Newport Beach tourism business improvement district dissolved

By the time the Newport Beach City Council considered dissolving the city’s Tourism Business Improvement District Tuesday night, the district had already expired, at the end of January, per its management plan.

The expected council action, which was to adopt a resolution formally stating the city’s intention to disestablish the district so a time and date could be set for a public hearing, was instead tabled after council members agreed they did not have enough information to render a decision.

The agenda item had been placed on the City Council’s consent calendar but was pulled for discussion by Mayor Will O’Neill.

Visit Newport Beach chief executive officer and president Gary Sherwin and City Atty. Aaron Harp addressed questions from the dais regarding the relationship between a new organization that would be formed and Visit Newport Beach and its parent, Newport Beach & Co., where and how funding from assessments would be used, and what oversight, if any, the city could have under the new arrangement.

The tourism improvement district was established in 2009 to help fund tourism marketing that would promote the city as a vacation and meeting destination. City staff said supplemental funding financed improvements that would increase hotel occupancy so they could be competitive in the conference sector of the tourism industry.

The district was administered by Visit Newport Beach, the city’s tourism arm, which receives about 18% of all transient occupancy tax in the city.

Annual assessment rates were about 3% of a hotel’s gross long-term room rental revenue The city remitted 99.75% of the funds to Visit Newport Beach while retaining 0.25% for the costs of collection and administration, according to a staff report prepared for Tuesday‘s meeting.

The board of directors opted to dissolve the district and instead form a Meetings Assessment Partnership, which operates the same as the tourism improvement district but in a private capacity.

During Tuesday’s discussion, O’Neill pointed to Anaheim, which state auditors have said failed to properly manage its tourism contracts and millions of dollars in associated costs, with some of its funds used for political purposes.

“I’m trying to understand when we now are getting rid of the TBID, which I saw quotes in the Orange County Register this morning saying that the reason for it is to get rid of bureaucracy — fine. My understanding is that from the staff report it was costing $12,000 a year,” said O’Neill. “It doesn’t seem like a lot of bureaucracy, but OK. If that’s why they wanted to get rid of it, fine.

“But is this new voluntary organization going to be a standalone? Are they going to be administered by one of the taxpayer organizations? And if that’s the case, is there an oversight problem now ... with what the state had been looking at in Anaheim and expecting cities to do with their taxpayer dollars?”

Businesses that will transfer over to the MAP include the Balboa Bay Resort, the Hyatt John Wayne Airport Newport Beach, the Hyatt Regency Newport Beach, the Newport Beach Marriott Bayview, VEA Newport Beach: a Marriott Resort and Spa, the Newport Dunes Waterfront Resort and Marina, the Renaissance Newport Beach Hotel and the Lido House.

It is unclear when the topic will return to the City Council for further discussion.