Department City of Sonoma Agenda Item Summary Meeting: City Council - Aug 21 2017 Administration Agenda Item Title Staff Contact Cathy Capriola, City Manager Discussion, Consideration and Possible Action to Accept the 2016-17 Annual Report of the Sonoma Tourism Improvement District Summary On June 18, 2012, the City of Sonoma formed a property and business improvement district, the Sonoma Tourism Improvement District, for a three year term expiring on June 30, 2015. On October 20, 2014, the City Council approved the renewal of the Sonoma Tourism Improvement District for a 10-year term through June 30, 2025 and approved the updated District Management Plan. The Sonoma Tourism Improvement District (TID) is a benefit assessment district established to fund marketing and promotion efforts for Sonoma lodging businesses. The TID includes all lodging businesses (hotels, motels, inns, bed and breakfasts, and vacation rentals) located within the boundaries of the City of Sonoma. State law authorizing tourism improvement districts provides that a non-profit mutual benefit corporation may be formed to perform the activities (specifically including promotion of tourism ) within a district comprised of businesses that are assessed to pay for the cost of the activities of the TID. The City contracts with the Sonoma Tourism Improvement District Corporation (STIDC), a non-profit corporation, to implement that Management District Plan. STIDC is charged with managing the Sonoma Tourism Improvement District s day-to-day operations including determining budgets and monitoring service delivery. As established in the Management District Plan, the STIDC has contracted with the Sonoma Valley Visitors Bureau for promotion and marketing programs to market Sonoma lodging businesses as overnight tourist, meeting and event destinations as well as providing support for visitor services. In accordance with the Plan, the Sonoma TID is required to present an annual report at the end of each fiscal year (no later than 2 calendar months after June 30) to the City Council pursuant to Streets and Highways Code 36650. Attached is a copy of the Sonoma TID s financials. The Sonoma TID representatives will present a summary report of their activities at the meeting for fiscal year 2016-17. At the end of their presentation, Council will be asked to accept the report. Recommended Council Action By motion, accept the 2016/2017 Annual Report. Alternative Actions Request additional financial information.
Financial Impact TID collections provide an estimated $7,785 (1%) administrative fee payable to the City of Sonoma Environmental Review Environmental Impact Report Negative Declaration Exempt Not Applicable Status Approved/Certified No Action Required Action Requested Attachments TID Presentation 2016-2017 P&L 2017-06 Balance Sheet STID 2017-18 Budget Alignment with Council Goals: Not Applicable Compliance with Climate Action 2020 Target Goals: N/A CC: Sonoma Tourism Board c/o Bill Blum, MacArthur Place Jonny Westom, Sonoma Valley Visitors Bureau
2016-17 Annual Report
President Owner: Sonoma Valley Inn Vice President General Manager: The Lodge at Sonoma Renaissance Resort & Spa Treasurer Owner: Inn at Sonoma Secretary General Manager: MacArthur Place Hotel & Spa Owner: El Pueblo Inn Owner: Cottage Inn & Spa; President: Sonoma Valley B&B Association City Manager: City of Sonoma
Sonoma TID Formed July 1, 2012 3 Year Term Sonoma TID Renewal July 1, 2015 10 Year Term Sonoma TID District = Sonoma City limits 2% Assessment on all Overnight Stays Hotels, Motels, B&Bs and Vacation Rentals The TID (2%) assessment collected by lodging properties in the City of Sonoma is given to the City of Sonoma along with the 10% Transient Occupancy Tax (TOT) and the 2% is given back to the Sonoma TID for marketing and promotion of overnight stays.
Provides a stable source of funding for a destination specific marketing program with the goal of increasing occupancy and room revenues at lodging properties in the City of Sonoma. Supports growth and sustains current levels of Transient Occupancy Tax (TOT) and Sales Tax in the City limits of Sonoma. Also allows for funding of visitor services and events that promote overnight stays to Sonoma. Allows Sonoma to compete with other competitive visitor centric destinations: (i.e. Napa, Monterey, San Francisco, Lake Tahoe, Mendocino, Healdsburg, Santa Barbara, etc.) Funds marketing programs, thus increasing occupancy and room revenues at Sonoma lodging properties with ancillary benefits to retail stores, wineries, restaurants and other tourism related businesses as well as the City of Sonoma's General Fund.
The TID aims to work with strategic partners to develop and implement a comprehensive plan to promote Sonoma as an overnight destination with the goal of increasing occupancy and rooms revenue. Minimal funds are used to maintain the TID (2%, $13,300) TID is comprised of a volunteer board of directors Research & Reports 3% TID Operations, 2% Funding for marketing and promotions Supports visitor services and operations Visitor Services, 13% Grants 7% City Fees 1% Special Event Grant Program provides partial funding to off-season events. Recipients include: Sonoma International Film Festival Valley of the Moon Vintage Festival Sonoma Valley Museum of Art Transcendence Theatre Company Sonoma Community Center (Trashion Fashion & Ceramics) Marketing 74% TID Operations Visitor Services City Fees Grants Marketing Research & Reports
Occupancy 64% 72% 12.5% Off-Season Occ. 52% 61% 17.3% TOT Collections* $2,358,718 $3,726,000 57.9% * Source: City of Sonoma
$4,000,000 $3,500,000 TOT & TID Collections FY: 2006/07 FY: 2016/17 $3,254,918 $3,568,737 $3,751,167 $3,726,000 $3,000,000 $2,500,000 $2,442,997 $2,615,474 $2,220,336 $2,084,450 $2,385,554 $2,358,718 $2,974,285 $2,000,000 $1,500,000 TID Inception $1,000,000 $650,984 $713,747 $750,233 $745,000 $500,000 $- $54,965 FY 06/07 FY 07/08 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17 TOT TID Linear (TOT) 23.1% - TOT growth since the inception of the TID of the TID (FY 12/13) 42.0% - TOT growth since the year before the inception of the TID (FY 11/12) 14.4% - TID growth since the first full year of collections (13/14)
Average Occupancy Levels FY: 2006/07 FY: 2016/17 80% 70% 60% 65% 66% 54% 58% 57% 62% 64% 68% 70% 59% 60% 73% 74% 66% 67% 72% 61% 50% 53% 53% 52% 45% 40% 44% 30% 20% 10% 0% 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Annual: Nov - Apr: Linear (Annual:) Linear (Nov - Apr:)
(a) The owners' association shall cause to be prepared a report for each fiscal year, except the first year, for which assessments are to be levied and collected to pay the costs of the improvements, maintenance, and activities described in the report. The owners' association's first report shall be due after the first year of operation of the district. The report may propose changes, including, but not limited to, the boundaries of the property and business improvement district or any benefit zones within the district, the basis and method of levying the assessments, and any changes in the classification of property, including any categories of business, if a classification is used. (b) The report shall be filed with the clerk and shall refer to the property and business improvement district by name, specify the fiscal year to which the report applies, and, with respect to that fiscal year, shall contain all of the following information: (1) Any proposed changes in the boundaries of the property and business improvement district or in any benefit zones or classification of property or businesses within the district. There are not any proposed changes to the boundaries of the Tourism Improvement District or in any benefit zones or classification of businesses within the district. (2) The improvements, maintenance, and activities to be provided for that fiscal year. There are no improvements, maintenance, and activities to be provided for that fiscal year (3) An estimate of the cost of providing the improvements, maintenance, and activities for that fiscal year. Included with this report are the FY 2016/17 Budget and FY 2016/2017 Year-end Financial Statements which include the cost of providing the improvements and the activities for the fiscal year. (4) 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. Following is the method and basis of levying the assessment in sufficient detail to allow each business owner, to estimate the amount of the assessment to be levied against his or her business for that fiscal year. Annual assessment rates are 2% of gross short term (stays of 30 days or less) room rental revenue on lodging businesses. Based on the benefit received, assessments will not be collected on stays of more than thirty (30) consecutive days, nor on stays by federal or state employees on official business, nor on stays by any officer or employee of a foreign government on official business. (5) The estimated amount of any surplus or deficit revenues to be carried over from a previous fiscal year. The TID did not have surplus or deficit revenues to be carried over from a previous fiscal year. (6) The estimated amount of any contributions to be made from sources other than assessments levied pursuant to this part. The Sonoma Tourism Improvement District does not receive any contributions other that monies collected from the assessment.
It s easy to enjoy our relaxed wine country lifestyle in a charming vintage escape. Experience the true taste of California; welcoming and naturally friendly. The art of enjoying life. To serve visitors, members and our community by promoting Sonoma Valley as a premier travel destination with the purpose of enhancing its economic vitality. To build awareness of Sonoma Valley and position it as an overnight, mid-week and year round destination while continuing to enhance the visitor experience.
Sonoma Valley Visitors Bureau implemented an integrated marketing and promotional campaign that aimed to increase visibility and awareness of Sonoma, drive overnight stays, and generate community support through special projects. Sonoma specific hotel section on www.sonomavalley.com TID Section of Sonoma Valley Visitors Guide (100,000 copies) Member hotel brochure distribution at two (2) visitor centers Feature on TripAdvisor Sonoma Valley page with booking capabilities Purchased boosted social media posts for TID properties Social Media contests Digital stories PR, travel writer, and journalist hosting resulting in story inclusion Photography inclusion on print and digital advertisements City of Sonoma specific information featured on Highway 37 billboard, maps, visitors guide, and other collateral
United States Sonoma County Tourism Jobs 15.1 million 19,710 Jobs from Tourism 1 in 9 1 in 10 Economic Impact (Annually) $2.1 trillion $1.82 billion Small Businesses 84% 82%
On average, visitors spent 4 days in Sonoma County, and had an average travel party size of 2; the average spending per travel party was $379 per day. Sonoma County visitors spending: Restaurants (87%) Lodging (68%) Retail (66%) Wine (50%) Tasting room fees (38%) 100% 80% 60% 40% 20% 0% Spending
SVVB Media Partners focusing in primary feeder markets into Sonoma
Excellent referral source of destination information an inquires
Goal: Generate interest in Sonoma as a small meetings destination, during off-season, mid-week time periods
While Sonoma lodging property renovations and rainiest winter on record affected TOT and TID collections during the first 6-months of 2017, the lodging properties in Sonoma are confident that occupancy and ADR will remain constant and increase slightly during FY 2017-18. Given the current number of lodging properties and hotel rooms, ADR and Occupancy are close to critical mass, meaning exponential growth in TOT and TID funds are likely to plateau. The TID has budgeted in FY 2017-18 to assist in the funding of Sonoma Heritage and Community Events, which are defined as special community events that have been operating for more than 25-years, including: Native Sons Flag Day Celebration 4 th of July Parade & Fireworks Valley of the Moon Vintage Festival Mexican Independence Day (Cinco de Mayo) Lighting of the Historic Sonoma Plaza Additional grants will be offered to assist with the funding of other events, primarily in the off-season (November April) Work to attract mid-week, off-season group business (groups 15 50 people) SVVB to continue marketing efforts to attract overnight visitors to Sonoma lodging properties.
4:56 AM SONOMA TOURISM IMPROVEMENT DISTRICT CORP. 08/17/17 Profit & Loss Cash Basis July 2016 through June 2017 Jul '16 - Jun 17 Ordinary Income/Expense Income Revenue Sonoma TID Revenues 100% 723,732.59 Less City Collection Fees 1% (7,237.34) Total Revenue 716,495.25 Total Income 716,495.25 Gross Profit 716,495.25 Expense Heritage & Community Events Community Event Grants 35,000.00 Total Heritage & Community Events 35,000.00 Advertising/Marketing Expenses SVVB-TID Marketing 550,000.00 SVVB-Additional 7,500.00 Total Advertising/Marketing Expenses 557,500.00 Other Funding SVVB Visitor Services 100,000.00 Total Other Funding 100,000.00 General Overhead Expenses Business Expenses Filing Fees 10.00 Total Business Expenses 10.00 Contract Services Accounting/Bookkeeping Fees 663.00 Total Contract Services 663.00 Insurance Insurance-D&O 1,549.00 Insurance - Liability 500.00 Total Insurance 2,049.00 Operations Office & Admin Expenditures 59.55 Total Operations 59.55 Total General Overhead Expenses 2,781.55 Research & Reports 25,000.00 Total Expense 720,281.55 Net Ordinary Income (3,786.30) Net Income (3,786.30) Page 1
4:56 AM SONOMA TOURISM IMPROVEMENT DISTRICT CORP. 08/17/17 Balance Sheet Cash Basis As of June 30, 2017 Jun 30, 17 ASSETS Current Assets Checking/Savings Operating Account 430,505.12 Total Checking/Savings 430,505.12 Total Current Assets 430,505.12 Other Assets Start Up Expenses 52,922.00 Accumulated Amortization (6,174.00) Total Other Assets 46,748.00 TOTAL ASSETS 477,253.12 LIABILITIES & EQUITY Equity Unrestricted Net Assets 481,039.42 Net Income (3,786.30) Total Equity 477,253.12 TOTAL LIABILITIES & EQUITY 477,253.12 Page 1
4:46 AM SONOMA TOURISM IMPROVEMENT DISTRICT CORP. 08/08/17 Profit & Loss Budget Overview Cash Basis July 2017 through June 2018 Jul '17 - Jun 18 Ordinary Income/Expense Income Revenue Sonoma TID Revenues 100% 760,000.00 Less City Collection Fees 1% -7,600.00 Total Revenue 752,400.00 Total Income 752,400.00 Gross Profit 752,400.00 Expense Heritage & Community Events Community Event Grants 40,000.00 Hertiage Events 25,000.00 Plaza Holiday Lighting 75,000.00 Total Heritage & Community Events 140,000.00 Advertising/Marketing Expenses SVVB-TID Marketing 475,000.00 TID Website Expenditures 4,000.00 Total Advertising/Marketing Expenses 479,000.00 Other Funding SVVB Visitor Services 100,000.00 Total Other Funding 100,000.00 General Overhead Expenses Business Expenses Filing Fees 500.00 Total Business Expenses 500.00 Contract Services Accounting/Bookkeeping Fees 4,000.00 Legal Fees 1,000.00 Total Contract Services 5,000.00 Insurance Insurance-D&O 1,600.00 Insurance - Liability 500.00 Total Insurance 2,100.00 Operations Postage & Delivery 100.00 Office & Admin Expenditures 200.00 Website Hosting 500.00 Total Operations 800.00 Total General Overhead Expenses 8,400.00 Research & Reports 25,000.00 Total Expense 752,400.00 Net Ordinary Income 0.00 Net Income 0.00 Page 1