HomeMy WebLinkAbout2020-09-28 City Council Agendas (12)
City of Palo Alto (ID # 11608)
City Council Staff Report
Report Type: Action Items Meeting Date: 9/28/2020
City of Palo Alto Page 1
Summary Title: Report & Direction re San Mateo Co TBID
Title: Status Report and Direction Regarding Continued Participation in the
San Mateo County Tourism Business Improvement District (TBID) or Adoption
of a Resolution to Withdraw Participation
From: City Manager
Lead Department: City Manager
Recommended Motion
Staff recommends that Council consider the following motions:
A. Adopt the Resolution (Attachment C) and direct staff to transmit the Resolution to
the City of Burlingame with a request to take all steps necessary to implement withdrawal
from the San Mateo County Tourism Business Improvement District effective January
2021. Authorize the City Manager to negotiate and pay necessary and reasonable
administrative costs of the City of Burlingame to effectuate the request;
Or,
B. Direct staff to transmit to the City of Burlingame a letter confirming that the City of Palo
Alto intends to maintain its participation in the San Mateo County Tourism
Business Improvement District, and provide direction to staff on next steps.
Executive Summary
In December 2019, representatives from hotels in Palo Alto requested that the City withdraw
from the San Mateo County Tourism Business Improvement District (TBID). Council directed
staff to poll the hotel properties and return to Council with the results. That poll revealed 20 of
the 27 hotel properties (74%) operating in Palo Alto, which collectively represent 79% of the
total assessment fees paid to the TBID and 75% of the total hotel rooms in Palo Alto, wish to
withdraw from the TBID. The San Mateo County Silicon Valley Convention and Visitors Bureau
expressed a desire to continue serving the City of Palo Alto and requested time to engage the
Palo Alto hotels and improve services and the relationships. The Palo Alto Chamber of
Commerce, which receives a portion of the TBID funding for performing visitor services, has
also communicated a need to maintain this funding in order to continue their information and
referral function.
CITY OF
PALO
ALTO
City of Palo Alto Page 2
Background
On March 8, 2010, the Palo Alto City Council voted 9-0 to adopt a resolution to include the City
of Palo Alto within the boundaries of the San Mateo County Tourism Business Improvement
District.
In July 2019, representatives from some of the hotels in the City of Palo Alto approached staff
with a request to withdraw from the San Mateo County TBID. On December 2, 2019, an action
item (CMR #10814) was moved forward by the Palo Alto City Council voting 5-2 (Filseth and
Tanaka dissenting) in favor of the following motion:
A. Monitor the progress of the San Mateo/Silicon Valley Convention and Visitors
Bureau to:
i. Demonstrate its value to the City of Palo Alto;
ii. Work with all hotels in the City of Palo Alto to resolve key concerns
regarding the San Mateo County Tourism Business Improvement District;
B. Return to the City Council in Autumn of 2020 with a status report and Staff
recommendation regarding continued participation in the San Mateo County
Tourism Business Improvement District (TBID); and
C. Direct Staff to request a response from each hotel property on whether or not
they would like to remain in the TBID.
The TBID assessment generates approximately $309,040 annually from the Palo Alto hotels. The
assessments are paid to the San Mateo County Silicon Valley Convention and Visitors Bureau
(known commonly as “SMCCVB”), which is administered by the City of Burlingame.
Approximately $31,890 of this assessment is transferred annually from the SMCCVB to the Palo
Alto Chamber of Commerce to support its function as a local visitor’s bureau specific to the City
of Palo Alto.
Discussion
Beginning in August, staff reached out to all 27 Palo Alto hotel properties via a combination of
phone calls, e-mail messages, and in-person visits. Some hotel properties were closed and/or
hotel owners or general managers were working remotely, as a result of Public Health Officer
orders due to the current global health emergency.
Of the 27 properties polled about continuing membership or withdrawing from the SMCCVB
TBID, property owners or general managers from 20 of the hotels stated that they wished to
withdraw from the TBID. The 20 hotel properties wishing to withdraw represented 74% of the
total hotels located within Palo Alto, and collectively represent 79% of the total assessment
fees paid to the TBID and 75% of the total hotel rooms in Palo Alto (Attachment A). It should be
noted that the 2020 poll results were similar to the poll results provided to staff in July 2019
(Attachment B).
City of Palo Alto Page 3
While acquiring poll responses this summer, staff learned from owners and operators who
wished to separate from the SMCCVB that they viewed the CVB as an outdated tool or source
for acquiring hotel business. With advanced technology used in the hotel industry, most
travelers reserve rooms through third-party booking websites or by making direct bookings
with the hotel via their website. Of the 20 hotel properties who wished to withdraw from the
TBID, 16 reported that they had never received leads from the SMCCVB that resulted in room
bookings. Staff heard from several properties that in the past ten years of membership with
the SMCCVB, their property had never booked a single room generated from the SMCCVB.
These properties further stated that they also never received a SMCCVB-generated booking due
to overflow when a large Palo Alto hotel property hosted a conference.
Those in favor of continuing membership voiced concerns that withdrawal from the SMCCVB
would leave Palo Alto hotels without any regional representation. They pointed out that the
regional representation provided by SMCCVB was more impactful for their properties than
“Visit California,” an initiative that represents the tourism industry statewide. The advantage to
Palo Alto’s continued membership in the TBID, in their opinion, were the marketing efforts
focused on the broader San Francisco area.
Since the December 2019 City Council meeting and after local economic impacts of COVID-19
on the hospitality industry have been assessed, the SMCCVB submitted and obtained a signed
emergency ordinance from the Burlingame City Council which eliminated the second quarterly
assessment and reduced the final two quarterly assessments by 50% in 2020. This emergency
ordinance was in response to severe revenue loss by local hotels due to impacts from the
Coronavirus pandemic. Specifically, hotel properties suffered lost revenue from 90-100% within
weeks of the implementation of public health orders by the State of California and Santa Clara
County that closed hotel properties to all guests except for first responders. Some Palo Alto
hotels historically passed through a small portion of the TBID assessment fee, on average
between $0.15 to $0.45 within the allowable Tourism Fees per room night, are now paying the
full TBID assessment from their operating expenses due to the severe reduction in hotel
bookings. Although public health orders have since relaxed; however, health and safety
consumer concerns remain high and are continuing to impact the travel industry as a whole.
The chief executive officers of both the SMCCVB and the Palo Alto Chamber of Commerce told
staff that they desired the City to continue its participation in the TBID. During tenuous times,
and certainly when the travel industry rebuilds, they voiced that it is the opportune time for
investment, representation, and marketing at a regional level. During the current market
downturn, the SMCCVB provides outreach and education to the hotel industry on a broad range
of topics ranging from health and safety requirements for employees and guests to training
about the future of conference hybrid meeting and bookings. Staff did receive positive
comments from smaller hotel properties that the communication and training opportunities
provided by the SMCCVB have been dramatically improved since the beginning of the year and
especially since the economic impacts of COVID-19 affected the local hotels. Staff is unaware of
City of Palo Alto Page 4
actions taken by the Palo Chamber of Commerce regarding its value to hotels since this issue
was raised in December.
Should Council decide to support withdrawal from the TBID, the annual transfer of funds from
the SMCCVB to the Palo Alto Chamber of Commerce would end. A fiscal impact of
approximately $31,890 would severely impact the Chamber’s ability to support its function as a
local visitor’s bureau specific to Palo Alto. The Chamber of Commerce distributes visitor’s
information electronically and in print form. The printed guide is updated every two years.
The City of Burlingame Finance Department administers the SMCCVB billings. The annual
process consists of a Resolution of Intent to Assesses in approximately November of each year,
followed by a public hearing scheduled in approximately December of each year to become
effective the next calendar year. Should the Palo Alto City Council decide to withdraw the Palo
Alto hotels from the TBID, it would require a resolution (Attachment C) to be submitted
requesting the change in the Burlingame ordinance to amend the district for 2021, prior to the
Burlingame City Council meeting on November 2, 2020.
Staff confirmed with the Burlingame Finance Department that an ordinance change would have
to be presented to Burlingame City Council no later than October 19, 2020 followed by
Burlingame City Council approval of that ordinance on November 2, 2020. The Resolution of
the Intent to Assess the hotels in 2021 is scheduled for November 2, 2020.
Resource Impacts
The TBID assessment generates approximately $309,040 annually from the Palo Alto hotels and
is paid to the San Mateo County Silicon Velley Convention and Visitors Bureau for regional
visitor and marketing services provided to its TBID members. Approximately $31,890 of this
funding is transferred from the SMCCVB to the Palo Alto Chamber of Commerce to support its
function as a local visitor’s bureau specific to Palo Alto.
There are no City of Palo Alto funds budgeted to support visitor’s services or marketing
functions such as those provided by the SMCCVB and Palo Alto Chamber of Commerce in their
capacity as a regional and local visitor’s bureau, respectively. The request for withdrawal from
the TBID does not propose any alternative source of funding for these purposes.
If the Council adopts the resolution (Attachment C) to withdraw from the San Mateo County
TBID, staff will work with the City of Burlingame to implement the withdrawal, including
negotiating and paying reasonable administrative fees to the City of Burlingame. The City of
Burlingame Attorney’s Office will track their hours and expenses associated with the change in
ordinance. The City of Burlingame Finance Director quoted the City Attorney’s rate at $231.40
per hour and the Assistant City Attorney’s rate at $141.28 per hour.
Stakeholder Engagement
City of Palo Alto Page 5
In response to Council’s direction on December 2, 2019, staff contacted the owner or general
manager of all 27 hotel properties in Palo Alto. Twenty-four properties participated in the poll;
20 favored withdrawal from the TBID, three were in favor of continuing membership in the
TBID, and one declined participation. Of the remaining three properties, staff received no
response from two of them (despite multiple attempts to contact the owner or general
manager via phone, e-mail, or in-person visits) and one property is currently closed for
business.
Staff contacted the Palo Alto Chamber of Commerce and the San Mateo Silicon Valley
Convention and Visitors Bureau to review the poll results.
Staff contacted the City of Burlingame Finance Department and learned of the annual Intent to
Assess timeline for calendar year 2021.
Environmental Review
This item is not a project for purposes of the California Environmental Quality Act (CEQA).
Attachments:
• Attachment A - City of Palo Alto 2020 Staff Poll of Hotels
• Attachment B - 2019 Hotel TBID Self Response
• Attachment C - Resolution Tourism BID
City of Palo Alto 2020 Staff Poll of Hotels Attachment A
Hotel Response
Annual
Assessment
Number of
Rooms
Sheraton Palo Alto Withdraw 86,904.00 346
Crown Plaza Cabana Palo Alto Withdraw 47,736.00 195
The Westin Palo Alto Withdraw 45,043.20 184
Hilton Garden Inn Palo Alto Withdraw 18,792.00 174
Creekside Inn Withdraw 14,688.00 136
Comfort Inn Palo Alto Withdraw 2,268.00 70
The Cardinal Hotel Withdraw 1,944.00 63
Garden Court Hotel Withdraw 15,177.00 62
The Nest Palo Alto Withdraw 1,749.60 50
Hotel Keen Withdraw 1,360.80 42
Oak Motel Withdraw 1,360.80 39
Hotel Parmani Withdraw 1,166.40 36
Stanford Motor Inn Withdraw 1,198.40 35
Travelodge Palo Alto Withdraw 939.60 29
Glass Slipper Inn Withdraw 810.00 25
Palo Alto Inn Withdraw 745.20 23
The Clement Hotel Withdraw 745.20 23
Coronet Hotel Withdraw 680.00 20 (1 less room in 2020)
Berbeda Place Withdraw 291.60 18
Cowper Inn Withdraw 226.80 16
20 properties Withdraw 243,826.60 1566
20 Votes to withdraw from TBID 74%
$243,826.60 of $309, 039.80 Total assessment 79%
1586 of 2112 Total rooms 75%
Homewood Suites by Hilton Palo Alto Continue 7,452.00 138
Dinah's Garden Hotel Continue 31,579.00 129
The Zen Motel Continue 1,198.80 37
Country Inn Palo Alto Declined to participate 874.80 27
The Nobu Epiphany Palo Alto No response - open 18,849.00 86
America's Best Value Sky Ranch Inn No response - open 939.60 29
Stanford Terrace Inn No response - closed 4,320.00 80
7 properties Remain a member 65,213.20 526
7 Votes to remain a member of TBID 26%
$65,213.20 of $309,039.80 Total assessment 21%
526 of 2112 Total rooms 25%
2019 Hotel Self-Poll Attachment B
_j__
HOTEL responses Assessment $ # of Rooms
Sheraton Palo Alto Hotel want to withdraw $86,904.00 346
Crowne Plaza Cabana Palo Alto want to withdraw $47,736.00 195
The Westin Palo Alto want to withdraw $45,043.20 184
Hilton Garden Inn Palo Alto no response $18,792.00 174
Homewood Suites by Hilton Palo Alto want to continue $7,452.00 138
Creekside Inn no response $14,688.00 136
Dinah's Garden Hotel no response $31,579.00 129
The Nobu Epiphany Palo Alto no response $18,849.00 86
Stanford Terrace Inn no response $4,320.00 80
Comfort Inn Palo Alto want to withdraw $2,268.00 70
The Cardinal Hotel want to withdraw $1,944.00 63
Garden Court Hotel want to withdraw $15,177.00 62
The Nest Palo Alto want to withdraw $1,749.60 50
Hotel Keen want to withdraw $1,360.80 42
Oak Motel want to withdraw $1,360.80 39
The Zen Hotel want to continue $1,198.80 37
Hotel Parmani want to withdraw $1,166.40 36
Stanford Motor Inn want to withdraw $1,198.40 35
Travelodge Palo Alto want to withdraw $939.60 29
America's Best Value Sky Ranch Inn want to withdraw $939.60 29
Country Inn Motel no response $874.80 27
Glass Slipper Inn want to withdraw $810.00 25
Palo Alto Inn want to withdraw $745.20 23
The Clement Hotel want to withdraw $745.20 23
Coronet Motel want to withdraw $680.00 21
Berbeda Place want to withdraw $291 .60 18
Cowper Inn want to withdraw $226.80 16
I Number of hotels that want to withdraw 19 $211 ,286.20 1306 want to withdraw
TOTAL 27 $309,039.80 2113 total
Attachment C
Not Yet Approved
1
Resolution No. _____
Resolution of the Council of the City of Palo Alto to Withdraw the City of
Palo Alto from the Boundaries of the San Mateo County Tourism
Business Improvement District
RECITALS
A. The San Mateo County Tourism Business Improvement District (SMCTBID) is
a district organized under the California Streets and Highways Code Sections 36500 et seq. for
the purpose of collecting assessments from commercial lodging facilities such as hotels and
motels and providing tourism and visitor support services.
B. In March 2010, the Council of the City of Palo Alto adopted Resolution No.
9043 consenting to Palo Alto being included in the boundaries of the SMCTBID and authorizing
the City of Burlingame, which administers the SMCTBID, to take all necessary steps and actions
to formalize the inclusion of Palo Alto in the boundaries of the SMCTBID.
C. The City of Burlingame effectuated the City of Palo Alto Council’s request to
be included in the boundaries of the SMCTBID.
D. Since 2010, commercial lodging facilities in Palo Alto have been assessed fees
according to the procedures of the SMCTBID, and an owner or manager of a hotel has served
on the SMCTBID advisory board.
E. At the request of certain hotel and motel owners and operators in Palo Alto
who have articulated a desire to no longer participate in the SMCTBID, the City of Palo Alto now
wishes to withdraw from the boundaries of the SMCTBID.
F. Accordingly, the Palo Alto Council now requests the City of Burlingame to
take all necessary steps to effectuate the withdrawal of the City of Palo Alto from the
boundaries of the SMCTBID, according to procedure and law, and as soon as it is feasible to do
so.
NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows:
SECTION 1. The City of Palo Alto hereby requests to withdraw from the
boundaries of the San Mateo County Tourism Business Improvement District for hotels
effective January 1, 2021, or as soon as feasible thereafter, and authorizes and requests the City
of Burlingame to take all necessary steps and actions to implement its withdrawal from the
boundaries of the SMCTBID.
/ /
Attachment C
Not Yet Approved
2
SECTION 2. The Council finds that this is not a project under the California
Environmental Quality Act and, therefore, no environmental impact assessment is necessary.
INTRODUCED AND PASSED:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
__________________________ ______________________________
City Clerk Mayor
APPROVED AS TO FORM: APPROVED:
__________________________ ______________________________
Assistant City Attorney City Manager
______________________________
Director of Administrative Services