor of LCTID renewal were submitted by 44 lodging businesses, which represent 50.88% of the total LCTID assessment. This majority petition allows the Board to initiate proceedings for LCTID renewal at the December 13, 2022 meeting.
December 14, 2022 NOTICE (COMPLETED)
The 94 Law requires the County to mail written notice to the owners of all businesses proposed to be within the LCTID. Mailing the notice begins a mandatory forty-five (45) day period in which owners may protest LCTID renewal.
December 20, 2022 RESOLUTION REQUESTING CONSENT (COMPLETED)
Upon adoption of the Resolution of Intention, the Board of Supervisors must request consent from all jurisdictions to be included in the renewed LCTID. Consent must be received from the jurisdictions prior to the final public hearing for their jurisdiction to be included in the renewed LCTID.
January 2023 RESOLUTIONS GRANTING CONSENT (COMPLETED)
Upon adoption of the Resolution Granting Consent, the County can move forward with the LCTID renewal process, and shall include the cities of Lakeport and Clearlake in the LCTID.
January 24, 2023 PUBLIC MEETING (COMPLETED)
Allow public testimony on the renewal of the LCTID and levy of assessments. No Board action required.
February 7, 2023 FINAL PUBLIC HEARING
If written protests are received from the owners of businesses in the renewed LCTID which will pay more than fifty percent (50%) of the assessments proposed to be levied and protests are not withdrawn so as to reduce the protests to less than fifty percent (50%), no further proceedings to levy the proposed assessment against such businesses shall be taken for a period of one (1) year from the date of the finding of a majority protest by the Board.
If the Board, following the public hearing, decides to establish the renewed LCTID, the Board shall adopt a resolution of formation.
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Recommended Action: a) Adopt Resolution of Formation declaring results of majority protest proceedings and renewing the Lake County Tourism Improvement District and b) Adopt 2024 - 2033 Lake County Tourism Improvement District Management Plan.