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Santa Rosa  —  The Santa Rosa City Council unanimously approved a resolution of intent to create a business improvement area  to promote tourism within the city limits.

The BIA, which was proposed by the Santa Rosa Chamber of Commerce and supported by a majority of city hoteliers, will add a 3 percent assessment to visitor rooms. It is expected to generate approximately $1 million in revenue that will be put into a fund meant solely for promotional purposes and not the city’s general fund, said Bill Arnone, chair of the chamber board and who helped draft the language of the ordinance.

Mr. Arnone, also a managing partner at Merrill, Arnone & Jones, helped draft another BIA already employed by the county, which is handled by the Sonoma County Tourism Bureau and has a $3.8 million annual budget. The county and city BIAs will be separate, and measures have been taken to prevent duplicative efforts, according to Mr. Arnone.

The 3 percent assessment will be in addition to the city Transient Occupancy Tax, which is at 9 percent, as well as the 2 percent assessment  levied by the countywide program.

Additionally, the revenue generated from the city BIA will be split by a 70 to 30 margin with the Department of Economic Development and Housing, which will in turn fund the Convention and Visitors Bureau at an estimated $300,000 a year, which previously came out of the city’s budget.

Funding for the visitors bureau was facing elimination as the city grapples with a budget deficit of approximately $4 million, said Keo Hornbostel, general manager of Hyatt Vineyard Creek and chair of the convention and visitors bureau board.

“We’ve been looking for a sustainable funding mechanism for some time,” Mr. Hornbostel said. “All the stars got aligned at about the same time. The city was looking to cut from its budget and close our funding.”

By law, funds generated from a BIA must be used to help those who carry out the assessment, in this case a total of 27 lodging businesses in Santa Rosa, Mr. Arnone said. But an agreement was struck with city leaders to benefit both hoteliers and city efforts to promote itself.

“The city acknowledged they cannot use money for any general funds. What the city is saying is some of its programs work on promoting the city, too, so it can take some of that money for promotional purposes,” Mr. Arnone said.

The visitors’ bureau draws an estimated 50,000 to 60,000 visitors a year for various conventions and events, Mr. Hornbostel said. If funding were eliminated, the city would stand to lose significant tourism dollars as well as the closure of its state welcome center.

“That’s certainly why we came to the table with it,” Mr. Hornbostel said. “It’s a long-term way of maintaining tourism in the city.”

City Councilmember Jane Bender, reading the intent to adopt the BIA, said the approach allows for more “agility” for the private sector to promote itself.

Mr. Arnone echoed such a notion, saying hoteliers much prefer a BIA.

“Hoteliers care a lot about whether it’s a BIA or TOT, because a BIA forces you to spend the money on tourism.”

The BIA will have an advisory board consisting of five people – three from hotels in the city, one representative from the chamber and one from the city.

A BIA differs slightly from a business improvement district, or BID, which Napa County recently voted to implement. A BIA requires members to opt out, whereas a BID is opt in, Mr. Arnone said. Each requires a simple majority of hoteliers to approve it.

The Napa County Board of Supervisors recently approved the formation of a TBID, which will similarly funnel revenue from a 2 percent assessment from hoteliers to a county-wide destination marketing fund that will be handled by the Napa Valley Destination Council. It is estimated to raise as much a $4 million annually.

Public hearings on the Santa Rosa city BIA will take place on July 20 and July 27, and a vote will take place on Aug. 3 and could take effect by Sept. 3.