Morgan Hill Municipal Code Ch. 3.26 Tourism Business Improvement District

The City of Morgan Hill renews the Morgan Hill Tourism Business Improvement District (MHTBID), for a ten year life, beginning March 1, 2024 or as soon as possible thereafter, and ending ten years from its start date, under the provisions of the Property and Business Improvement District Law of 1994, as set forth in the Streets and Highways Code of the state, Section 36600 et seq.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The management district plan (plan) dated September 15, 2023, is hereby adopted and approved.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

1. The activities to be provided to benefit businesses in the MHTBID will be funded by the levy of the assessment. The revenue from the assessment levy shall not be used: to provide activities that directly benefit businesses outside the MHTBID; to provide activities or improvements outside the MHTBID; or for any purpose other than the purposes specified in this chapter, the resolution of intention, and the plan. Notwithstanding the foregoing, improvements and activities that must be provided outside the MHTBID boundaries to create a specific benefit to the assessed businesses may be provided but shall be limited to marketing or signage pointing to the MHTBID.

2. The council finds as follows:

a. The activities funded by the assessment will provide a specific benefit to assessed businesses within the MHTBID that is not provided to those not paying the assessment.

b. The assessment is a charge imposed for a specific benefit conferred or privilege granted directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of conferring the benefit or granting the privilege.

c. The assessment is a charge imposed for a specific government service or product provided directly to the payor that is not provided to those not charged, and which does not exceed the reasonable costs to the local government of providing the service or product.

d. Assessments imposed pursuant to the MHTBID are levied solely upon the assessed business, and the business owner is solely responsible for payment of the assessment when due. If the owner chooses to collect any portion of the assessment from a transient or customer, that portion shall be specifically called out and identified for the transient or customer in any and all communications from the business owner as the "MHTBID Assessment" as specified in the plan. As an alternative, the disclosure may include the amount of the MHTBID assessment and the amount of the assessment imposed pursuant to the California Tourism Marketing Act, Government Code § 13995 et seq. and shall be disclosed as the "Tourism Assessment."

3. The assessments levied for the MHTBID shall be applied toward sales & marketing and sports facility marketing & development programs, and other improvements and activities as set forth in the plan.

4. Assessments levied on lodging businesses pursuant to this chapter shall be levied on the basis of benefit. Because the services provided are intended to increase room rentals, an assessment based on short term room rental revenue is the best measure of benefit.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The assessments for the entire MHTBID will total approximately $341,000 in year one.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

Bonds shall not be issued to fund the MHTBID.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The renewed MHTBID includes all lodging businesses, existing and in the future, available for public occupancy located within the boundaries of the City of Morgan Hill as described in the management district plan.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

1. The annual assessment rate is one and one-half percent of gross short-term sleeping room rental revenue. During the MHTBIDs term, the assessment rate may be increased annually by the owner's association upon approval from the board of directors by a maximum of one half of one percent of gross short-term sleeping room rental revenue per year. The maximum assessment rate may not exceed three percent of gross short-term sleeping room rental revenue. If the assessment rate is increased, it may subsequently be decreased by a maximum of one-half of one percent each year, but shall not be decreased below a minimum of one and one-half percent of gross short-term sleeping room rental revenue. Any proposed assessment rate increase or decrease shall be included in the MHTBID annual report and shall not be effective until approved by the council. Based on the benefit received, assessments will not be collected on: stays of more than thirty consecutive days or stays by any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

2. The assessments shall be used for the purposes set forth herein and any funds remaining at the end of any year may be used in subsequent years in which the MHTBID assessment is levied as long as they are used consistent with the requirements set forth herein.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The city will be responsible for collecting the assessment on a monthly basis (including any delinquencies, penalties and interest) from each lodging business located in the boundaries of the MHTBID. The city shall take all reasonable efforts to collect the assessments from each lodging business.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The council, through adoption of this chapter and the plan, has the right pursuant to Streets and Highways Code §36651, to identify the body that shall implement the proposed program, which shall be the owners' association of the mhtbid as defined in Streets and Highways Code §36612. The council has determined that Visit Morgan Hill shall continue to be the MHTBID owners' association. Passage of this chapter authorizes the council to contract with Visit Morgan Hill to administer the MHTBID.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

Visit Morgan Hill, pursuant to Streets and Highways Code §36650, 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 improvement and activities described in the report. The first report shall be due after the first year of operation of the MHTBID.

(Ord. No. 2349-N.S., § 1, 12-6-2023)

The MHTBID renewed pursuant to this chapter shall be subject to any amendments to the Property and Business Improvement District Law of 1994 (California Streets and Highways Code §36600 et. seq.).

(Ord. No. 2349-N.S., § 1, 12-6-2023)