To: Honorable Mayor and Members of City Council
From: Steve Potter, City Manager
Prepared By: Liz Habkirk, Assistant City Manager
TITLE:
Title
Resolution Granting Consent to the County of Napa to Renew the Napa Valley Tourism Improvement District (NVTID) and Include the City of Napa in the Renewed NVTID
LABEL
RECOMMENDED ACTION:
Recommendation
Adopt a Resolution Granting Consent to the County of Napa to Renew the Napa Valley Tourism Improvement District (NVTID) and Include the City of Napa in the Renewed NVTID
Body
DISCUSSION:
The NVTID is a benefit assessment district proposed to continue a revenue source to help fund destination sales and marketing promotions for Napa Valley 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 NVTID includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the cities of American Canyon, Calistoga, Napa, St. Helena, and the Town of Yountville and the unincorporated area of Napa County. The City Council is being asked to adopt a resolution granting consent to the County, as the County is the entity renewing the NVTID, in order for the City of Napa to be included in the creation, operation and future renewals of the NVTID.
With support from lodging business owners, the Napa Valley Tourism Corporation (NVTC) and Visit Napa Valley (VNV) initiated the process to pursue renewal of the NVTID in order to continue a revenue source devoted to marketing Napa Valley as a tourist, meeting and event destination. If renewed, the NVTID would generate approximately $11,000,000 on an annual basis for promotion of travel and tourism specific to Napa Valley.
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 assessed business owners to organize their efforts to increase tourism. Business owners within the TID fund the TID, and those funds are used to provide services that are desired by and benefit the assessed businesses within the TID.
TID benefits:
• Funds cannot be diverted for other government programs;
• They are customized to fit the needs of each destination;
• They allow for a wide range of services; including destination marketing, tourism promotion, and sales lead generation;
• They are designed, created and governed by those who will pay the assessment; and
• 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 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 Management District Plan (Attachment 3) includes the proposed boundary of the NVTID, a service plan and budget and a proposed means of governance. The NVTID will include all lodging businesses, existing and in the future, available for public occupancy within the boundaries of the cities of American Canyon, Calistoga, Napa, St. Helena, and the Town of Yountville and the unincorporated area of Napa County.
The annual assessment rate is two percent (2%) of gross short-term (30 days or less) sleeping room rental revenue. In years three (3), six (6) and nine (9) of the NVTID’s term, the assessment rate may be recommended to be increased by the Visit Napa Valley (VNV) Board of Directors and then brought to the Napa Valley Tourism Corporation (NVTC) Board for final approval. The maximum increase in years three (3), six (6) and nine (9) shall be one half of one percent (0.5%).
The total assessment rate may not exceed three percent (3%) of gross short-term (30 days or less) sleeping room rental revenue. Based on the benefit received, assessments will not be collected on stays of more than thirty (30) consecutive days. Stays by government employees on government business shall not be subject to assessment. “Government employee” shall mean foreign or domestic government employees subject to exemption from transient occupancy tax under Napa Municipal Code (NMC) Section 3.20.030.
The renewed NVTID will have a ten (10) year term, beginning June 26, 2025, or as soon as possible thereafter, and ending ten (10) years from its start date. Once per year beginning on the anniversary of NVTID 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 NVTID.
Each jurisdiction will be responsible for collecting the assessment on a basis that mirrors the collection of transient occupancy tax from each lodging business located in the NVTID boundaries. Each jurisdiction shall forward the assessments to the County of Napa (“County”) to be forwarded to Napa Valley Tourism Corporation, which will have the responsibility of managing NVTID programs as provided in the Management District Plan. Each jurisdiction tax collector will retain a fee of up to one percent (1%) of the amount of the assessment collected prior to remitting funds to the County, within their respective jurisdictions, to cover their costs of collection and administration.
FINANCIAL IMPACTS:
No immediate financial impact. The City of Napa shall be paid a fee equal to 1% of the amount of assessment collected to cover its costs of administration. Because the NVTID programs are intended to increase visitation to the City of Napa, there may be an increase in transient occupancy tax and sales tax collections.
CEQA:
The City Manager has determined that the recommended actions described in this agenda report are not subject to CEQA, pursuant to CEQA Guidelines Section 15060 (c).
DOCUMENTS ATTACHED:
ATCH 1 - Resolution
ATCH 2 - Adopted County Resolution Requesting Consent
ATCH 3 - NVTID Management District Plan
NOTIFICATION:
None.