Thoughts on the Tourism Improvement District’s annual report

August 18, 2017 by Fred Allebach

There will be eight more years of the current Tourism Improvement District (TID) authorization — revenue from a two percent hotel bed tax spent on marketing the town to tourists — by the city council.

The presentation of the TID annual report provides an opportunity for formal council oversight, as it is the council who has granted the TID its authority. If the council has anything to say about TID activities, now is the time to say it, at a public forum where the TID and tourism are in the agenda.

From reading the annual report, the TID sees itself as all benefits and no costs. The agency is very narrowly focused. However, the overall hospitality-tourism issue demands a less narrow, and more systemic view.

A systems-literate view would be one based on full cost accounting, using indicators centered on a triple bottom line method. This method is what is used when trying to be sustainable.

Does the council have any control here to raise and address systemic costs with the TID, or just to “accept the report?”

That this agenda item follows the discussion council member Harrington’s raised, of city financial support for the SVVB, is an opportunity for the council to further demonstrate their command of factors involved in the tourism issue. If this is going to be a public conversation, the public needs more information, and now is a good time for the council to ask the TID for it.

The primary costs of unsustainable tourism in Sonoma are low wages and high housing costs, followed by educational system problems. This conclusion is borne out by academic studies conducted by Samuel Mendlinger and Eben Fodor, and which were discussed in a seminar a number of years ago put on by NapaVision 2050, that city and Chamber staff attended. The pattern, and costs of unsustainable tourism is illustrated by examples from the Greek Islands; Woodstock, VT; Carmel, CA; and Aspen CO. Sonoma seems to be heading straight into recapping the same exact costs and patterns.

Mendlinger says that hospitality tourism must serve more than just the tourist client. To be sustainable, locals have to be served with good housing and jobs, and the future of the municipality has to be taken into account in terms of environment, resources use, and social fabric. This is basically a triple bottom line view.

Fodor lays out with compelling stats and public policy analysis why growth is not the holy grail believed in by some. This is the kind of work it would be good to see city staff be able to quote, yet no evidence of having attended the NapaVision 2050 seminar ever came out of the city.

The point here is that there is a lot of material available to frame tourism in more sustainable ways. Why is it taking so long to develop a more comprehensive view here in Sonoma and Sonoma Valley?

Given that the SVVB is a member of the Sonoma Ecology Center’s emerging Sustainable Sonoma group, one supported by the Sonoma Valley Fund, and using the Hidden in Plain Sight study as relevant data, it would be logical to assume that actual sustainability principles would be internalized by the TID. However, as with other more symbolic sustainability efforts, only the economic or environmental components are emphasized, and the social equity component is left out.

It is fine to talk about economic vitality and be centered on economic factors, but to have a sufficiently broad and systemic view of Sonoma’s role in the valley, the triple bottom line method is necessary. To date, the business as usual cohort of government and commerce, have yet to speak of, and display a command of this necessary full cost sustainability framework.

Rather than the council simply accept the report, and in lieu of the coming October agenda item on the SVVB, I suggest providing the following oversight, and asking the TID for further information, including the following:

 

• Given that the current number of hotel rooms, plus full-court press advertising, is going to result in a plateau to current exponential growth, this may be a good time to draw a line at the current capacity and not seek to grow the tourism sector any further; this is a good time to call in the chits with the Chamber and move for more economic diversity, away from hospitality tourism; it will be more adaptive for the city to have a wider economic palette.
• How much profit are the hotels getting in relation to the level of living wage paid toemployees?
• How are profits distributed to workers so as to allow them to live and shop in Sonoma?
• What percent of hospitality service workers commute to Sonoma and what is their transportation GHG footprint?
• What are the wages paid for service workers broken down by hotel, and type of job?
• What are the wages of the hospitality sector broken down by business type, and specific occupation?
• If the proposed Napa Street West hotel is offering an additional community benefit of union scale wages (to proactively foster what might be considered sustainable tourism), this presumes that other hotels do not offer union scale/ living wages.
• If tourism-based economic vitality is actually very unequally distributed, and the results of Sonoma-promotion, as mentioned by council member Edwards, cause people to want to move here, this causes gentrification, and drives up the price of real estate to create the number one cost issue of monoculture hospitality tourism: unaffordable housing.
• If 82% of county small businesses are in tourism, and 10% of jobs are in tourism, what do these jobs pay to workers? Where are the stats on that?
• What is the full cost accounting GHG transportation footprint of the tourism sector as as a whole, in the county and the city? (hint: it is not measured, and the lack of this data was the reason for the California River Watch lawsuit against the Climate Action 2020 programmatic EIR)

 

As I read the stats and budget, the TID gets a 2% assessment: i.e. a bed tax, and only uses $13,000 annually to maintain itself administratively; there are no TID salaries. The TID gets from this 2% fee, $750,000 a year. 74% of this $750,000 goes to marketing, $450,000 of which goes to the Sonoma Valley Visitor’s Bureau (SVVB), plus another $100,000 for SVVB visitor services, to total $550,000 to the SVVB. Another $100,000 is dedicated for SVVB/ TID marketing. (The city pays an additional $100,000 to support the SVVB.) This marketing budget is not broken down well in the packet, on the TID profit and loss sheet. A more detailed look, by someone like Chris Petlock, might show that the TID could make up the $100,000 city contribution, as Amy Harrington has suggested. Such a third party, volunteer look by Petlock might be instructional for the public and council.

The TID has $480,000 in current assets, which could be four years of making up the city’s cost to the SVVB, should the council see fit to look at Amy Harrington’s suggestions. Such funding and accounting work would basically be a redistribution of, and not a withdrawal of public funds. The TID and SVVB is using council-authorized public funding anyway.

On this tack, the Holiday Lighting costs $75,000 a year. That could be privately fundraised from philanthropy instead of paid for by taxpayers, and this $75,000 put in place of the city’s $100,000 SVVB money. How can city government afford to allocate taxing authority to have holiday lights but not have an affordable housing fund? The lights are really nice; get Sandy Weil to pay for them.

There is no SVVB budget in the TID annual report, with SVVB staff salaries shown, and how much of the TID $550,000 goes to pay for SVVB staff. This may be an oversight, or the SVVB budget may be coming out separately, wherein the salary component of the SVVB budget will be made clear.

The TID annual report stats show evidence for a full court press of advertising. This has been very successful. The effort even seems over the top, maybe too much. This advertising effort is what has all the buses, limos, vans and everything that is jamming up the whole Plaza. The TID has created a monster now, that they can’t control. This monster has invaded the Plaza, the symbolic and historic heart of town. Jonny sees the trouble and is calling the bus tours to do mitigation.

Annual report stats also show an intertwining of Darius Anderson interests with TID promotional efforts: Sonoma Magazine (not Valley of the Moon Magazine), Sunset, the Index-Tribine, Press Democrat, Cornerstone, and likely more. TID personnel have come to public meetings to support the new Anderson hotel. This support amounts to mission creep, and is like saying, “now that we are 300 pounds from eating potato chips, we need more to keep this weight, and grown even bigger, therefore more chips are needed.”

The report explains destination marketing: i.e. to promote Sonoma. This is seen by one cohort in town as all benefit, to create a high level of luxury tourism. Another town cohort, with good reasons, objects to the current level of destination marketing as too much, and as unsustainable. The social equity component is clearly left out. Why is it left out? Maybe it is because of certain economic ideology? It’s not unreasonable to want to put the values and ideas on the table here.

The TID report explicitly supports growth, economic vitality, and city finances, even while sustainability studies show that a carrying capacity level of consumption is needed (see Fodor’s research and publications links.) The Hidden in Plain Sight study shows that even as the city’s economic bottom line gets more money, service workers are getting poorer, and are not benefitting from the tourism economy.

TID personnel say that for every one percent increase in occupancy rate, this is $100,000 for the General Fund. Hotel advocates say how much money their projects will bring to the General Fund. What about how much workers will be paid? And if they will be able to even afford a studio here? What is needed to have these hotels self-administer a haircut, and use the savings to create social equity for employees.

Different council members have talked about sustainable tourism, what could that be?

It could be beneficial in terms of furthering community understanding of the tourism issue, that the TID, SVVB invite the Sonoma Valley Fund to give a presentation of the Hidden in Plain Sight study to their members and associates, please contact SVF board member Katherine Fulton to arrange.

The TID has grown 42% since its inception, and it now gets $750,000 a year. The goal is to pack tourists in year-round, all the time, mid-week as well. All of this has costs for preserving Sonoma’s small town, and the valley’s rural character. If the community place, the heart of town, the Plaza, is constantly swamped with tourists who seek to experience the unique feel of Sonoma, at what point is that feel lost when it has morphed into crowds looking to find what is no longer there? In the process, residents have been squeezed out of their own town in multiple ways, (see Mendlinger).

My comments here are intended to challenge a narrative that current tourism-centered economic activity is all benefit and no cost. All I’m asking for is some sense of balance and of seeing the big picture, that some sense of the inter-relatedness of issues is acknowledged, by the public, the TID, the SVVB and the city council. There is a disconnect here, between primarily higher-up economic actors and the rest of the community. These actors paint a picture of how great everything is, talk about economic vitality, and give each other awards, meanwhile objective demographic figures by the County Development Commission show that the bulk of benefits are restricted to the very top. From a sustainability perspective, the Sonoma community has a stilted picture of what success is. Real success, i.e. sustainable success, metes out the benefits to more than just those at the top.

The TID annual report shows that within the scope of their narrowly defined mission, they do very well. It is the city council’s job to have a wider vision, and use this agenda item to further the discussion started by council member Harrington last week.