DEL MAR — Council members unanimously agreed at the July 6 meeting to begin the process to renew the Tourism Business Improvement District, but the extension will likely be valid for less than 10 years, as was requested by the organization.
Formation of the TBID, which allows hotel operators to charge guests an additional 1 percent, was authorized in late 2010.
The money, collected with the transient occupancy tax, is used for marketing to attract more visitors to Del Mar.
Despite support from the operators of the city’s six hotels, the group admittedly got off to a rocky start. It took about three years to find the right marketing company and longer than expected to launch its website, Dream Del Mar.
Collections were impacted as some of the hotels started renovation projects after the district was formed. During required annual updates, council members were often frustrated by the lack of financial information and proof the organization was having any success.
In the past few years hotel occupancy and TOT funds have increased, but only slightly, leaving council members wondering if the TBID is the best use of funds. They have discussed increasing the TOT, which would result in more money for citywide improvements.
“We realize we haven’t done the best job over the years by providing cohesive communication,” said Shaun Beucler, general manager of L’Auberge Del Mar. “That needs to change.”
Since the inception of the district, occupancy rates and the number of overnight visitors have increased by less than 5 percent and TOT funds are up by an average of about 8 percent.
“We have not seen a decline in the last five years,” Beucler said. “We’ve only seen growth year over year, and we feel this is a true reflection of the results of all the things to do with marketing, the creation of the Dream Del Mar website, PR and social media plan.”
In addition to promoting the Del Mar hotels, the TBID also earmarks some money for downtown improvements and events, including developing the historic Del Mar walking tour, pedestrian directory signs and a Del Mar Village brochure.
The district is estimating a $205,000 budget. Approximately $141,450, or 70 percent, will to toward tourism promotion and special events. Only 5 percent is spent on administrative costs. Another 1 percent, or $2,050, will go to the city to cover its costs to collect the fee.
The organization is also proposing a new governance model. Visit Del Mar is the nonprofit organization created by the district to manage the assessments. The five people who own or manage the six hotels make up its governing board.
In an effort to improve administrative efficiencies, TBID would like to partner with the Del Mar Village Association.
“We are not the most nimble group, quite frankly,” Beucler said, adding that a partnership with DMVA “is absolutely necessary moving forward as part of our renewal process.”
Under the new plan DMVA would be the TBID owners association and the district would be one of its subcommittees, which would be made up of hoteliers and DMVA board members.
Richard Earnest, former mayor and current DMVA president, urged council members to renew the district, which would automatically expire this year without approval.
“This seems to be working,” he said. “You can argue that this doesn’t look much different than before we had it. You can make lots of different data arguments. You can cherry pick data and draw any conclusions you want.
“But what I think you would have to say is that something here is working,” he added. “Something’s better than it was. … I think it needs more gestation time to make sure that it’s working. This is not the time to take one of the pegs out of the hole just to make sure that variable is the one that didn’t work.”
The general managers of two of the city’s smaller hotels said the district has been beneficial.
“Having this allows us to be competitive,” said Man Lai Tam of Hotel Indigo.
“Once you get people into Del Mar it helps us all,” John Halper, from Les Artistes and Secret Garden Inns, said. “Stopping this now would hurt (restaurant and other retail businesses) more than it hurts us.”
The district was seeking a 10-year extension because the cost to renew is about $35,000.
Council members all agreed the district should be allowed more time to prove itself — between two and five years — although some had more reservations than others.
“It looks good this year but you’ve got a four-year track record that doesn’t look so good,” Councilman Dwight Worden said. “To renew for 10 years feels uncomfortable to me.”
Worden said he supports a two-year extension and asked for more specific goals and success metrics.
Councilman Don Mosier said the initial goal was “to raise more money than they consume.”
“Looking at reports you’ve done that,” he said, noting the increase in TOT money and occupancy rates could have more to do with an improved economy.
“The serious test of this organization will come when there’s an economic downturn,” Mosier said. “I think it’s important to have this kind of organization to be competitive and to weather those kinds of things.”
Mayor Al Corti said the money might be better spent on city projects such as lighting, benches and streetscape, sidewalk and accessibility improvements.
Public hearings on the renewal will be held July 20 and Sept. 8. No action will be taken at the first meeting. At the end of the second one council can adopt, revise, or modify the assessment or the types of improvements and activities that can be funded with the TBID money.