To: MAYOR AND CITY COUNCIL
From: GREG KAPOVICH, WATERFRONT & ECONOMIC DEVELOPMENT DIRECTOR
TITLE
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ADOPT BY TITLE ONLY RESOLUTION NO. CC-2312-130, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF REDONDO BEACH, CALIFORNIA, RENEWING THE AGREEMENT WITH REDONDO BEACH TRAVEL & TOURISM (RBTT) TO ADMINISTER THE REDONDO BEACH TOURISM MARKETING DISTRICT
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EXECUTIVE SUMMARY
On August 21, 2018, the City Council approved the establishment of the Redondo Beach Tourism Marketing District (RBTMD) for an initial five-year term, which levies assessments to participating hoteliers to provide a dedicated revenue source to lodging businesses to market Redondo Beach as a tourist, meeting, and event destination. Management of the RBTMD is the responsibility of the non-profit entity Redondo Beach Travel & Tourism (RBTT). The RBTT serves as the RBTMD’s Owner’s Association, manages the funds, implements the RBTMD programs, and provides annual reports to the City Council. The RBTT has managed the RBTMD since its inception in 2018. On July 18, 2023, the City Council renewed the RBTMD for a ten-year period beginning September 1, 2023. The proposed agreement allows for a renewal of the RBTT for continued management services to coincide with the City’s ten-year extension of the RBTMD.
BACKGROUND
The RBTMD is a benefit assessment district that acts as a revenue source to help fund marketing and sales promotion efforts for Redondo Beach lodging businesses. This approach has been used successfully in other destination areas throughout the state to improve tourism and drive demand for additional room nights to assessed lodging businesses. The RBTMD was initially approved by City Council in 2018 for a five-year term. During the formation process, consultants worked with a steering committee comprised of local hoteliers and City representatives to create a Management District Plan (MDP), which established a framework for the tourism management district (TMD) including boundaries, a service plan, annual budget, and a proposed structure for governance.
Management of the RBTMD is the responsibility of the non-profit entity RBTT, which was also established as part of the District formation process. RBTT serves as the RBTMD’s Owner’s Association, manages the funds, implements the RBTMD programs and provides annual reports to the City Council.
Pursuant to the Management District Plan, the RBTT Board is responsible for developing an annual budget for the RBTMD. The projected total budget for Fiscal Year 2023-24 is $1,315,066.
Assessments collected by the RBTMD are remitted to the City monthly at the same time the City collects Transient Occupancy Tax (TOT). The proposed Agreement between the City and the RBTT is the vehicle that allows the City to collect the assessments that are then forwarded to the RBTT.
In addition to preparing and administering the budget, the RBTT is responsible for program development, implementation, and administration and the financial reporting for the RBTMD. According to the Plan, the initial annual budget allocation is 87% sales and marketing, 10% administration and operations, and 3% contingency and reserve.
The sales and marketing program promoting Redondo Beach as a desirable place for overnight visits. The RBTT may contract with third parties to administer and implement programs to drive overnight visitation and room sales to assessed businesses such as:
• Internet marketing efforts to increase awareness and optimize internet presence
• Print ads in magazines and newspapers, television ads, and radio ads targeted at potential visitors
• Preparation and production of collateral promotional materials such as brochures, flyers and maps featuring assessed businesses
• Development and implementation of a public relations and communications strategy, inclusive of social media outlets and press release distribution
• Development and maintenance of a website designed to promote assessed businesses
• Development of Return on Investment (ROI) analysis on effectiveness of district funds
The administration and operations portion of the budget is allocated for administrative staffing costs, office costs, advocacy, and other general costs such as insurance, legal, and accounting fees.
The budget includes a contingency line item to account for any uncollected assessments. If contingency funds are collected, they may be held in a reserve fund or utilized for other programs, administration, or renewal costs at the discretion of the RBTT Board. The RBTT Board sets the policies related to contributions, target amount, and expenditure of monies from the reserve fund.
The Board also prepares an Annual Report to present to City Council within 90 days of September 1st of each year the RBTMD’s term is active. The Fiscal Year 2023-2024 Annual Report shall include:
• Any recommended changes to boundaries
• The improvements and activities to be provided for that fiscal year
• An estimate of cost for providing the improvements and activities
• 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 for that fiscal year
• The amount of any surplus or deficit revenues to be carried over from a previous fiscal year
• The amount of any contributions to be made from sources other than assessments
In Fiscal Year 2023-2024, RBTT continues to focus on the following:
• Positioning Redondo Beach as a premier destination for travelers visiting SoFi stadium and other LA attractions
• Continued support of BeachLife Festival through paid sponsorship program with a focus on digital impressions
• Investing in Expedia ad campaigns to increase exposure of Redondo Beach within the greater Los Angeles market
The proposed ten-year renewal of the Agreement between the City and RBTT allows for strategic planning and execution of long-term marketing initiatives, which are essential for sustained growth and increased visitation. The accomplishments highlighted in the attached “Redondo Beach Tourism Marketing FY23/24 Annual Report” demonstrate the effectiveness of the RBTMD in driving tourism, justifying the need for a continued partnership with RBTT.
Staff is recommending the City Council approve the renewal of the Agreement between the City and RBTT that facilitates the implementation of the District and maintains a formal relationship between the parties for the collection and distribution of the assessments.
COORDINATION
The proposed agreement to extend RBTT management services were coordinated by the Waterfront and Economic Development Department with assistance from the City Manager’s Office, City Attorney’s Office, City Clerk’s Office, City Treasurer’s Office and the Financial Services Department.
The Financial Services Department will continue to assist with RBTMD assessments, receipt of payments, and the processing of the assessments and payments. The Waterfront and Economic Development Department will take the lead in the renewal process with assistance from the City Manager’s Office.
FISCAL IMPACT
Funds from the RBTMD will be collected from the assessed hotels by the City via the TOT billing process. Revenues will then be submitted to the RBTMD corporation.
Adoption of the proposed 2023-2033 RBTMD is not expected to have a direct fiscal impact on the City’s budget. RBTMD assessments (currently 1% of gross short-term sleeping room rental revenue) are restricted for use exclusively by the RBTMD and must be reported to the City Council annually. It is anticipated that the TMD will continue to increase visitation to the City, resulting in an increase in TOT, and sales tax collections.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Agmt - Redondo Beach Travel & Tourism 10-Year Agreement
• Reso - No. CC-2312-130 Intent to Renew Redondo Beach Travel & Tourism
• Reso - No. CC-2310-108 Approving the Report of the Redondo Beach Travel & Tourism Board for FY 2023-24 in Connection with the Redondo Beach Tourism Marketing District, October 17, 2023
• Redondo Beach Tourism Marketing FY23/24 Annual Report, October 3, 2023