The City of Morro Bay is again getting out of the tourism promotions business, and turning over the spending of promotions monies to the lodging industry, where it started.
The Morro Bay Tourism Improvement District or TBID was formed in April 2009 after motel owners approached the City with the idea to form an assessment district to tax themselves and provide monies for promoting the town’s lodging industry.
The switch came at a time when the City was shrinking the budget for the Community Promotions Committee, the city board that worked with the Chamber of Commerce to promote tourism and support special events.
The TBID proposal, which was eventually adopted by the City Council, was to add 3% onto the cost of a room night — paid whether by the guest or by the motel. The money was spent by the TBID board via a non-profit organization of the same name.
While the City Council made the ultimate decisions on the TBID’s budget, the board decided how to market the town and also funded a visitor’s center.
That system worked well from the start as the motels, vacation rentals, and B&Bs increased occupancy well past the goal of 50% that the TBID started out with. The City also saw a sudden rise in transient occupancy taxes (of 10% on a room night), which became the City’s second largest source of taxes behind property taxes.
But the initial successes slowed considerably after 2016, when the City Council voted to create a tourism bureau within the City bureaucracy, and take over control of the TBID’s budget, which had quickly grown to nearly $1 million a year as tourism flourished.
The City hired a full time tourism manager and a small staff and took over promotions with the TBID board reduced to an advisory role. But that all came to a screeching halt in March 2020 when the Coronavirus Pandemic hit.
Immediately, the City shut off promotions as initially, motels and restaurants, along with numerous other businesses were ordered closed to fight the spread of the virus.
The City manager shut down the tourism bureau, laid off two of the three staffers, canceled the contract with its marketing firm, and all promotions dried up.
Indeed, the City even took out advertisements in Central Valley media outlets asking people NOT to come here, in an attempt to protect local residents from visitors who in most cases lived in areas with a much higher level of COVID-19 infections.
But motels and lodging businesses were soon allowed to reopen with limited capacity and by last summer, tourism had largely returned to town.
People were still not able to eat inside restaurants, but they beat a path to the cool ocean breezes and fresh air during a summer that had numerous devastating wildfires including several in the Sierras that blanketed the Central Valley in a haze of choking smoke.
But as the pandemic restrictions have lingered on for over a year now, the City took the opportunity to change the TBID back to what it was before, an independent, non-profit that manages its own budget.
That entailed changing the way the TBID assessment district was formed, in essence going from a 1984 law to a 1994 law. The old assessment district had to be voted on every year by the people who benefit from it.
This new version will be voted on every 5 years, so the new charter is good from July 1, 2021 to June 30, 2026, when the lodging businesses will be have to re-up the program or vote it out of existence.
Of note, the City Council again declined to expand the TBID to include privately owned RV parks.
The Morro Bay TBID is separate from the County Tourism Marketing District or TMD, which is a countywide assessment district — charging 1.5% of a room night — and focusing on promoting SLO County as a whole.
The Morro Bay TBID focuses on just promoting Morro Bay.
There is also a County Business Improvement District or CBID which collects 2% of a room night but just from motels, B&Bs and vacation rentals in unincorporated communities — mainly Cayucos, Cambria and San Simeon — with half of that money going back to a local advisory board to spend on local promotions and special events. The other half promotes tourism just in the unincorporated communities.
Morro Bay’s TBID will now have to complete the formation of a new non-profit organization to run the promotions through, and it’s expected that will be completed before the July 1 start of the new arrangement.
The City will collect the TBID charges monthly and remit it to the organization. The City estimated the assessment district would collect $991,000 a year.