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HomeMy WebLinkAboutStaff Report 154-10TO: HONORABLE CITY COUNCIL FROM: CITY MANAGER DATE: MARCH 8, 2010 REPORT TYPE: CONSENT DEP ARTMENT:PLANNING AND COMMUNITY ENVIRONMENT CMR: 154:10 SUBJECT: Adoption of a Resolution to Consent to the City of Palo Alto Being Included Within the Boundaries of the San Mateo County Tourism Business Improvement District and Direction to Terminate Destination Palo Alto Contract RECOMMENDATION Staff recommends that the City Council: 1) Approve the attached Resolution to Consent to the City of Palo Alto being included within the boundaries of the San Mateo County Tourism Business Improvement District; and 2) Direct City Manager to formally provide written notice to the Convention Visitors Bureau that the contract between the City of Palo Alto and the San Mateo County/Silicon Valley Convention Visitors Bureau be terminated effective June 6, 2010, providing the required 60 day notice for this action. EXECUTIVE SUMMARY The purpose of this report is to provide City Council with the Resolution of Consent which will initiate the process to include Palo Alto hotels as participants in the San Mateo County Tourism Business Improvement (TBID). Following adoption of the Resolution of Consent, the City of Burlingame, as lead agency for the San Mateo County TBID will propose the addition of Palo Alto Hotels into the TBID. The participation of Palo Alto hotels in the TBID would result in the hotel guest paying a small increment of approximately ($.15 to $1.00) per room, per night rather than the City providing funds in the Destination Palo Alto contract. (The exact amount of assessments would depend on a property's projected occupancy.) Essentially, the same service level would be provided to hotels through this approach, as was provided under Destination Palo Alto. The SMC/SVCVB has also indicated continuation of the Palo Alto Visitors' Center at the Palo Alto Chamber of Commerce. The potential cost savings to the City would be $80,000 in FY 2010. CMR: 154:10 lof5 BACKGROUND In October 2005, the City Council directed staff to agendize a Council discussion that would explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff convened a committee of stakeholders for a Palo Alto visitorship effort. The Destination Palo Alto committee was chaired by the City Manager and held its first meeting on March 15,2006. Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo Alto Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto Online, California Avenue Area Development Association (CAADA), Stanford Shopping Center, Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and business representatives from the hotel, retail and hospitality industries. On October 6, 2008, City Council authorized the City Manager or his designee to execute the agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau (SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year 2009 and fiscal year 2010. The first year of the contract included $215,000 to the SMC/SVCVB, and $25,000 to the Palo Alto weekly for an update of the Destination Palo Alto website and additional marketing materials. In the second year of the contract, the full amount of $240,000 was allocated for the provision of visitors hip services by the SMC/SVCVB. On November 2,2009, City Council confirmed the extension of the contract but requested that staff return with a description of the methodology and specific metrics to be used to quantify the City's return on its investment. The Council also directed that the contract be amended to provide for a 60-day termination clause by either party (which has been completed). In December, the Council received a request from the SMC/SVCVB that the City vote to approve inclusion in the Bureau's TBID, switching from a contractual arrangement with the City. In February 2010, staff presented baseline information and metrics quantifying the City's return on investment for Destination Palo Alto to assess the effectiveness of the program thus far, and considered a letter from the CVB to move to include the Palo Alto hotels in its TBID and terminate the Destination Palo Alto contract. Following this review, City Council unanimously approved the staff recommendation to consider adoption of a Resolution of Consent to participate in the San Mateo County TBID. DISCUSSION Attached to this staff report is a letter dated December 18, 2009 which staff received from the SMC/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the Tourism Business Improvement District which encompasses most of San Mateo County (with whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace. Eventual transition of the Destination Palo Alto to a TBID was the longer term outcome when it was initiated. Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo Alto Chamber office, at no additional cost to the City, so service would be uninterrupted. In addition, a Palo Alto hotel owner will be included on the TBID's advisory board. CMR: 154:10 20f5 The CVB proposed that the contract between the CVB and the City of Palo Alto end in April or May of2010 (to allow for public notifications regarding transition, etc.) and that the City Council pursue participation in the existing TBID. Inclusion into the TBID would result in a nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per room night based on the projected occupancy of each hotel. Smaller hotels with limited services and meeting space with lower occupancy pay less than larger, full-service hotels. The CVB's TBID has been in place successfully since April of2001. The City of Burlingame is the lead city for the TBID and conducts the notifications and public hearings for the TBID. Other areas competing for meetings with TBIDs of their own include San Jose, San Francisco, Santa Clara, Sacramento County, San Diego and Santa Cruz County. The CVB has already conducted outreach to the largest hotels in Palo Alto that represent a majority of rooms in the City. Several Palo Alto hotels, including the Westin, Sheraton, Cabana, Garden Court and Dinah's Court, have indicated their support for inclusion into the TBID. The CVB is continuing its outreach and will update the City Council on the outreach to both large and small hotels. Expanding the TBID to include Palo Alto hotels is a multi step process. To initiate the process, the Palo Alto Council must adopt a Resolution of Consent to be included within the San Mateo County TBID (Attachment 3). Once the initiating resolution is adopted, the Burlingame City Council as lead agency of the TBID conducts two additional public hearings to formalize the inclusion of the Palo Alto hotels as District C of the TBID. At these hearings, affected hotels will be given the right to file written protests. If protests are not received from owners of hotels or other lodging establishments responsible for 50% or more of the total value of the projected Palo Alto hotel assessment, the district will be amended to include Palo Alto hotels and the assessments will be levied against the hotels. The entire TBID inclusion process may take up to 90 days due to the, notification and public hearing process. Once the Palo Alto hotels are included in the TBID, the Burlingame City Council will conduct annual re-authorization hearings. This process is similar to that used to establish the Palo Alto Downtown Business Improvement District. To provide for an effective transition of this program, the contract with the San Mateo County/Silicon Valley Convention and Visitor's Bureau (SMC/SVCVB) would continue through May with an effective termination date of June 6, 2010. As discussed at the February 8, 2010 City Council meeting, City Council, staff, and the Convention Visitors Bureau believe that termination of the Destination Palo Alto contract and participation in the Tourism Business Improvement District is the best option for the delivery of services to the hotels in Palo Alto. Since hotels would not begin paying TBID assessments until the beginning of the first full quarter of inclusion, anticipated to be July 2010, there would be ample time to transition from the Destination Palo Alto contract to the Tourism BID. The SMC/SVCVB has met with the City's largest hotels and thus far the Sheraton/Westin, Cabana, Dinah's, Garden Court hotels and Creekside have indicated support for the transition to a TBID. Immediately following the City Council meeting on February 8, 2010, all Palo Alto hotels received a letter explaining the plan to make a transition TBID (Attachment 4). The letter provided contacts for questions and comments. To date, only one clarification request was CMR: 154:10 30f5 received from the Stanford Terrace hotel. No other comments, questions or concerns have been communicated to the CVB or the City. RESOURCE IMPACT The first year of Destination Palo Alto Visitor Program was funded through an allocation of the City's General Fund for FY 2009. The Destination Palo Alto program is a two-year pilot with $240,000 for the second year allocated as a part of the 2009-10 budgets. If the contract is ended on June 6, 2010, $80,000 of the original contract amount will not be expended. City Council will consider how to redirect the remaining Destination Palo Alto funds as a part of the FYI0 mid­ year or FY 2011 budget process. Should the City collect the TBID remittances directly, there will be additional administrative workload for the Administrative Services Department. In light of past and future budget reductions and general policy to become more effective and efficient, staff recommends that remittances be sent directly from hotels to the City of Burlingame. There appear to be no benefits to the City from it acting as an intermediary or second step in the remittance process. It is important to note that most cities in the TBID collect TBID assessments while collecting the transient occupancy tax. By remitting fees directly to Burlingame, hotels will experience a modest increase in work and mailing expenses. ENVIRONMENTAL REVIEW This action by the City Council is not considered a project pursuant to Section 21065 of the California Environmental Quality Act. PREPARED BY: DEPARTMENT HEAD: CITY MANAGER APPROVAL: CMR: 154:10 ~cb.~~ $USAN BARNES{ Manager Economic Development/Redevelopment CURTIS WILLIAMS, Director Planning and Community Environment 40f5 ATTACHMENTS Attachment 1: Attachment 2: Attachment 3: Attachment 4: CMR: 154:10 . Letter from SMC/SVCVB of December 21,2009 CMR 138:10 (February 8, 2010) Resolution of Consent for inclusion of Palo Alto hotels into the San Mateo County Tourism Business Improvement District Letter from SMC/SVCVB re: Joining San Mateo County TBID 50f5 December 21, 2009 Palo Alto City Council 250 Hamilton St. Palo Alto, CA 9430 I ATTACHMENT 1 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com Dear Mayor Drekmeier and Members of the Council: As you know, we began representing Palo Alto hotels and motels in October, 2008, promoting your properties in the same manner as the properties in the cities we represent as part of ollr TOllrism Business Improvement District (TBID). We have appreciated your Council's support and we believe that the relationship has resulted, and will continue to result, in a positive economic benefit for your city. When we entered into a contract with your city, our hope was that after two years under contract, Palo Alto properties would become patt of Ollr tourism business improvement district, with no Palo Alto City money involved. In these challenging times, ollr desire as a board is to maximize the time our staff spends on selling and promoting the area as a whole. It is the regional efforts that maximize the return on investment and bring people i11to ollr properties. What we are tinding lately. however, is that a disprop01tionate amollnt of staff time is being spent on local Palo Alto meetings, questions, etc. In an eff0l1 to allow our team to foclls on regional promotion, we voted at Ollr December Board meeting to spend the next fe\v weeks talking to Palo Alto properties about becoming part of our existing TBID midway through the second year of our contract with the City of Palo Alto, rather than operating under a system under which the City of Palo Alto pays for the equivalent of their assessments. Should such a change occur, it would save your city approximately $120,000. We will repOIt back to your city staff well in advance of your February 8 council meeting. If the hotels have an interest and your council wishes to be part of the TBlD (with hotel guests paying for the assessments, rather than using any city money), it would mean the City of Palo could simply pass a resolution requesting that Palo Alto be included in the existing TBID. The request would then go to the City of Burlingame as lead agency for our TBID, to handle all noticing requirements. We look forward to a continued positive relationship with the City of Palo Alto, We want to commend Susan Barnes in particular for doing everything possible to promote your businesses and city. It is a pleasure working with her. Sincerely, Ken Landis E~~O~ (tid» Chairman of the Board (2009) Chairman of the Board (2010) ATTACHMENT 2 City of Palo Alto City Manager's Report TO: HONORABLE CITY COUNCIL 14' FROM: CITY MANAGER DATE: FEBRUARY 8, 2010 REPORT TYPE: ACTION DEPARTMENT:PLANNING AND COMMUNITY ENVIRONMENT CMR: 138:10 SUBJECT: Review of Destination Palo Alto Metrics and Direction to Staff to Pursue Transition to Participation in the San Mateo County Tourism Business Improvement District RECOMMENDATION Staff recommends that the City Council: 1) Review the baseline data, methodology and Destination Palo Alto return on investment information; and , 2) Direct staff to explore participation in the San Mateo County Tourism Business Improvement District operated by the San Mateo County/Silicon Valley Convention Visitors Bureau. EXECUTIVE SUMMARY The purpose of this report is to respond to City Council questions and concerns regarding the City's return on investment for the City's visitorship effort, Destination Palo Alto. At the November 2,2009 City Council Meeting, staff was directed to return to City Council within three months with details of metrics t6 be used to measure performance of the program. This staff report contains detailed baseline data on transient occupancy tax revenue, occupancy rates, and total number of hotel rooms for Palo Alto and 7 other area cities. In addition, a specific estimate is provided for transient occupancy tax revenue generated as a-result of the San Mateo/Silicon Valley Convention and Visitors Bureau (SM/SVCVB) through Destination Palo Alto. The period covered in this review is November 2008 through December 2009. The data indicates the City received $187,061 in revenues, as compared to the $249,000 cost of the program which includes the $25,000 paid directly to the Palo Alto Weekly (for local marketing-website, visitors' guides, rack brochure) and operation of the Visitors' Center at the Chamber of Commerce. CMR: 138:10 10f6 Since the City Council meeting in November, staff has received communication from the SM/SVCVB regarding its desire to transition from the existing contract to the inclusion of Palo Alto hotels into the existing Tourism Business Improvement District operated by the CVB. This change would result in the hotel guest paying a small increment ($.15 to $1.00) per room, per night rather than the City providing funds in the Destination Palo Alto contract. Essentially, the same service level would be provided to hotels through this approach, following up on the success of Destination Palo Alto. The SMlSVCVB has also indicated continuation of the Palo Alto Visitors' Center at the Palo Alto Chamber of Commerce. The potential cost savings to the City would be approximately $60,000 -$120,000 in FY 2010. BACKGROUND In October 2005, the City Council directed staff to agendize a Council discussion that would explore enhancing Palo Alto's economy by improving visitor outreach. In February 2006, staff convened a committee of stakeholders for a Palo Alto visitorship effort. The committee, Destination Palo Alto, was chaired by the City Manager and held its first meeting on March 15, 2006. Stakeholders included: the Palo Alto Chamber of Commerce, Stanford Athletics, Palo Alto Business Improvement District, Palo Alto Weekly, Stanford Visitor's Center, Palo Alto Online, California Avenue Area Development Association (CAADA), Stanford Shopping Center, Stanford University, Town and Country Shopping Center, Palo Alto Arts Center and business representatives from the hotel, retail and hospitality industries. The goals of Destination Palo Alto included the development of a specific, actionable and achievable plan that would strengthen visitorship in Palo Alto. Three key objectives included: 1. Attracting more visitors to Palo Alto 2. Promoting return visitorship to Palo Alto 3. EntiCing visitors to stay longer, use additional amenities and spend more money locally Staff issued an RFP for visitorship services on April 14, 2008. Staff was directed to include $240,000 for the Destination Palo Alto program in the FY 2009 proposed budget and $240,000 in the FY 2010 proposed budget. Based on input from the Administrative Services Department, a formula was identified for estimating the City's return on its investment for Destination Palo Alto. Based on a 5% increase in the occupied room days for the five largest hotels in Palo Alto, the growth in revenue was estimated to be approximately $240,000 yearly. This amount was proposed for two years as a part of the FY 2009 and FY 2010 budgets. On October 6, 2008, City Council authorized the City Manager or his designee to execute the agreement with the San Mateo County/Silicon Valley Convention and Visitors Bureau (SMC/SVCVB) in an amount not to exceed $455,000 for visitorship services for the fiscal year 2009 and fiscal year 2010. $25,000 of the total $240,000 contract amount was awarded to the Palo Alto Weekly for an upgrade of the Destination Palo Alto website ($15,000) and for the provision of two visitor CMR: 138:10 20f6 · guides ($10,000). The cost of the visitor guides and website upgrade are one time costs. No rate of return was calculated for this portion of the contract. Thus, in the first year of the contract, the SMC/SVCVB portion of the contract was only $215,000. In the second year of the contract, the full amount of $240,000 was allocated for the provision of visitorship services by the SMC/SVCVB. On November 2,2009, City Council confirmed the extension of the contract but requested that staff return with a description of the methodology and specific metrics to be used to quantify the City's return on its investment. The Council also directed that the contract be amended to provide for a 60-day termination clause by either party (which has been completed). DISCUSSION Staff has collected baseline data from a number of other cities in an effort to address the questions from City Council. Attached is a spreadsheet that identifies the transient occupancy tax (TOT) revenue, occupancy rates (when available) and the tot~:tl number of hotel rooms in Palo Alto, Berkeley, Redwood City, Cupertino, Campbell, Mountain View, Menlo Park and Sunnyvale (Attachment 2). Baseline Metrics Staff analyzed FY2007, 2008, and 2009 data related to TOT revenue, percentage occupancy rates and number of hotel beds from 8 cities: Palo Alto, Menlo Park, Cupertino, Berkeley, Redwood City, Campbell and Sunnyvale. The statistical analysis did not identify any significant differences accounted for by either the presence or absence of a convention bureau, or the rate of TOT. Overall, the statistical results of the TOT analysis indicated that macroeconomic factors, especially the downturn in the economy in the Bay Area Region, swamped any other effects. While no specific inferences can be made from this data, the collection of baseline figures will allow staff to determine the impact of Destination Palo Alto as the program continues to develop. Rate of Return The Destination Palo Alto contract was initiated in October of 2008. Events and hotel room bookings are planned months and even years in advance. For this reason, the CVB cannot attribute any hotel bookings to the program for that 2008, therefore the table below begins with calendar year 2009. The following table illustrates rooms booked in Palo Alto for 2009, and 2010 (based on bookings through 12/15/2009). In addition, revenues generated through transient occupancy tax, secondary impacts (such as sales tax) and costs to operate Destination Palo Alto are detailed. CMR: 138:10 30f6 Table I Destination Palo Alto 2009 2010 (Full year estimate) 10 .. Rooms bookedl , 9,900 12,000 Palo Alto hotel room revenue generated by $1,439,559 $1,744, 920 DPA2 ... Secondary Revenue· Impact 3 $1,439,059 $1,735,080 . A. TOT Revenue to Palo Alto from DP A $172,747 $209,390 bookings 4 B. Sales tax revenue 5 $14,314 $17,351 Total TOT and Sales Tax Revenue 6 $187,061 $226,741 Annual Cost ofDPA 7 $240,000 $240,000 C. Return on investment 8 78% 94.4% D. Rate of Return (without Visitor Center) 117% 142% The following summarizes some of the key assumptions used to prepare the table (corresponding to the footnotes): 1. Rooms booked by SMC/SVCVB 2. Average room rate (9,900 x $ 145.41/night = hotel room revenues) 3. Secondary Revenue Impact (retail sales, restaurant sales, services purchased by travelers) -144.59 per room per day per Smith Travel Research 4. TOTrateofl2% 5. Sales tax at 1 % of retail impacts 6. A+B 7. Amount includes $25,000 to PA Weekly (2009) and $80,000 for Visitor Center at Chamber of Commerce 8. Ratio of total City revenue to cost ofDPA ($240,000) 9. Data through 12115/2009 10. Contract period is 10 months in 2010 Staff notes that there is an anticipated 21 % increase in total transient occupancy tax, and sales tax revenue comparing 2009 figures to 2010. This trend is expected to continue as the program matures and as additional room nights are booked. The ROR is estimated at 78% for 2009, including the dollars allocated to the Palo Alto Weekly ($25,000) and for the Visitor Center ($80,000). For 2010, the return on investment is projected at 94% (again including the Visitor Center costs). The figures above assume all room nights booked become actual room stays, which may tend to overstate bookings. However, this overstatement is somewhat offset by other revenues not captured in this metric, such as room night revenue, sales tax and total economic impact generated from leisure travelers generated by numerous articles and advertisements featuring Palo Alto, and rooms generated by features or ads in publications aimed at meeting planners. CMR: 138:10 40f6 Tourism Business Improvement District Attached to this staff report is a letter dated December 18, .2009 which staff received from the SM/SVCVB. In the letter, the CVB indicates that inclusion of Palo Alto hotels into the Tourism Business Improvement District (TBID) which encompasses most of San Mateo County (with whom Palo Alto would otherwise compete for hotel room bookings without inclusion into the CVB) would be a more effective way to deliver tourism services in the Palo Alto marketplace. This was the longer term outlook for Destination Palo Alto when it was initiated. Should Palo Alto opt into the TBID, the CVB will retain its visitor center presence in the Palo Alto Chamber office at no additional cost to the City, so service would be uninterrupted. The CVB proposes that the contract between the CVB and the City of Palo Alto end in April or May of 2010 (depending on the timeframe for public notifications, etc.) and that the City Council direct staff to pursue participation in the existing TBID. Inclusion into the TBID would result in a nominal additional cost to travelers. The range of cost is approximately 15 cents to $1 per room night based on the projected occupancy of each hotel. Smaller hotels with limited services and meeting space with lower occupancy pay less than larger, full-service hotels. The CVB' s TBID has been in place successfully since April of 200 1. Other areas competing for meetings with TBIDs of their own include San Jose, San Francisco, Santa Clara, Sacramento County, San Diego and Santa Cruz County. The CVB has already conducted outreach to the largest four hotels and others in Palo Alto that represent a majority of rooms in the City. Currently· a number of Palo Alto hotels including the Westin, Sheraton and Dinah's Court have indicated their support for inclusion into the TBID. The CVB is continuing its outreach arid will report these outcomes at City Council. Should City Council determine that participation in the TBID be explored, staff will return to City Council tentatively on March 8, 2010, with a resolution of intention for inclusion into the TBID by Palo Alto hotels. The entire TSID inclusion process may take up to 90 days with notifications. This process is similar to that used to establish the Palo Alto Downtown Business Improvement District. RESOURCE IMPACT The first year of Destination Palo Alto Visitor Program was funded through an allocation of the City's General Fund for FY 2009. The amount of the funding allocated for the program was based on the expected growth in hotel occupancy that results from implementation of the program. The expected growth in occupancy was estimated to be 5 percent, which translates into $240,000. It is estimated that approximately $187,061 was generated in revenue to the City in transient occupancy tax and sales tax alone for 2009. The Destination Palo Alto program is a two-year pilot with $240,000 for the second year allocated as a part of the 2009-11 budgets. If the contract is ended in April-June, 2010, approximately $60,000-$120,000 of the original contract amount will not be expended. Staff has recommended the flexibility to terminate the contract in April or May, depending on the time required for TBID inclusion to ensure uninterrupted services to the hotels and visitor's center at the Chamber of Commerce. CMR: 138:10 50f6 ENVIRONMENTAL REVIEW This action by the City Council is not considered a project pursuant to Section 21065 of the California Environmental Quality Act. PREPARED BY: S SAN BARNES, anager Economic Development/Redevelopment DEPARTMENT HEAD: . CURTIS WILLIAMS, Director Planning and Community Environment CITY MANAGER APPROVAL: ATTACHMENTS Attachment 1: Attachment 2: Attachment 3: CMR: 138:10 Letter from SMC/SVCVB of December 21, 2009 Baseline data on transient occupancy tax revenue, number of hotel rooms and occupancy for selected cities CMR: 386:09 dated November 2,2009: Approval of the Extension of the Agreement between San Mateo County Convention and Visitors Bureau and the City of Palo Alto for the Provision of Destination Palo Alto Visitorship Services in the amount of $240,000 for Fiscal Year 200911 0 60f6 Not Yet Approved ATTACHMENT 3 Resolution No. --- Resolution of the Council of the City of Palo Alto to Consent to the City of Palo Alto Being Included Within the Boundaries of the San Mateo County Tourism Business Improvement District WHEREAS, Section 36521.5 of the California Streets and Highways Code authorizes this City to consent to its inclusion within the boundaries of a Business Improvement District; and WHEREAS, it is proposed that the City of Palo Alto be included in the boundaries of the San Mateo County Tourism Business Improvement District for the purpose of collecting assessments from commercial lodging facilities (hotels, motels, etc); and WHEREAS, pursuant to the Streets and Highways Code sections 36500 and following, the City of Burlingame will hold necessary hearings, provide required notices, and receive testimony and protests; and WHEREAS, this City has reviewed the ordinances establishing the San Mateo County Tourism Business Improvement District, including but not limited to the proposed district boundaries, assessments, and purposes for the District. NOW, THEREFORE, the Council of the City of Palo Alto does RESOLVE as follows: SECTION 1. The City of Palo Alto hereby consents to being included in the boundaries of the San Mateo County Tourism Business Improvement District for hotels and authorizes the City of Burlingame to take necessary steps and actions to formalize its inclusion in the boundaries of the District. SECTION 2. The City further requests that the Burlingame City Council amend Section 14 of Ordinance 1648 to require an owner or manager of a hotel or property occupied by a hotel in the City of Palo Alto be appointed to the advisory board. II II II II II II 100210jb 0130565 Not Yet Approved SECTION 3. 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 APPROVED AS TO FORM: City Attorney 100302 jb 0130565 Mayor APPROVED: City Manager Director of Director of Administrative Services February 9, 2010 To: Palo Alto Properties ATTACHMENT 4 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com From: The San Mateo County/Silicon Valley Convention and Visitors Bureau Re: Joining Existing San Mateo County (Silicon Valley) Tourism Business Improvement District Dear Property Owners and Managers: A few years ago, we approached some of the largest properties in Palo Alto with an offer to have Palo Alto hotels and motels join our tourism business improvement district (TBID). In our TBID, hotels are assigned an assessment*, which is passed on to guests on the guest folio as a small "tourism fee". These TBIDs are now in place all over California, including Sacramento County, San Francisco/San Francisco County, Monterey County, the City of San Jose, the City of Santa Clara, San Diego and, of course, San Mateo County. They have become commonplace and visitors have become used to paying a tourism or TBID fee. At that time, it was proposed that instead of joining the TBID, the hotels get representation and sales outreach from our Bureau, but funded by the City of Palo Alto in a contract. In October of 2008, a contract was signed with the City of Palo Alto and all promises in that contract honored. We have found, however, that the "strictly local" meetings, reports and requests are detracting from our sales outreach for our area. We are all about sales and marketing, and our Board is convinced your properties would benefit far more from joining the TBID. At a Council meeting on March 8, the Palo Alto City Council will vote on a resolution requesting Palo Alto's inclusion in our TBID. If approved, the process would take up to 90 days, with Palo Alto properties officially in the TBID as of Mayor June, but with no assessments passed on until the quarter beginning July 2010, to allow collection of the fees prior to any billing, so no money would be out-of-pocket. We have already met with multiple properties in Palo Alto that would have the highest assessments and all five to whom we have spoken so far support giving the TBID a try, particularly in today's challenging economic times. (Hotels are notified annually when the renewal process is pending.) We are now reaching out to notify Palo Alto properties whose assessments would be at much lower levels to let them know this is under discussion. Enclosed is a list of services we offer. Worth noting for smaller properties are the opportunities we provide in terms of generating editorial about the area, leisure room nights, film crew leads and tour and travel. In addition, a general rule of thumb is that,even when we book a large conference into an area hotel, 20% of the attendees will book elsewhere in the area, "outside the block", in order to get a lower rate. Large meetings usually also generate overflow rooms for smaller properties. Please let us know if you have any questions or concerns prior to March 80 Thank you! Sincerely, Anne LeClair President & CEO * According to our calculations, since your property has over 20 sleeping rooms, if your occupancy is at 60%, your assessment would be covered with a tourism fee of 15 cents per night. The fee is adjustable. So, if your occupancy were at 30%, you could pass on a fee of30 cents per night. (All of this is explained in documentation that goes out to participating properties.) 111 Anza Boulevard, Suite 410, Burlingame, CA 94010 650-348-7600 • 1-800-288-4748 Fax 650-348-7687 info@sanmateocountycvb.com • www.visitsanmateocounty.com Your best contacts for questions about: Sales efforts in general/how small properties benefit most: Teipo Brown teipo@smccvb.com Billing/payment process: Gina Allhands gina@smccvb.com General Questions: Anne LeClair AnneL@smccvb.com Office Number: 650-348-7600