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HomeMy WebLinkAbout12-8-2020 FORMAL SESSION AGENDA CITY OF VIRGINIA BEACH "COMMUNITY FOR A LIFETIME" CITY COUNCIL 0We13E4 MAYOR ROBERT M. "BOBBY"DYER,At Large 'S L VICE MAYOR JAMES L. WOOD,Lynnhaven—Districts 0 :'. JESSICA P.ABBO7T,Kempsville—District 2 A: 2 MICHAEL F.BERLUCCHI,Rose Hall—District 3 U I \lt BARBARA M.HENLEY,Princess Anne—District 7 ,�. LOUTS R.JONES,Bayside—District 4 + ,•��' � +. JOHND.MOSS,At Large '+, .•° • AARONR.ROUSE,At Large :°' au• ".o°".' GUYK.TOWER.Beach—District 6 ROSEMARY WILSON,At Large CITY HALL BUILDING SABRINA D. WOOTEN,Centerville—District I 2401 COURTHOUSE DRIVE CITY COUNCIL APPOINTEES VIRGINIA BEACH, VIRGINIA 23456-9005 CITY MANAGER—PATRICK A.DUHANEY PHONE:(757)385-4303 CITY ATTORNEY—MARK D.STILES FAX(757)385-5669 CITY ASSESSOR—RONALDD.AGNOR CITY COUNCIL AGENDA E-MAIL:CITYCOUNCIL@vbgov.com CITYAUDITOR—LYNDON S.REMIAS CITY CLERK—AMANDABARNES December 8,2020 MAYOR ROBERT M. "BOBBY" DYER PRESIDING I. CITY COUNCIL'S BRIEFINGS -Virginia Beach Convention Center- 2:30 PM A. PUBLIC DEFENDER PAY PARITY Cal Bain,Virginia Beach Public Defender's Office B. COVID-19 UPDATE Dr. Demetria Lindsay, Director—Virginia Beach Public Health II. CITY MANAGER'S BRIEFINGS A. LOCAL COVID-19 RELIEF FOR VIRGINIA AQUARIUM & MARINE SCIENCE CENTER Cynthia Whitbred-Spanoulis, Director—Virginia Aquarium B. COMPREHENSIVE ANNUAL FY20 FINANCIAL REPORT(CAFR) and GENERAL FUND UPDATE Kevin Kielbasa, Principal Accountant—Finance III. CITY COUNCIL COMMENTS IV. CITY COUNCIL AGENDA REVIEW V. INFORMAL SESSION -Virginia Beach Convention Center- 5:00 PM A. CALL TO ORDER—Mayor Robert M. "Bobby"Dyer B. CITY COUNCIL ROLL CALL C. RECESS TO CLOSED SESSION CITY OF VIRGINIA BEACH "COMMUNITY FOR A LIFETIME" CITY COUNCIL G‘N�•BEgc MAYOR ROBERT M. "BOBBY"DYER,At Large �` 'S VICE MAYOR JAMES L. WOOD.Lynnhaven—District s 4 0S'�`_ JESSICA P.ABBOTT,Kempsville—District 2 '" 2 MICHAEL F.BERLUCCHI,Rose Hall—District 3 V j BARBARA M.HENLEY,Princess Anne—District 7 ' * i }Z., `' ' i LOUIS R.JONES,Bayside—District 4 JOHND.MOSS,At Large #4. , AARONR.ROUSE,At Large °' °°. GUYK.TOWER,Beach—District 6 ROSEMARY WILSON,At Large CITY HALL BUILDING SABRINA D. WOOTEN.Centerville—District 1 2401 COURTHOUSE DRIVE CITY COUNCIL APPOINTEES VIRGINLA BEACH, VIRGINIA 23456-9005 CITY MANAGER—PATRICKA.DUHANEY PHONE:(757)385-4303 CITY ATTORNEY—MARK D.STILES FAX(757)385-5669 CITY ASSESSOR—RONALD D.AGNOR CITY COUNCIL AGENDA E-MAIL:CITYCOUNCIL@vbgov.com CITY AUDITOR—LYNDON S.REMIAS CITY CLERK—AMANDABARNES December 8,2020 MAYOR ROBERT M. "BOBBY" DYER PRESIDING I. CITY COUNCIL'S BRIEFINGS -Virginia Beach Convention Center- 2:30 PM A. PUBLIC DEFENDER PAY PARITY Cal Bain, Virginia Beach Public Defender's Office B. COVID-19 UPDATE Dr. Demetria Lindsay, Director—Virginia Beach Public Health II. CITY MANAGER'S BRIEFINGS A. LOCAL COVID-19 RELIEF FOR VIRGINIA AQUARIUM &MARINE SCIENCE CENTER Cynthia Whitbred-Spanoulis, Director—Virginia Aquarium B. COMPREHENSIVE ANNUAL FY20 FINANCIAL REPORT (CAFR) and GENERAL FUND UPDATE Kevin Kielbasa, Principal Accountant—Finance III. CITY COUNCIL COMMENTS IV. CITY COUNCIL AGENDA REVIEW V. INFORMAL SESSION -Virginia Beach Convention Center- 5:00 PM A. CALL TO ORDER—Mayor Robert M. "Bobby" Dyer • B. CITY COUNCIL ROLL CALL C. RECESS TO CLOSED SESSION VI. FORMAL SESSION -Virginia Beach Convention Center- 6:00 PM A. CALL TO ORDER—Mayor Robert M. "Bobby"Dyer B. INVOCATION C. PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA D. ELECTRONIC ROLL CALL OF CITY COUNCIL E. CERTIFICATION OF CLOSED SESSION F. MINUTES 1. INFORMAL and FORMAL SESSIONS December 1, 2020 G. MAYOR'S PRESENTATIONS 1. RESOLUTIONS IN RECOGNITION a. Steven R. Cover b. Robert R. Matthias c. Mark Johnson d. Tony Zucaro e. Bobby Hill H. PUBLIC COMMENT 1. CONVENTION AND VISITORS BUREAU COMMUNITY TASK FORCE RECOMMENDATIONS I. PUBLIC HEARING 1. ACQUISITION OF AGRICULTURAL LAND PRESERVATION (ARP) EASEMENT 328.90 acres at 4152 Blackwater Road J. FORMAL SESSION AGENDA 1. CONSENT AGENDA K. ORDINANCES 1. Ordinance to AMEND Section 2-109 City Code re temporary pay adjustments (Deferred from December 1, 2020) 2. Ordinances to DESIGNATE as EXEMPT re Real and Personal Property Taxes: a. East Coast Volleyball Club b. Hospice and Palliative Care of Tidewater c. Luv All Warriors, Inc. d. One Step Ministries e. The Pink Ride, Inc. f. Trails of Purpose 3. Ordinance to AUTHORIZE: a. Acquisition of an Agricultural Land Preservation (ARP) easement from Ives Farm, LLC, (328.90+/- acres) b. issuance by the City of its contract obligation in the maximum principal amount of $2,012,868; and c. TRANSFER funds to purchase U.S. Treasury Strips 4. Ordinance to DECLARE 2.812+/-acres of land at the intersection of Princess Anne and South Witchduck Road (formerly Kempsville Road) in EXCESS of the City's needs and AUTHORIZE the City Manager to sell same to Princess Anne/Witchduck Associates 1, LC re construct a multi-tenant commercial development with architectural components consistent with Historic Kempsville Plan 5. Ordinance to AUTHORIZE the acquisition of property in fee simple re Princess Anne Plaza North London Bridge Creek Pump Station Project, CIP# 7-089 and the acquisition of temporary and permanent easements, either by agreement or condemnation (Deferred from October 20, 2020) 6. Ordinance to APPROPRIATE $1,163,295 in Fund Balance of the City Garage Internal Service Fund re purchase of horizontal grinder 7. Ordinances to ACCEPT and APPROPRIATE from the Commonwealth of Virginia: a. $463,672 to the FY2020-21 Voter Registration and Elections Operating Budget re November 3, 2020 General Election additional costs b. $6,571,166 to FY2020-21 Department of Public Utilities Operating Budget re direct customer subsidies 8. Ordinances to ACCEPT and APPROPRIATE $49,286 of CARES Act Funds from the Governor's Fast Track Broadband Program to the FY2020-21 Information and Technology Operating Budget re eligible broadband projects 9. Ordinance to REALIGN and TRANSFER CARES Act Funds in accordance with actual eligible expenses 10. Ordinance to ESTABLISH Capital Projects #100559, "Three Oaks Elementary Multi-Use Path," and #100558, "Violet Bank Trail" and TRANSFER funds from Capital Project #100119 "City Bikeways and Trails Plan Implementation" to newly established Capital Projects. 11. Ordinance to TRANSFER $3.7-Million from Capital Project #100147 "Dome Site Parking" to Capital Project#100145"Dome Site Development Acquisition"at 18th Street and MODIFY the description and scope of Capital Project #100145 re costs of decommissioning the Dominion Energy Substation L. PLANNING 1. RACHEL A. DIO for a Conditional Use Permit re short term rental at 5528 Cabin John Drive DISTRICT 1 —CENTERVILLE RECOMMENDATION: APPROVAL 2. ANITA WEST for a Conditional Use Permit re short term rental at 121 South Kellam Road DISTRICT 4—BAYSIDE RECOMMENDATION: STAFF—APPROVAL PLANNING COMMISSION—DENIAL 3. ARICA & MELVIN L. ATKINS III for a Conditional Use Permit re short term rental at 598 Pinewood Drive, Unit 205 DISTRICT 6—BEACH RECOMMENDATION: APPROVAL 4. HDS PROPERTIES,LLC/RUTH VOGEL for a Conditional Use Permit re short term rental at 600 South Atlantic Avenue DISTRICT 6—BEACH RECOMMENDATION: STAFF—APPROVAL PLANNING COMMISSION—DENIAL 5. RICKERT FAMILY LIVING TRUST for a Conditional Use Permit re short term rental at 349 Norfolk Avenue DISTRICT 6—BEACH RECOMMENDATION: APPROVAL M. APPOINTMENTS 2040 VISION TO ACTION COMMUNITY COALITION ARTS AND HUMANITIES COMMISSION CLEAN COMMUNITY COMMISSION COMMUNITY SERVICES BOARD GREEN RIBBON COMMITTEE HISTORIC PRESERVATION COMMISSION HOUSING ADVISORY BOARD INVESTIGATIVE REVIEW PANEL OLD BEACH DESIGN REVIEW COMMITTEE OPEN SPACE ADVISORY COMMITTEE RESORT ADVISORY COMMISSION SOUTHEASTERN PUBLIC SERVICE AUTHORITY TRANSITION AREA/INTERFACILITY TRAFFIC AREA CITIZENS ADVISORY COMMITTEE TRANSPORTATION DISTRICT OF HAMPTON ROADS VIRGINIA BEACH COMMUNITY DEVELOPMENT CORPORATION N. UNFINISHED BUSINESS O. NEW BUSINESS P. ADJOURNMENT If you are physically disabled or visually impaired and need assistance at this meeting, please call the CITY CLERK'S OFFICE at 3854303 ***************************** The Agenda(including all backup documents)is available at https://www.vbgov.com/government/departments/city-clerk/city-council under the eDocs Document Archive. If you would like to receive by email a list of the agenda items for each Council meeting,please submit your request to pmcgraw(aivbgov.com or call 385-4303. I. CITY COUNCIL'S BRIEFINGS - Virginia Beach Convention Center- 2:30 PM A. PUBLIC DEFENDER PAY PARITY Cal Bain, Virginia Beach Public Defender's Office B. COVID-19 UPDATE Dr. Demetria Lindsay, Director—Virginia Beach Public Health II. CITY MANAGER'S BRIEFINGS A. LOCAL COVID-19 RELIEF FOR VIRGINIA AQUARIUM & MARINE SCIENCE CENTER Cynthia Whitbred-Spanoulis, Director—Virginia Aquarium B. COMPREHENSIVE ANNUAL FY20 FINANCIAL REPORT (CAFR) and GENERAL FUND UPDATE Kevin Kielbasa, Principal Accountant—Finance III. CITY COUNCIL COMMENTS IV. CITY COUNCIL AGENDA REVIEW 1 V. INFORMAL SESSION - Virginia Beach Convention Center- 5:00 PM A. CALL TO ORDER— Mayor Robert M. "Bobby" Dyer B. CITY COUNCIL ROLL CALL C. RECESS TO CLOSED SESSION VI. FORMAL SESSION - Virginia Beach Convention Center- 6:00 PM A. CALL TO ORDER—Mayor Robert M. "Bobby" Dyer B. INVOCATION C. PLEDGE OF ALLEGIANCE TO THE FLAG OF THE UNITED STATES OF AMERICA D. ELECTRONIC ROLL CALL OF CITY COUNCIL E. CERTIFICATION OF CLOSED SESSION F. MINUTES 1. INFORMAL and FORMAL SESSIONS December 1, 2020 G. MAYOR'S PRESENTATIONS 1. RESOLUTIONS IN RECOGNITION a. Steven R. Cover b. Robert R. Matthias c. Mark Johnson d. Tony Zucaro e. Bobby Hill �v''BfA �G Cy o` +e°,ecll U.°0 RESOLUTION WHEREAS:Steven R.Cover began his service with the City of Virginia Beach as a Volunteer Firefighter in May 1977 becoming a career firefighter in July 1, 1980; WHEREAS:Steve spent the bulk of his career in the Fire Service,but he possessed the DNA of a police officer given to him by his father who served on the VBPD decades ago.He could have walked in his father's footsteps by becoming a Police Officer,but chose instead to blaze his own path and joined the Fire Service; WHEREAS:Steve rose through the ranks of the fire department becoming Captain(1990-1997),Battalion Chief(1997-2001),District Chief(2002-2005), Deputy Fire Chief(2006-2007)and the City's 4'Fire Chief in November 2007 continuing until November 7,2016; WHEREAS:Steve achieved numerous educational successes including a Bachelor's Degree in Fire Administration(Hampton University),National Fire Service Staff Command(University of Maryland), Master's Degree in Public Administration(Troy State University), Executive Fire Officer Program (National Fire Academy),Senior Executive Institute(Harvard University),and Executive Leaders Program(U.S.Center for Homeland Defense&Security); WHEREAS.Steve was an advocate for the Urban Search and Rescue system and supported VATF-2 as it deployed worldwide. Steve deployed numerous times with VATF-2 serving as Squad Leader-Oklahoma City Bombing response,April 1995;,Assistant Task Force Leader-Pentagon response,September 11,2001;Fire Chief-Navy Jet Mishap—April 6,2012; Operations Chief during Hurricanes Isabel,Frances and Ivan;oversaw and developed plans in response to Hurricanes Katrina,Rita, Ophelia,Dennis and Wilma;and served as the East Coast Representative for 9 FEMA USAR Teams to the National FEMA USAR Program Office; WFIEREAS.:The mission of the Fire Service was but a single aspect of a greater team,Steve understood that public safety had many faces,many uniforms, and many different tasks all working towards a common goal of keeping our citizens,our visitors and all persons safe. And,as such,Steve exchanged his turnout gear for a suit and tie when he joined the City Manager's Office,and began his role as Deputy City Manager in the midst of Hurricane Matthew; WHEREAS:Steve was instrumental in increasing the&re protection in the North End of the Beach District by adding the Fort Story Fire Station's shared use; WHEREAS::Steve supported the City's rescue squads,helping hundreds of our volunteers deliver excellent services; WHEREAS:Steve was instrumental in establishing the Criminal Mass Casualty Unified Command Policy,the multi-jurisdiction training,and exercising this policy.This preparedness led to the successful management of Building 2 during May 31"; WHEREAS:The Virginia Beach Police Department has a national reputation as a progressive and community-oriented agency,and our community was plagued with social unrest and violence on May 31,2020 and many days that followed.Deputy City Manager Cover stood shoulder to shoulder with police officers and executives to help provide steady leadership and an approach to protecting the rights of all people to express their views and opinions. While some in our community condemned law enforcement, Steve Cover stood tall and helped promote the virtues of the Virginia Beach Police Department. Steve managed both May crisis's with consummate calm and compassionate leadership; WHEREAS:Steve unified the public safety approach toward special events and mass gatherings,culminating with a successful response to the Something in the Water festival; WHEREAS:Steve knowledgably led with a strong will, warm heart and decisive,yet empathetic manner,in the Emergency Operations Center during numerous activations and contentious weather briefings,' WHEREAS:Virginia Beach is one of the safest cities in the nation and is one of the most desirable places to live,Steve Cover never forgot that danger awaits when we least expect it and his approach was to ensure staff were ready to respond with the necessary equipment and resources needed to do a very- complicated and dangerous job; WHEREAS:Steve raised the standards of safety for responders by advocating for more effective safety programs at the department level; WHEREAS:Steve is stepping into a new role as private citizen,he will always be respected by not only the leadership of all the public safety agencies but by those at the service level Firefighters,officers,deputies,dispatchers,emergency medical technicians,forensic techs,emergency managers and others who earn their living performing heroic tasks will never forget the true nature ofa man who himself never forgot what it took at the entry level; NOW,THEREFORE,BE IT RESOLVED: That the Virginia Beach City Council hereby expresses its appreciation to STEVEN R COVER for his outstanding contributions to our City and our public safety departments for the past 43 years. Given under our hands this 8t'day of December,2020. Council-%tem erjessicaftA66ott Council.:Hem6er94iclae(0.Ber(uce& Council,lember(Barbara;tif.7f fro Council 1cm6er uis Jones ncifl.ltmlerjofin D. floss utta(%tem6erAaron R R.puse ,‹ / e.......______ jilms4,4. I)11 Cou -ifriem6erGuy7X 7 Council"9.1 m6 semary'Kitson Council lem 6er Sa6rina(D.Wooten ayor James L Woof 7.1 m feet i."Bo6Dyer -'" yfr-fzm•-*"'; : s } ' '�. - s �[ -F 'ti � .�$t 1..StT r3 "k 51(" .Fay+ � e� eft s a r^�� 2' - €+ ,. �Kw Y nfr :;r ,ia*y ::.s 'to • gks ego` ce.e� � W'f' 3£ � +f 4F OUR„Eno' ram( J .�lQ! s:T� i A, sg .? a ; i:,, r:: w � 1 " RESOLUTION WHEREAS: Bob Matthias has been an invaluable resource to the General Assembly with his institutional knowledge of Virginia Beach; WHEREAS: Bob has been our go-to guy as a Liaison between the City and our Virginia Beach delegation,especially during session when matters are time sensitive; WHEREAS:Bob gave selflessly of his knowledge of military matters in dealing with Navy installations at Oceana,Little Creek/Fort Story and Dam Neck,directly leading to superb relationships with a series of commanding officers over four decades. Those commanding officers knew the City valued their presence, took necessary actions to improve their mission effectiveness and was proud to host such front-line warfighting installations; WHEREAS:Bob has gotten up early,stayed up late,and driven to the moon and back to represent the City's interests; WHEREAS: Bob was never too busy to assist and mentor others; WHEREAS: A Bob Matthias promise is worth more than any written contract; . WHEREAS:Bob would always go out of his way to say good morning to colleagues passing in the hall and save a seat in staff meetings so he could catch up with colleagues after a long legislative session away; NOW, THEREFORE, BE IT RESOLVED: That BOB MATTHIAS, a respected public servant, is recognized for his influential work advancing intergovernmental relations for the City of Virginia Beach. BE IT FURTHER RESOLVED: That the Virginia Beach City Council celebrates his contributions and wishes him well as he retires from 44 years of service with the City of Virginia Beach. Given under our hands this 8r11 day of De er, 020. c Council'ember Jessica(1 Abbott Council Member Michael E.Berfucchi Cou Member Barbara M.?fenfey CouncilMeme I'ouis R,Jones ncil Member John .Moss Council Me ber Aaron Xntse Cou Member Guy x Tower CouncilMemb sematy'Wilson ounci(Member Sabrina cD.Wooten ay antes L'Wool Mayor Robert "Bobby" er .0- Hz, ( .L.t.,11 s 40q NPn t,- RESOLUTION WHEREAS:Mark A.Johnson was appointed Director of Public Works in 2018,and previously served as Operations Engineer for Public Works where he was responsible for countless duties that have done much to keep our city running and growing, WHEREAS:Mark earned a Bachelor of Science Degree in Civil Engineering from Old Dominion University;is a licensed Professional Engineer,and has served as an active member of the American Public Works Association; WHEREAS:Mark began working for the City in 1984,first with Public Utilities,then later moved to Public Works where he had a key role in the development and implementation of the storm water program for the City;he was one of the initial planners and developed regulations that are now being used by not only the City,but throughout the state as well;the success of the City's storm water program is partly because of the many contributions and hard work by Mark; WHEREAS:Mark served as the project management engineer for all Capital Improvement Program projects for Public Works,as well as the City's highway and stormwater maintenance programs,as well as many other maintenance and emergency response activities; WHEREAS;Described by his managers as the"go-to guy,"Mark's responsibilities have run the gamut from filling potholes to shoveling snow to putting sand on the beach; WHEREAS.'Mark led the team that earned Virginia Beach Public Works full accreditation by the APWA,an honored designation that only a limited number of U.S.cities have attained; WHEREAS:Mark served his community and represented the City well by volunteering for many years with the Kempsville Pony and Colt Baseball Leagues,coaching teams and helping to build a new ball field;he also volunteered at Landstown Iligh School for several years-building a stage for their marketing program's fashion show as well as serving as a judge for the competitive events at the DECA District Leadership Conference; WHEREAS:Mark has been committed to providing and achieving excellence in service to the City and its citizens; along with his vast knowledge and countless number of projects completed throughout his Virginia Beach career,be leaves a wonderful record of accomplishment behind; WHEREAS:Under Mark's leadership,Public Works has had tremendous growth and many successes;and his efforts and contributions will leave a lasting impact and continue to benefit the City; WHEREAS:On this day,we honor a man and a leader who deserves our deepest gratitude,respect and friendship for all that he has done for each of us and for the City of Virginia Beach. NOW,THEREFORE,BE IT RESOLVED: That the Virginia Beach City Council hereby expresses its appreciation to MARK A.JOHNSON for his outstanding contributions to our City and extends its congratulations on the occasion of his retirement from government service Given under our hands this 846 day of December,2020. AllatC. 121. Council eryessicaT..A66ott Council lie m6rfuccfi Conned 9Kem6erBar6ara gq.1re Kf� 07141i Councif9Kem6 Louis X Ions L&we C.:4 t'''''.." Councif9lemferGuy x Tower Council31em6 semag Wi(son ouncif9Kem6erSa6rina(D.Wooten kik iliFil or lames L Wood 9Hayor 4jp6 !M. `Bo 6y"(Dyer R SOLUTION WHEREAS: Tony Zucaro has dedicated his life to public service and public safety,and we recognize his tireless commitment; WHEREAS:Tony was sworn in with the Virginia Beach Police Department on May 16,1979; WHEREAS:Tony had numerous assignments with the Police Department including Detective,Robbery Squad Supervisor,Crime Suppression Unit Supervisor, 2'd Precinct Shift Commander, Special Operations Lieutenant, Commanding Officer of the 2"d Precinct,and Deputy Chief of Operations&Professional Standards; WHEREAS:Tony served as Interim Chief from May 1,2020—October 14,2020 was sworn in as Chief of Police on September 1, 2020; WHEREAS:Tony lead the department's response to numerous demonstrations which involved not only deploying resources but meeting with members of various community groups; WHEREAS::Tony spearheaded the efforts to implement the Virginia Beach's Photo Safe automated red-light enforcement; WHEREAS:Tony lead the department's effort to implement the organization's professional development program for which he was awarded the agency's medal of merit; WHEREAS:Tony lead the police operations during the tragedy following the Naval jet Crash,several College Beach Weekends,as well as numerous special events and natural disasters; WHEREAS: Tony achieved numerous educational successes including a Bachelor of Science Degree(Saint John's University), Master's Degree in Public Administration(Troy University),Police Executive Leadership School(University of Richmond),Senior Management Institute for Police,Administrative Officer's Management Program(North Carolina State University, and Virginia Beach Police Department's West Point Leadership Course; WHEREAS: Tony continued his public service by as a longtime supporter of several community events to include the United Way Day of Caring, Virginia Beach School's Official fora Day and Virginia Special Olympics; WHEREAS: Tony is the recipient of over 150 letters of Commendation or Appreciation, recognized several times for his commitment to the Human Rights Commission over the many years he served as the department's liaison to the commission as well as numerous awards to include:Hampton Road's Top Cop Award,Police Officer of the Year—YMCA's Service to Youth Award and the Department's Public Service Award for distinguished service; WHEREAS:On this day, we honor a public servant whose leadership and commitment to public safety has immensely benefited the City; NOW,THEREFORE,BE IT RESOLVED: That the Virginia Beach City Council hereby expresses its appreciation to TONY ZUCARO for his outstanding contributions to our City and our Police Department. Given under our hands this 8d'day of December,2020. r M� Courm'tili(ees6e► It)1 66ott C,., . • . :.. 94"._ :4r.Me►filafii C 9lfees6er'Du6s Ifeafsy • f !. Cyr ierto 9C IMO ' r'rn 4. - ....L.. • Conseil tabor guy X,'Tower Coma*• ..`T Wilson C> rD Woolen �� JO •,- ' Rf �F UUR.0,01( - - :'° q , RESOLUTION WHEREAS: Bobby Hill first started volunteering with Virginia Beach EMS in 1968 with Davis Corner Volunteer Rescue Squad,and then transferred to the Virginia Beach Volunteer Rescue Squad in 1972; WHEREAS: When Bobby was not volunteering, he worked for the City of Virginia Beach in different roles retiring as Chief Magistrate of Virginia Beach in 2009; WHEREAS: In 2004, the Virginia Beach Rescue Squad Foundation started a long-term strategic planning collaboration with the Department of EMS to develop a comprehensive recruitment plan to recruit and retain volunteer members. During this time Bobby started to become actively involved in a system wide recruitment initiative,and was hired on as the Virginia Beach Rescue Squad Foundation's Recruitment Coordinator in 2009. This position was an instrumental step in the foundations effort to devote close to a million dollars in a multiyear approach in recruitment and retention of volunteers for the Volunteer Rescue Squads of Virginia Beach; WHEREAS: Bobby was deeply involved in developing and coordinating all recruitment efforts, marketing strategies, social media platforms, and management of the foundation's website. The many recruitment events that he attended over the years helped bring in hundreds of volunteers; WHEREAS: Bobby still took time to volunteer in the system as an operational member and then a member of the system's Mass Casualty Incident Response Team; WHEREAS: Bobby is also a Life Member for Virginia Beach Volunteer Rescue Squad, and received the 2011 Virginia Gilpin Distinguished Service Award; WHEREAS: Bobby has continued to improve and make sure the community knows about the Volunteer Rescue Squads of Virginia Beach, using every platform that is available to get the message out to recruit and retain well qualified volunteers.Most citizens know Bobby's voice from either radio adds,or meeting him at a recruitment or job fair; WHEREAS: Bobby has also been involved and helped lead the state-wide Virginia Recruitment and Retention Network of EMS and Fire Personnel. He was named head of the network in 2010, supported the Virginia Association of Volunteer Rescue Squads, which has allowed him to give our system a state wide spotlight on how to effectively recruit and retain members; WHEREAS: Bobby at the end of this year will be stepping down from his recruitment position with the foundation,but has already said he still plans to volunteer in his time to support the system; NOW, THEREFORE, BE IT RESOLVED: That the Virginia Beach City Council hereby expresses its appreciation to BOBBY HILL for his contributions to our City and his dedication to public safety. Given under our hands this 8th day oo,(f//DDeecemb r,202 AJ .YI. JU CouncifM 6er Jessica T.A66ott Council M M em6erickae(E.Berfuccki Cou M ,t em6 a ra .Ifenfey jAie C twi1 Mem6 AL�ouis 9Q,Jones u YMem6er John DD.Moss Council .31 6erAaron R. uses Coun Member Guy 7C Tower CouncilMem6er ry Wilson C nti(Mem6erSabrina(D.Wooten i2 ell r lames LWood 3layor9Z96ert .`Bo66y"(Dyer LI H. PUBLIC COMMENT 1. CONVENTION AND VISITORS BUREAU COMMUNITY TASK FORCE RECOMMENDATIONS Virginia Beach Virginia Beach CVB Community Task Force Virginia Beach City Council December 1 , 2020 „mo Bill Hanbury The Taskforce Background • Chartered by the City Council in July 2020 • Comprised of 17 members from a diverse group of civic stakeholders • Councilmembers Tower and Wilson represented the Council and co-chair: meetings • There was an engaged, enthusiastic, and candid interaction among Memb • Convened six meetings to: • Study DMO industry "best practices" • Evaluate governance structures of competitors and high-performance I • Learn directly from highly-regarded DMO executives • Review hundreds of pages of industry background material • Consider the finance, HR, and operations design of various DMO mod: Current CVB Challenges The Taskforce reviewed several major challenges which limit the Virginia Beac to perform at a high level: • CVB governance structure is not typical. Of 31 US destination marketing org (DMOs) with budgets of more than $20 million there is only one other with a government affiliation. • The City enthusiastically supports the CVB, but the private sector has either negative impressions of the organization. • The private sector has limited tangible methods of supporting the CVB and li to provide valuable guidance to the staff. • Compensation levels for CVB employees are below national DMO standard• higher the management position, the greater the variance. Thus, it is imposs the best executive leadership, in particular a CEO. • Both the resort area tourism product and the convention center market posit deteriorate. These factors limit the CVB's capacity to properly market the de Taskforce Charter • The Task Force was charged with evaluating new option governance structure of the City's destination marketing organization: • Remain within government. . .the structure of the current CVB • Hybrid public-private foundation or authority structure. . .similar Virginia Tourism Authority • Separate 501c6 non-profit corporate entity. . .common to cham. commerce and other DMOs Taskforce Study continued The Taskforce, early on in its proceedings, decided to move away from cons structure within government for three major reasons: • The need to hire a CEO and senior executives outside the constraint of th human resource parameters • The need for procurement nimbleness and speed-to-market in the face of changing marketing conditions • The need to increase the local hospitality industry's opportunities to partici management of the DMO The Taskforce focus then turned to seriously consider both the Hybrid Autho. 501c6 nonprofit models. In the end, the Taskforce decided with 16 "yes" votes, and one abstention, th preferred recommendation was an Authority model which would give the Cit oversight, transparency, and cost savings compared to the 501c6 nonprofit. Taskforce Study A continued The Convention Center • Convention Center should remain a City asset, and the City should maint. responsibilities for operations, maintenance and capital improvements. • The Convention Center staff, who are "operationally" focused, should rem. employees. • The CVB should continue to provide sales and marketing services for the Center as is the current arrangement. • As part of an overall agreement between the City and the new Tourism A specific Convention Center sales and marketing deliverables would be est The deliverables will include detailed key performance indicators (KPI's) achieved. 1('if it Virginia Beach CVB Director Meetings and VB Convention Administrative Marketing and Center Services Convention Tourism Sales Communications Sales Visitor Information Center Authority Model Advantages Advantages of the Authority in Four Areas as Recommended by t Taskforce Governance - • Continue a close affiliation with the City government. • Adequate transparency through record keeping, financial, and reporting to the City, plus a required annual audit. • Direct City Council participation in selection of the Board of Dir: • Engagement of the private sector in oversight of the DMO thro Director representation and creation of a robust committee stru • Redefine the organization's mission and strategic imperatives. Authority Model Advantages . . . continued Governance - • Allow the private sector an opportunity to contribute to the success through personal engagement, plus providing ne contributions and in-kind resources. • Require the CEO and the DMO staff to laser focus on achi Board established key performance indicators (KPIs). • Develop formal organizational protocols for strategic plans years) and tactical plans (annually). • The ability to emulate the successful experience of the Virg Tourism Authority. Authority Model Advantages . . . continued The Employees - • The CEO and Board of Directors will rewrite employee performance assure accountability and achievement of Key Performance Indicate • More flexibility concerning employee compensation to attract and re performance employees. This includes the ability to recruit a new C adequate compensation level. • Existing employees would continue as members of the Virginia Reti System (VRS) and the Consolidated Benefit programs available to I employees. Authority Model Advantages continued Marketing and Sales - • Improve the DMO's ability to collaborate, innovate, and act nimbly • maximizing speed-to-market from a marketing, business intelligenc: consulting, partner, and sales perspective. • Simplify procurement challenges for complex and/or opportune mei related to web-based, digital and other timely advertising solutions. • Refocus the DMO group sales effort to reflect the reality of Virginia current market position. • A new focus by the DMO on the local tourism '`product" and "experi: both improve Virginia Beach customer offerings and better align tho with emerging consumer trends. Authority Model Advantages contin Operations and Cost - • Provide purchasing flexibility by eliminating the City's stringent procurement new nimbleness and speed-to-market will improve the DMO's ability to succ: negotiate marketing, advertising, consulting, and external vendor agreemen u • The Authority also has cost advantages over the 501c6 nonprofit model due close affiliation with the City government. These savings include: • Possible cost savings from City provided operational support. • Health insurance could remain with the Consolidated Benefits Plan whic competitive rates and high-quality coverage for individual employees (an consideration). • The Authority can take advantage of other employee benefits (EAP, Be care, training, etc.) which provide economies-of-scale by remaining withi Plans. Recommended Next Steps for t City Council ' s Consideration Amend the 2021 Legislative Agenda to request that the General Assembly cre. Beach Tourism Authority on December 8, 2020. The proposed legislation (modeled on the Virginia Tourism Authority) would: • Establish the Virginia Beach Tourism Authority • Charter a Board of Directors appointed by the City Council. • Allow the Board to hire a CEO who shall employ the required members • • The powers of the Authority's Board would also include: adopting and a laws, executing contracts, retaining vendors, securing insurance, plus all necessary management and operational requirements. • The Authority could receive private sector grants and contributions, plus activities and services provided by the organization. • The Authority shall be tax exempt. • Exempt the Authority from the Virginia Public Procurement Act. Additional Steps In concert with preparing the proposed Tourism Authority legislat staff would: • Author a detailed "CVB Transition Plan and Timeline". • Make recommendation for establishment of a "Transition Corn • Develop a City supported "Do No Harm" employee transition p • Determine an Authority funding recommendation for the City C • Draft a "Marketing and Coordination Agreement" between the Virginia Beach and the future Virginia Beach Tourism Authorit VIRGINIA BEACH CUB CONCLUSIONS AND RECOMMENDATIONS Virginia Beach Convention & Visitors Bureau Management Analysis and Recommendations Presented to the City of Virginia Beach By Academy Street Collaboration, LLC January 24, 2020 Academy Street Collaboration, LLC 1 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Academy Street Collaboration, LIC Travel, Tourism and Event Advisory Services Off kcite,E :y e'i:es? etSr L'! Ron Williams Deputy City Manager City of Virginia Beach Dear Ron, Academy Street Collaboration is pleased to submit this management analysis and recommendations concerning the Virginia Beach Convention & Visitors Bureau and the overall visitor economy. Pursuant to our engagement agreement, this report represents impartial findings and independent research from various sources. The results presented are from primary and secondary sources of information. The consultant used information deemed reliable, and based recommendations on industry best practices, trends and assumptions. After a detailed review of the current destination marketing situation, we have provided the City with recommendations which should be closely examined by Virginia Beach's civic leadership. We've provided these findings by seeking input and consensus among the City's leadership and visitor industry stakeholders. It should be noted that organizational studies of this nature do not accentuate the positives. However, the consultant has attempted to constructively address issues relative to the scope of the report. The need for a high performing CVB in Virginia Beach is greater than ever, and its contribution to the overall economy is vital. An evaluation such as this is critical to the organization's evolution. The best practices recommended in this report are utilized by some of the nation's highest performing destination marketing organizations (DMOs). We suggest these innovative plans could place Virginia Beach at the forefront of the WO industry. It's a winning approach for the City, its citizens and the visitor economy. Yours sincerely, Bill Hanbury Managing Principal Academy Street Collaboration, LIC ` VIRGINIA In ACH CVB CONCLUSIONS AND RECOMMENDATIO i 1,0 Executive Summary Virginia Beach finds itself in a very competitive environment relative to the health of its visitor economy. The locations that Virginia Beach competes against are led by dynamic destination marketing organizations (DM0s) similar in mission to the Virginia Beach CVB. However, there are substantive distinctions between the Virginia Beach CVB and other high performance DMOs. America's best CVBs position themselves as "shared" community assets, playing an integral role in uplifting the destination's overall economy. This role not only includes marketing the destination, but also helping to "manage" the visitor product and experience. DMOs have transformed themselves into aggressive and business-oriented nonprofits that use marketing innovations and state-of-the-art technological expertise to maximize the community's investment in their mission. This industrywide DMO transformation has outpaced the rate of change at the Virginia Beach CVB. The CVB lags behind other competing destinations that have the support of both government officials and area stakeholders who believe in the extraordinary power of the visitor industry. In Virginia Beach, the City government strongly supports the CVB. However, many private sector visitor industry stakeholders don't support the CVB and have either lukewarm or even negative impressions of the organization. Importantly, without a high level of private sector stakeholder alignment and engagement, it can be challenging or even impossible to implement new strategic initiatives that elevate the destination's attractiveness and improve the traveler's experience. This Report contains several important observations about the management and structure of the CVB. The Report does not accentuate the positives, although there are many positives about the performance of the CVB staff. However,the consultant has attempted to constructively address issues noted in the Report and an evaluation of this nature is important to the organization's progress. The Report provides a series of recommendations to be considered by the City Council, City executive staff, CVB management, plus visitor industry and community stakeholders. A summation of these observations and recommendations follows: 1.1 Key Observations a. There are concerning economic trends across the national tourism sector which, in the not- too-distant future, could harm the Virginia Beach visitor industry. Closer to home, there are local economic trends (T) which indicate Virginia Beach is losing brand position to Acaden VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS competitors. Visitor industry stakeholders are deeply concerned about the destination's viability both from a marketing perspective and from the viewpoint of a declining tourism product. b. In comparison to its competitors,the Virginia Beach CVB's governance structure is not typical. The majority of U.S. based DMOs are organized as separate entities, outside of direct reporting to municipal government. c. DMOs globally are focusing on strategies related to community alignment and destination stewardship to improve their value to community and marketing performance. The consultant found limited focus on these types of strategic issues within the CVB. This could be an indication that the CVB is not addressing the defining strategic topics affecting a global tourism industry experiencing rapid growth and change. Further, there is no evidence of a commitment to long-term strategic planning within the CVB. d. Compensation levels for Virginia Beach CVB employees run 30%to 40% below DMO industry norms. The higher the position within the CVB, the greater the variance between Virginia Beach compensation versus other DMOs. This fact restricts Virginia Beach from recruiting highly competent A-team executives. e. The CVB has not kept pace with the latest technology, data and operational innovations being utilized by other best-in-class DMOs. These factors have constrained growth for the Virginia Beach visitor economy. f. The world-class Virginia Beach Convention Center is underperforming within the meetings and conventions market segment due to the lack of an attached, full-service convention center hotel. Meeting planners won't even consider Virginia Beach because all their other options now include a connected or adjacent hotel to the convention center. This type of hotel inventory is required to just get in the game. Without it, Virginia Beach will continue to be relegated to the sidelines. g. Local hoteliers and restaurateurs suggest the profile of the "typical" Virginia Beach visitor has changed and is now tracking to an "economy" or "mid-scale" versus an "upper-scale" visitor from an economic profile perspective. h. The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling behind its competitors, relative to product development, community collaboration and marketing/sales innovation. i. The CVB should strongly support the Virginia Beach Resort Area Strategic Action Plan (RASAP) 2030. The organization should make a concerted effort to back the Plan's focus on beautification, placemaking, wayfinding, events and enhanced infrastructure. Further, the Plan's emphasis on adaptive reuse and rehabilitation of existing properties assures the Academy Street Collaboration, LLC t, RGINIA BEACH C: 3(O',Ct.C1S!ONS AND RECOMMENDAT ON' Virginia Beach tourism product remains authentic and sustainable, and thus preserves the "sense of place" that visitors love. j. The private sector has limited tangible methods of supporting the CVB,thus it has little opportunity to provide valuable direction and assistance. Industry stakeholders feel there are inadequate opportunities to "plug in"to the organization and thus they have relinquished responsibility for destination marketing to the City and CVB. k. The operational structure of the CVB places the Virginia Beach destination at a competitive disadvantage from an administrative, marketing and sales performance perspective. Industry wide, DMOs function as marketing and communications entities, not government bureaucracies. Due to the CVB's direct affiliation with the City, it's often required to act like a government agency. This sets structural limits on the CVB, which don't exist for other DMOs. I. A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability and a passion for making Virginia Beach a world-class destination. m. First-rate DMO senior management talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy. This objective will be difficult to achieve under the current governance structure. n. There are examples of DMO transitions from government to nonprofit entities which have been successfully executed and which have dramatically improved destination performance. San Antonio, Kissimmee, Puerto Pico, Bermuda and Washington, DC are five destinations which can be considered by Virginia Beach to model a future organizational structure. 1.2 Strategic IMPS Five imperative strategic issues were identified during the consulting assignment: 1)The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling behind its competitors, relative to product development, community collaboration, innovation and marketing/sales effectiveness. 2) The private sector, a critical component in the success of any destination, needs to be given an opportunity to assure the success of the CVB and the overall tourism economy. Academy Street Collaboration, El G ': VIRGNIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 3) Internal CVB management systems need to be improved, not only to enhance destination performance, but also to promote a more nurturing and collaborative employee environment within the CVB. 4) A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability and a passion for making Virginia Beach a world-class destination. 5) Additional DMO executive management talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy. 1.3 Recommendation The consultant recommends to the City of Virginia Beach City Council the establishment of a Community Taskforce to: 1) Evaluate the possibility of transitioning the CVB to a new public/private 501c6 nonprofit organization.The 501c6 would be charted by and contracted to the City to perform the destination's marketing and sales activities. Governance would be shared between the City and the private sector.This proposed change would improve marketing, sales and operational capabilities, while providing for private sector Involvement in the new entity. 2) If it was found too impractical to establish a 501c6 management structure outside of City government, the Taskforce would thoroughly review the CVB organization and make recommendations for operational and marketing improvements based on the existing governance format.Additionally,the taskforce may consider a possible hybrid governance model which would possibly include a 501c3 nonprofit foundation model, like the Virginia Aquarium & Marine Science Center Foundation. The Community Taskforce would be comprised of private sector leaders and City representatives. The private sector leaders would come from both the business community and visitor industry sectors. These individuals would act as honest brokers for the City Council and assure a fair vetting of this important topic. The Chairperson of the Taskforce should be a highly trusted, private sector CEO. The Taskforce would convene over a 90-day time period and then present detailed recommendations to the City Council. The City Council would decide on these recommendations. ACa emy S e. Collaboration, Lit VIRGINIA BEACH CV3 C!?NCI USIONS AND I+'COMMENDATIONS If a nonprofit option were recommended by the Taskforce and approved by the City Council, a transition process could unfold over a to-be-determined timeframe. The transition would be carefully planned to assure organizational continuity with no harm to employees or to ongoing marketing and sales efforts. For the new nonprofit,the City would provide civic oversight, while the private sector would be engaged in a more substantial manner. This approach would assure strong fiduciary control and enhanced marketing/sales capabilities for the new organization. The new structure would encourage additional private sector financial and marketing support for the new CVB. Regardless, of what the final CVB structure would entail...either remaining within government or as a separate nonprofit...it's an economic necessity that the organization's mission, strategy, marketing, sales, governance and organizational management be realigned. For the Virginia Beach City Council, the opportunity cost of failing to respond to the current marketing and operational deficiencies are substantial. By not addressing the CVB's current limitations,the City is restricting its long-term economic growth. The City Council should be adamant about improving CVB performance, not only for tourism industry reasons, but also for the overall health of the entire Virginia Beach economy. 2.0 Assigt orient Scope The City of Virginia Beach contracted with Academy Street Collaboration, LLC and its principal, Bill Hanbury, to provide destination organization and marketing advisory services. The assignment focused on the Virginia Beach Convention &Visitors Bureau (CVB) relative to its overall effectiveness and structural relationship to City government. With the departure of the CEO and other key employees, the CVB is at a pivotal point. The City of Virginia Beach sees an opportunity to redefine how the CVB is managed with the goal of improving the community's overall economy, which is vitally dependent upon tourism. Through this process, the City and local stakeholders could potentially build a new or improved "best practices" organizational structure. The timing for this review could not be better. The City of Virginia Beach has recently made substantial new investments in tourism infrastructure from the Sports Center and the Wave Park to added support for the Aquarium, plus arts and cultural institutions. In these projects alone, the City is investing over$150 million.This is a good time for the City Council to consider maximizing the return on these investments by assuring the City has a highly effective CVB capable of selling these new assets and the existing tourism products. lcatlem‘ Strc(i (olldboration, t.1(; • VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS This advisory assignment was started by the consultant with no preconceived notions about the future CVB structure and what may be best for Virginia Beach. Whatever the City decides, it should reflect a specific solution customized for Virginia Beach and its stakeholders. As the City has instructed, the consultant assured that valued community stakeholders had a significant say in the Report's conclusions and recommendations. They have played a role in this process by providing direction and consensus concerning the defining topics confronting the Virginia Beach visitor economy. The consultant sought feedback from a wide range of community leaders and visitor industry partners. This included input from over 60 individuals. Academy Street Collaboration has analyzed the CVB relative to governance and oversight, marketing, communications,sales, product and visitor experience, plus community and industry support. The consultant is presenting recommendations to City leadership with the goal of improving the performance of the CVB, and the Virginia Beach's visitor economy overall. These recommendations should allow the City to more effectively compete for tourism dollars, which sustain and expand business opportunities while creating and retaining jobs. This, in turn, supports vital city services which add to an enhanced quality of life for all residents. 3.0 Methodology In order to complete this assignment, Academy Street Collaboration, utilized the following methodology: a. Reviewed available data provided by the City of Virginia Beach and its CVB. b. Worked with City and CVB staff to compile and review organizational performance data. c. Analyzed market, organizational and public policy issues that impact the CVB's operations. d. Interviewed external civic and visitor industry stakeholders, department heads at the City and the CVB, plus staff regarding their thoughts on CVB structure,culture and performance. e. Analyzed various competitive sets both from the group and leisure market segments and examined Virginia Beach's management and performance relative to these destinations. f. Reviewed CVB performance measures, incentive plans and other management techniques in comparison to other industry best practices. g. Researched and summarized a wide range of industry data concerning DMO best practices relevant to the Virginia Beach CVB. •cademy Street Collaboration, LLC VIRGINIA BEACH 0J13CONC1I ISIONS AND R e n Vikitnr Economy and the Competition The visitor economy is vital to the City of Virginia Beach. The following statistics support this assertion: 19 million annual visitors, $132 million in local and state tax revenue, plus 14,000 jobs.This data indicates impressive impact from the visitor economy. However, other economic indicators suggest that Virginia Beach has additional potential, and there is more upside to the destination's overall performance. The Smith Travel Research (STR) chart below notes that Virginia Beach hotel revenue has outpaced the cumulative US inflation rates (173%vs. 126%) over the last 30 years. However, hotel room demand has been relatively flat over time, and actually declined in the last ten years. CITY OF VIRGIN IA BEACH CONVENTION &VISITORS BUREAU Hotel Revenue and Demand 1987 to 7O!:, 4.600.011. • is toil 44.•dt ' `AN{� �a� fl '401 .R=:fi' ldM: .a e .!'• Searcy Smith!ravel Research STR notes in the following chart that 2019 hotel revenue year-to-date (YTD),through November, has only increased 1.7%. This statistic is particularly concerning as the nation continues to benefit from one of its most dynamic economic expansion. The chart also points out that hotels in destinations within the competitive set are all outperforming Virginia Beach. VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS REVENUE YTD 2019 vs. 2018 ti1 10..2 7.0 SA 3.6 1.T 2.2 1.4 2.3 I oa INN A - L _411._. } ' ! a 8 ca s g o , E A at LL a a U Also of concern is STR data through November 2019 YTD for room supply, demand and occupancy as noted below. Room demand and supply has declined 0.3% and 2.9% respectively, while occupancy has increased 2.7%. From a demand and room supply perspective, all the destinations in the competitive set are outperforming Virginia Beach. Again, this data needs to be considered in the context of an extraordinarily healthy US economy. YTI3 ROOIVil NIGHTS BOOKED $c SUPPLY: V 2019 vs. 2018 s.s I li kt 3.0 f7 i&iiL. -09 -1.7 -1A estate Region 1MH1learn.burg Ocean Virginia Myrtle Coastal City Beach Beach Carolina � :ttl.-r] t i Supply •_t Occ Further, Virginia Beach's brand image may be falling behind its primary competitors who are expending additional financial resources and may be deploying more ground-breaking marketing approaches. The following two charts from a 2018 SIR Survey reflect this trend. Academy Street Collaboration, IIC 11 Vfi�G'Ni/1ilEAC+{C.`i3(ONO UStON ;U", MLND;tT O1 Respondents are less likely to visit Virginia Beach in the near future compared to Myrtle Beach and the Outer Banks Myrtle Beach.SC 35% Outer Banks.NC 40;e AM Ill Ocean City,MO 44% Virginia Beach.VA 49C641111.111110 3: Don't know Never likely teVIM .S Among key competitors, respondents are least familiar with Virginia Beach Myrtle Beech.SC 57% Outer Banks.MC 47% Ocean City.MD 47% vtrgn4e Beach.VA 37% • This situation is exacerbated by trends across the national visitor economy which could negatively impact Virginia Beach. The following three charts from STR reflect this concern. First, the chart below notes that increases in U.S. hotel occupancy and ADR may be at the end of a long dynamic growth cycle. Acatlemp Street Collaboration, I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS • Long Run Trends Point In One Direction: Down! B.B 7'a a 1.4 -0.0 -3.4 •t -6 -- ®cc% Change ADR %Change -6.7 -10 -0.7 1990 2000 •2010 10L11 U.S.,500 S OCC 1G Change,12 MPAA 1/1990-09/2019 Second, the STR chart below reveals that through Q3 2019, ADR growth nationally has been negative for five consecutive quarters. neat ADP Growth(ADR%minus CPI%)Has Now Been Negative For Five Quarters a 111111IIIIIhI1,.�,tllil ,(l1.11II(IflhIII1 ulL rI 111111111111i1iiihiii1.11 -a • 1990 2000 2010 Third,the STR chart below discloses that the nation is experiencing the longest hotel RevPAR "upcycle" in the past 30 years which, according to industry analysts, has run its course. RevPAR Growth: Longest RevPAR Upcycle(with two small interruptions) 15 111 Month ' 5 112 Months -5 (out of 112) (out of 115) • -1 5 ' -25 1990 2000 9010 Academy Street Collaboration, I.LC V RGINIABLAUH C','_3 CONCt' SIONS;;ND RECOMMENDA1 ONS Further, the U.S. Travel Association is projecting soft growth in 2020 for the domestic travel market. The forecast suggests that U.S.Travel will only increase by 1.4%, the slowest pace in four years. Internationally, U.S. Travel is also predicting that the US-based market share of global tourism demand will continue a steady slide from a high of 13.7% in 2015 to a low of 10.4% by 2023.This equates to an economic loss of over $78 billion in overall U.S. visitor spending. f1 Tht fMO Competitive Fnvirortmnnt As Virginia Beach City leadership evaluates the accompanying observations and recommendations, it's important to note that the most effective DMOs have the support of both government officials and area stakeholders who believe in the extraordinary power of the visitor industry. In Virginia Beach, the City government strongly supports the CVB. However, many private sector visitor industry stakeholders have either lukewarm or even negative impressions of the organization. Importantly, without a high level of community stakeholder alignment, support and engagement, it can be challenging or even impossible to implement new strategic initiatives that elevate the destination's market position. The destination's performance may not improve until industry stakeholders better engage in owning the future success of the CVB. In an extremely competitive environment, America's best performing CVBs are "shared" community assets. They play an integral role in uplifting the destination's overall economy. This role not only includes marketing the destination, but also helping to "manage" the visitor product and experience. This is accomplished by improving community buy-in regarding the organization's overall mission. Further, DMOs have transformed themselves into aggressive and business-oriented nonprofits that use marketing innovations and state-of-the-art technological, plus digital expertise to maximize the community's investment in their mission. As noted below, Academy Street Collaboration analyzed the Virginia Beach CVB relative to other DMOs from a governance, strategic alignment and employee compensation perspective. 5.1 Governanc} In comparison to its competitors, the Virginia Beach CVB's governance structure is not typical. The majority of U.S. based DMOs are organized as separate entities, outside of direct reporting lines to municipal government. Destinations International has recently published its latest broad-based analysis of the DMO industry. Over 520 destinations and industry leaders (including the Virginia Beach CVB) participated in the DestinationNEXT 2019 survey. As the IcadenRR Street t ollahoratiou, I1(. 14 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS graph below notes, only 20.3%of all DMOs are government affiliated organizations, and most of these entities are in the budget category of under$5 million. Concerning the 31 DMOs within the Virginia Beach budget category of over$20 million in the U.S., there is only one other organization (Fort Lauderdale), besides Virginia Beach which is government affiliated. Chamber of commerce 2.4% Public/private partnership Riot Public authority Government organization 4.8% Other =. 32% Non-profit,no membership Non-profit,with membership The consultant was able to research more detailed information concerning nine competitive destinations in the tighter budget category of$20 to $30 million. This budget category better aligns with the Virginia Beach CVB.The research originated from the 2018 SearchWide DMO Contract and CEO Employment Study. The Study information is presented in aggregate and does not reveal which CVB provided the information. However, the study provides an interesting comparison to the Virginia Beach CVB. Virginia Beach did not participate in the survey. Highlights of the Study include: a. Only one organization was under government authority (Fort Lauderdale). b. Relative to the comp set, Virginia Beach's employee "full time equivalent" count of 58 is on the lower end of the survey. c. All CEOs within the comp set had employment contracts. The former Virginia Beach CEO had no employment contract. Academy Street Collaboration, t1C ` 'ftRGINiA BEACH CV3 CO 4_l 'tUOMPv1LNDNTIONS d. The former Virginia Beach CEO's base salary was below eight of nine CEOs in the Study. Fort Lauderdale, the only organization in the survey currently under government authority, was at the bottom of the CEO pay scale. As a point of information: since this survey's completion, the Fort Lauderdale CEO has seen a significant increase in compensation due to Broward County reevaluating its compensation policies relative to the CVB, e. CEOs within the comp set earned bonus percentages of between 21% and more than 50%. The former Virginia Beach CEO had no opportunity to receive a bonus percentage f. Concerning "other benefits', there were six different types of benefits received at varying levels by the CEOs within the comp set. Of these six benefits the former CEO of the Virginia Beach CVB, received only two. 5.2 Strategic Alignment The DestinationNEXT 2019 survey provided persuasive information concerning the most compelling strategies that high performance DMOs are deploying to assure success. Of the top 20 strategies noted in the survey, 14 of them are related to "Community Alignment" and "Destination Stewardship". Strategies associated with Community Alignment include: a. enhanced engagement with the local community b. improving the hospitality culture c. building new social networks within the community d. working with the community to build authentic experiences Strategies associated with Destination Stewardship included: a. building coalitions between the visitor industry and economic development agencies, academia, civic and philanthropic entities b. building strategic alliances outside of the tourism industry c. elevating quality of life for local citizens d. focusing on sustainability and issues like tourism overcrowding After staff interviews, and reviews of Virginia Beach CVB's 2020 departmental plans,the consultant found few references to these types of strategic issues within the CVB. This could be an indication that the CVB is not addressing the defining topics effecting a global tourism industry experiencing rapid growth and change. VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS The CVB is improving its community alignment with a new$100,000 local advertising campaign, but the thrust of the campaign is related to attracting local citizens to take more advantage of the local tourism economy, a laudable objective. However,the program doesn't include the goal of promoting the CVB as a community asset and stressing the overall value it contributes to the Virginia Beach economy. Importantly, as the CVB becomes more engaged in the implementation of the Resort Area Strategic Action Plan (RASAP) 2030, the objective of building destination stewardship and community alignment should improve. 5.3 Employee Compensation Another major difference between the Virginia Beach CVB and its competitors is relative to employee compensation and benefits. Destinations International's 2018 Compensation and Benefit Survey provides detailed information concerning these topics. Compensation levels for Virginia Beach CVB employees run 30%to 40% below DMO industry norms. The higher the position within the CVB,the greater the variance between Virginia Beach compensation versus other DMOs. For example, according to the Compensation Study, the former Virginia Beach CVB CEO had a total compensation of$167,000. In comparison, the CEOs for other US-based DMOs with budgets in the range of$20 to $30 million had a median total budgeted compensation of $471,018 (14 respondents-Destinations International 2018 Compensation and Benefits Survey). Based upon these compensation details, Virginia Beach would have difficulty recruiting an A- Team CEO and other executive departmental leaders. Simply stated, the CVB is at a definite disadvantage when alternating to attract and retain highly talented employees. Based on conversations with the City of Virginia Beach Human Resources management, these compensation challenges may be difficult to resolve within the City's current structure. 6.0 Virginia Beach Versus the Competitive Sets In order to understand if Virginia Beach is performing similar to national trends or is unique to the local market, a competitive set analysis is required. 6.1 Group Virginia Beach's competitive set for group business as identified by the Knowland's TAP Report includes: Baltimore, Birmingham, Charlotte, Chattanooga, Memphis, Nashville, Omaha, Academy Street Collaboration, LLC .1 IRGiNi 1 !, ACM CV i3 COrdUIt+IONS AND Ri s tit .1 14. Richmond and Tampa. CVB staff has also identified as additional competitors for group business to include: Savannah, Raleigh, Norfolk, Lexington and Louisville. The TAP Report is a foundational data management tool for CVBs to evaluate on a monthly basis current and forward-looking group demand for a destination. Over 60 of the top destinations across the nation use the tool to track group room night pace information across the entire multi-year future booking window. Up until 2019, the Virginia Beach CVB was a participant in the TAP Report system. However, in 2019, the CVB discontinued using the TAP Report. Thus, for this Report it's not possible to evaluate Virginia Beach's group performance versus it's competitive set. It is recommended that the CVB reengage in providing data to the TAP Report in order to monitor organizational and competitive set sales performance. 6.2 Leisure CVB staff and stakeholders have identified the following destinations within Virginia Beach's leisure tourism competitive set: Primary-Ocean City, Myrtle Beach, Coastal Carolina. Secondary- Outer Banks, Rehoboth, Hilton Head, Cape Cod and Daytona. For the primary competitors, hotel data provided by STR from 2014 to 2018 is as follows: Occupancy 2014 2015 2016 2017 2018 Virginia Beach 58.2% 60.1% 62.6% 63.7% 63.1% Myrtle Beach,SC 55.3% 55.6% 57.3% 57.4% 58.9% Ocean City, MD 52.0% 55.8% 58.8% 59.2% 56.7% Coastal Carolina, NC 54.4% 55.8% 58.1% 55.8% 56.9% ADR 2014 2015 2016 2017 2018 Virginia Beach $118.34 $122.86 $124.98 $126.00 $128.30 Myrtle Beach, SC $115.23 $120.05 $123.04 $128.30 $131.68 Ocean City, MD $137.43 $139.57 $138.59 $142.85 $147.20 Coastal Carolina, NC $112.13 $120.83 $120.90 $125.63 $126.75 RevPAR 20141_ 2015 2016 2017 2018 Virginia Beach $68.84 $73.79 $78.24 $80.21 $80.96 Myrtle Beach, SC $63.75 $66.74 $70.54 $73.67 $77.62 Ocean City, MD $71.50 $77.93 $81.49 $84.60 $83.51 Coastal Carolina, NC $60.99 $67.46 $70.28 $70.09 $72.11 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS This data indicates that the competitive set dynamic has remained stable during this five-year timeframe. No particular destination dramatically outperformed or underperformed their competitors. STR YTD data, through November 2019, notes Virginia Beach occupancy increased 2.7 YOY to 66.6%. outpacing an expanded competitive set (now including Williamsburg). ADR YTD was up 1.9%to $134.74. RevPAR was up 4.7%to $89.77. The following chart provides additional detail. P�'�,PAR i'M%Eh rtge Occu' �. ' . . j .74 i rgino Ceai.h t 2./Q 1574 4 t.L Myrtle Beach 61,S1'0 I $134 2)1 _ 0-.0110 Beach 115 IMEMI OcecnCiti 1 59.5% $15325 $>1.2 OccanCstj I 2. b 25 4.2 coastal Cor_0:^a 6')4 $1 {''.?? $79 r. Coastal Cordira 3.5% imm i:tr. witlifflis I plums Again,these data points don't reveal any significant trends for any specific destination within the competitive set, including Virginia Beach. There is market stability among these competitors. However, it should be noted that these charts provide a limited perspective concerning Virginia Beach's performance versus its competitive set.Additional analysis would be required to truly judge the destination's performance versus primary and secondary competitors using the above noted measures and other market-related information (i.e., population, CVB budget, hotel inventory, room occupancy tax, convention center size, airlift, etc.). The consultant recommends that more analysis be conducted concerning both primary and secondary competitors relative to Virginia Beach. 7.0 SWOT Analysis A Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis was conducted using input from civic leaders and industry stakeholders, plus referring to industry best practices. The consultant has developed the following list for consideration: 7.1 Internal Environment Strengths a. Virginia Beach is one of America's premier family vacations spots, ranking 7th nationally in surveys as a "beach destination". In its competitive set, the destination ranks 2"d in awareness behind Myrtle Beach. t a e ree Ilaboration, Lt. VIRGINIA BEACH CVRR CONCLUSIONS AND RECOMMEND to _ b. Virginia Beach was recently recognized by Safewise as the number one safest city in America. The 2019 listing ranked The Safest Cities (population 300,000 and higher) based on the rate of reported violent crime per 1,000 people in the city. c. Virginia Beach was ranked number 1 as the Best Big Cities to Live In for 2019. WalletHub compared the 62 largest US cities based on 56 key indicators of attractiveness and Virginia Beach was rated the best in America. d. Virginia Beach has a diverse array of hotel accommodation offerings, both national brands and locally owned/operated. e. The destination has a large inventory of vacation rental properties which significantly contributes to Virginia Beach's attractiveness to a wide spectrum of customers. f. Virginia Beach has a rich collection of arts,culture, history, retail and family attractions. g. It has varying restaurant offerings across the full matrix of consumer interests. h. The destination's sports market has seen significant growth, and with the new Sports Center,this segment will continue to outperform other destinations. i. Virginia Beach occupancy rates continue to outpace its key beach competitors. j. The community has a dynamic and entrepreneurial private sector. k. Virginia Beach is blessed with a vibrant urban core well represented by the CBDA. I. There is tremendous economic energy supplied by the military sector of the economy WeaknesseL a. In a recent survey (SIR's Brand Awareness Report), consumers "in the future" were less likely to visit Virginia Beach compared to competitive beach destinations (Myrtle Beach, Ocean City, Outer Banks, Cape Cod, Hilton Head). b. The SIR Report notes that "familiarity with Virginia Beach" has only grown marginally between 2013 and 2018. c. In the same survey, Virginia Beach continues to be viewed as "less safe" than its key competitors. d. The CVB has not kept pace with the latest marketing, digital, sales and operational innovations being utilized by other best-in-class DMOs. Specific examples are noted below in section 8.1. These factors have constrained growth for the Virginia Beach visitor economy. e. The world-class Virginia Beach Convention Center is underperforming within the meetings and conventions market segment due to the lack of an attached,full-service headquarters hotel. Disturbingly, from FY 2016-17 to FY 2018-19, the number of room nights related to "1(adem% Strut=t ( nitaboratiouu, I I( �tfE' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS convention center business declined by 47%,from 40,320 to 21,305 (Virginia CVB internal sales data). f. Human Resources, procurement, technology and administrative procedures associated with City government are limiting the CVB's effectiveness, flexibility and speed-to-market. g. With four executive positions vacant within the CVB management structure, there is a lack of departmental leadership which is affecting staff collaboration, and in the end, sales and marketing effectiveness. 7.2 External Environment Opportunities a. A new CVB organizational model and/or management approach could substantively improve overall destination performance. b. The private sector could be called upon to provide the CVB with significant additional financial and intellectual resources. c. The military establishment is an economic asset for the destination which could be better utilized by tapping into more ceremonial events staged by the military that travelers would be interested in, and by better catering to military families and affiliated travelers visiting the region. d. Shoulder seasons afford Virginia Beach an opportunity to stabilize employment, service levels, and overall economic activity on a year-round basis. e. A headquarters hotel attached to the Convention Center would improve long-term destination occupancy, ADR and RevPAR. It also would improve job prospects and overall economic activity across the entire visitor economy. Threats a. Other competitive destinations are investing heavily, beyond Virginia Beach's current product and infrastructure investments, to improve market position. b. Once the new Sports Center is opened, the Convention Center will lose 4 to 6 events annually. In addition, less hotel room inventory close to the facility will be available for meetings and convention use which will further undermine the facility's occupancy and profitability. c. From Fort Lauderdale and Daytona to Myrtle Beach and the Outer Banks, competitive destinations are aggressively improving their marketing performance using innovative technology and digital assets. Academy Street Collaboration, [IC 1111133 „VIRGINIA BEACH C.'.:3 CON(tUS,ONS AN I)lU Ch ' ' -I t d. Even far afield destinations (California, Cape Cod and Puerto Rico) are attempting to steal market share from Virginia Beach by targeting existing or potential customers. e. Local hoteliers and restaurateurs suggest the profile of the "typical” Virginia Beach visitor has changed and is now tracking to an "economy" or "mid-scale" versus an "upper-scale" visitor from an economic profile perspective. This perceived trend may be reality.The latest City of Virginia Beach report of hotel tax revenue reveals a concerning trend emerging. Over the last five months (July to November 2019) hotel tax revenue has declined YOY by 10.2%, from $5,267,952 to $4,728,894 (City of Virginia Beach Budget Office 11/19 Tax Revenue Report). f. A national recession or reduced investments in the local military command could cause harm to the Virginia Beach visitor economy. g. Restaurateurs and retailers note revenue declines in Q3 and Q4 2019. However, the City of Virginia Beach reports that over the last five months (July to November 2018), restaurant meal tax revenue has actually increased YOY 9.96% from $19.5 million to $21.5 million (City of Virginia Beach Budget Office 11/19 Tax Revenue Report). More analysis should be conducted concerning these perceptions versus the actual economic data. h. The global tourism industry is in a constant state of change, and the rate of change is only accelerating based upon:travel technology innovations, big data analysis,the gig economy, over-the-top video technology, digital platforms, 3" party intermediaries, plus tourism overcrowding and sustainable growth issues. Virginia Beach stakeholders suggest the CVB is not keeping pace with these market dynamics. 8.0 Key Strategic Issues Using the SWOT Analysis, stakeholder feedback and industry best practices, the consultant has identified what should be considered the defining strategic issues for the CVB and Virginia Beach visitor economy.They include: 8.1 The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling behind its competitors, relative to community collaboration, product development, innovation and marketing/sales effectiveness. VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS41111 Community Collaboration High performance DMOs in tourism dependent destinations exhibit astute skills in engaging the community in their critical economic mission. Other destinations rely on their CVB to act as a forum for consensus building, collaboration, information exchange, plus product and experience development. Virginia Beach does not have these attributes at a best practices level. Innovative CVBs also build community pride and civic esprit de corps...assets which are important in accomplishing major community initiatives. These are competencies which local Virginia Beach citizens believe are lacking within the current CVB structure. The CVB's CEO is responsible for achieving these performance metrics, and if they are not achieved, there are serious consequences. Without a new spirit of innovation and community collaboration, plus an aggressive defense of Virginia Beach's market share,the destination could see declines in demand. DMOs are rushing to adapt operational innovations which improve market position. The astute use of technology and digital applications are must haves in order to compete on a national or global stage. Although CVB improvements have been implemented in the last couple of years, there is a lack of urgency to accelerate change. This is a strategic mistake. Product Development The absence of a shared CVB mission, coupled with market liabilities such as the lack of a major convention center hotel and a deteriorating product within the destination's resort area, has also restricted the CVB's capabilities to best service the visitor industry. These facts restrict the overall impact of conventions and tourism to Virginia Beach's economic vitality. While the CVB is not directly responsible for the lack of a convention center hotel or for deteriorating hotel and retail product, the organization has not been an effective asset in developing sales and marketing strategies to combat product conditions or to distinguish Virginia Beach in the East Coast destination marketplace. These "product" challenges are impacting the visitor experience, and per industry stakeholders, it suggests reduced consumer demand particularly in the mid and upper scale personas which are most economically attractive to Virginia Beach. To counter the deteriorating product situation, the CVB should strongly support the Virginia Beach Resort Area Strategic Action Plan (RASAP)2030.As the plan notes: "Cities that focus on providing the highest quality spaces and experiences are seeing...visitors who keep coming back every year." The CVB should make a concerted effort to support the Plan's focus on beautification, placemaking, wayfinding, events Academy Street Collaboration, t C AEI L'iRG{id! BUJ,: 4t ;5(_t„a,4+.t tJSifl.'I r., - < �J and enhanced infrastructure. Further, the Plan's emphasis on adaptive reuse and rehabilitation of existing properties assures the Virginia Beach tourism product remains authentic and sustainable, and thus preserves the "sense of place" that visitors love. The recommended facade grant program, support for enhance maintenance, community policing, plus code enforcement for repairs and upkeep could all go a long way in improving tourism product quality...and thus the visitor experience. The CVB should also strongly support the RASAP's proposed District Improvement Program which affords matching grants for small business and locally owned/operated businesses.This will assist with building improvements, modernization, and facade improvements. As the RASAP notes, small business is vital to the success of the Virginia Beach economy, and the Plan's recommended steps are a practical way to fix the tourism product to better match consumers' desires. One interesting note concerning the previous RASAP which was authored in 2008: Of the top eight priorities identified in the 2008 Plan, the only one not "completed" or "underway" was the construction of a convention center hotel. With this noted,the consultant strongly recommends that the City make another effort to bring to fruition the development of a convention center hotel project attached or immediately adjacent to the facility. With declines in bookings (which are approaching 50%YOY), the facility will see additional future occupancy declines and thus the need for more subsidies from City Government. This negative demand trend will accelerate based on the November 2020 opening of the new Sports Center. Today's national convention center market conditions are unlike five years ago, when Virginia Beach could be competitive with other facilities for some selected pieces of convention and tradeshow business. Now, hotel capacity within immediate proximity of the convention center is an absolute necessity. Meeting and event planners won't even consider Virginia Beach because now all their other options include a connected or adjacent hotel to the convention center. This type of hotel inventory is now "table stakes"to just get in the game. Without it, Virginia Beach will continue to be relegated to the sidelines. It's imperative that the City address this issue to reverse this dramatic deterioration in Virginia Beach's competitive position. if not, the destination will see more group market declines, reduced convention center occupancy and more payments from the City to subsidize facility operations. innovation and Marketing/Sales Effectiveness Community stakeholders are concerned about the lack of innovation by the CVB relative to technology, data usage and state-of-the-art marketing and sales strategies. From the 1c;atteno. Street Collaboration, t_tt' 21_ VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS consultant's perspective,these issues are not considered "nice to haves" but rather"must haves now". Overall, within the CVB,there should be a better understanding of the meeting planner and leisure traveler booking process throughout the decision cycle. Further, the CVB should better understand,from a persona perspective, its unique generational cohorts (millennials, GenX, GenZ, Boomers, etc.) to assure that both marketing/sales messages and the destination's products/experiences match. More specifically, some of the most salient issues include: a. The Meetings and Conventions Sales Department receives less than 2% ($129,950) of an over $7 million CVB advertising budget. Best practices indicate that this number is completely inadequate to properly position Virginia Beach in this marketplace.Similar CVBs traditionally invest 15%to 20% of their advertising resources to this market segment. Further, Meetings and Conventions Department goals and objectives are not clearly defined.And, with some KPIs down by as much as 50% over the past year,there has been no organization-wide effort to remediate this lack of performance. b. Meetings and Conventions needs to more aggressively sell the Virginia Beach product to meeting and event planners. The consultant submits that the destination can be substantively more successful by currently focusing on individual hotel property business and meeting/event planners who are willing to compromise on the severe limitation surrounding the Convention Center. This is not an easy sell, but it's what's currently available. Also, the Department should embrace new emerging trends relative to meeting planners' interests, including more group excursions offers, community and charitable giving activities and creative experiences outside of the meeting room. c. In 2018 the CVB's media mix included allocating 15% of its resources to digital advertising. To the CVB's credit, this figure increased to 21.8% in 2019. More aggressive movement to digital advertising still needs to be achieved. Sojern's 2019 Digital State of the Industry Report notes that in 2018, 47% of all travel marketer ad budgets were directed to digital and that two-thirds of these advertisers planned to spend even more in the coming year. It's imperative that Virginia Beach continue along the path of utilizing evolving trends and new technical capabilities to maximum marketing impact. d. Virginia Beach continues to increase its emphasis on social advertising,from 9.9% in 2018 to 12.0% in 2019. (21.2% annualized growth). However, these increases may be too little for the circumstances. Tourism marketers are seizing on the growing sophistication of social ad- targeting tools by directing a greater portion of advertising budgets into this channel. Social media growth is expanding at a rate of over 30% annually for travel marketers according to Academy Street Collaboration, 4 -"a¢ 1PGINIA BEAC I I' COW.USIONS AND F ECOMMr NDA"IO J a report by Interactive Advertising Bureau and PricewaterhouseCoopers. This high growth dynamic will continue over the next several years, and the CVB must continue to aggressively transition additional advertising resources to social channels. e. The CVB could benefit from a better understanding of the current and future short-term rental ecosystem relative to growth, convergence with other travel sectors, and local property management. To minimize the importance of the short-term rental market has been detrimental to many destinations. Virginia Beach should not make that mistake and aggressively support these important accommodations alternative. f. The CVB should consider additional emphasis on video advertising to take full advantage of the growing convergence between traditional and online video ad formats. The rising consumption of digital video versus TV will allow for better tracking of advertising performance and providing new layers of consumer interactivity.The CVB needs to react faster to adapt to this multiplatform, multiservice device world by better tailoring video to suit the way it's consumed. lAB's Video Advertising Spend Report 2019 found that 59% of ad buyers planned to increase their advanced TV spend in the next 12 months. Half of these buyers expect significant increases in over-the-top budgets (advertising integrated within TV and from content streamed over the internet). g. Although the Mar/Comm department is utilizing some advanced data metrics (Arrivalist, VVT, Adara, Google Analytics, Meltwater),the consultant notes two areas which are strategically problematic relative to the consumer booking cycle and the CVB's management of their media mix: • Consumer Booking Cycle—There is a lack of coordination by the CVB concerning the consumer booking cycle. The consumer booking cycle is comprised of: dreaming, researching, booking, experiencing and sharing their travel experience. For each phase of this cycle,there are specific channel branding solutions to connect with and attract consumers.Throughout the cycle, different media can be used at different timeframes along the booking continuum. Progress has been made here, but additional business intelligence expertise within the CVB staff should be considered. • Media Mix—There are four types of media available to the CVB: Earned (publicity), Shared (social), Owned (content), and Paid (advertising and brand). The consultant suggests that more work needs to be accomplished by CVB leadership to assure that financial resources are deployed appropriately across these various channels. This needs to be an ongoing process to assure the destination optimizes the funds expended for this purpose. Again, additional business intelligence capabilities would aid this objective. Ott atli.im Struul Cullabaralinn, it t: VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS h. By addressing these topics,the CVB should have a better understanding of consumer demographics, geographic targets and personas which best match the destination's products and experiences. Using technology and data tools to connect with the right customers, at the right time, with the right messages, and at the right price is the winning combination. 8.2 The private sector, a critical component in the success of any destination, needs to be given an opportunity to assure the success of the CVB and the overall tourism economy. The private sector has limited tangible methods of supporting the CVB, thus it has limited opportunity to provide valuable direction and assistance. Industry stakeholders may have some responsible for this situation, but they feel there are inadequate opportunities to "plug in"to the organization. Thus, they have relinquished responsibility for destination marketing back to the City and CVB. The consultant repeatedly heard from industry stakeholders that they had no established method to interact with the CVB. The Resort Advisory Committee (RAC) has many duties relative to the health of the local resort area. The RAC has led several major initiatives which have improved Virginia Beach's visitor experience. However, the Commission does not provide the kind of detailed oversight and sustained monitoring of the all-important KPIs relative to the CVB marketing and operations. This type of ongoing oversight and monitoring is typical of a high performance CVB Board of Directors which are intensely focused on organization performance. The Advertising Advisory Committee (AAC) was initially organized to provide input from industry experts in marketing, communications and sales. Currently, it's not functioning as originally designed. Some Committee members are not senior executives or "experts" in the Committee's areas of focus. Further, when dealing with CVB management topics,the members have limited involvement in actual decisions. Meetings are often structured in a way which afford members little, if any, feedback to staff. There is no real Committee "authority" to make decisions, and there is a common feeling among Committee members that they are there to provide tacit approval of predetermined decisions. Virginia Beach's visitor and business sectors are comprised of energized and entrepreneurial leaders who aren't being utilized by the CVB for their aggressiveness, intelligence, financial resources and collaboration skills. If these individuals had a way to access the CVB, the community's private sector would be more willing to provide significant financial and intellectual resources to boost CVB marketing and sales performance. This would allow for the eif y Stree aboration, i ri , t'-'_.. E, ;AND RD., leveraging of resources for future unified campaigns, including not just for the resort area, but for the entire metro region. To reinforce this point, stakeholders in various sectors of the visitor economy have expressed these types of concerns: a. Although the CVB staff has tried to engage the hotel GMs on different occasions, they are disconnected and not contributing to support marketing and sales initiatives (room blocks, FAM tours,tradeshow participation, PR activities, advertising co-ops). b. A disorganized retail community has no seat at the table. Although they comprise an important segment of the region's economy,they are seldom asked to contribute directionally to the CVB. c. The restaurant sector, which contributes a major component of tourism tax revenues has no say concerning the destination's strategy or tactics. d. Virginia Beach has a wide array of small businesses which are directly linked to the visitor economy. Many of these businesses are isolated from the CVB efforts and not fully benefitting from a dynamic visitor economy. With no ability to collaborate with the CVB, they dismiss the organization as a department of government.Thus,they don't take advantage of cooperative marketing programs,training opportunities, business intelligence or a sense of civic connection, which are common practices in competing destinations. e. Tourism promotion is one place where the beach community and the urban core (represented by the CBDA) could productively cooperate. There is an "us vs. them" mentality between the groups, which is counterproductive to building civic collaboration and brand strength. Under the right circumstances,the CVB could engage and better organize these two entities into a more cohesive force to economically benefit the entire region. The visitor economy is one area where the two competing entities should find common ground. It's an opportunity lost. For the Virginia Beach CVB to better engage the private sector, we can look to other DMOs that have had similar challenges. In an innovative 2005 study of American CVB Governance Models by Zeitgeist Consulting, 22 organizations were evaluated which had become independent (501c6 nonprofit)from either a government entity or a chamber of commerce. All organizations evaluated had at least three years of operations as separate entities, so opinions about the organization's performance were more solidified. In the study, regardless of whether they were originally government or chamber entities, the municipal entities that now contracted with the 1r adi mn Street CollaboratiuH !t( 2S VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS independent CVBs believed they received a higher ROI from their tax investment in destination marketing and promotion under the new nonprofit structure. These more positive performance results were attributed to newfound advantages in recruiting and retaining highly competent sales and marketing professionals. Also, the ability to better engage the private sector and generate additional revenue streams that were previously impossible when the entity was a unit of government supported better results. Further, industry partners were more interested in investing their money in a private nonprofit, which was one step removed from government. Additionally, other identified reasons for the success of the new nonprofit entities included: improved speed executing marketing and promotional ideas, rapid response to changing market conditions, more flexible procurement and HR procedures, and the private sector playing a more supportive role to attract major pieces of citywide convention and event business. 8.3 Internal CVB management systems need to be improved, not only to enhance destination performance, but also to promote a more nurturing and collaborative employee environment within the CVB. The operational structure of the CVB places the Virginia Beach destination at a competitive disadvantage from an administrative, marketing and sales performance perspective. Industry wide, DMOs function as marketing and communications entities, not government bureaucracies. Due to the CVB's direct affiliation with the City, it's often required to act like a government agency. This sets structural limits on the CVB, which don't exist for other DMOs. Due to these limiting factors, there are organizational problems which could be better addressed, if Virginia Beach adopted a different management model: a. The municipal procurement process doesn't allow the CVB to flexibly respond to market opportunities. The need to rely on City purchasing eliminates speed-to-market and the necessary nimbleness to take advantage of optimizing advertising placements, which maximize value for money. This is particularly true when purchasing media on digital platforms where "on the fly" decisions are the norm. b. One example of purchasing policy ineffectiveness relates to Mac computers, which are the industry standard for high quality graphic design. They are not allowed on the City's Microsoft-based IT system. Thus, the CVB's creative talent works around the City's IT restrictions to use superior software for design projects. Academy Street Collaboration, LLC 29 ` IR li:IA CAC004040.0clittv011iliataii*Vjggzsimmok44 c. In an emergency, when a laptop crashes, it could take up to four weeks to procure a new laptop for an employee. This kind of inflexibility makes it difficult to effectively manage the organization. No high performing DMO has these restrictions on the management of their valuable marketing assets. d. The restrictions placed on the CVB while adhering to the City's Human Resources Department's procedures is debilitating. Hiring, onboarding, performance evaluations and DMO-specific training opportunities are perceived by CVB employees as not being at an acceptable level. e. Restructuring a CVB department or changing an employee's job description to meet evolving organizational needs sometimes becomes an impossible task. One of the key traits of best practices DMOs is their ability to adapt staff resources to address evolving marketing and sales opportunities. This ability is not possible within the existing CVB structure. f. For more than two decades, the CVB had contracted all marketing and communications to an outside advertising agency. The effort has since been taken inhouse, where there was limited institutional knowledge and no historical context to operate Mar/Comm at a level of "best practices". By all accounts, the new Mar/Comm team is severely understaffed relative to the outside ad agency approach (currently 9 CVB employees versus formerly 20 agency employees working on the CVB account). Although well intended,the Mar/Comm team has struggled to accommodate the needs of other internal departments which often have unrealistic expectations concerning timelines and internal capabilities. Crisis projects are thrown at Mar/Comm, often at the last minute.Then,they become expensive to solve and tend to be improperly executed due to the lack of appropriate planning time. The result: other CVB departments continue to be dissatisfied with Mar/Comm's overall level of service and the final work products suffer. g. Business Intelligence (BI) and research don't have the stature within the CVB that they deserve. The Department's Coordinator is overextended due to constant and wide-ranging requests from inside and outside the CVB. There is limited prioritization of the work, which is often spent responding to last minute requirements and inputting data, which could potentially be accomplished by individual department staff. In addition, BI is not a top organizational priority, something unimaginable in a high performance CVB. In comparable DM0s,the BI coordinator is usually at a "Director" or "Vice President" level, with the position residing in the executive office, and directly reporting to the CEO. These individuals have wide ranging responsibilities including not just BI and research, but also organizational technology and data, management dashboards, and customer relationship management systems (CRM). 1t atli Ifl Strt+ t (ollabur atioii, I It 341 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS With these internal management issues noted above, it is a top priority, regardless of what future governance structure is decided for the CVB, that these internal management challenges be expeditiously resolved. 8.4 A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability and a passion for making Virginia Beach a world-class destination. Viewed as a whole, the staff of the CVB is dedicated and believe in the mission of the organization.They view themselves as community ambassadors. They take pride in their mutual hard work and in the accomplishments they have achieved. However,there is uncertainty within the ranks regarding the recruitment of a new CEO and filling three other vacant executive positions. Further,the CVB's cultural climate does not allow for an aggressive, entrepreneurial, commercially oriented environment, which is conducive to operating a top performing, world- class DMO. People are the number one priority in high functioning DMOs, and under the current CVB management structure, a focus on employee wellbeing and engagement, plus career training and work/life balance are not top priorities. The lack of synergy between CVB departments, which hurts overall destination productivity, is obvious to internal and external observers. This disorder affects organizational mission, objectives, strategy and KPIs which are not commonly shared across CVB departments. And since the CVB is not driving these broad-based destination goals and KPls, the overall Virginia Beach visitor economy languishes without strategic direction. Candidly,the CVB is not a source of direction, inspiration or innovation for the local visitor economy. Of concern is the fact that there is no institutional commitment to strategic planning or to build an annual consolidated business/marketing plan for the organization. Individual departments do in fact "plan", but there is a miniscule effort to integrate these plans into a combined approach which maximizes financial, personnel and operational resources. It should be noted that all forms of planning can foster a better culture of staff cooperation within organizations. Furthermore, there is a practical need to develop consistent KPIs across the entire organization. There's currently an internal effort, using Simpleview technology, to build an organizational- Academy Street Collaboration, PLC .s ;:`...I;.. t E?t i v,i f..i)NCtt?S ONE„i`NL)lit O 'vii_C+ AMMO wide performance dashboard. However,the process has not been completely embraced across the organization, and it remains in the development stage. This situation is further exacerbated by the fact that the Virginia Beach visitor industry doesn't have a clear comprehension of the CVB's goals and objectives that they should be striving to achieve. Specifically, here are examples of internal asymmetry and workarounds currently within the organization: a. Universally, Sports is considered a very effective department of the CVB. However,they tend to work in isolation from the rest of the CVB team. This situation may be further exaggerated once the Sports Department relocates to the new Sports Center. The value of sports marketing can't be overemphasized. In FY2019, the Department hosted 103 events, with a total attendance of 444,000 and generating 111,000 estimated room nights (CVB internal sales data). Additional support, direction and oversight from the CVB's senior leadership, and a new sense of departmental cooperation, will only improve this high level of performance in the future. b. Although there are published internal brand standards, CVB staff members sometimes disregard the standards. This approach hurts marketing, sales and event continuity, and diminishes brand value. c. Meetings and Convention Sales continues to underperform. Department goals and objectives are not clearly defined and as noted above, some KPIs have declined by as much as 50% over the past year. In addition,the fact that the senior sales leadership position within the Meeting and Conventions Department has been vacant for more than one year reflects the lack of emphasis on this vital market segment. d. The Visitor Information Center staff believes they are isolated from the rest of the CVB team citing that they are often not included in organizational communications and activities. It should be noted that additional analysis is needed concerning the overall efficiency of the Visitor Information Centers and its employees. Further, video technology links may help resolve some of the communication and location issues noted by staff members during the consultant's interviews. e. The International, Canadian and Group Tourism Department efforts are disconnected from the rest of the CVB.They have separate PR, marketing tools, data analytics, and are not always adhering to brand standards or participating in consolidated planning efforts. Further, the Department Director who has expertise in "tourism marketing" provides little, if any, input into domestic tourism strategy. tr atil 111A Street ColLibnration, I t t 32 VIRGINIA BEACH CV3 CONCLUSIONS AND RECOMMENDATIONS f. The interim CVB leadership has made an effort at building staff collaboration. However, there is limited institutionalized communication between departments regarding consequential strategic issues. And with no established and clearly defined strategic or tactical planning methodology in place, the senior leadership team has inadequate ability to effectively collaborate on the most compelling challenges facing the organization and destination. Obviously,this situation will only be remediated by employing a new CEO and filing vacant leadership positions. g. Overall, due to the lack of permanent executive leadership, the staff doesn't feel a collective sense of mission or purpose. Teamwork between departments is sometimes lacking, which damages both organizational and overall destination performance, plus individual employee morale. 8.5 Additional DMO executive management talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy. Several positions within the CVB are currently vacant. Due to non-competitive compensation packages, plus organizational and tourism product deficiencies, it will be difficult to attract and retain high performance employees. Specifically: a. As previously noted,there are material differences between the Virginia Beach CVB and other DMOs relative to employee compensation and benefits. With compensation levels 30%to 40% below DM0 industry norms, it's difficult, if not impossible to attract and retain highly talented employees. The higher the position within the CVB,the greater the variance between Virginia Beach compensation versus other DMOs. b. Employee career planning, team training programs, plus organizational succession planning, which are standard in most peer DMOs, is limited within the CVB. A case in point:to currently have four senior positions vacant at one time is an indication of a lack of succession planning, retention strategy and employee training initiatives. The lack of these employee-centric management tools affects the organization's ability to attract A-team performers. c. It's impossible to adequately reward high achievers within the CVB.The current incentive plan is not workable and doesn't act as a real "incentive" for employees. It is only limited to a small group of sales employees which causes staff resentment. Plus, the minor compensation connected to the current plan doesn't stimulate higher performance by employees. Within other DMOs, incentive plans play an essential role in spurring Academy Street Collaboration, LLC 33 .. 1,G1"ti k,#e A.tUSIONSP )i ...i ,;1%,1!-\[. -,TONS performance and simultaneously compensating top-notch employees.These programs are built to be fair to all employees and transparent in how they are administered. Performance bonuses for personnel across an entire DM0 organization can reach as high as 25%to 30% of annual salary. d. The process of terminating underperforming employees is problematic. It can take months, if not years, for the performance improvement process to conclude for a deficient employee. Further, employees don't have highly defined goals, objectives and KPls, so it's even more difficult to closely monitor and judge employee performance. In high performance DMOs, employee performance is built into the culture of the organization and is constantly monitored by staff leadership and the Board of Directors. If an employee is not performing up to clearly defined standards,they are aggressively counseled and trained to improve deficient competencies in a reasonable timeframe. This is particularly true concerning sales and marketing employees. If performance doesn't improve, they are asked to leave the organization. e. In conversations with the City of Virginia Beach Human Resources leadership, it was suggested that compensation levels for CVB senior executives could possibly be adjusted to better reflect market realities. Even so, there will be limits from both a compensation and benefits perspective in the organization's ability to attract high achieving industry executives. Further, City HR leadership suggests that adjusting compensations for administrator, coordinator, manager and director level positions may be more difficult to resolve. Based on state employment mandates and the system currently utilized by City government for its 7,000 plus employees,there may be no opportunity within this current system to improve compensation levels for these positions. The City's HR leadership concurs with the consultant that the one possible solution to these compensation challenges may be the formation of a new CVB organizational structure. 9.0 Additional Management Observations Although the consulting assignment has predominantly focused on organizational challenges, there are several CVB programmatic areas, not mentioned above, which are functioning at a satisfactory level.These include: 9.1 The Operations of the Virginia Beach Convention Center The consultant has not evaluated the operational management of the Convention Center.There is consensus that the facility is well managed and maintained. The complex remains in excellent condition and the staff has a strong commitment to service and quality.The significant CVB 'tcattertn Street it OOII,II )r ati{)rr, t l( VIRGIN:A BEACH CVB CONCLUSIONS AND RECOMMENDATIONS sales and marketing challenges which have been documented above, have not hurt Convention Center operations. Obviously,the future challenge for the building will be to improve utilization based on better CVB sales and marketing strategies. It should be noted that building occupancy will be further challenged once the Sports Center is completed in November 2020. The loss of several sports related pieces of business will negatively impact the facility's revenue generation. Thus,there's even more urgency to maximize the sales and marketing capabilities of the CVB. 9.2 City Budget, Audit and Financial Oversight The City provides strong oversight of the CVB's budget and financial position. The organization is well funded and adheres to strict master financial controls, procurement protocols, contract compliance, public transparency, and formal audit/risk procedures. The annual budget process is an important management tool for the CVB team. Although there needs to be better coordination between the staff's actual business/marketing plan and the budget, this doesn't preclude the fact that the budget process itself is well run. Further, the annual external audit by the City Auditor provides important oversight of the organization, thus assuring transparency and confidence in the CVB's program of work. 9.3 Policies and Procedures The CVB staff is governed by the City's Policies and Procedures, as well as Administrative Directives and Ordinances, which afford staff with stable and predictable internal management procedures. 10.0 Examples of Successful DMO Transitions There are five DMO examples with similarities to Virginia Beach, that have successfully transitioned from government to new organizational structures. Each had different management circumstances, and each had its own unique challenges. However, one common theme links all five destinations:There was noticeable improvement in market position and community support, once the transition was concluded. 10.1 San Antonio For several years, San Antonio was outspent and underperformed relative to its competitive set. From 2013 to 2015, there was a decline in visitor interest in San Antonio as visitation dropped during that timeframe(Rivard Report, Feb. 15, 2016). According to local news sources, the reasons for the declining numbers is varied. Well financed marketing efforts in Houston, Academy Street Collaboration, EEC - k'IRGINIA BEACH Ct't3 CONCLUSIONS AND RECOMME 1' Dallas, Austin, Nashville, New Orleans and Phoenix were capturing San Antonio's market share. All these cities invested heavily in redevelopment of cultural institutions, parks, convention centers, hotels and urban core infrastructure. According to Casandra Matej, CEO of the former San Antonio CVB, the City continued to present the same mix of tourism amenities, and the CVB budget remained flat as peer destinations significantly outspent them. Again, according to CEO Matej,the San Antonio CVB struggled with the bureaucratic complexities as a municipal agency and their inability to attract private sector engagement and investment into their overall mission. It also was difficult to attract and retain talented marketing and sales employees to compete with their primary competitors. Thus, in 2015,the Mayor and City Council charted a CVB Structure Taskforce to review the CVB's mission and organizational framework. The 13-member taskforce was comprised of city government officials and representatives from across the local hospitality industry. The Taskforce spent eight months studying how independent CVBs function, reviewing DMO best practices, and eventually formulating recommendations. The Taskforce outlined the relative merits of the CVB either staying with the City or going out on its own. Going independent would mean more support from the private sector and a more competitive marketing/sales effort. The Taskforce also pointed out the downside, which was mostly logistical: added office and IT costs, new expenses for finance, legal and HR management, and less direct contact with city agencies. The Taskforce eventually recommended to the City Council that the CVB become an independent organization with its own board of directors, but closely aligned to the City government. The new Visit San Antonio (VSA) would obtain 501c6 status and take 12-18 months to transition from city governance. The new structure meant the City would contract with the VSA and provide approximately$23 million annually, allocated from 35% of the Hotel Occupancy Tax Fund. Once the City Council approved the plan with a 7 to 2 vote,they set up an internal transition group staffed by the City's HR, Legal and Finance departments, plus senior leadership at the existing CVB, including Ms. Matej.Some original Taskforce members were also asked to join the transition group along with outside contract counsel. During the process,there was great care taken to accommodate employees affected by the transition. CVB employees either"crossed over" to the new organization or transferred to other City departments. Special consideration was given to employees nearing retirement, so they would not lose any accrued benefits. VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATION A highly detailed five-year Destination and MarketingServices Agreement authorized the VSA to assume the promotion duties of the City's former CVB. Initially, they would receive $23 million annually from the City, but the VSA, per the Agreement,was also required to build a "revenue enhancement plan" to augment the City's public tax investment. This revenue was to include: co-op advertising programs, partnerships, selling tourist and convention delegate services, corporate sponsorships and eventually membership dues provided by the private sector. A Tax Improvement District was also under consideration where hotels would impose a tax on themselves to increase CVB marketing resources. These enhanced revenue strategies are similar to how other US cities effectively raise new resources, thus lessening the burden on public tax dollars. Under the agreement, the VSA is required to present to the City quarterly and annual reports, performance targets, plus an up-to-date revenue enhancement plan. VSA must maintain transparency in all its transactions. A 21-member Board was selected by a five-person Nominating Committee appointed by the Mayor and Ms. Mate), the new VSA CEO. 60 individuals applied for the 21 spots. Small and large businesses alike, plus city and suburbs were given equal consideration by the Committee to assure fair representation. The Board was comprised of the following appointments: Mayor appointments (2)—Council members City Manager appointment (1) Hotels and lodging (3) Leisure attractions (2) Restaurant and Culinary(2) Heritage and Preservation (1) Arts, Culture and Music (1) Transportation (1) Chamber (1) At large Business (3) Corporate CEO (1) Ex-Officio Voting (2)—Convention Center & City Economic Development Ex-Officio Non-Voting (2)—City Aviation& Military Academy Street Collaboration, LLC 37 L'IRGINI-A BEACH('.3 CON( Li,S1ON5 AND RECQMMENnAT,ONS Since the transition to an independent DMO, which began in 2015, the destination has seen impressive gains in marketing and sales performance. Visitation has increased from 29.7 million to 37 million visitors, an increase of 24.5%). Economic impact has increased by$1.6 billion to over$15.2 billion annually. In addition, the hospitality industry employs 140,200 individuals, an increase of 9,400 positions since 2015. The industry contributed $214 million in taxes to the City in 2018 (San Antonio Business Journal Nov. 30,2018). Convention room nights booked have increased from 860,000 to 912,000 (Visit San Antonio Annual Report),with future TAP pace reports signifying more significant improvements (Per Ms. Mate.)). Additionally, online engagement has jumped 33% from 5.4 million to 7.2 million (Visit San Antonio Annual Report). Another performance indicator includes raising over $10 million in private sector resources annually for marketing and sales activities as the private sector has become more engaged. Importantly, since becoming independent,the VSA was selected by employees as a Top Workplace in San Antonio for 2019 (San Antonio Business Journal September 2019). San Antonio has also broken into the ranks of the top 15 best cities in the US, according to rankings by the prestigious Travel + Leisure Magazine (Travel+Leisure Magazine,June 2019). Further, CEO Matej notes that talent recruitment and retention has now become more effective as VSA searches for top-notch talent. 10.2 Kissimme,. Kissimmee, FI, as a destination, has similarities to Virginia Beach. It is predominantly a leisure tourism destination, with a relatively small meeting and convention market share. Kissimmee has many vacation home rental units and a major position in sports marketing. The Osceola County Heritage Park is a 150 acres sports and entertainment complex featuring a 10,500-seat indoor arena and 90,000 sq.ft. of flexible space in an adjacent exhibit hall. Both destinations have built in advantages, one with world-class beaches and one with proximity to the world's most popular theme parks. Experience Kissimmee, the tourism authority for Osceola County, Florida has a similar budget to the Virginia Beach CVB ($22 million when you exclude Virginia Beach Convention Center costs). And, both destinations have similar staff sizes, 55-60 team members. The CVB was started in the 1980's as a department of County government. By 2013, there was a realization among private sector visitor industry stakeholders that the organization was not achieving its mission of expertly leading the marketing of the Kissimmee tourism experience to the world. The organization was constrained because of its inability to attract and retain 1( d(l( In\ Strc+t Collaboration, VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS competent employees. Plus, procurement inflexibility and lack of marketing and sales innovation were hindering performance. Thus, in 2013 a taskforce was chartered by County government to evaluate the options to improve the organization. After six months of study, it was decided to move the CVB out of government and launch a 501c6 nonprofit with close affiliation to Osceola County Government. This move took place in 2014. A newly appointed 29-member Experience Kissimmee Board of Directors represented a diverse hospitality industry. The Board was comprised of: five (5) attractions representatives, nine (9) bed tax collectors (hotel industry representatives), three (3) civic leaders, five (5) ex-officio members,three (3) restaurant/retail/transportation representatives, one (1) sports representative, and three (3) at-large members appointed by the board ehairman. The ex officio members include a County Commissioner, the County Manager and the Director of Osceola County Economic Development. The five attractions include, among others, representatives from Disney, Universal and SeaWorld. Members were elected to three-year terms with an option to serve an additional two-year term at the end of the first. Unless a Board member moves into a leadership role,they may serve for two consecutive terms. According to local stakeholders and industry analysts, since 2014, Kissimmee has seen a marked Improvement in their marketing and sales capabilities. Two areas of improvement include marketing performance and private sector involvement in the mission of the CVB. a. Marketing Performance—Due to a strong emphasis on improving marketing and sales efforts, Kissimmee has experienced solid growth in market position. Their commitment to digital media execution, business intelligence and improved tourism marketing strategy has been recognized within the community and across the industry. This is best demonstrated by reviewing hotel tax collections over the last six years...beginning with the inception of the new CVB structure. In 2013/14 hotel tax collections totaled $40,581,713. By 2018/19 that figure was $61,097,777 (Experience Kissimmee 12/19 Board Presentation). This tax revenue increase of 50.5% far outpaces national trends and the growth of other Florida- based destinations. b. Private Sector Involvement- With the transition to a 501c6 nonprofit,the CVB had delivered on a mandate to engage the private sector in the business of improving Kissimmee's market position. While the CVB was a part of County Government there were no substantial contributions from the private sector to the organization. That has changed as the following Partnership Investments will attest. In FY2019,through November, the CVB has received $421,144 in contributions, including membership, in-kind and co-op marketing support Academy Street Collaboration, LLC from its partners (Experience Kissimmee 12/19 Board Presentation). Just as importantly, the private sector is now more engaged in assuring the destination's success. On a day-to- day basis industry leader provide valuable guidance and engagement to support the CVB's mission. 10.3 Puerto Rico Before the traumatic events of Hurricane Maria,the Puerto Rico legislature had already decided to transition the convention and tourism marketing effort out of government. Puerto Rico tourism had been stagnant for over a decade due to image problems, reduced air lift and declining investment in tourism products. With the launch of Discover Puerto Rico, a new private/public partnership, the marketing and sales responsibilities were transferred to a nonprofit corporation. In concert with this transition, the island has seen a dramatic increase in visitation. Since 2011, visitation has increased by 24%, from 4.2 million to 5.2 million visitors (Puerto Rico Tourism Company, Skift Report, Nov. 2019). Remarkably, Discover Puerto Rico's aggressive hurricane recovery strategy is attributed with spurring a 13% increase in 2018 visitation versus pre-hurricane visitation in 2017 (Puerto Rico Tourism Company, Skift Report, Nov. 2019). The new organization has retained high performing former government employees, recruited energized new employees from the private sector, and attracted a dynamic new CEO (Brad Dean formerly of Myrtle Beach). The organization was built from the ground up using state of the art DM0 management strategies and tactics. There is consensus island wide and within the U.S. tourism industry that Discover Puerto Rico has improved marketing and sales efforts,while simultaneously better engaging the private sector in the work of the DMO. Discover Puerto Rico leadership and the organization have been recognized with industry awards from the United States Travel Association and Destination International for their management and marketing expertise. Discover Puerto Rico's future hotel and convention center pace reports indicate a bright future for the island's tourism economy, which signifies a turnaround from their previous dire situation (Per Brad Dean, CEO, Discover Puerto Rico). 10.4 Bermuda For a decade, from 2006 to 2015, Bermuda tourism had been in serious decline. Air arrivals declined 31% during that timeframe (Bermuda Tourism Authority(BTA). Hundreds of hotel rooms across the island were shuttered. Employment in the sector was at a historic low point. In a bold move by the ruling government,the tourism effort was removed from the Tourism tc,tidt'nm Stct• °i oiiattot ation, t t t 10 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Ministry. The new entity was launched as an independent entity which still received government funding but was charted as a private company. The Government still had strong Board representation (appointing 3 of 9 Board positions, plus the Chairman) and fiduciary oversight of the new Bermuda Tourism Authority, but the goal was to make the organization as nimble and effective as possible. The move to privatization was started in late 2013, and beginning in 2015,the island nation started to experience dramatic growth in the tourism economy. The results have been spectacular. Visitor arrivals increased from a low of 584,457 in 2014 to a high of 770,683 in 2018 (BTA 2018 Annual Report). This is an increase of 32% during a four-year timeframe. Tourism GDP increased over 35% during the same time. Over 1,000 new jobs have been added to the economy, and four new hotel properties have opened (BTA 2019 Marketing Update). As a point of information, 80% of the new BTA employees transferred over from the Tourism Ministry as the start-up commenced. These individuals became the foundation for the new organization and, over the years, have performed at a very high level in the new private sector environment. Importantly, significant growth has occurred in Bermuda's shoulder seasons, at a time when additional economic activity was urgently needed to stabilize employment levels, service quality and island-wide economic activity (Per BTA Business Intelligence Department). Universally, Bermuda leaders and industry experts attribute this turnaround to the privatization of the BTA. An indication of Bermuda's new stature as a world-class destination came when it hosted the 2017 America's Cup, defeating San Francisco, San Diego and Chicago for the site designation.To its credit, Bermuda remains today as the fastest growing destination across its entire competitive set (STR hotel occupancy data provided by BTA). 10.5 Destination DC (DDC) Although a more dated example, Destination DC is often cited as a successful transition from government oversight to a public/private 501c6. Today, Washington, DC is one of America's, and the world's, premier convention and tourism destinations. That was not always the case. Throughout the 1980s and 1990s,the City was in steady decline both in real economic terms and from a destination marketing perspective. Civil unrest, high unemployment, business and population loss, plus government dysfunction ruled the day within the District. This all began to change in 2000 when Anthony Williams was elected as Mayor. He brought with him a competent team of senior government leaders which added stability, predictability Aca emy t eet Collaboration, LE _ _ ViRGINIA LEACH .�' C NMI IQr !•Nr)P COIV1% ' -._. _�..._ .,fit and ethics to City government.This new approach was a signal to the private sector that a return on investment was now possible. A tidal wave of pent up economic demand was unleashed, eager to acquire City real estate and access to all things connected to the federal government. This commercial energy allowed the City to make strategic investments in new or refurbished infrastructure. Over the next two decades, the urban core has been transformed with new restaurants, retailers and visitor attractions. The energy continues to this day, as the District benefits from strong economic growth. In 2001, as part of this extraordinary urban revival,the City separated the convention and tourism effort from City government, with the intention of taking full advantage of new municipal stability and the City's economic resurgence. The Washington, DC Convention and Tourism Corporation (Destination DC) was founded, and a new CEO was recruited as its first employee. Over the next decade,the organization was built into one of the highest performing DMOs in the industry. During this time frame, over 2,500 hotel rooms were placed on the drawing boards or constructed (STR data per DDC Business Intelligence). A new $900 million convention center was built, along with the magnificent Nationals Baseball Park, home of the World Series Champions. The DDC also played a key participant role in the construction of the World War II Memorial and the Martin Luther King Memorial. Further, the organization led the Mayor's Economic Recovery Taskforce after the events of 9/11, raising over$4 million to support the effort. From a marketing perspective during this timeframe, the District experienced spectacular growth. The Washington Convention Center became one of the world's most successful facilities of its kind hosting as many as 30 city-wide conventions/events annually. DDC increased overall room night booking performance from under 650,000 annually in 2002 to over 1,500,000 room nights in 2011, an increase of over 130% (DDC TAP Report). Today,that number stands at over 1.9 million room nights (DDC TAP Report). Between 2002 and 2010 the Capital Region increased international arrivals by 46%from 1.3 million to 1.9 million (CRUSA 2018 Annual Report data). And, in a five-year period, from 2004 to 2009, unique website visits increased from 2.4 million to over 5.7 million visits, an increase of 137.5% (DDC Annual Report 2010). Finally, in a ten-year timeframe, DDC led the District in hosting over 10 city-wide arts and cultural festivals,three presidential inaugurations, two national memorial dedications and two presidential funerals. Academe Street Coltaboi ation, I IC 12 VIRCINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 11.0 Recommended Path Forward for Virginia Beach 11.1 The Ultimate Goal There are significant issues to consider when evaluating changes of the CVB's structure which has been in existence for decades. Any potential organizational change will have ramifications that should be clearly understood. If a newly formed organization is approved, it must be committed...by mission and by law...to a partnership with the City which provides measurable benefits to the community's citizens and industry stakeholders. With struggling Convention Center sales performance, a resort product which needs refreshing, and a hyper-competitive regional and national visitor marketplace, performance criteria based on market dynamics would need to be negotiated and contracted between the City and the new entity. In a transition of this nature, consideration must be given to issues of control and oversight. Historically, all control has rested with the City both on the management and policy- making sides. A transition to a more independent structure will require relinquishing a certain amount of control by the City in return for an increased private sector investment, both in time and financial support. In best practices DMOs,the board is comprised of private sector volunteers from the hospitality and broader business communities who dedicate their time and attention to achieve great results for their community.Typically included in the board composition are City Council and professional staff members who represent the City's interests and are responsible for the CVB's results to be delivered. At the end of the day, the ultimate goal for the City should be to place the very best team on the field which is unencumbered by non-competitive business practices and positioned to be innovative, opportunistic, responsive to clients, and nimble in a fast-paced and constantly evolving global marketplace. 11.2 Community Taskforce Based on the aforementioned conclusions, the consultant recommends to the City of Virginia Beach City Council the establishment of a Community Taskforce to: Academy S ree Cola6bFation, U.0 — _43 VIRGINIA PE .C4i CVB CONCLUSIONS AND RECOMMENDATIONS 1) Evaluate the possibility of transitioning the CVB to a new a public/private 501c6 nonprofit organization.The 501c6 would be charted by and contracted to the City to perform the destination's marketing and sales activities. Governance would be shared between the City and the private sector.This proposed change would improve marketing, sales and operational capabilities,while providing for private sector involvement in the new entity. 2) If it was found too impractical to establish a 501c6 management structure outside of City government, the Taskforce would thoroughly review the CVB organization and make recommendations for operational and marketing improvements based on the existing governance format. Additionally, the taskforce may consider a possible hybrid governance model which would possibly include a 501c3 nonprofit foundation, like the Virginia Aquarium & Marine Science Center Foundation. The Community Taskforce would be comprised of private sector leaders and City of Virginia Beach government representatives. The private sector leaders would come from both the business community and visitor industry sectors. These individuals would act as honest brokers for the City Council and assure a fair vetting of this important topic, keeping in mind what will be the best interests of the citizens of Virginia Beach. The Chairperson of the Taskforce should be a highly trusted, private sector CEO. The Taskforce would convene several times over a 90- day time period and present detailed recommendations to the City Council at the end of the project. The City Council would then decide on these recommendations. If a nonprofit option were recommended by the Taskforce and approved by the City Council, a transition process could unfold over a to-be-determined timeframe through a logical and graceful process. The transition would be carefully planned to assure organizational continuity with no harm to employees or to ongoing marketing and sales efforts. For the new nonprofit,the City would provide civic oversight, while the private sector would be engaged in a more substantial manner. This approach would assure strong fiduciary control and enhanced marketing/sales capabilities for the new organization. The new structure would encourage additional private sector financial and marketing support for the new CVB. This could include, among other items: co-op advertising programs, partnerships, selling tourist and convention delegate services, corporate sponsorships, eventual membership dues, and even the possible creation of a Tourism Improvement District. The Taskforce would decide if the operations-oriented Virginia Beach Convention Center and CVB's Resort Management Department would remain under the management of the City of Virginia Beach or transition to the new CVB nonprofit. Regardless, the new CVB would continue Acations Stret I (ollaboratinit, 11( 11 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS to provide the sales and marketing services for these departments as they are currently provided. It would be logical for all other departments of the current CVB to move to the new organization, including: Mar/Comm,Tourism,Sales, Services, Visitor Information, and Sports, but this would be a Taskforce decision. 11.3 A Necessary Realignment Regardless of what the final CVB structure would comprise...either remaining within government or as a separate nonprofit...it's an economic necessity that the organization's mission, strategy, marketing, sales, governance and management be realigned. This realignment will be required for the following: a. Redefining the organization's Mission and strategic imperatives. b. Private sector engagement and attraction of new financial resources. c. The development of specific KPIs and an accurate method to measure and report results through a sophisticated organizational dashboard metric tool and the use of best practices relative to individual employee performance management. d. A complete review and update of the CVB employee compensation strategy and incentive program to assure fairness,transparency and the need to retain talented individuals. e. A complete remake of employee performance management policies and procedures to assure high achieving individuals are rewarded and non-performing individuals are terminated. f. A realignment of the international tourism effort to reflect the current marketplace potential and available resources. g. A refocus of the CVB group sales effort to reflect the reality of deficient room inventory within immediate proximity of the Convention Center and an evolving product mix due to the new Sports Center. Further, the City should make another concerted effort to develop a convention center hotel attached or adjacent to the Convention Center. h. The reorganization of the CVB structure to include a new organizational chart,job descriptions, new methods of staff collaboration, etc. i. A reorganization of the CVB's internal marketing activities and a rebalance of the marketing effort using additional external resources. j. A reengagement of the hotel community and other key visitor industry stakeholders in the CVB's program of work. k. Close alignment with the objectives of the RASAP 2030 Plan to assure the Virginia Beach visitor product and experience is improved and better aligned with emerging consumer trends. Academy Street Collaboration, LLC VIRGINIA B[-; CH C.VB CONCtt SIGNS AND RECOMME '. 1. A dramatic pivot by the CVB to a business intelligence management model which relies on a data-centric approach to sell and market the Virginia Beach destination. m. The development of formal organizational planning protocols, both strategic (3-5 years), and tactical (annually). 11.4 New Board of Directors If the 501c6 nonprofit concept was approved by the City Council, the Taskforce would work to establish a new CVB Board of Directors, which would provide oversight for the new organization. The Board's composition could be similar to Visit San Antonio, but customized to address Virginia Beach's specific needs. A five-member Nominating Committee could be appointed by the City Council to decide on the Board's membership. The city would have strong representation on the Board. Outside legal counsel would be retained by the City to author a detailed Services Agreement between the City and the new CVB. The Board would have the following lines of authority: a. Redefine what success looks like for the destination with a new Strategic Plan to include: a new mission statement, vision and values, plus goals, objectives and long-range strategies. b. Assure the new organization's culture remains in constant adaptive mode in an ever- changing visitor industry. c. Have fiduciary oversight of the budget developed by the staff. Oversee an annual audit. d. Approve an annual business/marketing plan developed by the nonprofit's staff. e. Set goals, objectives and KPIs for the organization, both long term and annually. f. Hire, advise and have performance oversight of the CEO, requiring him or her to adhere to well defined annual personal and organizational KPIs. g. Approve and provide oversight for organizational policies and procedures. h. Within the community, act as advocates for the organization specifically, and for the visitor industry in general. 11.5 A New CEO Importantly, one of the Board's first orders of business would be the recruitment and selection of a new CEO. A national search firm with specific DMO experience should be retained. The new organization will require the CEO to complete the organization's transition as it builds out systems, policies and procedures, staff crossover from government, external recruitment, plus the need for Board and committee management throughout the transition. 1cadem‘ 'trot t oltaboratioir, I I t 46 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 11.6 The Cost of Inaction For the Virginia Beach City Council,the opportunity cost of failing to respond to the current marketing and operational deficiencies are substantial. By not addressing the strategy limitations noted above, the City is restricting its long-term economic growth and risking falling behind its market peers. Each of Virginia Beach's competitors are constantly refreshing market assets such as convention centers, hotels, attractions and image campaigns. As a result, destinations such as Norfolk, Myrtle Beach, Fort Lauderdale and Memphis have become destinations which both groups and leisure travelers want to visit. As market leaders, the positive impact on these communities, both economically and socially, has been dramatic. Let us assume Virginia Beach reorganizes the CVB marketing efforts. Additionally, let us assume that this new effort achieves performance like the successful CVB transitions referenced in this Report. Based on these examples, once the organization is stabilized, a 10% increase in hotel room occupancy would be a reasonable prediction. If that was the case and based on 2018 tax revenues generated by accommodations within Virginia Beach, the City would benefit from an additional$37.2 million in total direct accommodations revenue. The overall economic impact of indirect and induced spending across the destination would be substantially more than this figure. Also,for discussion purposes, you could add to this figure the lost opportunities cost due to the lack of a convention center hotel which is estimated at $41.5 million for new net direct, indirect and induced spending annually(noted in HVS's 2018 Virginia Beach Market Analysis). Both these figures represent significant additional economic activity,additional jobs and tangible new tax revenue to the City annually. The City Council should be adamant about improving CVB performance, not only for these tourism industry reasons, but also for the overall health of the entire Virginia Beach economy. Destination promotion acts as a catalyst for overall economic development to succeed in broader economic terms. Oxford Economic, a highly regarded global economic advisory firm, notes four primary channels through which destination marketing drives economic development and community growth (Destination Promotion and Economic Development 11/2014): 1) Destination marketing builds awareness, familiarity and relationships in commercial and individual networks that attract investment. Oxford Economics notes that nearly one-third of new residents first visited their communities as tourists. Academy Street Collaboration. LLC - 7. I'C. tfl,\I r `1. v`,It -,IO 1kND kit OIV1MENk),,T'ON) 2) By developing the visitor economy, destination marketing supports transportation infrastructure, thus providing both greater public accessibility and business supply-chain logistics that are important to attracting community investments. 3) Visitor spending, attracted by CVB marketing, helps support a larger and higher quality of local amenities than an area might otherwise sustain. The cultural, entertainment, culinary and retail attractions that visitors support make a place more attractive for both local citizens and potential investors, 4) By attracting business events (tradeshows and conventions),destinations appeal to the very prospects that economic development agencies target.These business events provide synergies with "economic clusters" (business sectors indigenous to Virginia Beach). Obviously, for Virginia Beach, these economic clusters revolve around the military sector. 11 7 Process Timeframe Once the Taskforce makes its recommendations, and if the City Council decides to reorganize the Virginia Beach CVB into a nonprofit, it would take approximately 6 to 8 months to complete the transition. This approach would require staff support from both the City and CVB, plus outside legal and organizational management counsel. There would be a long list of tasks to complete, which might be best managed using Smartsheet,to track project tasks, benchmarks, timelines, and financial controls. This management tool would allow the transition staff to streamline planning and communicate clearly with interested parties throughout the process.It should be noted that during the transition process, City Council, staff, industry stakeholders and the community will be kept appraised of developments as transparently as possible. If a nonprofit structure was approved, a timeframe could unfold in the following manner. This is a partial list, for illustrative purposes only, of some key process benchmarks.This list does not include every task necessary to complete the project. Ideally, these tasks would be tackled in a linear format, but some tasks could be accomplished out of sequence. Starting in April 2020, here is a month-by-month proposed timeline: April • City Council approves a "proof of concept" and reaffirms a Taskforce's responsibility to lead the next phase of the discovery process. • The Taskforce convenes and agrees on its new mandate, program of work and a project schedule. , tlrrtat Sir4'I4 Collaboration, Et( .!S VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 4141 • In concert with the City and CVB, an initial transition budget is developed to fund the next phase of the transition, and a management plan is authored. • The Taskforce begins a deeper analysis of comparable CVB structures. • The Taskforce researches nonprofit IRS status for the new entity. May • An organizational model is selected which best matches Virginia Beach's specific needs. • Financial, HR, operational and logistical issues are addressed by the Taskforce with support from City and CVB staff. • An organizational charter, by-laws, Board and committee structure are drafted. • An operational plan for transition management,financial resources and HR requirements is approved by the Taskforce. June • Outside legal counsel works with the Taskforce and the City to author a draft Services Agreement between the City and the new entity. • From the Taskforce,the City Council selects a five-member Nominating Committee to oversee the recruitment and selection of Board members. • The Taskforce selects a search firm to recruit the new CEO. • Board members are recruited and vetted. July • The new Board is selected. • The new Board meets for the first time and approves the charter, by-laws and Board structure. • The Board establishes: specific leadership and committee responsibilities, code of conduct, financial authority parameters, confidentiality mandate, meeting schedules, etc. • The Board initially reviews the Services Agreement with the City and makes recommendations for revisions. • The Board, with staff support, authors and approves: master financial controls, audit/risk procedures, Board and employee code of conduct, procurement protocols, contract compliance,transaction documentation, expense accounts, etc. August • CEO candidates`are interviewed, and a final candidate is offered the position. Academy Street Collaboration, LLC 49 r -F VIRGIN r\{3E ,C11 CVE1 CONCLUSIONS AND PLCOMMEN[?ATIONS • The Board, in concert with the City and CVB,will work with an external, locally based HR firm to build the organization's new HR management system to include: payroll administration, benefits, insurance, incentive plans, performance reviews, on- boarding, employee portal, etc. • The locally based HR firm works with City and CVB staff(with Board oversight)to assure compliance with all employment regulations and standards. The HR firm's primary focus will be City employees crossing over from the existing CVB to the new organization. They also will play a role in recruiting new employees, vetting existing and new employees, interviews and the administrative procedures. These HR issues will require time, systems, and sensitivity. September • The CEO begins his or her employment. • The Service Agreement between the City and the new entity is signed by all parties. • The CEO, using staff support, will approve a recommended technology platform and applications, plus approve purchases or transfers from the City of hardware, software, tel-corn, mobile devices, laptops, presentation software, etc. for organizational-wide usage. • The CEO approves policies and procedures, financial authorities and guidelines, expense account and contract compliance, procurement and transaction documentation. The Board ratifies these management items. • CVB employees have final interviews for positions within the new organization. • Additional position recruiting may be necessary to fill specific competencies within the organization. Depending on the position, recruitment would be locally or nationally based. • Onboarding of new employees begins. • The CEO refines various employee management tools, including the organizational chart,job descriptions and performance objectives which reflect industry best practices and are approved by the Board. October • The transition is nearing completion, and the new entity begins its responsibility as the destination's DMO. • The CEO initiates the strategic planning process with the Board. This process will also drive the development of the Annual Business/Marketing Plan by the new staff. li � I Convention and Visitors Bureau a i Community Taskforce City Council Package December 1, 2020 ICVB Community Taskforce I Table of Content Tab 1 Resolution ITab 2 Sept. 11'20 Meeting IMeeting Agenda Biographies IMeeting Presentation Tab 3 Roster ITab 4 Sept 25'20 Meeting Meeting Agenda IMeeting Minutes Meeting Presentation I Tab 5 Sept. 11 Follow Up ITab 6 Revenues Ordinances ITab 7 HVS Report Tab 8 Hanbury Report ITab 9 Oct. 9'20 Meeting Meeting Agenda IMeeting Minutes IMeeting Presentation Tab 10 Sept 25 Follow Up ITab 11 Oct 23'20 Meeting Meeting Agenda IMeeting Minutes Meeting Presentation ITab 12 Oct 9'20 Follow Up Tab 13 Nov 6'20 Meeting IMeeting Agenda IMeeting Minutes Meeting Presentation ITab 14 Oct 23 '20 Follow up 0 i RP'S - 040 3 't IREVISED VERSION REQUESTED BY COUNCILMEMBER ROUSE 1 A RESOLUTION ESTABLISHING A CVB COMMUNITY 2 TASK. FORCE TO EVALUATE TRANSITIONING THE 3 CONVENTION & VISITORS BUREAU TO A NEW 4 ORGANIZATIONAL STRUCTURE I5 6 WHEREAS, at the City Council's retreat in February 2020, the City's consultant, 7 Bill Hanbury with Academy Street Collaboration, presented initial findings of his analysis I 8 and recommendations for management of the Convention & Visitors Bureau ("CVB"); 9 10 WHEREAS, the consultant recommended the establishment of a Community Task I 11 Force to evaluate transitioning the CVB to a new organizational structure with three 12 distinct alternatives: 13 I 14 1. Remain within the City government; 15 2. Hybrid public-private foundation or authority; or 16 3. Public-private nonprofit; and I 17 18 WHEREAS, the City Council believes it would be helpful to receive 19 recommendations from a task force composed of subject-matter experts and I 20 stakeholders as well as citizen representatives. 21 22 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF 23 VIRGINIA BEACH, VIRGINIA: I 24 25 1. That the City Council hereby establishes the CVB Community Task Force. 26 I 27 2. That the task force shall serve in an advisory capacity to the City Council, 28 and the City Council shall appoint its members. 29 I 30 31 3. That the task force shall consist of: 6 Two City Council members; 32 ' A Resort Advisory Commission representative; I 33 ` Two Virginia Beach Hotel Association representatives; 34 . A Restaurant Association representative; 35 t A Central Business District Association representative; I 36 37 • Two persons with sports marketing experience; 6 Three business representatives from other industry sectors; and 38 6 Three citizens from across the City. I 39 40 4. That the goal of the task force shall be to evaluate the three potential 41 alternative new organizational structures listed above and make recommendations to the 42 City Council on the best path forward, provide input on the qualities sought in a new CVB I 43 director or Chief Executive Officer; and perform any additional duties assigned to the 44 Task Force by the City Council. — 45 46 5. That the task force shall report back to the City Council with its 47 recommendation on a new organizational structure no later than the last City Council — 48 meeting in October. Adopted by the Council of the City of Virginia Beach,Virginia, on the day of _ , 2020. APPROVED AS TO LEGAL SUFFICIENCY: City Attorney's Office — CA15104 R-4 July 7,2020 1 A RESOLUTION REGARDING THE TIMING OF THE 2 CVB COMMUNITY TASK FORCE'S 3 RECOMMENDATIONS 4 5 WHEREAS, on July 7, 2020, the City Council adopted a resolution establishing 6 the CVB Community Task Force to advise the City Council regarding the transitioning of I 7 the Convention & Visitors Bureau to a new organizational structure; 8 9 WHEREAS, that resolution required the task force to report back to the City I 10 Council with its recommendations on a new organizational structure no later than the last 11 City Council meeting in October; 12 ' 13 WHEREAS, since the adoption of that resolution, the City Council has twice 14 adopted additional resolutions that added more members, and those new members were 15 appointed by the City Council during its September 1, 2020 meeting; and 16 17 WHEREAS, because the final appointments to the task force were made recently, 18 and because of the complexities of evaluating the various organizational structure 19 options, it is not feasible for the task force to complete its work by the deadline set in the 20 July resolution; 21 22 NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF ' 23 VIRGINIA BEACH, VIRGINIA: 24 25 That the task force shall report back to the City Council with its recommendation I26 on a new organizational structure no later than the first City Council workshop meeting in 27 January 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 2020. IY APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: GC/c City Manager's Offi City Attorney's Office CA15161 R-1 September 2, 2020 I City q/ Virginia Beach Convention and Visitors Bureau Community Taskforce September 11, 2020 Agenda I 1. Welcome and introductions - Councilmembers Tower&Wilson 2. Task Force Charge- Deputy City Manager Ron Williams 3. Destination Marketing 101 - CVB Executive Advisor, Bill Hanbury 4. History of Virginia Beach Convention&Visitors Bureau (CVB) - CVB Interim Director, Ron Kuhlman 5. CVB Budget&Organizational Overview- CVB Interim Director of Administration, Michelle Boyette 6. Convention Center Overview- CVB Interim Convention Center Manager, Bryan Miller 7. Discussion 8. Future Meeting Agendas 9. Next Meeting- September 25th 9:00 AM I Mission To evaluate the three potential alternative new organizational structures(remain within the City governments, Hybrid public-private foundation or authority, Public-private nonprofit)and make recommendations to the City Council on the best path forward,provide input on the qualities sought I in a new CVB director or Chief Executive Officer and perform any additional duties assigned to the Taskforce by the City Council. I Virginia Beach Convention&Visitors Bureau 2101 Parks Avenue,Suite 500 I Virginia Beach,VA 23451 I ph(757)385-4700 I fx(757)437-4747 I Ronald H. Williams, Jr. I Ron Williams serves as the Deputy City Manager - Economic Vitality for the City of Virginia Beach. In this capacity he oversees the Departments of Agriculture, Convention & Visitors Bureau, Cultural Affairs & Historic Homes, Economic Development, Housing & Neighborhood Preservation, and Planning & Community Development. Ron previously served as Norfolk's Deputy City Manager for Planning and Infrastructure, which included the departments of Planning, Public Works and Utilities. Ron directed major capital projects and public-private partnerships such as the Stover Library, the Main - Hilton and executive conference center, the Norfolk Premium Outlets, and the Norfolk Amtrak Station. Prior to becoming their Deputy City Manager, Ron served as Director of Budget Management & Grants, the Special Assistant to the City Manager, Acting Grants Director, and Director of Intergovernmental Relations. Ron is an advocate for coastal resiliency, placemaking and community development strategies and has participated in Advisory Service panels for the Urban Land Institute. He was awarded the 2016 Julian F. Hirst Award for Distinguished Service from the American Society for Public Administration—Hampton Roads Chapter. In addition to his local government experience, Ron has worked in executive positions in the private sector and non-profit organizations. He served in the United State Marine Corps Reserves from 1992-1999. Ron holds a Bachelor of Arts degree in History from the Virginia Military Institute and a Master of Business Administration degree from Regent University. I I I I I I 1 Bill Hanb provides advisory services including: DMO 1 strategic planningury , leadership consulting, convention center/DMO collaboration programs, crisis management, nonprofit strategy/tactics, and marketing/comms best practices. vyears of executive experience, including Bill has over 30 P g CEO roles with: Bermuda Tourism Authority (BTA), Destination DC (DDC), Visit Milwaukee, plus Chambers of Commerce for Hilton Head, Buffalo and Syracuse. He is also the former CEO of the United Way NCA. He is a sought-after thought leader on nonprofit management, tourism and economic development policy having appeared on several national and global media outlets. Bill was the BTA's first CEO, an innovative public/private tourism and economic development initiative. He was responsible for building the organization from the ground-up and setting the stage for a dramatic economic revival of the Island Nation's economy. While at DDC, Bill oversaw management for one of the world's premiere destinations with responsibility for marketing the Capital City as a top-tier global destination. As a capstone to his time in DC, Bill served for 4 years as CEO of the United Way NCA by helping rebuild the region's largest non-profit into a respected organization again. There are few people in the nonprofit or economic development space with more real- life experiences in crisis management. He has tackled: DC's 9/11 economic recovery, SARs, the anthrax crisis, three major hurricanes, political instability, civil/labor unrest and event cancellations. Bill has served on the Boards of several national organizations, including: Destination International, US Travel Association, NFL Alumni and Travel Business Roundtable. Bill holds a Master's of Public Administration from the Kennedy School of Government from Harvard University and a Bachelor of Arts from Wilkes University. Earlier in his career, he was a speechwriter and PR consultant. 1 1 ' 1B City of Virginia Bich IConvention and Visitors Bureau Community Taskforce ' CVBCT Members: B.J. Baumann,Z. Burden,T. Counts, C. Dyer,J.Evans-Cox, L. Habr, D.Howard,R. Melatti, P.Midgett,H. Richardson, M. Ryan,C.Thornton,G.Tower,R.Vogel,R Wilson,J.Zirkle, INot Available: M.Standing ' City Staff: B. Hanbury,R.Williams, D. Harmeyer, B.Rumpf,P.Matthias, M.Boyette, B.Miller Meeting Place: Virginia Beach Convention Center ' Meeting Date: September 11,2020 Please report errors or omissions on these notes to Brande Rumpf(brumpf@visitvirginiabeach.com)within 24 hours of receipt of the notes. Otherwise,CVB will pursue the actions outlined in the"Action Items"sections of these notes. ' Councilwoman RosemaryWilson opened the meeting p e g by introducing of Deputy City Manager, Ron ' William and Executive Advisor to the Convention and Visitors Bureau (CVB), Bill Hanbury. She turned the meeting over to Councilman Guy Tower. Councilman Tower thanked the Taskforce members for serving and asks them to provide a brief introduction of themselves. ' Councilman Tower turned the meeting over to Mr. Williams to discuss the Taskforces' charge. Mr. Williams introduced Deputy City Attorney Dana Harmeyer to discuss some housekeeping items.Mr. ' Harmeyer explained how the Freedom of Information Act (FOIA) impacts the Taskforce and the meetings that take place regarding the work of the Taskforce. The first being that these meetings are open to the public and second, if three of the Taskforce members are gathered and discussing ' the business of this Taskforce, that constitutes a meeting, and he needs to be made aware immediately so it can be noticed properly. Finally, please save all of your emails and notes or anything that links to the business of the Taskforce, regardless of where it is stored.Anything that ' relates to the business of this Taskforce is considered a public document and is subject to FOIA. Mr.Williams thanked the Taskforce members for serving and reviewed the meeting flow and topics I that will be presented during the next few meetings. Mr. Williams gave a brief synopsis of the current environment of the CVB and the challenges the former CVB director faced, within the current structure of the department. He provided an explanation of the opportunity that presented itself to look at the structure of CVB and an overview of the work that Mr. Hanbury and the organization has accomplished over the past year, including standing up this Taskforce. I CVB Community Taskforce Meeting September 11, 2020 Page 2 Additionally,for context,City Council passed a resolution to reestablish a Resort Management office. There has been a Resort Management office within the CVB for the last few years a new office will be established specifically for Resort Management. The administrator of that office will be responsible for the resort as a managed district, the contracted services, special events and permitting,including code enforcement and all business of that nature. Mr. Williams also explained the parallel task of hiring a search firm to recruit the next Chief Executive Officer for the CVB and role that the Taskforce will play in providing input on the qualities sought in a new CEO. Mr. Williams reviewed the charge of the Taskforce,which is to evaluate transitioning the CVB to a new governance and management structure with three possible alternatives: 1) remain within City Government; 2) hybrid public-private foundation or authority; or 3) public-private non-profit,then making a recommendation will be made to City Council in January 2021. Williamsintroduced Bill Hanburyto review the guidingprinciples of the Taskforce and to Mr. P p explain the "cornerstone" fundamentals of the Virginia Beach travel and tourism economy. Mr. Hanbury went on to explain,in detail,what a destination marketing organization is,and what it does for a community. Additionally, he explained the link between the tourism industry and economic development and how together they succeed in broader economic terms. The detail provided on what a high performance destination marketing organization looks like includes investment in product development by developing and maintaining accommodations, facilities, attractions, dining, and infrastructure consistent with the destination brand and meets evolving visitor needs; marketing and sales,by establishing a brand and generate demand for the destination,plus ensure adequate resources to effectively promote to all appropriate markets; the visitor experience must ensure visit satisfaction through a coordinated effort to provide experience that consistently meet visitor's expectations; and last but not least, the industry and community must build productive relationships across the visitor industry and community that are interdependent and support mutual objectives. Mr. Hanbury reviewed a chart from Destinations International showing organizational budgets and the business models of 521 different DMOs across the US. Gary Ryan requested the composition of the DMOs that are listed in the more than$20M section of the chart and inquired if we are in the $20M quadrant because of the convention center. Mr. Hanbury explained that most DMOs do not operate a convention center and that even if the center was not a part of the CVB,we would still be in the$20M range. Tage Counts,asked if what recently happened in Williamsburg,with restructuring the tourism unit was a trend.Not knowing all the specifics,there is an ongoing trend to completely isolate the DMOs with contractual obligations, out of the Chambers and out of government. The reason to do this is so there is a board of directors managing the CEO, that has a performance criterion in which to adhere. I I CVB Community Taskforce Meeting September 11, 2020 Page 3 Mr. Hanbury asked Courtney Dyer, as previous GM, information on convention centers. Mr. Dyer explained some of the operating structures of convention centers across the country. ' Regarding the DMO business models, B. J. Baumann asked in the last five years, which of these models are growing and which are shrinking? Which tend to be trending the most forward? Mr. ' Hanbury explained that there is a reduction in the government model that either move to public authorities or public private partnerships. Mr. Hanbury continued with his presentation describing the differences between the Virginia Beach CVB and other DMOs. He explained that Virginia Beach competes against DMOs similar in mission ' however, our governance structure is not typical. He explained that industry-wide transformation has outpaced the rate of change in Virginia Beach. ' This rate of change will only accelerate as the pandemic recovery continues. He explains that we are blessed that our DMO is within City government right now and is still funded. Other DMOs around the country have been decimated by the economics of COVID.There is no money for promotion and ' very little intellectual energy. Staffs are at a quarter or third strength. Mr. Hanbury gave an example of Destination D.C.where they had 60 employees working for this DMO,now they are now down to 10 FTEs. Mr. Hanbury requested that the Taskforce members be placed on the distribution list for the CVB Friday update. ' Mr. Hanbury explained that we are a legacy market and a drive market. Additionally,we have been able to control the spread of COVID. Our number show that,where our occupancy numbers are not ' where they were in 2019,we are outpacing other destinations in our competitive set. Mr. Dyer mentioned that City leadership has always held the CVB in high regard when it came to ' budget time revenues. It has always been looked at as the rain maker for our city and that is why it has always been funded. Mr.Hanbury agrees and explains that we would not be where we are today if it was not for the support of City leadership. ' Councilman Tower mentions the private sector is activelyplugged p gged in with the CVB through the Advertising Advisory Committee, which is a committee that is sharply focused on looking at different marketing opportunities that are coming up and critiquing the advertising programs. Mr. Williams explained that having both the Tourism Investment Fund and the Tourism Adverting Fund has enable the City to assist with advertising efforts. Laura Habr questioned if the City was excepting RFPs to build a convention center headquarters hotel. Mr. Williams explained that prior to COVID we had two letters of intent to build. Perhaps in a future meeting we can talk about convention center hotels. There is very limited hospitality investment happening right now. The group discussed the difference between the hotel product that a national meeting planner is looking for versus a sports planner. Mr. Hanbury addressed that I ' I CVB Community Taskforce Meeting September 11, 2020 Page 4 the CVB needs to put more focus on the meetings and conventions market, as currently, they are I booking around 50,000 room nights per year. Mr. Hanbury reviewed his S.W.O.T of the CVB from 2019. Mr. Williams providing some clarity on marketing and sales as it relates to the convention center and the DMO.He explained that there are the operations of the convention center, marketing of the convention center, and then there is marketing the destination. As Mr. Hanbury indicated DMOs may or may not have an asset such as a convention center or the new sports center. Mr.Williams reviewed the history of the CVB. The slides shown were just highlights of the 46-year span of the department. Michelle Boyette, CVB's Interim Administrative Services Manager, provided an overview of the y g , current CVB Organization structure, which outlines the operational units and FTEs. Michelle then provided an overview of the Business Systems unit explaining the operational elements. Michelle explained the City's financial structure and an explanation of governmental funds.She displayed the CVB's FY21 adopted budget summary by fund, both revenues and expenditures and the program summary of the CVB's General Fund, Tourism Advertising Program Fund (TAP) and the departments portion of the Tourism Investment Program Fund (TIP). The question was if the new sports center, would take business from the convention center? If so, how much will be lost? Mr. Williams explained that only a few pieces of business will leave the convention center when the sports center opens.Additionally, he deferred to Bryan Miller who will get into additional detail as it pertains to the convention center. It might be beneficial to the Taskforce to have an overview of where the revenues are coming from in the TAP Fund and to explain where admissions taxes fall (what fund they go into). The TIP Fund is where admissions taxes are deposited. Mrs. Ryan inquired if the salaries that are currently in the TAP Fund, are for the Visitor Information Center? Michelle explained that a combination of the Marketing and Communications Unit and the Visitor Information Center staff salaries are in the TAP Fund because the purpose of those positions meet the definition of the ordinance.Mrs.Ryan request a copy of the ordinance of both the TIP and TAP Fund. Tage Counts inquires that if the convention center creates revenue,therefore we would not need to use City funds (tax revenues) to compensate the bottom line? Mrs. Boyette confirmed that yes,the convention center revenues off sets the expenditures. I Mrs. Baumann,inquired as to how many FTEs are related to the convention center specifically? Mr. Miller will cover the FTE count in more detail in his presentation. I Bryan provided an overview of the convention center's organizational structure, including the FTE count, divisional responsibilities for the Sales and Service unit, Business unit and Operations unit. Bryan reviewed the contract service providers used throughout the convention center from food and beverage to internet services. Bryan also reviewed the pre-COVID yearly averages for the past five years and concluded with a typical year at the convention center as it relates to types of events. I CVB Community Taskforce Meeting September 11, 2020 Page 5 Mrs. Ryan asked what are your goals? Mr. Hanbury explained that the primary support of the convention center is not related to the building, it is what the economic impact is to the rest of the destination. Mrs. Baumann inquires if the convention shuttle services that we provide to large conventions, is paid for out of the convention center's budget or the meetings and convention's Budget. Bryan confirmed it was the meetings and conventions budget. Diana Howard inquired about the economic impact number from the convention center business and asked where it was originated. Mr. Miller explained that he uses Destinations International's formula for calculating convention center's economic impact. Mrs. Habr asked about the sustainability numbers for the ' convention center and inquired about the Safety Clean Certification for convention facilities and the opening of the convention center post COVID. Mr. Miller and Mr.Williams explained that there is a plan, however clients are working through how cost effective it is to host their events. Mrs. Habr inquired about sales goals? Mr. Miller explained that the convention center's goals work with meetings and conventions goals. Mr. Hanbury explained that,from an economic perspective,at one ' point the facility was attracting national meeting planners.We were a national player,but overtime, because of the lack of a convention center hotel, and consistency of our marketing, we lost that position.Mr. Counts questioned what can be done as it relates to building a convention center hotel? ' Mr. Williams stated staff would provide the most recent HVS study on the need for a convention center hotel. ' The Taskforce had a discussion on the future of meetings and conventions model post COVID. With many participating in a virtual environment, do we think there has been a shift change in the business model? Mr. Hanbury explained that the long-term viability of the travel and tourism ' economy is pretty good, people want to travel, people want to convene. If anything, it will expand the opportunities for events and conventions. Mr. Williams closed the meeting by recapping Mr. Hanbury's principles that we need to focus on strategy not tactics, on policy not procedures, and that the most important item is structure. He thanked everyone for their time and dedication to the process. ' Action Items: ' • Add Taskforce members to the weekly CVB Friday Update • TIP and TAP funds Explanations • Ordinance for the TAP Fund • An overview of the revenue loss when sporting event move over to the Sports Center from the convention center ' • Cost savings from convention center sustainability efforts • GBAC Star Certification for the convention center • Destinations International Economic Impact Model for the convention center ' • HVS Convention Center hotel study Next Meeting: October 9, 2020 ( 9a-12p Virginia Beach Convention Center r 1 %-.,-- 0,4 I 4 • ___ JO .,. I ' '--.,., -, : ..E• -- -, , • _4 • ,. ..•: • • •, `-..1 • I - ,,r,- -1. „,--,----''''':'-- - "..•-, V !'-., ', , • * t-,•,; 'I -4 x ' . , . , . , . 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I Agenda • Welcome and introductions - Councilmembers Tower & Wilson - Task Force Charge - Deputy City Manager Ron Williams GuidingPrinciples and Lain the Cornerstone - Bill Hanbury � N Laying Destination Marketing 101 - CVB Executive Advisor, Bill Hanbury ,= rs - History of Virginia Beach Convention & Visitors Bureau (CVB) - CVB Interim Director, Ron Kuhlman • CVB Budget & Organizational Overview - CVB Interim Director of Administration, Michelle Boyette • Convention Center Overview - Interim Convention Ctr Manager, Bryan Miller • Discussion Future Meeting Agendas Next Meeting - September 25 9:00 AM 2 MINI 11111/ NM =II MS MIN NMI WIN NMI Nall MIN NINO Mill MI 1011 MI NM NMI 1111111 Task Force Charge • The Task Force is to evaluate transitioning the CVB to a new governance and management structure with three possible alternatives: — Remain within City government — Hybrid public-private foundation or authority — Public-private non-profit 3 Task Force Charge cont. • Make a recommendation to the City Council on the best structure. • Provide input to the City concerning the qualities sought in a new CVB CEO. 4 r Task Force Guiding P • Make Task Force decisions based on what's best for the CVB and the community, not for an individual's business or self-interest. • Focus on strategy not tactics; policy not procedures. • Take the time and display the cooperative spirit necessary to deliver the Task Force mission. • Act as honest brokers to assure a fair vetting of this important topic. • The Task Force should strive for "consensus" on the recommendations to be presented to City Council. 5 Task Force Guiding Principles wat • . . a Use civility and collegiality to achieve meeting objectives. • Task Force members will avoid "off-line" decision making. • The City and CVB staff will provide administrative support. Be barn raisers not barn burners. a Divergent opinions are needed and welcomed. But, once a majority decision is reached, all Task Force members should be willing to publicly support the majority decision. 6 Mill — Ili Mr M M I r I r r — s s Mr NM OM _Os Lay the Cornerstone, Built to Last • In a moment of an unprecedented national crisis, we intend to lay a cornerstone for today and the future. - No matter what CVB structure is decided upon, the organization should be viewed as an extremely valuable economic asset which should embody shared community values. - The Task Force is representing the 14,000 employees working in the visitor economy who generate $4 billion in annual economic impact. • The quality of life enhanced by the visitor economy and its economic impact, positively effects every resident of Virginia Beach...family, friends, and neighbors. Lay the Cornerstone, Built to Last cont • The taxes generated by the visitor economy reduces property taxes and aids the City to improve community quality of life. • The visitor economy is an industry where upward mobile; family sustaining jobs can be created for entry-level employees. Something sorely needed in Virginia Beach. • The CVB is the one place where citizens can be the creative, collaborative glue that holds community businesses together, and envisions a brighter future. 8 - MI NM IM r UM IM MN OM 11111 M S MI r Lay the Cornerstone, Built to Last cont • Regardless of what the final CVB structure would involve...remaining within government, converting to a hybrid model, or a separate 501c6 private nonprofit...it's an economic imperative the CVB governance and management structure be realigned. • The opportunity costs lost by not mitigating the current CVB operational deficiencies is substantial and limits the City's long-term economic growth. 9 'X '�{ • to r :° P x r - aom� ;l � 1�'a '� .+����{�rCtl v�a� d,� .£�, r'a ° . 0 es .441 • By promoting the community as an attractive visitor destination, America's best Destination Marketing Organization's (DMO) position themselves as shared community assets, playing an integral role in uplifting the destination's overall economy quality and ualit of life. • No other civic entity can have a more immediate economic impact. No other entity is more effective at creating a compelling image of its hometown, and precious few have a more positive impact on reducing property taxes. • High performance Destination Marketing Organization's not only market the destination, but also help to manage the visitor product and experience. • Destination Marketing Organization's are multifaceted storytellers curating complete communitycontent to encourage consumers to come as individuals, couples, families, groups, teams, and conventions. g P 10 M N g W M M MI MI M NM MO M M MI MI M MI — vLy M1y .,i nakimti� 9 si b" ET: a r.aix/,o dk non u i ,;.' ', .id�i� a''''' r�r �r w': t a e � b�j � t + ` �. { ��.,c � wit�,a74' R. N a Y �'F, '� e+n I•II • • • Top-notch DMOs are aggressive and business-oriented using marketing innovations, plus technological n. and digital expertise to maximize the community's investment in their mission. • The best DMOs assure community stakeholders have a substantive way of contributing to, and communicating with, the organization. • DMOs are community assets, not just room night booking machines. Yes, they attract visitors, but theyalso play a foundational role in economic vitalityand communiy quality of life. • DMOs spend valuable community financial resources, therefore in theory, the organization is collectively owned by the community. 11 aa .- ti .`v�y �+'�"n Nta�e V �., ;.. c � ! a a li��t � ?,,% �' J.w�suar�'tt v ¢�,�t * �, s '� i r. wv X'� use` �'d: R "� Y' a � ,� v v e�' 'M w.` w`� - t, w F vi R M� cF w {s"P ss �' .t eveiopmen 16— II II Destination marketing supports not only the visitor economy, but also is a catalyst for community economic development. Cities that succeed as destinations, succeed in broader economic terms. • Destination marketing builds awareness across business networks that attract investment. By developing the visitor economy, a destination supports transportation and civic infrastructure, thus providing added public conveniences and business supply-chain logistics. 12 MR ON Mal MS M — N — r 0 i — MI N — MN M MI 11111 The Link between Tour - m., n . • ` Development • Visitor spending supports a larger and higher quality of local amenities than an area might otherwise sustain. Arts/culture, entertainment, culinary, and retail that visitors support make a place more attractive for both its citizens and potential investors. • By attracting tradeshows and conventions, destinations appeal to prospects that economic development agencies target. Business events provide potential synergies with local economic clusters (i.e., military, technology, medical, etc.). 13 PRODUCT DEVELOPMENT MARKETING & SALES Develop and maintain Establish a brand and generate {. accommodations, facilities, demand for the destination, plus attractions, dining and ensure adequate resources to infrastructure consistent with the effectively promote to all destination brand and meets appropriate markets evolving visitor needs -- -_- ____r. ..------ --------- High Performance i DMOs VISITOR EXPERIENCE INDUSTRY/COMMUNITY Ensure visitor satisfaction through Build productive relationships across a coordinated effort to provide the visitor industry and community experiences that consistently meet that are interdependent and support visitor's expectations mutual objectives I u, II i Ilia I co i I�t ft lilid I irm tn f Z pr- I Mt CO t tn I 03 C �� 0 a... 44 0 ro 0 (0 lia tiff iMIR II al I 2 c:, z I DMO Business Models Business Model Chamber of commerce 2A% Public/private partnership Public authority : Government organization 4.8% d4 Other 9.4% 32% Non-profit no membership Non- Source:Destinations International profit,with membership 16 111111 M .w r IIIIIII RINI Mil N M M r MI M A I M M M N The Difference Between Virginia Beach and Other D - Virginia Beach competes against DMOs similar in mission to the CVB. However, there are distinctions between the CVB and other high performance DMOs. The CVB's governance structure is not typical. Most DMOs are organized as separate 501c6 entities. Of the 31 U.S. DMOs with budgets of more than $20 million, there is onlyone other with government t a direct government affiliation. A DMO industry-wide transformation has outpaced the rate of change in Virginia Beach. This rate of change will only accelerate as the pandemic recovery continues. The City enthusiastically supports the CVB. However, private sector stakeholder.: have either lukewarm or negative impressions of the organization. The private sector has limited tangible methods of supporting the CVB and littl opportunity to provide valuable direction and assistance. 1.: The DifferenceBetween Virginia - m and Other cont. DMOs globally are focusing on strategies related to destination stewardship and product development. Stakeholders and survey data suggest the CVB is not focused on these topics, indicating it's not addressing key issues affecting a dynamic local tourism industry. • Compensation levels for CVB employees are 30% to 40% below DMO industry norms. • The higher the position...the greater the compensation variance. Of the top 30 CVBs is America, the medium CEO salary is more than $400K in total compensation. A figure dramatically above the compensation of the former CVB Executive Director. • Compensation limits make it impossible to attract and retain the best executive leadership within the DMO industry. 18 N W _ r — M MI M M IIIIIII r M r INN M 1111. _ MIN MN The Di ference Between Virginia Beach and Other D cont. • Improvements to tourism infrastructure, plus aggressive marketing and sales by competitors may damage VB's future market position. • The Convention Center is dramatically underperforming due to the lack of an attached, full-service hotel. Meeting planners won't consider VB because all other options now include a hotel adjacent to the convention center. • Further, the CVB convention sales effort, over time, has been purposefully diminished and is not at an acceptable performance standard. • The resort area's tourism product continues to deteriorate. This concerning trend is damaging competitiveness relative to VB's comp set. 19 SWOT -- Strengths, Weaknesses, Opportunities and Threats 2019 Strengths • Exciting new tourism infrastructure investments by high profile investors. • Recently recognized by Safewise as the #1 safest city in America. • Ranked #1 according to the 2019 Best Big Cities to Live In survey by WalletHub. • A premier, legacy family vacation destination within easy driving distance. • Rich collection of arts, culture, history, retail, and family attractions. • A dynamic and entrepreneurial private sector. • A vibrant urban core in Town Center. - Adequate public funding from a supportive City Government. 20 MINI 111111111c.IIIII NMI MIN 111111 NMI INN NMI MI IIIIII MI MIN ION IIIIII INN :all SWOT - Strengths, Weaknesses, Opportunities aniLA Threats 201 implow Weaknesses • Consumers "in the future" are less likely to visit VB compared to competitive destinations (SIR 2018). • "Familiarity with Virginia Beach" has grown marginally between 2013 and 2018 (SIR 2018). • VB continues to be viewed as "less safe" by potential visitors than its competitors (SIR 2018). 21 Concerning Macro - Market Data - 21 Respondents are less likely to visit Virginia Beach in the near future compared to Myrtle Beach and the Outer Banks Myrtle Beach.SC 35% Outer Banks, NC AO,-. Ocean City. MD 44"; MEM Virginia Beach. VA 49' Don't knov. Never • Likely to Visit 22 It 6 s 4110 0 ®Ilail 1 raPi I IV E H— m I fri to o r. C at g,--,z I f 1 t 2 Dm I Ilai c #� w I fa CL 07 Q co 03 44 I (Its tiet Nf SWOT - Strengths, Weaknesses, Opportunities and Threats (2019) Opportunities • A new CVB management model could improve overall destination performance. • The private sector could provide the CVB with additional financial and intellectual resources. • A convention center hotel would improve long-term destination economic performance. • A renewed emphasis on convention sales would improve destination performance. 24 INN I ;N H N EMI N N MINI NMI IIIIIII E MI N M En M W = 4+ ~^ � �7„ � � w� p ., �e , � r r a�ia and Threats 2019 Threats • Competitive destinations are investing beyond VB's current tourism product and infrastructure investments. • Local hoteliers and restaurateurs suggest the profile of the typical VB visitor has changed and is now an "economy" versus a "mid-scale" or "upper-scale" visitor. • An economic crisis or reduced investments in the local military would` significantly harm the visitor economy. History of Virginia Beach CVB Tourism Resides within City Department of Economic 1974- Development 198: Convention Sales & Housing Bureau Started 1977 Pavilion Convention Center Opens 1980 Hotel Inventoryis 6 950 and Grew to 10,323 in 10 years � 1981 (TODAY — 11,599) 26 History of Virginia Beach CVB City Council Establishes the Department of Convention & 1988 Visitors Development Labor Day Riots 1989 First American Music Festival 1994 City Council Approves New Staff for Sports Marketing 1999 27 History of Virginia Beach CVB First Rock n Roll Marathon 2001 Convention Center Groundbreaking & Key Convention 2003 Sales Staff hired Department Changes Its Name to Convention & Visitors 2003 Bureau Phase One of the Convention Center Opens R F 9 2005 _ e 28 11111 - 0 I - = = = = = - I = = ■■1 r - 1= History of Virginia Beach CVB Al Phase Two of the Convention Center Opens 2007 Virginia Beach Sports Center Groundbreaking 2018 Something in the Water Festival 2019 City Begins Analysis of CVB Structure and Governance 2019 29 CVB Finance and Administration Michelle Boyette I AIM INN MEI MI NM 1111111 NM MI MN INN MI MIll IIIII NM =I _JIM MN I INN Agenda • Departmental Organizational Chart • Administration Operations • CVB Budget Review 31 Departmental Organizational Chart S31 :, sdds3(s31d6) pa}dopd ZZAJ uo.- oolong weds ;aeL.J also lexuaua;aedao (s31A 6£'1) lueWa6euew poseg saa;ue3 uo Auao ul aoi1S1A unwell eUOON(S314 1,1) unwell (luPalul)4a114/1i w, ; I ue a•N (s314 9) seolnaa9 pue (s31d 69'09) Ilassna(s313 01) (s3131►) 6u seleS`6uga�laew suol�ealunwwo3 a ue Naew uol�uanuo� aa�ua�uol�uanuo� pus�138)Wsw sews p odS 4300$elul6iIA Bul}aaµew wslanol 14n21(3J.d 6) wl�wl eIio •8 . ;uawdolanaa (s3J.d 6) uog ssaulsn8 e�lslulwpd f.. y twualul)uewlynN aa>>wwoo Jdwn21(31A I) RaospipV Baaesp.ranpt+ e3$Iss`d and aax3 imam JOI3aalQ 9AJ RJnqunH 1110'JashPV anl;n�ax3 1gge A 30wouoa3 ao{aabeueW 40*dap ae5euUW 1wuno3 Apo 4seeg elul l 0 ■MO LIM w 0 0 0 ILE m i MIMI Mill 11110111 MINI MI =I MN ME IMIll MINI Mill MINI M CVB Administration Operations Finance/Budget/Procurement — Budget (Operating and Capital) — Procurement and Contracts — Accounts Payable/Receivable — Payroll — Financial Reporting Data Driven Financial Management Decision *Requires partnership with central city services and does not include rent or other overhead services provided by the City such as IT infrastructure and computers, legal, finance, procurement, payroll, risk management, human resources support, public works facilities/capital maintenance, vehicles, etc. 35 CVB Administration OperaOperations cont • r . • Human Resources* — Recruitment — Retention — Professional Development — Knowledge Management — Occupational Health and Safety — Employee Relations • Workplace Issues • Employee Satisfaction • Performance Management • Compensation/Benefits *Requires partnership with central city services and does not include rent or other overhead services provided by the City such as IT infrastructure and computers, legal, finance, procurement, payroll, risk management, human resources support, public works facilities/capital maintenance, vehicles, etc. 36 INN M ;ME M M i M ME al111 M NM MN EN M E M MN MN CVB Administrati&i� • inotri . . — Innovation • Technology • New Product Evaluation — Infrastructure — Hardware — Software • Network — Cloud Computing Reliability/Stability • Life Cycle Management (Asset) Y Y — Procure • Security — Deploy • Communication — Manage » Implementation - Technical Support » Upgrade — Dispose/Refresh *Requires partnership with central city services and does not include rent or other overhead services provided by the City such as IT infrastructure and computers, legal, finance,procurement, payroll, risk management, human resources support, public works facilities/capital maintenance, vehicles, etc. 37 u . aet =I IIIIII MINI MN i IIIIIII MN MN M 1E11 r ER MN M. IME MN City F rt" d Financial Structure Governmental Funds • The City's accounting system is organized and operated on • Most of the governmental functions of the City are a fund basis. financed in governmental funds which have a short- term measurement focus of one year. Budgets and • A fund is defined as a financial reports (CAFR) are produced annually. separate, self balancing set of accounts which is segregated for the purpose of carrying on • The types of governmental funds the CVB uses are: specific activities or obtaining certain objectives. 1. General Fund - primary operation fund of the City 2. Special Revenue Funds - account for resources • The City's resources are restricted for specific purposes accounted for in individual funds based upon the purposes for which they are to be spent and controlled. 39 CVB FY 21 Budget Overview • Number of FTE's — 120 . 28 • Number of Divisions — • Number of Funds — 3 • Total Budget $30 . 3M N r M — MI I — — 1 — 1 I 1 — MI 1 - - N 2 ADO T D BUDGET SUMMARY B FUND .... 4,4. tfJ . . i i .� • 4 General City TIP Fund Support $5,418,659 G352.866 21.0`Dc --` ~w— 17.9% TAP Fund TAP Fund TIP Fund 14,698,837 5,418,659 48.6% General' $14,698,837 17.9% evenue Fund 48.6% i - General Fund •g;' Ire. 8,785, i2.5OZ2% $10,137,888 33.59� `F 4 a TAP fund General Fund i TAP Fund 1 General Fund gi TIP fund IIIR General • Su •ort W TIP F Urd *TAP Fund includes$5M Transfer In ..,.y.. :. .. i 4- I I I I I I r IIIMII INN =I Mil IMO NEI MINI Mil >• NMI ONO INIIII Jogol/onpoJauo.,pun savauaq abuu4 apnpur sauolos. 960 00i SSS'LEVOT S 7VIOL 96[79 99875£`9 .aoaariE 4,0 %£'L£ ZZO`SSL'£ anuanab .poddns Ai)/sanuatia8 960'OO1 888'L£T'Or TII'LZCE LLL'OT89 S7tf1C11 %879 I61`99£9 PEVZOL'Z L59 S99'£ .aajua;)UOI UanUOJ fj:loas oOUJfJafti %8'OT LZ97607 £OL'SL PZ69I01 salas'6u:a)yuoyj uonuanua;) %6'S S£O`S65 E9l`6S NETS' sagas w 6u►.wpayv s,poctS- 969't+ P96'89' 8ZL' P WW1, saps w 6u!xavoyu wsunol %£'0 9O1?'O£ 801'O£ - suoJ;aalunuauaoD ft 8d'6u, a oygJ 969'ST 10978S'I S8Z'E717 8S£`69I'T uoi of sitquipv/ardio sio,paaai saJnyfpuadx3 pwn3 peaaaua9 jafipn8 iabpn910401 suopasadO „sauolos i.1)0.150.:6' 49 10101.10% ,.. -.-.. „• PUflI .! . - .,, ,,,, • . , , , ., . , , ,„ .., , ,..,.,.,., ...... _ ,...,. •e.,'. ',.. ,n .. . • • Aewwn Asieuauins uJewifoosido Jogo'/onpaoi uoa pup sliJauaq abuu,(apnpui salJoIns, 9600OT LE8969' I SW1Qt i 960't£ 000`000'9 ul Jaj%t!w1 %O 99 L1'9'969'E arauanad 14 siafsuO,rj/sanuaiia8 960'O0I ZE8 8b9'i+i £9EZI E`ET $LY96'E`I S7V1Q1 %t+'0 8£8`99 919'99 - area SJafsUDJ1 9681' 9£07OL ZPZ`TTZ EL'68P JaluaJ uar DU JaIuiJa espy %61' Oirpa 0pelvE - saps.►g Bugs JDyryt uoppuanUD %6'6 6I8'91 `T 6I8`8ro`T - sapDS v BUna JD$J spJOOS' 9617 WWI 'OZ'POE - saps a Buipai O 1 iusuryay %P'LL L61'69111 LrrEL 'OT 099 968 saao4Dapvrteueuao 6,Sd'oUiqaapio %L`I €0E-E' Z EOVEld - uappDJasywwpifaat4ja s,.iapai a satampua pond anuanaa trJIJads(dd1) uiodwid&JisaJanpd uasr.anol 7bpn6" dV11WD1 a96 fadpns ia3o ilo9rJJaCQ� ,saLJCaJOS ciiboJd pu AJealuins we °lid • . , • • , ,, , , ,., , ., . _ ' N I M E M ! M I MN M M MI N E M = ' ! MI Jogol ionvo.puo,pup svjauaq a5144 apnpui sauoios WWI 6s9'BIs's swiol %0'oor 6S9VreS anuanall sanua,ap WWI WI 6S9'SIl'S me8?1'* 9ZI'069 swum 96I`L9 ip0'OZLIP STS'6Z0'q 9ZZ'069 Quan3loiads sauubard jiosad 96671 819'869 ST9'869 - suoluctunwwc)6'lid'6uuavakV salryrpuadx3 pun, anuanaa mpacIE(dii)wadjoJdpawasanul tuspnoj OOP,* bpno l0101 suo4DuadU :uw6cud dti lDAl to% PUS aj AlettillirlS we 13 d pa3IZAd 9AD k iiii C C) U C 0 sus 6 C CD all �� •MN • c 2 o Lill mipC IN) 611 CO co fp s� al sii. 0MO Number of Employees r Full Time— 50 Bryan Miller Food&Beverage Part Time — 40+ - Interim General Manager Distinctive Gourmet Stella Salyer ( apital C Les�olsong IVIiChelle ®yette Mark Casalez Jacki Perry Interim Asst General Improvement Asst General Manager- Asst General Manager- Building Maint.Tecb vesc Office Assistant Manager-Sales and Service Program - --- ----- Operations - -- - __ Business _ .. — Kimberlee Dobbins Diane Harrison C Bill Bradshaw Vacant Office Assistant(2) Sales Manager(2) Maintenance Supervisor Sustainability Coordinator Account Clerk Ill-Payroll/AP Groundskeeping Supervisor - p —--— --- ---It: If % C Wilonda Spratley Groundskeeping Brenda Felton Housekeeping/SetupMaintenance Stella Salyer Director of Events Box Office Manager/AR Crew(3) Worker(7) Supervisor Event Manager(6) Account Clerk(2) Crew Leader(3) PT Event Staff PT Ticket Staff Housekeeping/ (25+) (15+) Setup Crew(12) _ _ 46 M r r - M NM I N 1 1 N M - M N s - -M Division Responsibilities -Sales ervi Book community events Coordinate with CVB Sales staff to attract Convention/Trade Show business • Manage Booking Calendar • Manage event planning/onsite management of events • COVID Planning • Event contract negotiations • Sports Center coordination/assist with large sporting events 47 Division Responsibilities - Business • Budget Preparation • Finance/Payroll/AP/AR • Event Invoicing • Box Office Operations • CIP Management • IT Management • Records Management 48 IMO MIN EMI MN MINI MIN MIN MI MN IIIIIII 11011 11111111 NW MI MIN Division Responsibilities -Operations • Physical plant — Maintenance and repair/replacement of mechanical systems. — Plumbing, electrical, carpentry, painting, etc. — Supervision of Sports Center maintenance agreement with ESM. — Utilities for events (electric, water, etc.). 49 Divisions . s ,.:..- - —Operations co F^9" "T �� 'Yf ':7r'�' � � ,, n""S.1 N • Housekeeping/Setup — Cleaning and disinfecting of the building. — New COVID cleaning guidelines. — Setupand removal of equipment for events. — Restroom maintenance/refreshing. 50 r11111 NM M M M IIIMi M NM r ® i NM Division• Respons'ix i � w 1- rI ations co . • Groundskeeping — 60 + acres on VB Convention Center and VB Sports Center site. — Trees, shrubs, grass, flowers, beds, parking lot trash. 51 Contracted Services • Food and Beverage • Medical Services — Distinctive — American Medical Response Gourmet (Sodexo) * Supplemental Event Staffing • Audio Visual Rentals pp — Currentlysolicitin — Event Staffing Inc. vendors 9 • Multiple maintenance contracts a • Security — Fire systems, HVAC, window — Securitas (citywide washing, water treatment, contract) elevators, waste removal, etc. • Internet Services • 25 + other contracts — Smart City — Various supplies and services Networks 52 INN =I 1E11 NMI =II Mil Mil MI Convention Center Pre-COVID Yearly Averages (past five years) Expenditures - $6M Revenues - $4.3M Estimated Attendance — 619, 194 Room Nights — 102,576 Out of Town Attendees — 124,870 Estimated Direct Delegate Spending - $66M Estimated Tax Revenue to Virginia Beach from VBCC events - $5.6M 53 �i?itQ"tiw11 '� sew '� v� i ry2�'' ``'',e i" A • !M1 t o fit L Ti f`"" $t e^ t inky y "k,..,y ct"k 4r"" Fiscal Year 2019 Community Events 47 Conferences 4 Conventions 17 Other (Banquets, local/corporate meetings) 156 Participatory Sports 24 Trade Shows 6 Consumer Shows 27 MINI E M IIIIII MIMI NM MINI INN MI NI. MIMI MI Discussion Future Meeting Agenda September 25 — Continue Divisional Overview — CVB Marketing and Public Relations Strategy — Academy Street Collaboration Analysis October 9 — Procurement and Hiring — Model CVB Review/Benchmarking — CEO Selection Process and Compensation October 30 MI MIN MIN EMI MIMI MI NMI 11•11 MI IIIIII MIN MN MI MN MI MEI ME MI I= rr.... _ 1 , 1.- . . . . , . _ ..._ „ .__ _., -----,, .---- _ 0 - ,,...- ..., ^ "' ir it , 7,r". •--4.7 _It ........ ',.._..-- --- .- 6 it •._. ._ __,.. '.- . --. ' .„,_ ,.., ...-.., -.....- ,,, ..,........ .._ --. .„..... ... 57 t ""1 -"1 7_11 :_::i I I I ._I _ I .1 I I I __1 1 1 1 CONVENTION & VISITORS BUREAU COMMUNITY TASK FORCE Meetings: Location: Convention Center Phone:385-6624 Composition: 17 Members:2 City Council Members, 1 Resort Advisory Commission rep., 2 VB Hotel Association reps., 1 Restaurant Association,rep., 1 Central Business District Association rep., 3 persons with sports marketing experience, 3 business representatives fronn Term: Report due to City Council October 27, 2020 other industry sectors and 4 citizens Finandal Beginning Expiration Disclosure Regrind Name Address District Phone Email Notes Dare Date Dare tDrc Upon Arnt1 308 Mediterranean Avenue Baumann Elsrabctb Virginia Beach.VA 23431 3 333-1233 c. bj(iurockafellers.com 6 8'18 2020 N.A 1.16 2020 Represents.Resort Advisory Commission Burden.Zahn I. 2943 Kingsfeld Drive 803 684J Virginia Beach.VA 23436 zohnburden iJ(m{mtailxnm 8,16 2020 N A Si 20'2020 Represents:Sports Marketing , 1133 Whitestone'Way Counts.Tage 7 Vi�tnu Beach.VA 23434 289-9233 c. tagecounts(piidoud.COM 8'18'2020 _ N.A 8.20 2020 Represents:Citizen 2328 San Marco Court Over,W.Courtney 7 Virg nu Beach.VA 23456 646-3307 c. wco0rtneydyelfgatLntaii,Con1 18 18'2020 N/A 8/21.2020 Represents:Citizen Evans-Cox.Jeanne 210 B 74th Street 6 639-9778 c. jevans480cox.ngt 8/18'2020 N'A 1.22:2020 Represents-Central Business District Association Virginia Beach,VA 23451 620 19th Street i Habit.Laura Wood Virginia Beach,VA 23431 3 288-3861 c. f Iaura(ir crocs19thstreetbistro.corn 8 18,2020 N A : 10 2020 Represents.Restaurant Association I _ Howard.Dianna L. 1037 Debaca Court - - 367-9021 Virginia Beach,VA 23434 dianna.howard@cox.net 18 18:2020 N A 8'31:2020 Represents:Citizen tlelam.Robert 231'Calumet Drive - 613-0830 Virginia Beach.VA 23436 1 bobby atrr(ct imvoingee caita.cotn 8 18.2020 N:A 8/27 2020 Represents:Citizen i ,Llid crt R.Preston 1804 Seddon Circle 3 631-2323 c. r 2 n 8 Virginia Beach,VA 23434 pmidketdeaaoLctlm 8-k8/2020 N'A 02-. Represents.Business lndmtn•Sector 1128 Hill Road Richardson.Henry H. Virginia Beach.VA 23431 3 633-4900 c. hrdiv'I vaoLcona 8 18'2020 N A 1.30/2020 Represents:VB Hotel Association - Ryan.inns Girt' 724 VirginiaAvenue 6 91.4-220-2039 c. Virginia Beach,VA 23431 nxirla�rytt'a(a'lcrttail.corn 8 18 2020 N A Mailed 8'19 2020Represents Business.IndustrySector 809 Lankhorn Drive Standing.Michael J. Vitgiw Beach.VA 23431 6 288-9031 c. ,c.lvattrm nnsifl'gmuLcoku 9.1;2020 - N.'A ..11 2020 Represents:Sports Marketing 2477 Piney Bark Drive Thornton)a.Charles R. Virginia Beach,VA 23456 673-3245 c. chuck(fubeachsportsplt^x.i oni 8;i8 2020 N A 8.31.'2020 Represents.Sports Marketing 2401 Courthouse Dnvc Tower, Represents:Cats•Council-District Gus.K. 6 600-4366 Virginia Beach.VA 23436 ' otyert[LybtKOt'.COnt 8 23 2020 N A 2.2 2020 921 Atlantic Avenue 6302 Wilson,Roseman Virginia Beach,VA 23431 6 422-0733 rett'ilson(z t.bintv,com 8'23 2020 N A 1'28 2020 Represents:City Council-At Large i 2388 London Bridge Road Vogel,Rands E, Virginia Beach.VA 23436 618-6466 randi(w.humclubfama.cont 8.18 2020 N.A Mailed 8.19'2020 Represents:Business Industry Sector 233 Bridge Landing Court Zirkle.John E. t'u inn Beach.VA 23434 3 348-8488 jzirkle(fudoubletreevb,cum 9'1.2020 N'A I'6'2020 Represents:VB Hotel Association Rumps.Brande 383-6624 brumpf(iivisitvrry niabcach.com City Staff Liaison City of Virginia Beach I F Convention and Visitors Bureau ' Community Taskforce ' September 25, 2020 Agenda 1. Welcome and Housekeeping- Councilmembers Tower&Wilson 2. CVB Divisional Overviews a. Resort Management-Jamie Capps,Special Events and Resort Manager ' b. Visitor Information Center- Maria Aragon, Office Supervisor Ic. Meetings and Conventions -Sally Noona, Convention & Tourism Marketing&Sales Coordinator d. Sports Marketing-Nancy Helman, Convention& Tourism Marketing&Sales Coordinator Ie. Tourism Sales - Kelli Norman, Convention & Tourism Marketing&Sales Coordinator If. Virginia Beach Travel and Tourism Foundation- Bill Hanbury g. Marketing and Communication -Tiffany Russell, Convention & Tourism Marketing Admin. I3. CVB Marketing Communications Strategy 4. Academy Street Collaboration Analysis I5. Discussion ' 6. Next Meeting- October 9, 2020 9am ' Mission To evaluate the three potential alternative new organizational structures(remain within the City governments, Hybrid public-private foundation or authority, Public-private nonprofit)and make recommendations to the City ICouncil on the best path forward, provide input on the qualities sought in a new CVB director or Chief Executive Officer and perform any additional duties assigned to the Taskforce by the City Council. I Virginia Beach Convention&Visitors Bureau 2101 Parks Avenue,Suite 500 I Virginia Beach,VA 23451 I ph(757)385-4700 I fx(757)437-4747 ' City of Virginia Beach Convention and Visitors Bureau Community Taskforce ' CVBCT Members: Z. Burden,T.Counts, C.Dyer, L.Habr, D. Howard, R.Melatti,P. Midgett, H. Richardson, M. Ryan, M. Standing,C.Thornton,G.Tower,R.Vogel,R.Wilson,J. ' Zirkle, Not Available: B.J.Baumann,J. Evans-Cox, City Staff: B. Hanbury, R.Williams, D. Harmeyer,B.Rumpf, P. Matthias ' Meeting Place: Virginia Beach Convention Center Meeting Date: September 25,2020 I Please report errors or omissions on these notes to Brande Rumpf(brumpf@visitvirginiabeach.com)within 24 hours of receipt of the notes. CVB will pursue the actions outlined in the"Action Items"sections of these notes; Councilman Guy Tower opened the meeting thanking everyone for attending the second meeting of ' the CVB Community Taskforce. Mr. Tower introduced Taskforce member Mike Standing who was not able to attend the first meeting. Then the meeting was then turned over to Mr. Williams. He informed the group that Mrs. Baumann was not able to attend the meeting today and Mrs. Ryan and I Mr. Harmeyer were joining us via conference call. Mr. Williams went through the layout of the binders including the minutes and the follow-up information that was requested. Mr. Williams explained that today's meeting was an overview of the CVB's divisions to help understand the ' current structure. Mr.Williams explained,for context,that the Special Events Office will be breaking away from the department and will be reporting to the new Resort Management Office. The resort Management Office will report to Mr.Williams. He also introduced Ron Kuhlman as the interim CVB fDirector for the past 18 months. ' Jamie Capps, Special Events Office, began the department overview with an explanation of the current structure of the Special Events Office, then described the roles and responsibilities from managing the oceanfront entertainment contract and franchise agreements, to the permitting of I special events, as well as managing the cost recovery program. Mrs. Capps explained the goals for the entertainment and event program which include broadening the range of city-wide entertainment,cultural and recreational opportunities,to enhance the experience of both residents and tourist to increase tourism visitation. This also generates room nights and a positive economic impact. She provided information on the IMGoing (Beachevents) annual contract and what major events and holiday weekend activities fall under the contract, as well as the annual contract for ' general entertainment on the at 31st Street Park main stage. I I CVB Community Taskforce Meeting September 25, 2020 Page 2 Mrs.Capps spoke about the resort area franchise contract requirements and described the different contracts managed by the Special Events Office from beach equipment rentals to Old Beach Farmers Market. She also explained how the office staff participates in the planning and coordination of construction, infrastructure installations and maintenance within the resort area. She also covered the resort area event calendar and how all events are prioritized. Mrs. Capps explained how the event permit process works and the agencies that we collaborated with to ensure safety and mitigation strategies are followed. She also reviewed the total permits issued for calendar years 2016 - 2020, noting events that took place on public, commercial, and private property. She explained the responsibilities the office has in managing the cost recovery program from tracking costs of City services and invoicing event planners for such services. This program was created in 2013 to recoup the cost for City services from major event planners hosting events that required street closures,additional public safety,beach modifications,and utility modifications.The program generates approximately $225,000 annually for the general fund. Mrs. Capps reviewed goals for assisting with operational management, maintenance, and development of initiatives supporting the Resort Area Strategic Action Plan; focus on promoting tourism through special events which results in positive economic impact, and coordination with agencies city-wide to build industry leading special event standards. Mr. Counts refers to the previous meeting,where the organizational chart indicated that this office was not a part of the CVB. Where will this office fall as it relates to the CVB?Mr.Williams answered that the office is currently part of the department(CVB) however,because of the resolution the City Council passed in September, creating the Resort Management Office, it will report directly to him. Mr.Williams expects that it will take four to six months to stand up this new department. Mrs. Habr asked for additional information about the management of short-term rentals.Mrs.Capps explained that within the ordinance there is some language about issuing permits for event houses and enforcement. Mrs. Capps went on to explain that during COVID restrictions were put in place as it related to social gatherings,which impacts the event houses. Mrs. Habr asked for a definition of an event house?Which is described as a house that did not obtain a conditional uses permit for a short- term rental that would allow houses to have 50 - 100 people for a duration. Mrs. Habr asked what the cost would be for the permit?A permit cost of$200 would be charged to the requester for the event house. Mr. Richardson inquired as to where the $225,000 in revenue from the cost recovery program goes? Mrs. Capps explained that those funds get deposited into the general fund and distributed. Mrs. Howard inquired if the park at 31st Street adjacent to the Hilton hotel was sold to new owners. Additionally, inquiring if we provide $100,000 for one-day of entertainment for May through September? Mrs. Capps explained that the duration of the acts that perform on the main stage are one-day acts,an example would be the summer concert series,there are six of those each season. Mr. Tower elaborated that the $100,000 has also been leveraged with private money from the owner of the hotel and sponsorship money and that it is a lot more than $100,000 worth of entertainment. 1 Maria Aragon,Visitor Information Center, began her presentation by reviewing her organizational chart and providing the mission of the center. Mrs. Aragon described the locations of the four visitor's information centers,the main center on Parks Avenue,the Chesapeake Bay Center at First Landing State Park and the two oceanfront kiosks at 17th Street and the boardwalk and 24th Street I CVB CommunityTaskforce Meeting g ISeptember 25, 2020 Page 3 and Atlantic Avenue. Mrs. Aragon also provided the unique attributes of each center and the ' primary focus of each location. Mrs. Aragon reviewed the responsibilities of the visitor services division which includes assisting walk-in visitors with hotel, dining, attractions, directions, maps ' and any other information that they may need as it relates to Virginia Beach.The staff also provides that same level of service to the community and potential visitors inquiring about Virginia Beach via phone,email,and through the website. Mail service distribution of Virginia Beach informational ' literature to hotels and visitors' centers throughout Virginia as well as assisting in updating promotional literature and providing staff for convention services welcome desks and shuttle services.The services that are provided to locals and visitors at the main center include discounted attraction tickets, special event passes, interpreters, a rest stop with ATM, Wi-Fi, bathrooms and other amenities. Additionally, the Virginia Department of Transportation and the Virginia State Police use the main center as a staging area. Furthermore, they are currently providing free masks ' to whomever comes into the center.The services to the hospitality industry include free listings in the vacation guide and on the Visit Virginia Beach website, provide brochures and pad maps, provide visitor accommodation rates and availability to visitors coming into the center, provide ' motor coach parking,and promote Virginia Beach at regional visitor centers.Mrs.Aragon went over the trends of walk-in visitors and inquiries to the centers from 2015 to 2019. Mrs. Habr inquired about statistics on 2020? Mrs. Aragon explained that the number of walk-in visitors has been very ' low due to the pandemic and that we closed the visitor centers on March 16 and did not open our main center until the July 4 weekend. She also explained that the main visitor information center is the only center that we currently have open right now. So walk-in visitor counts are down about 80%. Mrs. Habr asked how staff has been reallocated during the pandemic?Mrs.Aragon explained that she has been using only full-time City staff members in keeping the main visitor center open seven days per week. She did not bring back the temporary staff that are normally hired to assist ' with the operation of the other sites.Mrs.Habr inquired if someone was on staff at the Visitor Center who manages social media? Mrs. Aragon explained that the Marketing and Communications unit ' manages the social media aspects for the department. Mrs. Howard inquired as to why the main visitor center numbers keep going down? Mrs. Aragon explained that there are several reasons as to why the numbers are lower for walk-in visitors. The first being that people tend visit our website, ' so they already know what they want to do and where to stay when they arrive. Also, the poor visibility of the Visitor Center, currently there are trees and greenery that hide the building. Mr. Hanbury added that there is a global trend that less and less people are using visitor information ' centers based on technology innovation. The organization is currently working on seeing what the next generation of Visitor Center might look like. Mrs. Howard was curious if there has been an increase in website traffic? Mr. Hanbury explained that those numbers were coming up and would ' see the increase in both website traffic and on social media platforms.Mr.Zirkle inquired if we track the time of day that people are coming into the center? Mrs. Aragon explained that she does and during the summer season you can see the eb and flow between the morning and afternoon hours at the main center. However, at the Chesapeake Bay Center it stays busy with campers and the oceanfront kiosks stay busy during the ' lunch and dinner times but also during major oceanfront events. Mr. Melatti thanked Mrs.Aragon for the hard work and dedication of the staff at the center. Mr. Melatti described the integration of services between Beachevents and the Visitor Information Center and the level of customer service CVB Community Taskforce Meeting September 25, 2020 Page 4 provided to them.Mrs.Vogel asked how the center reaches out to industry partners to provide their information for rack cards. Mrs.Aragon explained that partners provide rack cards to be displayed in the visitor complimentary. Sally Noona, Meetings and Conventions division, began with a brief introduction and reviewed the organizational chart of the unit and explained that each of the sales managers oversees a specific market segment and geographical territories. She then described the duties of the mangers for the convention services from transportation to housing. The strategy of the meetings and conventions unit is to drive new and incremental meeting and event opportunities to Virginia Beach to maximize our hotel, convention center and City venues by creating compression in the marketplace. Supporting that strategy, the team builds new and existing client relationships, they encourage client visitation to Virginia Beach, increase awareness that Virginia Beach is a high-quality meeting and event destination and assist in the booking of room nights during need time periods.The market segments of primarily focused are state association and government,Social,Military,Multi-cultural, Education, Religious, Fraternal (SMMERF), hobby and military reunion, targeted corporate opportunities, national and regional associations linked to the greater DC region and within 300- 600miles of Virginia Beach, and markets indigenous to the region such as high-tech/data, bio- medical, homeland security, marine, and agribusiness. Mrs. Noona described the accountability benchmarks for the sales team which include, definite room nights,tentative room nights, number of bookings, number of leads, local networking, individual events, client site visits, sales appointments and prospective conversations. Some of the ways the team gets in front of clients are by sales missions, social media engagements, event management planning and assistance, presentation bids and videos. From a historical prospective, sales is a collaborative process, the CVB does not own any hotel rooms, we rely on our partnerships with our industry. Over the past five years the CVB has had some major changes in terms of perspective and leadership as it related to meetings and conventions.There has been a cut in funds to support direct sales efforts,marketing and public relations efforts and incentives to groups to level the playing field,especially as it relates to shuttles for groups. Mrs. Noona references the chart showing how over the 10-year period the decline in room nights booked dropped.Addressing how the impact of COVID on the meetings and convention industry was shown on a chart noting the number of events that have either canceled or postponed. Many hospitality workers that have partnered with the CVB over the years are still on furlough or are performing the jobs of many for their particular property. Mitigating the impacts on the meetings and conventions industry has been top of mind. The team has been keeping in touch with our clients, personally and professionally. We are accommodating clients that want to come in for site visits.We are listening to our buyers and finding out what the newest and greatest things are. We are becoming certified in our Customer Relationship Management (CRM), we are creating incentives and new opportunities. Mrs. Noona described the goals of the meetings and conventions team is to first generate more convention center and city-wide group business by executing strategic selling plans targeting specific key corporate and association meeting. The second goal is to generate more leads for hotel-based group business by increasing the volume of leads for single hotels. Third, generate and build meeting and convention awareness by increasing the City's visibility by creating and investing in a client advisory board supporting more direct sales opportunities,and national industry partnerships. Fourth,is to exceed attendee and I I CVB Community Taskforce Meeting September 25, 2020 ' Page 5 planner expectations by providing excellent meeting and convention services by presenting the destination's partner services and experiences available to groups to ensure repeat and referral ' business. Mr. Richardson inquired as to what market segments are not included that have been in the past?What markets are we not pursuing because of the current sales strategy,prior to this year? Mrs. Noona explained that if the group makes sense for us, and we look at the history of a group, have they met in like cities in the past.We hunt down convention calendar of cities that are similar to us if they end up coming from more than 600 miles from us and they make good since for Virginia ' Beach we pursue them. Staff is not going after major medical or corporate associations because the air lift is one of the most important things that they are looking for in a destination we don't have that. Mrs. Howard inquired if we have an economic report regarding convention center revenues ' and expenditure and how that impacts the City's revenue. Mrs. Noona asked if there was a specific time period in which Mrs. Howard was looking for, we could run the Destination's International economic impact calculator for the definite business during that period. Mrs. Howard asked how ' often that report is published,monthly,weekly?To clarify,Mrs.Noona asked,to report out to others. Confirming yes, Mrs. Noona indicated that we don't report that to everyone because it takes a lot of discussion to understand what it means. She indicated that staff is working on acquiring all four ' calculators for conventions,sports, festivals and consumer. Mrs. Howard asked if we were working on last years' and indicated that she would like economic impact of convention center related business? Mr. Dyer publicly recognizes Mrs. Noona for her dedication to the sales effort of Virginia ' Beach. Mr. Dyer spoke on the economics of the convention center. The hospitality industry has struggled with metrics,most convention centers don't go near them because there are holes in every report. So, over the years we have done very conservative estimates, that show the building in a positive nature every year, based on the economic impact. Mr. Dyer ask Mrs. Noona to state what some of the lost business reports look like, what did some of the unsuccessful clients say after the site visit,after the sales pitch.What do you hear when they say,they don't want to come?Mrs.Noona indicated that when we were building this facility we were competing with many other destinations. What meeting planners want is a facility like this and 1,000 rooms within a four-block radius that is ' walkable.The number one reason that we lose business is because we don't have that headquarters hotel that is attached or adjacent to the convention center or those 1,000 rooms.Mr. Hanbury added that he feels that there is a much bigger issue,that as an organization,three or four years ago made a conscious decision to stop chancing major city-wide conventions, we did not fill a vacant senior executive level position in the meetings and conventions unit, we significantly decreased the advertising dollars relative to meetings and conventions, and we also made a conscious decision to ' stop subsidizing shuttle systems. Today, we are making an effort to change that direction by increasing the amount of advertising assets. We are much more aggressive on chasing city-wide business.Mr.Counts asked is the sole reason that we are down is because of investment?Mrs.Noona answer, with the loss of staff those relationships go with them. Mr. Hanbury added that not hiring the senior executive for that unit it just shows that lack of emphasis on this market segment. Additionally,Virginia Beach has been hurt by the fact that in other destinations headquarters hotels are part of the package, everyone has one, that was not the case then. We are the only destination of our size that does not have a headquarters hotel. Today, the team is working towards over 100,000 room nights per year plus. Mrs. Howard asked what meeting planners say when you tell ' them the Doubletree is less than a half a block away? Mrs. Noona explained that we sell the Doubletree all of the time, usually the peak night is 500 - 800 rooms on peak, so only about 250 of those rooms can be placed at the Doubletree and I would still need to make up another 400 based I CVB Community Taskforce Meeting September 25, 2020 Page 6 on that peak night. Mrs.Howard references several years ago the option of a pedestrian bridge from the Doubletree to the convention center,Mr.Williams provided clarity,and explained that the plans for the convention center allow for two additional exhibit bays that would be built on the surface lots that are to the west. Mrs. Vogel was curious if getting people here through the tunnels and the airport was still a problem and if so, what were we doing to address it? Mrs. Noona explained that we work around the challenge by providing information about the best time to travel to miss the tunnel traffic and also remind travelers that there are many ways to get to Virginia Beach, be it by air, rail, car or boat. Mr. Zirkle commented that Mrs. Noona's presentation speaks to why the Taskforce has been established and agrees with Mr. Hanbury on the room night goals. Mrs. Habr asked about the goals of the CVB this year and what is the organizational structure of your colleagues in other destinations? Mrs. Noona explained that this year's goals are aspirational because the industry is in a rescheduling mode. So, this year is about researching and keeping in touch with clients and partners.As it relates to the organizational structure of other colleagues most are working at 60% or less of staff and are unable to do what we are currently able to do. Most DMOs are set up as hybrid or quasi-non-profit government. Mrs. Noona mentioned the importance of grassroots marketing and starting with your local connections and then expanding that reach regional and so forth. Mrs. Habr hopes that we can change the City ordinance to allow us to use advertising dollars in market. Mr. Counts agrees that there are pros and cons of a non-profit model and sometimes when the economy is not great is when it is good to have the City as a part of the structure. Mr. Standing agrees with Mr. Dyer's comments but is curious as to what are those impediments are and are, they available for us to look at. Mr. Williams mentions that the impediments to operational productivity have been highlighted. That is one reason we have formed the Taskforce and understanding our current structure are constraints on compensation employee performance, procurement restrictions, all of these are topics that we will discuss at a future meeting.As for the convention center hotel there's a website on vbgov.com that lists all the studies that have been done over the years and most recently the HVS 2018 study, but it is also in your packet. We've had approaches by two different directors at the CVB that had philosophical differences. We are now trying to get to a structure, once we get the structure right some of those performance operations can be improved. Mr.Zirkle commented on going back in time and looking I at some of the higher end city-wide conventions that have been booked, those people spend the money, the sports teams are great, however a conventioneer are here to buy out the upstairs of Watermen's,as an example,for a private social.It is a completely different market and higher dollar. I Mr. Williams explained the nuances of Executive Order 67 and that we as staff are anticipating us being under well until 2021. 1 Nancy Heiman,Sports Marketing,began her presentation with a brief review of the operational unit followed by an explanation of sports tourism. The sports tourism market in a $45.1 billion industry according to Sports ETA, previously National Association of Sports Commissions. It is a huge business. According to USA Today 2 out of 10 families are spending$1,000 plus per month on youth sports. Virginia Beach is poised to do both vacations and tournaments coining the phrase "tournacation."Sports tourism in Virginia Beach has proven to be recession proof and weatherproof and it has shown constant growth within the market. Mrs.Heiman described the brief history of the sports program which began in 1999 with only two employees. Then continued to describe the supporting functions of the unit from event sales and faciliation to attending sports related CVB Community Taskforce Meeting September 25, 2020 Page 7 meetings, hosting/planning/coordinating 100 plus events annually, venue developments and managing the sports grant program. A succcess story from a client taking advatage of the sports grant program, Excalabiur Gymnastics started out as a small gym that hosts a small competion that I was looking to grow, now they are a certified USA Gymnastics events that takes up all four of the exhibits halls within the convention center with an international competition. Mrs. Helman reviewed a chart showing the number of athletes, spectators, total attendance, and room nights from FY 14/15 to present. The continual growth speaks to the investment that has been made in sports tourism, and also the collaboration between the CVB and industry partners,Virginia Beach is all in. Mrs. Helman then described the 10 year event breakdown chart and pointing out the 2019 ' year the CVB hosted 109 events out of 49 weekends. Mrs. Helman spoke about the Virginia Beach Sports Center and how we got to today. She explained that this facility was funded through the Tourism Investment Fund at $68 million including parking and was solicited through a PPEA ' process with a design, build, operate team. There was a multi-faceted development committee established,three sites were evaluated, and site visits to other sports facilities around the country were visited.The project was completed early and on budget. Mrs.Helman showed a visual timeline ' from clearing the site lots to the opening of the building. The project consists of 285,000 sq. ft. column free sapce, 12 basketball courts that can be converted into 24 volleyball courts,a 200-meter hydraulically banked track, seating for 5,000 plus, meeting rooms, vendor spaces, VIP rooms, sky box, food service operations, festival plaza and much more. Monday through Thursday is the time for the local leagues to play in the building and on the weekend will be occupied with tournaments. In the first year alone the sports team has signed 42 events totally 83,447 attendance. Mrs. Helman showed a video of a current fly through and provided an overview of the facility.Mrs.Howard asked if the FY 20/21 room night estimates are what is currently booked or that we think will be here? Mrs. Helman explained that the asterix indicates that those numbers are projections, there is a lot ' of new business booked in the Sports Center for this year.We won't know what the actual pickup is until after the event has taken place. Mrs. Howard asked if we had anything booked, and Mrs. ' Helman responed that we have many events booked, starting with November 15 then December. December is when track season and we are booked through the end of the year. Kelli Norman, Tourism Sales began her presentation on the organizational chart of the unit and spoke of the repsonsiblities of the tourism team. The goal for the unit is to increase economic impact for Virginia Beach, through travel trade and media distribution channels. To accomplish this goal ' the team participates in domestic and international tourism sales missions, targeted marketing to travel trade including tour operators, travel agencies, and international inbound operators. Furthermore, the team attends consumer and travel trade shows and coordinates familiarization tours to connect with and influence key client. Additionally, public relations activities on social media platforms and hosting journalists assist in accomplishing this goal. An explanation as to what travel trade is was defined as tour operators, travel agents, receptive operators and wholesalers. ' These professionals organize and contract to buy travel product to sell to the consumer through individuals or groups. As it relates to domestic travel trade in the group tour market, we spend approximately $100,000 plus in advertising in national trade publications and also participate in sales activities including shows, sales calls,and client site tours in addition to developing itineraries such as Live the Life Adventures. As it relates to travel agents we work with AAA and CAA as they are one of the largest travel agencies in North America with approximately 56 million members.We I CVB Community Taskforce Meeting September 25, 2020 Page 8 host an annual familiarization tour for both AAA and CAA to come to Virginia Beach and familiarize themselves with the area and the amenities that we have to offer. We also work within the family reunion,wedding,bank clubs,social groups,and LGBTQ markets.As it relates to international travel trade, we participate in co-op marketing with tour operators to promote itineraries and packages to consumers.As well as partner with Capital Region USA to leverage regional sales and promotion opportunities. We also participate in activities that include one-on-one appointments at trade shows,sales missions in key target markets and host travel journalists. Travel agents are a little bit different overseas where tour operators sell through the agents in key global markets. Activities include sales presentations to the client, site tours, and familiarization tours. Predominantly overseas, families will book through a travel agent, whereas in the United States we're booking directly with the provider, be it air travel or accommodations. The unit also overseas contract in public relations and social media activities in Canada,China and in Germany.Mrs.Norman reviewed a chart on international visits to Virginia Beach by region of origin for 2019 showing that Canada was approximately 45% of the 414,000 total international visits,this information was provided by Tourism Economics. As it relates to Canadian marketing, we invest about $295,000 in advertising for the French-Canadian market consisting of broadcast, digital,and out of home. The primary goal is to maintain visitation despite the value of the dollar. We partner with Virginia Tourism Corporation to also stretch that investment. The primary audience for Canadian marketing is Gen- X families traveling with children under 16,ages 35 to 54 with a household income of over$100,000 dollars. Our secondary audience is millennials and boomer without children. As it relates to promotion and product development, we encourage and assist local stakeholders to create new adventures and experiences an assistant brainstorming new idea. Additionally, working with technology to execute a special website and mobile promotions. The effects that the pandemic has had on tourism has been tremendous. We have paused international advertising and terminated overseas contracts; we've reallocated dollars to domestic markets with an emphasis on nature- based tourism activities. Programs we've done include virtual training and travel itinerary development and strengthened our stakeholder engagement. Mrs. Howard requested the report that indicates $22,000,000 of economic impact. Mrs. Haber inquired where she stands with our other colleagues and outreach on their organizations and how things are operating.Are you seeing them as non-profit are you seeing them within cities government? Mrs. Norman indicated that she concurs with Mrs. Noona's comments as it relates to the structure of the bureaus around the country. Many of her colleagues have been placed on furloughs around the country and she tries to continue to encourage them, but it's mostly been public private structures that have needed to furlough employees. Secondly, Mrs. Haber asked how Mrs. Norman was reassigning her staff and what her goals are for 2020 in 2021? Mrs. Norman responded that client development is very important for her team right now.Additionally,developing itineraries and brainstorming new ideas for future offerings. Our message is going to be wide open spaces and safe travel. What kind of LGBTQ partnerships or events are you dealing with domestically and also with some of the diversity and inclusive outreach and how many people of color do you have on your staff? For nature-based tours we're looking at Autobahn and Sierra and for the LGBTQ we do consumer shows.We tried to stay as diversified as we possibly can especially within our itineraries. Mrs. Vogel asked if we currently are partnering with the Virginia Tourism Corporation on LGBTQ marketing?Mrs.Norman indicated that she would leave those marketing questions up to the marketing and communications unit as they oversee that market program. Additionally, Mrs. Vogel asked about the surf sand and study promotion, is it being geared towards locals as well as out of market?Mrs. Norman said yes, I CVB Community Taskforce Meeting September 25, 2020 Page 9 I- it is available and that she would leave more detail of the program to the marketing communications team to answer more detailed questions. Mrs. Norman announced that we would be doing a ' restaurant month promotion in January. ' Tiffany Russell, Marketing and Communications began her presentation with a brief history of the advertising program for Virginia Beach. The Virginia Beach CVB had an agency of record for 28 years. However, what we're seeing globally is that there's more of a movement towards in-house efforts. Mrs. Russell then reviewed the organizational chart of her unit she explained that overtime the management of the advertising program went from one person overseeing an advertising agency to bringing 11 people in-house and that this was a huge transformation for the organization. ' This transformation has afforded us the keeper of the brand. We have control over messaging and what ad content are,we are developing ads,we're able to partner with third party experts when we don't have the capacity in house. Mrs. Russell showed a chart that shows the different elements as ' it relates to marketing and advertising and the work that's being done in-house. Another topic, important to note, is all of our advertising looks the same, especially across the economic vitality portfolio. As an example, if someone got the New York Times and they saw different ads from Virginia Beach would they know that it is coming from the same city?That is ultimately an initiative and much higher strategy of brand evolution. The reorganization also helped us move those cost savings into media investment. Mrs. Russell showed a chart on the expenses for marketing and ' advertising within the CVB from administrative expenses program expenses and personnel costs. Mrs. Russell went over the key objectives for her unit. First being to increase awareness and familiarity of Virginia Beach that lifts consumer intent to visit and induces lodging demand. The FY21 goals are to exceed 3.5 million visits to thevisitvirginiabeach.com website through paid media and to generate $5,000,000 in earned media coverage in partnership with a new PR firm of record which is Finn partners. Lastly to exceed 110 million social media impressions. The team is also rresponsible for industry in advertising research, ad design, media tagging, and trafficking, website development and management, as well as email marketing collateral development, partner ' communications, local and national media relations, media planning, and buying and content development. Additionally, the team handles video and photography production, social media management, brand management, and event marketing. Mrs. Russell showed a slide of the FY21 ' marketing budget with the TAP fund at $10.64M and the TIP fund at $332,000. Additionally, the chart showed out-of-market media spending, production, PR and other expenses. The locals campaign comes directly out of the TIP Fund in comparison to the rest of the budget. Mrs. Russell ' went over our target audiences which includes repeat visitors, multi-cultural, and multi- generational families,niche audiences for seasonal and weekday lift,meeting planners,travel trade advisors, and sports planners. The demographic that we are targeting for the leisure transient are millennials Gen-X boomers, and families traveling with children. For the meetings and conventions market,we are targeting association state and regional - drivable corporate, SMMERF government and 3rd party planners.We work within the LGBTQ markets such as DC Pride and HR Pride.We also do a media buy in key magazines.On the team three generational cohorts are represented including LGBT, and two African Americans. Our strategy and approach are to make sure that everyone can see themselves in our creative. Geographically our focus is on in state drive markets and markets ' that have historically shown strong visitation and local spend. Additionally, new markets showing intent to travel or"checking us out"organically and then also to our local residents.From an earned \ media perspective,the team is excited to be working with our new PR firm.The goal is to continue CVB Community Taskforce Meeting September 25, 2020 Page 10 to provide honest compelling messaging designed to reassure travelers to pick Virginia Beach for their next trip by generating feature coverage that drives year-round consumer trade and business visitation. In addition to promoting Virginia Beach promotions to drive business and bookings.Mrs. Russell showed some examples from forbes.com, Reader's Digest, the Toronto Star, Group Travel Leader, and US News. Mrs. Russell showed a slide of where the 3.3 million sessions in 2019 website searches are originated.Her next chart shows the impact on social media total impressions and how those social media platforms just continue to grow year over year. Mrs. Russell showed some examples of promotional pieces that are used to sell Virginia Beach from the look book to banner ads and then reviewed the Together at Last and the We're Open campaign commercials.Mrs.Russell concluded her presentation with the accomplishments of her unit and contributions towards increased lodging revenues and increasing top of mind awareness to the consumer. This took Virginia Beach from#13 to#7 in 2018 beach vacation destinations list and provided a higher rating of destination familiarity perceived as safe and a higher intent to visit. Also, as the number 1 DMA as it relates to COVID-19 recovery campaign efforts. The Norfolk/Virginia Beach DMA is number one for hotel occupancy recovery in the top 25 markets. Mrs. Russell also reviewed hotel occupancy chart detailing the COVID-19 tourism recovery. Mr. Richardson asked, as it relates to the CVB marketing budget and the $861,000 in salaries, for a breakdown. Mrs. Howard asked if businesses ever pay us to give them more advertising?Mrs.Russell stated that we are not a membership-based Bureau. Mrs. Russell explained the membership Bureau model and how those DMOs only promote for their members.With our CVB not being under that model, it gives us the flexibility to advertise to what our consumers are looking for. Mrs. Howard inquired if every business has a login to the site and are,they all equally represented? Mrs. Russell explained in terms of equal representation, each business in Virginia Beach can have a business listing on visitvirginiabeach.com. One of the responsibilities of the team is that when a new business arrives in Virginia Beach,we on-board them and explain how to get involved with the CVB and then they can have a free listing on our website. In terms of coverage, the team tries very hard to share the love across business districts. It is important to remember that the consumer is informing our content strategy.Mrs.Howard inquired if we are mostly advertising events,hotels,restaurants, and entertainment? Mrs. Russell explained that she does not advertise hotel properties specifically, however when that does happen it's primarily from a media lead as an example for when the Cavalier reopened. That was a huge story because of the history that went along with that specific property and consumers are looking for that.We are always looking to promote history lovers, food lovers, outdoor lovers, beer lovers, etc. Mrs.Haber inquired about the impact of the Go Beachless campaign,was it positive?was it negative? Would you do it again?Will there be anything like that coming forward? Final questions were how has your team dealt with the violence? How did you meet those challenges and how did you respond? Mrs. Russell responded with understanding of the impact that Go Beachless had on community. It was an imperative choice to work with an agency that could help break through the clutter of beach destination advertising. If you looked at our ads up against another beach destination ad all you really needed to do was switch out the logo and we were all saying the exact same thing.It was a disruptive way to break through the clutter and highlight that we are more than just a beach destination, it did just that.We had record hotel occupy campaign for several months. Could we have done things differently,in hindsight yes.While we had support from the Advertising Advisory Committee, I wish that we had more time to work with the community and get them prepared for this campaign so there was greater understanding and support. Currently,are we are working with Pharrell Williams and his team at I am OTHER on the We're Open campaign and we're I CVB Community Taskforce Meeting September 25, 2020 ' Page 11 seeing that we are hitting some of those key trends. To make sure that we are successful into the future,we are just doing it in a different way.Whatever the future is of the CVB and the marketing ' team, it will be critical that the community be open to new ideas. The ad space is just getting to be more and more of artificial intelligence and more disruptive.As it relates to the civil unrest that has been taking place nationally,we're staying on top of news coverage and traveler's sentiment.After ' the disturbances at the oceanfront we did pause our advertising for a short period of time because we wanted to be sensitive to what was going on. We will always follow the lead of the City's Communications Office in terms of any messaging that goes out. We work very closely with the director and her team. She directs the messaging for us, so we are consistent in whatever we're telling locals, is exactly what we're telling a visitor which is exactly what we're telling the New York Times. Mrs. Russell concluded her presentation turning the floor back over to Mr. Hanbury for any closing remarks. Mr. Hanbury requested because of lack of time to defer his presentation to the October 9 meeting. It was important for the Taskforce members to hear the details from the operational units of the CVB so they would have a good understanding of the work that is being done. The next meeting, we can get into the direction and what that might look like. Mr. Hanbury turned the meeting over to Mr. Williams who reviewed the upcoming agenda for the next meeting which will primarily focus on benchmarking other CVBs and Bill's report on the analysis of our current CVB. Follow Items: • Economic Impact of Convention Center Related Business • Economic Impact Report of$22M Group Tour Market ' • EEO Report for CVB • Breakdown of$861 TAP Fund Salaries Next Meeting: October 9, 2020 I 9a-12p Virginia Beach Convention Center 1 I f L O d i L.O Q U a o ' Z Q 0 ° O o, .� o o c - a o a E° Z t - c � CU a Z E o .z' c L o O Cc z - u i o e o ~ c Cs Z - � ', _ ° F` , -Sa � p, z — - I c u a, a ti •- CC) �? o o tz °° VI 0) I - OC U - v O = N 0 [r ..,O In < Z O t N C I L..) 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Holiday Duals Wrestling, NHSCA Senior Nationals Wrestling and NHSCA Duals Wrestling. The combined revenue is $270,000 approximately 6% annually. 1 Convention Center Economic Impact Numbers The VBCC uses a model that was developed by Destinations International (DI) from 1 the early 2000's and has been a standard used in our annual report for several years. DI recently released a Local and Public Events Economic Impact Calculator that the department is currently evaluating for implementation. I GBAC Star Certification The GBAC Star Certification would require a financial risk involving jurisdiction and 1 choice of law. We are exploring how to minimize the risk so that the risk does not outweigh the cost of the certification. The VBCC is positioned well to obtain the certification when we can resolve the legal/risk hurdles. I 1 Sustainability Initiative Savings As a result of sustainability initiatives, annual convention center electricity expenses Ihave been reduced by$200K since the building was first certified LEED Gold in 2010. Initiatives include electricity peak management, energy efficiency program rebates, I demand response program rebates, electricity bill auditing in addition to multiple sustainable practices. I I I N u esday,September 15,2020 I Today's Paper Tititadt,1 la irltVirerLog In MEWS SPORTS BUSINESS OPINION POLITICS ENTERTAINMENT LIFE FOOD HEALTH REAL ESTATE OBITUARIES Q w 'VOW WHAT? down by the c® ®nav rus Philadelphia s convention cent r- prepares to re. pen w pdated:August 4,2020-9:02 AM i Inga Saffron I @IngaSaffron I (saffron@InquI►er.cc. 9- 4' — AA • -ter - � s # a i. fir I 4. •Y.' .D ' 1 'IDI BRUMBACH l'tor's(Mate 'vs about the coronavirus is changing quickly.The I latest information can be found at Imadrer.com/coronavirus President Donald Trump may have :!, ,.,;on holding a convention ▪ the midst of a pandemic,but not Mark Yuska. professional meeting planner,`i,4,, is so convinced that convention centers can be made safe that he decided to organize a gathering for the people who manage the world's conferences and 'tide shows.His company,Lill,n e i).,,i ti booked the main hall _:Orlando's convention center,went into sanitation overdrive,and signed up a room's worth of exhibitors.On July 24—while Florida ▪ as experiencing an unprecedented surge in coronavirus cases— 400 people poured into the building for the Together Again Expo, uelieved to be the fast major trade show since America's convention centers went dark in March. ilOKAVIRUS COVERAGE LIVE UPDATES FULL COVERAGE VIRUS TRACKER t was proof that it could be done safely,"said Cathy Breden who runs the International Association of Exhibitions and Events and who was one of the speakers. —;' not actually proof,since there has been no follow-up to 'ne if any of the attendees contracted the virus.What the event 4- :monstrate is how desperate the vast convention-industrial )mplex is to find a way to restart their meeting halls. ms://www.inquirer.com/real-estate/inga-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html )20 The Philadelphia Inquirer,LLC 0 IJ i_ q N I i _ , i,At rr li ... es ,f,....., ..-" " EXPO O ENTRANCE i ,I - al&West Af8 Lobbi 'AI 11 -110--,'''''-- - 1J 4, ._ il ,.. _., L HEIDI BRUMBACH On July 24.Alliance Exposition put on a one-day convention at the Orange County Convention Center In Orlando to demonstrate that such an event could be held safely. INQUIRER MORNING NI LETTER Get the news you need to start your day vcurr`emtiLcom Sign Up — Conventions and trade shows are now wrestling with the same challenges facing schools,religious groups,and professional sports. — Whenever large numbers of people gather indoors,in tightly enclosed spaces with mechanical air circulation,odds are that spikes in coronavirus infections will follow.But conventions aren't merely an optional social get-together;they are also the linchpin of America's urban economies,supporting a$100 billion ecosystem of hotels, restaurants,and entertainment venues.That's why Yuska and hundreds of others in the meeting business are trying to adapt convention centers so that large events can still take place,even under the extreme constraints demanded by the pandemic. Since people may be leery of attending big gatherings for some time to il ec,mt their efforts could determine how quickly cities are able to get back on their feet.In Philadelphia,hospitality is the second-largest industry,pumping$7.1 billion a year into the city's economy, according to Econsult Some 77,000 residents owe their jobs to those suitcase-toting,lanyard-wearing conventioneers.And unlike office employees,they don't have a work-from-home fallback option.Not a single event has been held at the Convention Center on Broad Street since the Philadelphia Flower Show closed March 8,and nearly 60%of ,— the city's hospitality workers are now unemployed.The loss of tax revenue for the city is immense. https://www.inquirer.com/real-estate/inga-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html ©2020 The Philadelphia Inquirer,LLC s f a ' ' tiI HEATHER I04AUFA/STAFF PHOTOGRAPHER Iuests take photos in the main entranceway of the 2020 Philadelphia Flower Show at the Convention enter on opening day in February,a month before the coronavirus lockdown went into effect. Yet,as Trump discovered when he was fq.ced to cancel the major ortion of the Republican National Con entio°n safely assembling everal thousand people in the same buiping is a daunting undertaking.Some believe that Herman Cain fie former presidential contender who died from COVlD-19 las eek,contracted the virus su SIT wring Trump's June 20 rally in a Tulsa,Okla.,arena.This will be the I rst election year in American history ttt r FLwhite-and-blue-clad party delegates do not assemble in person to select their presidential candidates. 60 SHARE ven the Consumer Electronics Show,an annual mega-convention LIHKEDIH at attracts 180,000 gadget geeks to Las Vegas,threw in the towel and announced that the event will take place online in January.People will t have to watch the theatrical product rollouts on their screens. Ishii e many people think of gambling as Las Vegas'main business,the city is essentially one big convention venue."Every hotel is a r men tion hotel,"said Sherrif Karamat,who runs the Professional ion Management Association. ADVERTISEMENT p. course,the shows can still go on even if the convention centers stay closed.After the lockdown orders went into effect,many scientific and trade conferences quickly transitioned to online.The 50-member Ilumni council for my university did just that,compressing a two-day vent into three hours.It turned out that the format forced us to focus more efficiently on the key issues.Those who wanted to socialize simply stayed on Zoom after the agenda items were completed. 'jut the remote meeting did little good for the city where our alumni council normally gathers.Not a single airline ticket,hotel room,rental ,ar,or restaurant meal was purchased,and no one stayed late into the fight at the bar,racking up an impressive tab. For many conventioneers,the bar—not the meeting hall—is where the most fruitful exchanges occur."Those serendipitous exchanges 'on't happen online,"Karamat predicted. "Networking,in-person product demos and impromptu breakout Lace-to-face meetings are important parts of the convention xperience that have not translated well in the digital convention cosystem,"Josh Swissman,a hospitality consultant,told the Las Vegas Review-Journal. ADVERTISEMENT in ssis://www.inquirer.com/real-estate/inga-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html 320 The Philadelphia Inquirer,LLC As unsatisfying as the online meeting experience might be,many trade associations believe they are the only option for now.Since many of those groups rely on convention revenue for their operating budgets, online conventions have been a lifeline As for cities,their best hope right now is that those online-only conventions can be turned into hybrid conventions,which offer both online presentations and limited,in-person gatherings.Since Convention Center operators believe they can operate safely with 20% capacity,only a portion of the normal crowd would be allowed in the building.The downside is that that there will be fewer out-of-town .. visitors staying in hotels and spending money. The Convention Center is already retrofitting its three-block-long behemoth in Center City for a hybrid future.Over the last four months,the state-run meeting hall has installed$3 million in sanitary upgrades,said John McNichol,who oversees the operation.That includes automatic,ultraviolet sanitizers that run underneath the escalator handrails,souped-up air-filtration systems,antimicrobial — film on the door handles,and touchless T.ntprol�s in the restrooms."If you can dream it,we're looking at it,"Mckic�o!said. A. 4 \l- tir\ ' ►' .. JESSICA GRIFFIN/STAFF PHOTOGRAPHER iii Bobby Fripps,a foreman in housekeeping,cleans the hand rail as part of the Pennsylvania Convention Center's new coronavirus protocols. Most convention centers are installing similar equipment to entice associations to adopt the hybrid model.The industry recently devised an accreditation system called Global Biorisk Assessment,a pandemic-level Good Housekeeping seal of approval,for meeting halls,airports,and hotels."You can fog and disinfect the building after 11 every event,"Yuska said. Convention centers have also developed the usual social distancing I protocols.ASM Global,the company that manages Philadelphia's convention center,has mapped the meeting halls and trade floors to ensure there will be six feet of separation between chairs,tables,and exhibition booths.Because convention centers tend to have soaring ceilings and wide corridors,they are a naturally safer environment than buildings with small rooms,like schools,argued Bob McClintock, ASM's vice president.Of course,attendees would need to wear masks and have their temperatures checked before they enter. I hops://www inquirer.com/real-estate/inga-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html ©2020 The Philadelphia Inquirer,LLC IQUICK FACTS What you should khav abet coronavirus 'Idtec September 15,2020—8:31 AM s marry cases have there been? There have been about 29.31 million confirmed cases and 929,000 deaths globally.In the United States,there have been about 6.55 million confirmed cases and 194,500 deaths. .. What are the symptoms? Like other respiratory infections,symptoms of coronavirus can READ MORE v —c the all-out battle to wipe down pathogens in convention centers maybe a fight against the wrong enemy.ilks an essay in The Atlantic Argued,the evidence suggests that coron viPB Tis not primarily spread trough surface transmission.The first time an infected person walks ito a convention hall,all that deep cleafundrii out the window. r0 Vie tat_mot SICA GRIFFIN/STAFF PHOTOGRAPHER Tley Dabb,communications manager for the Pennsylvania Convention Center,photographs an air ality tester in the main corridor. Yuska,who is a leading advocate for restarting conventions,remains nvinced they can be done"safely and responsibly."At the Together fain Expo in Orlando,attendees sat six feet apart as they listened to speakers.The round banquet tables that normally accommodate 10 people were limited to five,even though it meant people had to speak "wily.Everyone wore a mask and dutifully adhered to social stancing,even in the line for the steam tables,he said. Fie believes that state restrictions have unfairly lumped convention minters in with bars and concert venues."Our cleanliness standards ceed what you're seeing in restaurants or Walmart,"he said.At the Together Again Expo,"people told me,'I feel more comfortable here than going to my local restaurant'" ADVERTISEMENT °I's worth noting that about three-quarters of the 1,400 attendees lived thin driving distance.An additional 8,200 chose to stay home and watched it online.If convention centers are allowed to reopen,even :he most boosterish industry executives say that,initially,future aetings will be regional,rather than international events. ncnow what normal is going to be,"Karamat said."I want to say :�. ,normal.'That's because I don't believe we're ever going back what was normal before." ii://www.inquirer.com/real-estate/Inge-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html 20 The Philadelphia Inquirer,LLC Since Together Again was envisioned as a proof-of-concept experiment,it's a shame that Yuska didn't arrange a follow-up survey, to determine whether anyone got sick.Then,perhaps,we could know what the future of conventions will look like. — JESSICA GRIFFIN/STAFF PHOTOGRAPHER Lisa Dobbertin,engineering project manager at the Pennv,*rbenia Convention Center,inspects the ultraviolet light sanitizing devices just installed undemeat+rrhe TE§§For handrails. SUBMIT Posted:August 4,2020-5:00 AU EMAIL Inge Saffron I @IngaSaffron ii7 rr;arr@inqufrer.com 6- SHARE Era LINKEDIN View Comments ADVERTISEMENT We Recommend Philly Bread rebrands as What advanced stets tell us about Merzbacher's after moving to the Eagles'sack problem,Jalen Germantown Reegor's speed,and more I Early Jenn Ladd,Staff Writer Birds EJ Smith,Staff Writer n Jackson didn't play much This is the reality of the How Philly's summer of protests msoft rebuild.I Mike Slelskl revitalized the affordable housing Mike Sielski,Staff Columnist movement Anna Orso,Staff Writer U.S.attorney says Philly DA Larry Krasner's'radical experiment has Man found dead In Wynnewood failed°in announcing federal was murdered,authorities say charges in 2 cases Erin McCarthy,Staff Writer Julie Shaw,Staff Writer https://www.inquirescom/real-estate/inga-saffron/convention-business-coronavirus-philadelphia-revenue-20200804.html ©2020 The Philadelphia Inquirer,LLC I DEDICATION OF LOCAL REVENUES III Real Estate* $580,989,105(Rate=$1.0175 per$100 of assessed value) Recreation Centers Agricultural Reserve Program $20,691,331 (3.4760) $5,357,364(0.900) Outdoor Initiative CIP General Fund Storm Water Operations I $2,797,735(0.470) $14,881,568(2.50) City Council Priorities Town Center TIF I $11,012,360(1.850) $8,839,635 Special Service Districts Sandbridge SSD Town Center SSD I $519,024(additional rate of 40) $2,390,683(additional rate of 450) Bayville Creek SSD Harbour Point SSD $72,380(additional rate of 47.20) $26,659(additional rate of 12.00) IChesopeian Colony SSD Old Donation Creek SSD $203,021 (additional rate of 29.130) $70,359(additional rate of 18.40) Shadowlawn Area SSD Hurds Cove SSD $31,025(additional rate of 15.940) $213,124(additional rate of 43.80) Gills Cove SSD Schilling Point $13,624(additional rate of 6.30) $39,316(additional rate 40.40) 01 Personal Property* $158,153,731 (Rate=$4.00 per$100 of value) I Restaurant Meals* $58,145,356(local rate=5.5%) Tourism Investment Program Open Space Tourism Advertising Program w I $11,191,741 (1.06%) $4,645,629(0.44%) $5,279,122(0.50%) Hotels* '. $27,187,853 (local rate=8% plus$2 per room night) ITourism Advertising Tourism Investment Program Central Business District TIF Sandbridge SSD Program$4,323,115(1% (TIP)$14,090,858(5%plus $500,000 $2,473,912($1 per room night plus$1 per room night) $1 per room night) plus 6.5%of the tax generated in Ithe Sandbridge SSD) Other Revenue Dedications I Amusement Cigarette* $3,705,707 $9,689,470 (local rate=5%Pa 10%) (local rate=750 per pack) .,. Tourism Investment Economic Development Investment Program Tourism Investment Program Program $2,067,087(160) $645,965(50) Other Non-Dedicated Local Revenues I City Tax on Deeds* Bank Net Capital* City Tax on Wills* Automobile $7,218,385 $3,655,093 $100,070 *$11,578,052($30 1 Business License*$46,289,549 General Sales*$63,159,899 Utility Taxes vehicles under I *$45,760,883 4,000 pounds) *These revenues are included in the School Revenue Sharing Formula net of certain dedicated amounts.For information on the school formula see the Appendix Section of the Operating Budget. I Fiscal Year 2020-21 108 Executive Summary I -20- . Item I-G 1.p. FY 2001-2002 RESOURCE MANAGEMENT PLAN OPERATING BUDGET iORDINANCES ITEM#48158 IUpon motion by Vice Mayor Sessoms,seconded by Councilman Branch,City Council ADOPTED: Ordinance to ESTABLISH a separate accounting for the revenues I associated with the tax on transients obtaining lodging,on the purchase of food at restaurants,and,on the tax levied on the purchase of cigarettes for the maintenance,renewal,replacement,construction and debt service on major capital projects I I Voting 11-0(By Consent) I I Council Members Voting Aye ILinwood 0 Branch, III, Margaret L Eure, William W Harrison, Jr, Barbara M Henley, Louis R Jones, Reba S McClanan, Robert C Mandigo,Jr Mayor Meyera E Oberndorf, Nancy K.Parker, Vice Mayor I William D Sessoms,Jr and Rosemary Wilson I we I M Council Members Voting Nay None I Council Members Absent None Imo ... May 15,2001 I 1 AN ORDINANCE TO ESTABLISH REVENUES FOR AND 2 PLANNED EXPENDITURES FROM THE MAJOR PROJECTS 3 SPECIAL REVENUE FUND AND OPEN SPACE SPECIAL 4 REVENUE FUND AND TO TRANSFER $5,000,000 FROM 5 THE AGRICULTURAL RESERVE PROGRAM FUND TO THE 6 OPEN SPACE SPECIAL REVENUE FUND 7 WHEREAS, there is a need to allocate funds from increased I 8 revenue generated by the two and one-half (2.5) percent increase in 9 the tax on transients obtaining lodging, the two and one-half (2.5) I 10 mills increase in the tax levied on the purchase of cigarettes, and 11 the one (1) percent increase in the tax on meals purchased at food I 12 establishments; 13 WHEREAS, the Major Projects Special Revenue Fund and Open I 14 Space Special Revenue Fund have been established by the FY 2001-02 15 Appropriations Ordinance to receive the transfers of revenues from I 16 these taxes and to provide a means of providing funding to certain 17 projects and obligations to include, among others: I 18 (a) CIP #9-018 Convention Center Relocation; 19 (b) CIP #9-031 Virginia Marine Science Museum Parking; 20 (c) CIP #9-032 Pavilion Theater Replacement; and 21 (d) CIP #4-004 Open Space Program Site Acquisition; I 22 WHEREAS, the transient lodging tax in the Sandbridge 23 Special Service District has been lowered, and it will be necessary I 24 to transfer revenues from the Major Projects Special Revenue Fund 25 to the Sandbridge Special Service District Fund to reimburse this I 26 fund by an amount equal to the loss in revenue caused by the tax 27 reduction; 28 WHEREAS, City Council has decided to re-allocate 80% of 29 certain revenues generated from the levy of the admissions tax from 30 the Tourism Growth and Investment Special Revenue Fund ("TGIF") to I 31 the Major Projects Special Revenue Fund, and to transfer the 32 obligation for payment of the outstanding Virginia Marine Science I 33 Museum Phase II debt service from TGIF to the Major Projects 34 Special Revenue Fund; and I I I 1 35 WHEREAS, City Council desires to transfer $5,000,000 of 36 fund balance from the Agricultural Reserve Program Fund to the Open 37 Space Special Reserve Fund. 38 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY I 39 40 OF VIRGINIA BEACH, VIRGINIA: 1. That the following revenue sources shall be paid 41 into the General Fund, and from there allocated to the following I 42 funds, subject to annual appropriations: 43 a. Revenue generated by the two and one-half (2.5) I44 percent increase to the eight (8) percent tax on transients 45 obtaining lodging, the two and one-half (2.5) mills increase to the 46 sixteen (16) mills cigarette tax, and fifty-six (56) hundredths of 47 one (1) percent increase to the five and one-half (5.5)tax on meals I 48 purchased at food establishments shall be allocated to the Major 49 Project Special Revenue Fund; and I 50 b. Revenue generated by forty-four (44) hundredths 51 of one (1) percent of the tax on meals purchased at food I 52 establishments shall be allocated to the Open Space Special Revenue 53 Fund. I54 2. That, subject to appropriation, eighty (80) percent 55 of the revenues generated from the levy of the admissions tax, I56 excluding participatory sports, that accrue in the Tourism Growth 57 and Investment Special Revenue Fund shall be redirected to the I58 Major Projects Special Revenue Fund. 59 3. That, subject to appropriation, remaining debt I 60 service on the Marine Science Museum - Phase II Capital Project 61 shall be paid from the Major Project Special Revenue Fund. I 62 4. That, subject to appropriation, an annual amount 63 equivalent to two and one-half (2.5) percent of the total amount 64 paid for lodging within the Sandbridge Special Service District, by I 65 or for any such transient to any lodging place, excluding hotels, 66 motels and travel campgrounds, shall be annually returned to the 2 67 Sandbridge Special Service District Fund from the Major Projects 68 Special Revenue Fund. 69 5. That $5,000,000 of fund balance is hereby 70 transferred as part of the FY 2001-02 Capital Budget from the 71 Agriculture Reserve Program Fund to the Open Space Special Revenue 72 Fund. 73 6. If any portion of this ordinance is for any reason 74 declared to be in conflict with previous Tourism Growth and ' 75 Investment Special Revenue fund ordinances and any Agriculture 76 Reserve Program ordinances, this ordinance shall take precedent. ' 77 Adopted by the Council of the City of Virginia Beach, 78 Virginia, on the 15th day of May, 2001. CA-8120 ordin/noncode/16explifundord.wpd R-7 May 10, 2001 APPROVED AS TO CONTENT APPROVED AS TO LEGAL SUFFICIENCY: Managem nt S rvices Iw epartment 1 1 3 _ 1 ) 1 AN ORDINANCE ESTABLISHING THE TOURISM INVESTMENT 2 PROGRAM (TIP) FUND AND CONSOLIDATE THE MAJOR PROJECTS 3 AND TOURISM GROWTH AND INVESTMENT(TGIF) FUNDS INTO THE 4 TOURISM INVESTMENT PROGRAM FUND IN THE FY 2011-12 5 OPERATING BUDGET . 6 WHEREAS, the Tourism Growth and Investment (TGIF) fund was established in FY 1993-94 to provide funding for 7 tourism related capital projects and initiatives with dedicated revenue streams of ten cents of the Amusement Tax, two 8 cents of the Hotel Room Tax and one-half cent of the Hotel Room Tax for Beach Events, as well as other miscellaneous 9 tourism related revenue;and 10 11 WHEREAS, the Major Projects fund was established in FY 2001-02 to provide funding for the rebuilding of the i. 12 Convention Center,the Sandler Center for the Performing Arts and the expansion of the Virginia Aquarium parking facilities 13 with dedicated revenue streams of 80% of the Amusement tax diverted from TGIF, 2.5 cents of the Hotel Room Tax, 0.56 14 cents of the Restaurant Meal Tax and 5 cents of the Cigarette Tax;and • 15 16 WHEREAS, consolidation provides the necessary opportunities for future Strategic Growth Areas as well as 17 Economic Development projects while continuing to cover the debt obligations and operating programs previously .. 18 authorized by City Council. 19 20 NOW,THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF VIRGINIA BEACH,VIRGINIA: 21 " 22 (1) That the Tourism Investment Program (TIP) fund is hereby created to consolidate the Tourism Growth and 23 Investment(TGIF)and Major Projects funds; 24 I 'S (2) That the dedicated revenue streams of both the Tourism Growth and Investment (TGIF) fund and Major o Projects funds are hereby dedicated to the Tourism Investment Program (TIP)fund beginning in the FY 2011-12 Operating 27 Budget; 28 I 29 (3) That all programs and currently supported initiatives of both the Tourism Growth and Investment(TGIF)fund 30 and Major Projects fund are hereby supported by the Tourism Investment Program (TIP) fund beginning in the FY 2011-12 31 Operating Budget. " 32 k 33 BE IT FURTHER ORDAINED:That this ordinance shall be effective on July 1,2011. 34 35 Adopted by the City Council of the City of Virginia Beach,Virginia,on this 10th day of May,2011. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: t-b Cr Aa Q 13_y\aJ.L6;2 Management Services ,Si>,,r� ffi i Requested by Councilman Linwood O. Branch, III 1 AN ORDINANCE ESTABLISHING THE TOURISM GROWTH 2 AND INVESTMENT SPECIAL REVENUE FUND, 3 TRANSFERRING AND APPROPRIATING CERTAIN 4 REVENUES TO SUCH FUND, DIRECTING THE CITY 5 MANAGER TO BUDGET THE RECEIPT AND EXPENDITURE 6 OF TGIF FUNDS, ESTABLISHING THE RESORT AREA 7 ADVISORY COMMITTEE AS THE SPECIAL FUND 8 OVERSIGHT COMMITTEE, EXPANDING THE MEMBERSHIP 9 OF RAAC AND DIRECTING THE AMENDMENT OF ITS 10 BYLAWS, ESTABLISHING REVENUES OF THE TGIF 11 SPECIAL REVENUE FUND, AND ESTABLISHING THE 12 TGIF PROJECTS 13 WHEREAS, the City Council has approved the Tourism Growth ' 14 and Investment Program ("Program") in the Fiscal Year 92/93-98/99 15 CIP, including revenues and projects, and recognizes that such 16 Program and funding may be modified in future years; ' 17 WHEREAS, the City Council desires that the Program be 18 budgeted and financially reported in such manner as to permit the 19 separate display of Program financing and status; and 20 WHEREAS, the City Council will establish an oversight ' 21 committee and desires such committee to receive information and 22 provide advice to the Council from time to time; 23 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY 24 OF VIRGINIA BEACH, VIRGINIA: 25 That the following policies are established: ' 26 1. That the City Manager will cause to be established 27 a Tourism Growth and Investment Special Revenue 28 Fund (the "Special Revenue Fund") to account for 29 revenues and expenditures, including inter-fund 30 transfers related to the Program. All funds 31 received that are related to the Special Revenue 32 Fund shall be annually appropriated, and 33 transferred from the general fund to the Special 34 Revenue Fund on a monthly basis in accordance with 35 appropriate governmental accounting procedures. 36 Funds shall be annually appropriated and 37 transferred monthly from the Special Revenue Fund 38 to the Debt Service and/or Capital Projects Fund. I 39 When there are multiple capital project funding 40 sources, Special Revenue Fund funds will be assumed 41 to be the first dollars spent. 42 2. That as to the two revenue sources of the Special 43 Revenue Fund which were effective January 1, 1993, 44 i.e. , one-half cent (4) of the five and one-half 45 (51/2 ) hotel room tax, and revenues derived from the 46 admissions tax on participatory sports, and whose 47 revenues have not been appropriated, such funds 48 received between January 1 and June 30, 1993, shall 49 be received into the general fund and are hereby _ 50 transferred to and appropriated for the purposes of 51 the Special Revenue Fund. 52 3. That beginning July 1, 1993, the City Manager will 53 cause the Special Revenue Fund to be budgeted in 54 the operating budget, and will cause a display of 55 an overall summary of the Program and the current 56 and projected financing and activities of the 57 Special Revenue Fund, as well as project detail 58 sheets, to be included in future capital 59 improvement programs. 60 4. That the responsibilities of the Resort Area _ 61 Advisory Commission ("RAAC") are hereby expanded to 62 include oversight of the Special Revenue Fund. 63 5. That it is the intent of Council that the Special 64 Revenue Fund be utilized for capital projects 65 specifically designated by Council to promote and 66 increase tourist visitation and to improve the 67 quality of life for the residents of this City. It 68 is the further intent of Council that the integrity 69 of the Special Revenue Fund be maintained. Changes .. 70 by Council will be made in consultation with the 71 City Manager and the oversight committee. Final _ 72 authority for current and future appropriations to 2 73 the Fund and the projects rests exclusively with 74 the City Council. 75 6. That the City Manager shall provide the RAAC with ■ 1 76 quarterly updates on the Fund and projects, 77 beginning June 1, 1993. The RAAC shall make annual I78 recommendations to the City Manager regarding the 79 TGIF section of the CIP and make an annual report I80 to Council regarding the Special Revenue Fund and 81 TGIF projects. 82 7. That the RAAC shall be expanded to include up to, 83 but not more than, eighteen (18) members, and that 84 the by-laws of the RAAC shall be amended consistent 85 with the provisions of this Ordinance. 86 BE IT FURTHER ORDAINED: ' 87 Subject to annual appropriations, the following revenue 88 sources will be used to pay the costs of the TGIF Program and are I89 in addition to those TGIF costs directly paid from the revenues of 90 the Virginia Marine Science Museum, golf course, parking, and 91 amphitheater (if and as established) enterprise funds: N 92 1. One-half cent (1/20) of a total five and one-half 93 cents (550) hotel room tax, effective January 1, 94 1993, and two cents (20) of a total five and one- 95 half cents (510) hotel room tax, effective July 1, I96 1993; 97 2. One half cent (1/20) of a total four and one-half I98 cents (410) restaurant meal tax, effective July 1, 99 1993; I100 3. Reallocation of funding now provided to the 101 Oceanfront Events Program up to $200,000 per year; I 102 4. Fees derived from Resort Area franchises; 103 5. Revenues derived from the levy of the admissions I 104 tax on participatory sports, effective January 1, 105 1993, and revenues derived from all other 106 admissions taxes, effective July 1, 1993; IIMI L � 3 II I 107 6. Virginia Marine Science Museum net revenues in 108 excess of costs of operations, maintenance, 109 depreciation, debt service, indirect support, and 110 renewal and replacement; 111 7. Golf course net revenues derived from City of 112 Virginia Beach courses (whether owned or leased) in 113 excess of costs of operations, maintenance, 114 depreciation, indirect support, renewal and 115 replacement, and debt service; 116 8. Revenues from the proposed amphitheater in excess 117 of all operations and maintenance costs, — 118 depreciation, debt service, and return on City 119 investment; 120 9. Parking fees from City-owned, leased, or managed 121 lots and meters in excess of the costs of — 122 operations, maintenance, depreciation, indirect 123 support, renewal and replacement, and debt service; 124 and — 125 10. Fines from parking tickets. 126 BE IT FURTHER ORDAINED: — 127 That the following capital projects are those initially 128 established as the Tourism Growth and Investment Program and shall — 129 be the only activities authorized under the Program unless and 130 until modified or amended by City Council as a part of the CIP or 131 operating budget deliberations: 132 1. Virginia Marine Science Museum Expansion; — 133 2. Convention Center - The City Manager will undertake 134 a site and, as necessary, feasibility study with 135 regard to conference/convention facilities prior to — 136 engaging in design or construction activities and 137 present such report to Council for action; — 138 3. Golf Courses; 139 4. Amphitheater; 140 5. 31st Street and Gateway Corridor Improvements; 141 6. 24th Street Park Improvements; 4 i 142 7. Existing Streetscape Project, including Sidestreets 143 and Connector Parks; 144 8. Rudee Walk; and 145 9. Resort Area Parking Replacement. I146 Adopted by the Council of the City of Virginia Beach, 147 Virginia, on the 9 day of Bab= 7,77 , 1993. I 148 CA-4880 149 ORDIN\NONCODE\TOURISM.ORD 150 R-5 151 PREPARED: 02/03/93 I I I I I I I I I I I 1 5 I mg Requested by Councilmember Linwood 0. Branch, III 1 AN ORDINANCE ESTABLISHING THE TOURISM 2 ADVERTISING PROGRAM SPECIAL REVENUE FUND 3 WHEREAS, City Council has amended section 35-159 of the 4 City Code by adding a flat tax of one dollar for each night of 5 lodging at any lodging place other than a campground ("Flat Lodging 6 Tax") , with the proceeds to be used for the purpose of increasing 7 the City's budget for its advertising and marketing program 8 ("Advertising Program") ; I 9 WHEREAS, City Council desires that the proceeds from the 10 tax be budgeted and financially reported in such manner as to I 11 permit the separate display of revenues and expenditures; and 12 WHEREAS, City Council has established the Virginia Beach I 13 Advertising Advisory Committee whose purpose is (i) to review the 14 City's advertising program and marketing strategy, (ii) to make 15 recommendations to the Department of Convention and Visitor I16 Development regarding advertising and marketing initiatives and 17 strategies designed to foster and stimulate the growth of tourism I18 within the City, and (iii) on or before February 15, 1996, to 19 prepare and submit to the City Manager, for his review and I 20 consideration, a recommended budget for the Tourism Advertising 21 Program Special Revenue Fund for fiscal year 1996-97 which does not I22 exceed the estimated revenues available to such Fund as determined 23 by the Department of Management Services. I 24 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE 25 CITY OF VIRGINIA BEACH, VIRGINIA: 26 1. That the City Manager is hereby authorized and I27 directed to establish a Tourism Advertising Program Special Revenue 28 Fund (the "Special Revenue Fund") to account for revenues and I29 expenditures, including inter-fund transfers related to the 30 Program. All revenues received in the General Fund that are I31 related to the Special Revenue Fund shall be annually appropriated, 32 and transferred from the General Fund to the Special Revenue Fund I33 on a monthly basis in accordance with appropriate governmental 34 accounting procedures; I 1 ---- 35 2. That revenues received from the Flat Lodging Tax 36 shall be received and appropriated to the Special Revenue Fund for 37 use in the Advertising Program, except that such funds generated by 38 lodging places (other than hotels, motels, and travel campgrounds) 39 located in the Sandbridge Special Service District area shall be 40 used to supplement the financing of beach and shoreline management ' 41 and restoration in such District; 42 3. That in addition to the Flat Lodging Tax, revenues 43 from one cent of the percentage-based portion of the transient 44 lodging tax and one-half cent of the restaurant meal tax received 45 into the General Fund shall be transferred and appropriated to the 46 Special Revenue Fund for use in the Advertising Program; and 47 4. That the City Manager is hereby authorized to make ' 48 adjustments to the appropriations and revenues of the FY 1995-96 49 Operating Budget to institute the formation of the Special Revenue 50 Fund; 51 5. That, beginning July 1, 1996, the City Manager is 52 hereby authorized and directed to cause the Special Revenue Fund to — 53 be budgeted in the operating budget, and to display an overall 54 summary of the revenues and expenses of the Advertising Program; — 55 6. That it is the intent of City Council that the 56 Special Revenue Fund be utilized for the Advertising Program for 57 advertising, promotion, marketing, and related activities including 58 the operation of the Visitor Information Center to promote and 59 increase tourist visitation to this City. It is the further intent 60 of Council that the integrity of the Special Revenue Fund be 61 maintained. Changes by Council will be made in consultation with 62 the City Manager and the Virginia Beach Advertising Advisory 63 Committee; provided, however, that final authority for current and _ 64 future appropriations to the Fund shall rest exclusively with the 65 City Council. 66 7. Notwithstanding any provision herein to the 67 contrary, in the event City Council appropriates an amount to the 68 Advertising Program that is less than the amount of estimated 69 revenues available to the Fund, those revenues representing the 2 M 70 difference between the amount appropriated to the Advertising 71 Program and the amount available to the Fund shall be appropriated 72 to CIP Project No. 2-255 (Conference/Convention Facility Expansion 73 Planning) . 74 BE IT FURTHER ORDAINED: 75 That subject to annual appropriations, and to the 76 provisions of this ordinance, the following revenue sources will be 77 used to pay the costs of the Advertising Program: 78 1. One (1) cent of the total five and one-half (5-1/2) 79 cents percentage-based portion of the transient lodging tax, 80 effective July 1, 1995; 81 2. One-half (1/2) cent of the total four and one-half 82 (4-1/2) cents restaurant meal tax, effective July 1, 1995; 83 3. A flat tax of one dollar ($1.00) for each night of 84 lodging at any lodging place other than a campground, with the 85 exception of those additional revenues generated by lodging places ' 86 (other than hotels, motels, and travel campgrounds) located in the 87 Sandbridge Special Service District area, effective September 1, 88 1995; and 89 4. Revenues produced by and in support of the Visitor 90 Information Center. 91 Adopted by the Council of the City of Virginia Beach, ' 92 Virginia on the 22 day of August , 1995. ' CA-6015 ORDIN\NONCODE\TOURFUN.LIN R-2 PREPARED: 08/23/95 APPRO a 0 • TO CONTENT 71 ' Manager- t Services APPROVED AS TO LEGAL SUFFICIEN epartment of Law i 3 1 I I I I - 1FTVS I DRAFT MARKET ANALYSIS I Proposed Headquarters Hotel IVIRGINIA BEACH,VIRGINIA I .. .116r ` . A 4f fx s to Y "` .+m,,.,e, ter. , jjJJ +�.. ash' .k x { T a 1 3 .., - y . 40 SUBMITTED TO: PREPARED BY: IMr.Brad Van Dommelen HVS Convention,Sports&Entertainment Virginia Beach Convention&Visitors Bureau Facilities Consulting 2101 Parks Avenue,Suite 500 205 West Randolph,Suite 1650 I Virginia Beach,Virginia,23451 Chicago,Illinois 60606 +1 (757)385 4700 +1(312)587-9900 I I ii` s June 20, 2018 Mr.Brad Van Dommelen 205 West Randolph Virginia Beach Convention&Visitors Bureau Suite 1650 2101 Parks Avenue,Suite 500 Chicago,Illinois 60606 Virginia Beach,Virginia,23451 +1312-587-9900 +1 (757) 385-4700 +1312-488-3631 FAX BvanDomm@visitvirginiabeach.com www.hvs.com Re: Proposed Hotel Virginia Beach,Virginia Atlanta Boston Dear Mr.Dommelen: Boulder Chicago Attached you will find our Market Study of the Proposed Hotel in Virginia Beach, Dallas Denver Virginia. Las Vegas Mexico City We certify that we have no undisclosed interest in the property, and our Miami employment and compensation are not contingent upon our findings.This study is Nassau subject to the comments made throughout this report and to all assumptions and New York limiting conditions set forth herein. Newport San Francisco It has been a pleasure working with you.Please let us if you have any questions. Toronto Vancouver Sincerely, Washington Athens HVS Convention,Sports&Entertainment Buenos Aires Facilities Consulting Dubai Hong Kong Lima London Draft Madrid Mumbai New Delhi Sao Paulo Catherine Sarrett Shanghai Senor Director Singapore Draft 1 Brian Harris Director I 1 I l l vS I I Table of Contents I I SECTION TITLE PAGE 1. Summary of Salient Data and Conclusions 4 2. Description of the Site and Neighborhood 13 I3. Virginia Beach Market Overview 20 4. Impact on Convention Center 29 I S. Supply and Demand Analysis for the Proposed Hotel 41 6. Average Rate Analysis for the Proposed Hotel 67 7. Projection of Income and Expense for the Proposed Hotel 70 8. Projection of Income and Expenses for the Convention Center 81 9. Economic&Fiscal Impact Analysis 88 I 10. Statement of Assumptions and Limiting Conditions 97 11. Certification 99 Addenda Penetration Explanation 100 I I I I I I I I I 1 i 1. Summary of Salient Data and Conclusions I Subject of the The Virginia Beach Convention & Visitors Bureau ("VBCVB") engaged HVS Market Study Convention, Sports, and Entertainment Facilities Consulting ("HVS") to conduct a Market Study of a proposed convention center headquarters hotel ("Proposed Hotel"). The site's location has not been finalized but will be proximate to the Virginia Beach Convention Center ("VBCC"). For the purpose of this study HVS assumes the property will open on July 1, 2021, and will feature a 400-room full- service hotel a restaurant, a lounge, a coffee shop, 37,400 square feet of meeting space, a pool, a whirlpool, an exercise room, a business center, a gift shop, and a guest laundry room. The hotel would also include back-of-the-house space necessary to support full-service hotel operations. The term "headquarters" is given to a hotel,which serves as the one in the center of operations for an event occurring in the City's convention center. This hotel typically dedicates the largest room block to the event, sometimes devoting up to 90% of its rooms during the peak day(s) of the convention event. The headquarters property also serves the food and beverage needs of the group (outside of those held in the VBCC) at receptions,lunches, and dinners. While the VBCC provides food for large-scale exhibits and meetings, the Proposed Hotel would support ancillary meetings and pre-and post-group events. The Proposed Hotel would feature one of the larger room counts and ballrooms in the market. The most prominent brands for a convention headquarters hotel include Hyatt, Hilton, Marriott, Starwood's Westin,and Sheraton brands, Gaylord, Omni,Loews,and Peabody. Methodology This study employs the methodology illustrated in the figure below. 1 I I 1 DRAFT June 20,2018 Summary of Salient Data and Conclusions Proposed Headquarters Hotel-Virginia Beach,Virginia 4 I I S I I FIGURE 1-1 ' HOTEL MARKET STUDY METHODOLOGY Research Potential Competitive Hotels Economic Indicators Competitive Set Analysis Induced Demand *AK R OcciigitheV ifstfmt s ' Unaccommodated ' Demand Occupancy and ADR Proposed Headquarters Forecasts by Market Hotel Market Penetration ' Room Supply Changes Segment Comparable Hotel Estimate of Proposed Inflation and Market Operating Data Headquarters Hotel ' Growth Assumptions Financial Operations HVS 1) analyzed the historical performance of a competitive set of hotels, ' 2) estimated the amounts of induced and unaccommodated demand in the market, and 3) researched potential changes in room supply. Based on these hotel market trends and economic and demographic indicators of future changes in hotel ' demand, HVS projected the future performance of a competitive set of hotel properties.Through a market penetration analysis,we estimated the average daily room rate and occupancy of the Proposed Hotel in each of three market ' segments—commercial,meeting&group,and leisure.An estimate of average daily room rates and occupancies generates a projection of room revenues,which,when combined with the operating data on comparable hotels,yields a ten-year estimate of financial operations. The methodology used to develop this study is based on the market research and valuation techniques set forth in the textbooks authored by Hospitality Valuation Services for the American Institute of Real Estate Appraisers and the Appraisal Institute, entitled The Valuation of Hotels and Motels,1 Hotels, Motels and ' I Stephen Rushmore, The Valuation of Hotels and Motels. (Chicago: American Institute of Real Estate Appraisers, 1978). DRAFT June 20,2018 Summary of Salient Data and Conclusions C Proposed Headquarters Hotel-Virginia Beach,Virginia `� I IIT's 1 Restaurants: Valuations and Market Studies,2 The Computerized Income Approach to Hotel/Motel Market Studies and Valuations,3 Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations,4 and Hotels and Motels - Valuations and Market Studies.s All information was collected and analyzed by the staff of HVS Convention,Sports&Entertainment Facilities Consulting. Pertinent Dates The effective date of the report is June 20,2018.Catherine Sarrett and Brian Harris inspected the VBCC, and possible sites for the Proposed Hotel on February 22, 2018. Ownership, Franchise, The ownership of the Proposed Hotel was not determined as of the date of this and Management study. The Proposed Hotel would be on a site adjacent to the VBCC and built on Assumptions land owned by the VBCC. The site would be leased on a long-term basis to the ownership of the Proposed Hotel for a$1 a year. Details pertaining to management terms were not yet determined at the time of this report; however, we assume that the Proposed Hotel will be managed by a professional hotel-operating company,with fees deducted at rates consistent with current market standards. We have assumed a market-appropriate total management fee of 3.0%of total revenues in our study. A brand has not been selected for the Proposed Hotel, and the terms of the franchise agreement have not been determined. For purposes of this study a franchse fee of 5.00% of gross room revenues and 3.00% of food and beverage sales, plus a 4.00% of gross room revenues program fee has been included in the expenses of operation. Summary of Hotel The following figure provides a long-term perspective on the supply and demand Market Trends trends for a set of competitive hotels selected by HVS,with data provided by STR. Smith Travel Research ("STR") is an independent research firm that compiles data on the lodging industry. HVS selected these hotels based on their potential to compete with the Proposed Hotel. Stephen Rushmore, Hotels, Motels and Restaurants: Valuations and Market Studies. (Chicago:American Institute of Real Estate Appraisers, 1983). 3 Stephen Rushmore, The Computerized Income Approach to Hotel/Motel Market Studies and Valuations. (Chicago:American Institute of Real Estate Appraisers, 1990). Stephen Rushmore, Hotels and Motels: A Guide to Market Analysis, Investment Analysis, and Valuations(Chicago:Appraisal hlstitute, 1992). 5 Stephen Rushmore and Erich Baum, Hotels and Motels Valuations and Market Studies. (Chicago:Appraisal Institute,2001). DRAFT June 20,2018 Summary of Salient Data and Conclusions Proposed Headquarters Hotel-Virginia Beach,Virginia V I I I I FIGURE 1-2 HISTORICAL COMPETITIVE HOTELS TRENDS I • $160 80% I $120 --- 60% $100 50% I $80 .- .L �-_� a: --- ". - - :... - - •,"! - 40% $60 30% $40 ADR — — —RevPAR Occupancy 20% I $20 i ._. 10% $0 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ISource:STR Revenue per available room, ("RevPAR") is a common hotel industry performance I metric, calculated by multiplying the occupancy rate by ADR and provides a combined measure of rate and occupancy. The competitive hotels have shown consistent growth in RevPAR from 2014 through 2017. IThe following figure reflects our estimates of operating data for hotels in the primary and secondary competitors for the years 2015 through 2017. IFIGURE 1-3 WEIGHTED HISTORICAL SUPPLY,DEMAND,AND PRICE(2015—2017) Accommodated Room Nights Room Nights Available Hoteh Competitive Competitive Competitive Year Hotels ADR Hotels RevPAR Occupancy Amount I2015 514,000 766,000 67.1% $147.63 $99.06 2016 524,000 766,000 68.4% $151.73 $103.79 2017 586,000 856,000 68.5% $154.00 $105.42 IPercent Change 2016 1.9% 0.0% 1.9% 2.8% 4.8% 2017 11.8% 11.7% 0.1% 1.5% 1.6% ISince 2015, accommodated room nights increased by 14%, while the number of available room nights increased by 11.7%.As a result,market occupancy increased I (2%) during the same period. Average daily room rate grew (4.3%) since 2015. IDRAFT June 20,2018 Summary of Salient Data and Conclusions -7 Proposed Headquarters Hotel-Virginia Beach,Virginia / I I 1-1-VS I I The combined effect of changes in occupancy and ADR caused RevPAR to grow I (6.4%) over the three-year period analyzed here. Most Recent Twelve HVS also analyzed the recent changes in the competitive hotels over the last 12 I Months Demand months as reported to STR. FIGURE 1-4 I UNWEIGHTED HISTORICAL 12 MONTH DEMAND TRENDS Month Occupied Prior Year Change Percentage I Room Nights Feb-17 47,660 44,252 3,408 7.7% Mar-17 66,535 61,858 4,677 7.6% I Apr-17 75,322 68,683 6,639 9.7% May-17 79,814 70,621 9,193 13.0% Jun-17 90,375 75,263 15,112 20.1% I Jul-17 94,243 85,075 9,168 10.8% Aug-17 93,329 83,306 10,023 12.0% Sep-17 79,434 69,919 9,515 13.6% Oct-17 80,249 65,727 14,522 22.1% I Nov-17 64,375 57,893 6,482 11.2% Dec-17 52,487 45,503 6,984 15.3% Jan-18 52,945 46,820 6,125 13.1% 12 Month Total 876,768 774,920 101,848 13.1% 1 Source:STR Demand within the competitive set showed very strong growth over the last 12 months. A major factor in the increase in demand is the opening of the Hilton Norfolk The Main and the Hyatt House Virginia Beach in 2017.The properties are included in the competitive set. I Summary of Forecast To forecast the occupancy of the Proposed Hotel, HVS performed a market Occupancy and penetration analysis of three market segments. The following figure summarizes I Average Rate estimates of accommodated room night demand by market segment,assuming the Proposed Hotel begins operation on July 12021. I I I DRAFT June 20,2018 Summary of Salient Data and Conclusions I Proposed Headquarters Hotel-Virginia Beach,Virginia C7 i t i FIGURE 1-5 ' PROPOSED HOTEL FISCAL YEAR ESTIMATED ROOM NIGHT ABSORPTION BY MARKET SEGMENT 2021/22 2022/23 2023/24 2024/25 Available Room Nights 146,000 146,000 146,000 146,000 Absorption by Segment Commercial 18,100 19,400 20,000 20,000 ' Meeting and Group Leisure 48,500 53,900 57,100 58,400 20,600 22,500 23,500 23,600 Total Absorption 87,200 95,800 100,600 102,000 ' Projected Occupancy 60% 66% 69% 70% Percent Segmentation ' Commercial 21% 20% 20% 20% Meeting and Group 56% 56% 57% 57% Leisure 24% 23% 23% 23% The Proposed Hotel will open on July 1,2021, and take four years to stabilize. In a stabilized year of demand, the property could absorb room nights and achieve a stabilized occupancy level of 70%. ' The extensive meeting space, the largest amount in the local market, would allow the property to attract meeting and group with an above market average daily rate ("ADR"). In positioning the ADR, we also consider the full-service product, new ' construction,adjacency to the VBCC and Sports Center,expected strong brand,and near beach location.We positioned the ADR in the base year 2017 at$150.00. ' This rate would grow with inflation and in proportion to the rate growth in the competitive set.The positioned ADR is before the discount of 3% in 2021/22,and 1%in 2022/23 as the hotel is stabilizing in the market.The figure below compares ' the estimated average daily rate of the Proposed Hotel with that of the competitive hotels for fiscal years starting July 1. I I DRAFT June 20,2018 Summary of Salient Data and Condusions Proposed Headquarters Hotel-Virginia Beach,Virginia 9 1.1 vs FIGURE 1-6 FISCAL YEAR COMPETITIVE HOTELS& PROPOSED HOTEL AVERAGE RATE FORECAST Competitive Hotels Proposed Hotel Base Year 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 r Competitive Hotels 154.00 159.04 163.02 167.09 171.27 175.55 179.94 184.44 Proposed Hotel 150.00 154.90 158.77 162.74 161.80 169.27 175.25 179.63 Summary of Forecast HVS supports its estimates of revenue and expense levels using comparable Income and Expense operations or trends specific to this market.The following figure presents the HVS Statement forecast of income and expense for a stabilized year of operation. DRAFT June 20,2018 Summary of Salient Data and Conclusions Proposed Headquarters Hotel-Virginia Beach,Virginia I I I FIGURE 1-7 FINANCIAL OPERATIONS IN THE STABILIZED YEAR(2024/25) ISTATISTICS Number of Rooms 400 Occupied Room Nights 102,200 I Occupancy 70% Average Rate $179.63 RevPAR $125.74 I $000 %of Gross Operating Revenue I Rooms $18,358 63.6% Food 8,609 29.8% Beverage 1,230 4.3% Other Operated Departments 492 1.7% I Miscellaneous Income 154 $28, 0.5% Total Operating Revenues 843 100% Departmental Expense* I Rooms $4,222 23.0% Food &Beverage 6,494 66.0% Other Operated Departments 320 65.0% I Total Expenses Departmental $11,036 38.3% Income $17,807 61.7% Undistributed Operating Expense I Administrative &General $2,070 7.2% Marketing 2,166 7.5% Franchise Fee 1,947 6.8% I Prop.Operations &Maint. 1,059 3.7% Utilities 1,203 4.2% Info &Telecom Systems 265 0.9% Total Expense $8,711 30.2% I Gross House Profit $9,096 31.5% Management Fee 865 3.0% Income Before Non-Opr.Inc.&Exp. $8,231 28.5% I Non-Operating Income&Expense Property Taxes $721 2.5% Insurance 241 0.8% I Reserve for Replacement 1,154 4.0% Total Expense 2,115 7.3% EBITDA Less Reserve $6,115 21.2% I °Departmental expense ratios are calculated as a percentage of departmental revenue. 1 DRAFT June 20,2018 Summary of Salient Data and Conclusions 11 Proposed Headquarters Hotel-Virginia Beach,Virginia I i 1 The Proposed Hotel is expected to stabilize at a profitable level.Please refer to the Projection of Income and Expense for the Proposed Hotel chapter of our report for a detailed explanation of the methodology used in deriving this forecast. ' Extraordinary An extraordinary assumption is one which relates directly to the subject hotel Assumptions development and which, if found to be false, could alter our opinions or conclusions. Extraordinary assumptions presume as fact otherwise uncertain information about physical, legal, or economic characteristics of the subject property, or about conditions external to the property such as market conditions or trends, or about the integrity of data used in an analysis. An extraordinary assumption may be used in the analysis only if it is required to develop credible options and conclusions; a reasonable basis exists for the assumption, use of the extraordinary assumption results in a credible analysis. HVS discloses the use of any extraordinary assumption. In addition to the normal hotel development assumptions that would apply to any hotel,the projections of the subject hotel's occupancy and rates are dependent on a few extraordinary assumptions. • The Proposed Hotel is built at a site proximate to the VBCC. I • The Sports Center is opened by April 2020 and would induce a total of 90,900 room nights into the total Virginia Beach market including hotel outside of the competitive set. Our analysis does not address unforeseeable events that could alter the proposed project and the market conditions reflected in the analyses; we assume that no significant changes, other than those anticipated and explained in this report, would take place from the date of inspection to the date of this report.Our findings are subject to all the assumptions and limiting conditions described herein. The reader should contact the authors with any questions after reading the report. I I I DRAFT June 20,2018 Summary of Salient Data and Conclusions 1 2 Proposed Headquarters Hotel-Virginia Beach,Virginia 1 1 I S I 2. Description of the Site and Neighborhood The suitability of the land for the operation of a lodging facility is an important consideration affecting the economic viability of a property and its ultimate marketability. The site for the Proposed Hotel will be proximate to the VBCC. The ' specific site was not selected as of the date of this study. The key site characteristics that affect the viability of a hotel property include its capacity to accommodate the project, accessibility, visibility, and supporting road and utility 1 infrastructure. Ownership,Franchise, The ownership of the Proposed Hotel was not determined as of the date of this and Management study. The property could be managed by a brand operator or an independent Assumptions third-party hotel operator. For purposed of this study, we have assumed the property would enter into a franchise agreement with a national brand and contract with a third-party manager. The Proposed Hotel would be marketed by Ihotel staff,through brand marketing services,and the VBCC. Site Destination appeal is a critical factor in choosing a site. Facilities alone do not create a competitive advantage. The vitality of the neighborhood surrounding a hotel creates destination appeal. The site will be proximate to the VBCC,which is illustrated in the following map. I I I DRAFT June 20,2018 Description of the Site and Neighborhood P g 13 Proposed Headquarters Hotel-Virginia Beach,Virginia I I VIEW OF THE VBCC I ' '� , 1 _ "lbI 4 4 p ti ,�,>, ��tui} .; VBCC 4} it,A.li S / L ... , , ,1..1/ ,e, f` ~ ,...., .. , _ ,, ,,.., . , „ „, , __, ti_ 44 I ' r e �Yr� ert �� w•N M1 r .�,i k�' �- _. ii" -�' I 1 # A. 4 , }y r A. - 1` ' ,. t' . _ t.. .rak ;t Access and Visibility The site provides good regional access. A variety of regional routes serve in the Proposed Hotel's market,as illustrated on the following map. I REGIONAL ACCESS 4 Ghipiinep..le I ii1'• Ir . hi' 1k Ia1rvNt I ta)r,rlh-rp p\,t rtA4ft) _ Pep ig �' M ,, tf vNr•1. Newport Wi'wr: I C h1,1 '.urrgpn Boncb Wortolka .,sr 1 r -. ,rh-- r,E441n Cnera r, pfakr _ ht'CrtMf ` ' twr fl i.s N.,,aha• ..t CIO a I 1. ir•`w.e•'Y' •'w its L :10 et!ff 7e^+'A d't.Ng sfpM,'"i[r.::: DRAFT June 20,2018 Description of the Site and Neighborhood ^i I Proposed Headquarters Hotel-Virginia Beach,Virginia 1`t I I I V S I I Interstate 264/22nd Street and Norfolk Virginia Beach Expressway provide excellent access to the site,as illustrated on the following map. I LOCAL ACCESS I ttOR 1 lit A. 1 vtkGirtft, Crtet-1 t Virginia Beach O r f 1211est I r i I I I 'itt Vtsania Aquarium 8 Nuisances The VBCC did not inform HVS of any site-specific nuisances or hazards at the I and Hazards proposed sites,and there were no visible signs of toxic ground contaminants at the time of our inspection. Because we are not experts in this field,we do not warrant the absence of hazardous waste and urge the reader to obtain an independent Ianalysis of these factors. Flood Zone According to the Federal Emergency Management Agency map illustrated below, Ithe proposed sites are in flood zone x. I I IDRAFT June 20,2018 Description of the Site and Neighborhood P g 15 Proposed Headquarters Hotel-Virginia Beach,Virginia I I IiVVS I I COPY OF FLOOD MAP AND COVER 1 C.\,...t- , \{ ION , — X ZONE M - • yr: roFw x _ jir �. Ali , �y� = -. p11fE y 2, 0 X = MN _ F1001SMACf P&h MP ayy WME x WWI te_ ,„r CS...-.,-.: )) 4thr '. .s'-- �, �L.,:xS. ut.Ao:, _sz,iPtWEE► , -.• tir;;x3, imr+rr r m ZONE% r - 1 - C ZONE% ---� .. ... PONE% [MUM AMMO • t i, NWMU& 3 ,,.� NTNNFP LIMO I --_____"r--. _•. v;. .� * i N : [-. : :- i i fif. . -r-....s v.e✓ The flood zone definition for the x designation is as follows: The areas of minimal I flood hazard, which are the areas outside the Special Flood Hazard Area and higher than the elevation of the 0.2-percent-annual-chance flood,are labeled Zone C or Zone X. Zoning According to the local planning office,the subject property is zoned as follows: RT- 3 - Resort Tourist District,which allows for most commercial uses, including small office complexes, retail centers, service industries, and hotels and motels. We assume that all necessary permits and approvals will be secured (including appropriate liquor license if applicable) and that the subject property will be constructed in accordance with local zoning ordinances, building codes, and all other applicable regulations. The local zoning requires a minimum of one parking space per hotel room. Our zoning analysis should be verified before the start of construction at the site. Height Restriction The Federal Aviation administration ("FAA") issued a notice on the height of i allowed development during the prior study of a headquarters hotel at the VBCC. The FAA stated that development near the VBCC may not exceed 110 feet above ground,as shown below. DRAFT June 20,2018 Description of the Site and Neighborhood I Proposed Headquarters Hotel-Virginia Beach,Virginia 1V I IIVS I I I FAA-NOTICE OF PRESUMED HAZARD-HEIGTH RESTRICTION **NOTICE OF PRESUMED HAZARD** The Federal Aviation Administration has conducted an aeronautical study under the provisions of 49 U.S.C.. Section 44718 and if applicable Title 14 of the Code of Federal Regulations.part 77,concerning: ' Structure:Location: Building Project 11 Virginia Beach.VA Latitude: 36-50-40.73N NAD 83 Longitude: 75-59-09.10W Heights: 207 feet above ground level(AGL) 217 feet above mean sea level(AMSL) Initial findings of this study indicate that the structure as described exceeds obstruction standards and'or would ' have an adverse physical or electromagnetic interference effect upon navigable airspace or air navigation facilities.Pending resolution of the issues described below.the structure is presumed to be a hazard to air navigation. ' Any height exceeding 110 feet above ground level(120 feet above mean sea level),will result in a substantial adverse effect and would warrant a Determination of Hazard to Air Navigation. ' The City may seek an update from the FAA concerning the height restriction.The City may also seek relief from this interpretation and will serve as an active participant along with the developer in seeking a final height determination from ' the FAA.For the purposes of this study,we assume that the design of the building will conform to FAA standards. Easements and We are not aware of any easements attached to the possible sites that would IEncroachments significantly affect the utility of the property or marketability of this project. Description of the The quality of a lodging facility's physical improvements has a direct influence on I Proposed Hotel marketability, occupancy, and average room rate. The design and functionality of the structure can also affect operating efficiency and overall profitability. HVS assumes that the hotel will be full-service and with the finish typical of a first- class, convention headquarters hotel. The hotel is expected to be of high quality, conforming at a minimum to the brand specific guidelines set forth by the chosen brand. Our forecast assumes that the property will be maintained in a competitive ' condition, undergoing regular renovations of soft goods and case goods funded primarily by a reserve for replacement. ' For this analysis,we assume that the Proposed Hotel would be financed sometime in 2019 and after a two year design and construction period,the hotel would open on July 1, 2021. The following figure shows the features of the Proposed Hotel. I DRAFT June 20,2018 Description of the Site and Neighborhood 17 Proposed Headquarters Hotel-Virginia Beach,Virginia I H VS I FIGURE 2-1 PROPOSED HOTEL FACILITIES Guestroom Configuration Number of Units Kings 150 Queen/Queen 234 Suites 16 Total (ADA-Compliant Rooms per Local Code) 400 Seating Food&Beverage Facilities Capacity Full-Service Restaurant including Private Dining 160 Lounge 60 Coffee Shop 20 Indoor Meeting&Banquet Facilities Meeting Space Grand Ballroom divisible into Meeting Space 16,000 Junior Ballroom divisible into Meeting Space 8,000 Meeting Space 12,000 Boardrooms 1,400 Total Square Feet of Meeting Space 37,400 Amenities&Services Pool Business Area Whirlpool Gift Shop Exercise Room Laundry Room infrastructure Parking Spaces 400 Elevators 4 Guest, 2 Service ... Life Safety Systems Sprinklers,Smoke Detectors Construction Details Steel, Reinforced Concrete For this study,we assume the following: o The Proposed Hotel would offer a well-designed, functional layout of support .. areas,restaurant&lounge,ballroom &meeting space,and guestrooms. o The hotel staff would be adequately trained to allow for a successful opening. Mai a Pre-marketing efforts would have introduced the product to major local accounts at least six months in advance of the opening date. a The Proposed Hotel would meet all pertinent codes and brand standards. DRAFT June 20,2018 Description of the Site and Neighborhood 18 Proposed Headquarters Hotel-Virginia Beach,Virginia I II\"S • The Proposed Hotel would be fully open and operational on the assumed ' opening date and would meet all local building codes. • Construction would not create any environmental hazards. • The Proposed Hotel would fully comply with the Americans with Disabilities ' Act. Capital Expenditures After its opening, the Proposed Hotel would require ongoing upgrades and ' periodic renovations to maintain its competitive level in this market. These costs should be adequately funded by the forecasted reserve for replacement, if the hotel's staff employs a successful,ongoing maintenance program. 1 I I I I I DRAFT June 20,2018 Description of the Site and Neighborhood i n Proposed Headquarters Hotel-Virginia Beach,Virginia 17 I I I I VS I 1 3. Virginia Beach Market Overview I HVS explored economic and demographic factors that affect the level of lodging demand in the market including population, income, employment, retail sales, business presence,major tourism attractions,and transportation access.We relied on third party data sources to review historical trends and provide forecasts of the rate of growth or decline of the local economy. We also assessed whether the neighborhood surrounding the subject site would support the development of the Proposed Hotel. This market overview provides a framework for projections of lodging demand and revenue growth in the local market. National Economic Our analysis of the outlook for this specific market also considers the broader Trends context of the national economy.The U.S. economy expanded during the last three years,with a relatively low point in growth occurring during the fourth quarter of 2015 and the first quarter of 2016, as well as the first quarter of 2017. Most recently, the U.S. economy expanded by 3.1% and 3.0% in the second and third quarters of 2017, respectively. The recent acceleration reflected strong personal consumption expenditures (PCE), private inventory investment, nonresidential fixed investment,exports,and federal government spending. I I I I I I DRAFT June 20,2018 Virginia Beach Market Overview ^t Proposed Headquarters Hotel-Virginia Beach,Virginia o I I II\'S I I FIGURE 3-1 I UNITED STATES GDP GROWTH RATES US GDP Change 2010 Q1 1.6 i♦ Q2 3.9 I Q3 2.8 UM 2.8 ER 2011 Ql -1.31111\111111 Q2 3.2 I Q3 0.8 U Q4 4.6 2012 Q1 2.3 1111111 I Q2 1.6 r Q3 2.5 Q4 0.1 I 2013 Q1 1.9 In I Q2 1.1 Q3 3.1 IN Q4 41.0 dililla I 2014 Q1 -1.2 Q2 4.0 Q3 5.0 Q4 2.0 IIII I 2015 Ql 3.2 Q2 2.7 IIII Q3 1.6 MI Q4 0.5 • I 2016 Q1 0.6 i♦ Q2 2.2 Q3 2.8 MUM Q4 1.8 11111 I 2017 Q1 1.2 i♦ Q2 3.1 Q3 3.0 MUM ISource:Bureau of Economic Analysis U.S.economic growth continues to support expansion of lodging demand.In 2017, demand growth through November registered 2.7%, stronger than the 1.6% level I recorded in 2016. The economic growth, low unemployment, higher levels of personal income, and stability in the U.S. economy as of early 2018 is helping to maintain strong interest in hotel investments by a diverse array of market Iparticipants. Market Area Definition The market area includes all of Virginia Beach and extends to Norfolk due to large I convention center/meeting-oriented hotels in that market, as illustrated in the following map. I DRAFT June 20,2018 Virginia Beach Market Overview ^�i Proposed Headquarters Hotel-Virginia Beach,Virginia L 1 I I I I VS 1 I MAP OF MARKET AREA I 40 ('. �0 46$ 16} Cig ,C 4BFEL6, 6 1cl Sit't t06 CV #.:,i ILA: • t:f 11' Norfolk VIr a teach_ Naval Air , Portsmouth Station Oceana its 0sae7 9 177 c I 1T t ['AiA NE 1, e P. F P�IY Wilt (42,3G 14 I Ches apea@ wooalloug[ 11) 01.)h � k eaE �Rit C-oR,.Ea I GO a^.e _ Economic and HVS used the Complete Economic and Demographic Data Source published by Demographic Review Woods & Poole Economics, Inc., a well-regarded forecasting service based in Washington,D.C.as a source of economic and demographic data. Using a database containing more than 900 variables for each county in the nation, Woods &Poole I employs a sophisticated regional model to forecast economic and demographic trends. Census data and information published by the Bureau of Economic Analysis provide the basis for historical statistics. Woods & Poole formulates the projections,and all dollar amounts have been adjusted for inflation,thus reflectingI real change.The following figure summarizes these data. I I I I DRAFT June 20,2018 Virginia Beach Market Overview ^� 1 Proposed Headquarters Hotel-Virginia Beach,Virginia 7� I I I-i VS I I FIGURE 3-2 I ECONOMIC AND DEMOGRAPHIC DATA SUMMARY Beginning Ending Estimated Annual Economic Indicator/Area Amount2000 2010 2018 2025 Ending Amount Compound Change 2018 to 2025 IResident Population(millions) Virginia Beach (Independent City) County 0.43 � - ---- - 0.49 0.7% Virginia Beach-Norfolk-Newport News,VA-NC MS 1.6 r-..-,- - 1.9 0.7% IVirginia Beach-Norfolk,VA-NCCSA 1.7 .- .•--•- - 2.0 0.7% State ofVirginia 7.11 .._-. - •"" 9.48 1.2% United States 282.16 . _ .-- _ 352.57 0.9% I Per-Capita Personal income* (thousands) Virginia Beach (Independent City) County $38.57 _-- _- •; $57.0 1.7% Virginia Beach-Norfolk-Newport News,VA-NC MS $33.49 ---- " $49.3 1.6% I Virginia Beach-Norfolk,VA-NCCSA $33.26 _ - -- �` $48.9 1.6% State of Virginia $39.05 $54.4 1.5% United States $36.81 �- $49.9 1.5% W&P Wealth Index I Virginia Beach (Independent City) County $113.01 '' ' *~ $117.36 0.1% Virginia Beach-Norfolk-Newport News,VA-NC MS $96.15 _ -- - $101.33 0.0% Virginia Beach-Norfolk,VA-NC CSA $95.38 --- -_- $100.38 0.0% I State of Virginia United States $109.11 _ - ------. $111.04 0.0% $100.00 $100.00 0.0% Food and Beverage Sales*(billions) I Virginia Beach (Independent City) County $0.62 T a $1.07 1.8% Virginia Beach-Norfolk-Newport News,VA-NC MS $2.01 $3.50 1.7% Virginia Beach-Norfolk,VA-NC CSA $2.21 _ - $3.85 1.7% State of Virginia $9.13 _ - .---`-- $18.41 2.2% , I United States $368.83 _ . - ` $664.41 1.9% Total Retail Sales*(billions) Virginia Beach (Independent City) County $5.43 _,:-,,.-- - $7.44 1.3% I Virginia Beach-Norfolk-Newport News,VA-NC N $20.17 __- ---.- $27.56 1.3% Virginia Beach-Norfolk,VA-NC CSA $21.79 �- -* $29.81 1.4% State of Virginia $100.83 __ _,,. --- - $150.18 1.8% United States $3,902.83 __ --.., ----.- - ° $5,578.47 1.5% I Inflation Adjusted Source:Woods&Poole Economics,Inc. Workforce The characteristics of an area's workforce indicate the type and amount of ICharacteristics transient visitation likely to be generated by local businesses. Sectors such as finance, insurance,and real estate ("FIRE"); wholesale trade; and services produce a considerable number of visitors who are not particularly rate-sensitive. The I government sector often generates transient room nights, but per-diem reimbursement allowances often limit the accommodations selection to budget I DRAFT June 20,2018 Virginia Beach Market Overview 23 Proposed Headquarters Hotel-Virginia Beach,Virginia I H VS I and mid-priced lodging facilities. Contributions from manufacturing, construction, P g g g transportation, communications and public utilities ("TCPU") employers can also be important,depending on the company type. I The following figure shows the estimated change in employment in the top ten sectors in the county workforce distribution by the various business sectors in 2000,2010,and 2018,and a forecast for 2025. FIGURE 3-3 TOP TEN EMPLOYMENT SECTORS IN VIRGINIA BEACH Beginning Ending Sector/Geographic Area Employment Amount 2000 2010 2018 2025 Amount (thousands) (thousands) Virginia Beach(Independent City)County Health Care And Social Assistance 16.2 35.4 Retail Trade 30.5 '-- - -" 34.1 Accommodation And Food Services 20.3 _e- --^"-' 29.4 State And Local Government 20.2 ,..- -""" 26.5 Real Estate And Rental And Lease 11.7 _--r--•-.^"" "' 19.7 Professional And Technical Services 18.4 ..--,.,_r.--'"'�'1 19.4 Finance And Insurance 9.9 ..--..-- ------" 19.1 Federal Military 23.2 6--"--- -,—, 18.4 Construction 16.3 i., r---'"'` 17.5 Administrative And Waste Services 16.6 �r,,,r....-----' 17.2 Other 50.6 r--- -"'- 62.2 Total Virginia Beach(Independent City)County 234.0 ,,,....-_• 298.8 U.S. 165,371 „„ --' 217,671 I Source:Woods&Poole Economics,Inc. Growth in tourism visitation should drive more accommodation,food service, and retail sales. The health care, finance, insurance, professional, and government sectors of the economy should continue to expand along with the overall growth in the local area economy.The construction sector has continued to recover from the I significant decline due to the downturn in home prices during the last recession. Unemployment The following figure presents historical unemployment rates for the Proposed Statistics Hotel's market area. I I DRAFT June 20,2018 Virginia Beach Market Overview ^�^ Proposed Headquarters Hotel-Virginia Beach,Virginia 7 I I 11 VS I I FIGURE 3-4 I UNEMPLOYMENT STATISTICS Year Virgins Beach MSA State I 2008 3.6 % 4.2 % 6.9 3.9 % 2009 6.0 6.7 2010 6.5(r) 7.6(r) 7.1 2011 6.1(r) 7.3(r) 6.6 I 2012 5.7(r) 6.8(r) 6.1 2013 5.4(r) 6.3(r) 5.7(d) 2014 4.9(r) 5.7(r) 5.2(d) 2015 4.3(r) 4.9(r) 4.5(d)I 2016 4.0(r) 4.7(r) 4.1(d) 2017 3.6(r) 4.2(r) 3.8(d) Recent Month -Apr I 2017 3.3 % 3.8 % 3.5 % 2018 2.7 3.1 2.8 I *Letters shown next to data points(if any)reflect revised population controls and/or model re-estimation implemented by the BLS. Source:U.S.Bureau of Labor Statistics I The local labor market has continued to tighten in 2018 with the unemployment rate below 3%through April. I Major Business and The figure below shows the larger employers in the region. Industry FIGURE 3-5 MAJOR AREA EMPLOYERS I Rank Firm Number of Employees 1 Naval Air Station Oceana-Dam Neck 5,850 2 Sentara Healthcare 5,200 3 Joint Expeditionary Base Little Creek/Ft.Story 3,600 4 GEICO General Insurance Company 2,700 I 5 General Growth Properties (Lynnhaven Mall) 2,600 6 Gold Key/PHR Hotels&Resorts 2,365 7 STIHL Incorporated 2,113 8 Amerigroup(Anthem) 1,850 I 9 Navy Exchange Service Command 1,550 10 Engility Corp. 800 Source:Virginia Beach Economic Development Website 2018 I I DRAFT June 20,2018 Virginia Beach Market Overview 2 IProposed Headquarters Hotel-Virginia Beach,Virginia J 1 I-I VS I Vir The economic base of the Hampton Roads/Virginia Beach area revolves heavily around tourism, the federal government, healthcare, and the military and aerospace industries.Aside from the strong government presence,top companies within the military and aerospace industries maintain significant operations in the area, including SAIC, AMSEC LLC, Northrop Grumman, Lockheed Martin, and Raytheon.In addition,the National Institute of Aerospace is a world-class research and education facility created to conduct aerospace and atmospheric research. Lastly,tourism in Virginia Beach continues to be an anchor for the local economy, sustaining businesses throughout the year. Several hotel developments are underway along the Virginia Beach oceanfront.The breadth of government-driven anchors,along with tourism,should continue to support the area's economy. Airport Traffic Norfolk International Airport is southeastern Virginia's dominant airport, serving 1 the Greater Hampton Roads area and northeastern North Carolina. Norfolk International has continued to expand its service, with numerous new nonstop destinations added from 2010 through 2012. Furthermore, an $11.7-million renovation was completed in early 2014, with upgrades to the public areas, restaurants, and retail outlets. Additionally, renovations to Concourses A and B were completed between March 2014 and September 2016, inclusive of updated security checkpoints, new technology, new noise-reducing windows, and new flooring.In March 2016,the Norfolk Authority Board approved a$3.7-million plan to renovate the dining options and restrooms,including adding a lactation room in the main terminal lobby. Renovations to these areas should be completed by March 2018. The following figure illustrates recent operating statistics for Norfolk International Airport,which is the primary airport facility serving the market. I 1 1 I DRAFT June 20,2018 Virginia Beach Market Overview 26 Proposed Headquarters Hotel-Virginia Beach,Virginia I I I I\'S I I FIGURE 3-6 AIRPORT PASSENGERS NORFOLK INTERNATIONAL AIRPORT Year Passenger Annual Percentage Change Traffic 2008 3,549,000 2009 3,409,000 -3.9% MIK 2010 3,332,000 -2.3% 2011 3,193,000 -4.2% 2012 3,344,000 4.7% 2013 3,112,000 -6.9'Yo ;;` 2014 2,965,000 -4.7% 2015 3,034,000 2.3% 2016 3,209,000 5.8% 2017 3,381,000 5.4% ' 5 Source: Norfolk International Airport Tourist Attractions The market benefits from a variety of tourist and leisure attractions in the area. The peak season for tourism in this area is from May to September. During other times of the year, weekend demand comprises travelers passing through in route to other destinations, people visiting friends or relatives, and other similar weekend demand generators. Primary attractions in the area include the following: • Virginia Beach has 35 miles of coastline from the Chesapeake Bay, the Resort Area on the ocean coast to the East Coast beach hideaway of Sandbridge. The beach offers not only the water recreation and a large boardwalk but also attracts special events such as the East Coast Surfing Championships, North American Sand Soccer Championships, Verizon Wireless American Music and Neptune Festivals, February Polar Plunge, and the Rock'n Roll and Shamrock Marathons. • Cape Henry Memorial commemorates the first landfall at Cape Henry of colonists bound for the Jamestown Settlement. After landing on April 26, I 1607, they explored the area, named the cape, and set up a cross before proceeding up the James River. The Cape Henry Lighthouse has long been important for a large amount of ocean-going shipping traffic for the harbors,its rivers,and shipping headed to ports on the Chesapeake Bay.It was the first lighthouse authorized by the U.S. government, dating from 1792. I I DRAFT June 20,2018 Virginia Beach Market Overview 27 Proposed Headquarters Hotel-Virginia Beach,Virginia 1 IVS 1 • The Military Aviation Museum exhibits World War One, Two and Vietnam War aircraft that can still fly. Guests, for a fee, can take a flight in an open cockpit biplane. • The Virginia Aquarium & Marine Science Center offer exhibits and educational programs. ' • The Norwegian Lady Statue commemorates the lives lost in the 1891 shipwreck of the Norwegian ship Dictator, off the coast of Virginia Beach, and the lifesaving efforts of the community. An identical statue is in the sister city of Moss,a coastal town in Norway. • The Adam Thoroughgood House is a brick house located in the neighborhood of Thoroughgood. Recent research has placed its construction circa 1720.Fully restored, it currently serves as a museum. It is listed in the U.S. National Register of Historic Places as a National Historic Landmark. VIRGINIA BEACH y' .. ,' °d+ D 1 a. �.-fi .•: tom' `t .r�.3i• ..c d . • 1 • Conclusion The economic conditions discussed in this report indicate that Virginia Beach is experiencing a period of economic strength and expansion, led by the education and healthcare sectors. Our market interviews and research revealed that technology and defense manufacturing have stabilized and continues to be a cornerstone in this market. The beaches and associated attractions continue to attract significant leisure demand for local hotels.The outlook for the market area is positive. I DRAFT June 20,2018 Virginia Beach Market Overview Proposed Headquarters Hotel-Virginia Beach,Virginia �� I Convention,Sports&Entertainment I 1`f S Facilities Consulting IChicago,Illinois I 4. Impact on Convention Center Demand IThe proposed headquarters hotel would allow the Virginia Beach Convention Center("VBCC")to compete more effectively for regional and national conventions ' and conferences.Adequate attached lodging to a convention center is a key selection criterion for meeting planners and a primary point of comparison among competing venues.As convention centers across the U.S. have developed hotel properties to meet this demand,the lack of a headquarters hotel in Virginia Beach has decreased ' the desirability of the VBCC and impeded the its efforts to book quality events. Historical Convention The VBCC provided HVS with a summary of the number of events and ' Center Demand corresponding total attendance that occurred at the facility from July 1, 2013 through June 30, 2017. The following figure presents the event, attendance, and room night history at the VBCC for the past five years. i i i I DRAFT June 20,2018 Impact on Convention Center Demand 29 Proposed headquarters hotel IP Convention,Sports&Entertainment I-I VS Facilities Consulting Chicago,Illinois FIGURE 4-1 - SUMMARY OF DEMAND HISTORY FY FY FY FY FY 2013 2014 2015 2016 2017 - Events Conventions 21 12 18 20 16 Trade Shows 13 12 8 7 6 - Consumer Shows 36 40 43 39 47 Sports &Competitions 14 18 17 17 17 Meetings &Conferences 150 152 1.27 115 134 Banquets 68 96 86 86 73 - Assemblies 12 8 11 13 14 Other 5 6 10 6 8 Local Support 5 5 5 4 5 Total 324 349 325 307 320 - Attendees Conventions 64,104 42,960 54,940 91,410 55,766 Trade Shows 12,725 11,595 8,450 8,150 6,850 - Consumer Shows 146,060 147,293 180,460 249,016 165,246 Sports &Competitions 118,865 121,915 119,572 146,674 150,200 Meetings &Conferences 27,116 25,813 23,828 15,102 28,880 - Banquets 24,008 33,433 30,967 33,583 35,071 Assemblies 67,949 63,725 57,918 59,501 59,500 Other 5,486 3,767 7,520 4,450 14,500 Local Support 112,143 106,446 99,700 61,500 106,000 - Total 578,456 556,947 583,355 669,386 622,013 Occupied Room Nights Conventions 24,159 17,158 20,073 29,710 20,093 ... Trade Shows 1,521 2,130 1,618 1,501 1,381 Consumer Shows 3,194 2,044 1,704 21,345 1,985 Sports &Competitions 32,829 33,060 28,033 41,355 39,309 Meetings&Conferences 405 1,349 1,643 1,980 1,405 - Banquets 1,103 1,161 599 619 831 Assemblies 155 55 40 20 20 Other na na na na na Local Support 40,438 46,800 40,285 19,327 36,112 - Total 103,804 103,757 93,995 115,857 101,136 Source: Virginia Beach Convention Center In recent years,event demand and attendance levels have been relatively consistent stable. The VBCC currently hosts a variety of events, including conventions, trade shows, consumer shows, and sporting events that use the facility's exhibition - spaces. Meeting and banquet demand primarily includes events hosted by local corporations and civic organizations. Meetings and banquets produce the greatest DRAFT June 20,2018 Impact on Convention Center Demand 30 Proposed headquarters hotel Convention,Sports&Entertainment H VS Facilities Consulting ' Chicago,Illinois I number of events at the VBCC. Consumer shows and sports competitions draw a ' greater number of average attendees,thus a higher percentage of annual attendees. Lost Business Analysis The VBCVB provided HVS with a summary of lost convention center business for events occurring from 2012 through 2017.The data includes events that considered Virginia Beach and the VBCC but ultimately did not booked in Virginia Beach. Planners often identify one or more reasons for not booking a venue. The VBCVB t and86 followingu iqu eventsthat presenthave not a summary book oat f the lost business data. ' FIGURE 4-2 EVE vT S LOST BY REASON Lack of headquarters,attached hotel 73% ' Prefer meeting space and hotel under one roof 40% Convention center too small, not available 26% Shuttle concerns,prefer walkable amenities 16% Insufficient market hotel inventory 15% ' Competitor destination appeal,overall package 15% Hotel rate too high and other budgetary 13% Geography,rotation,and delegate proximity 8% 111 I I DRAFT June 20,2018 Impact on Convention Center Demand 31 Proposed headquarters hotel I r 3 Convention,Sports&Entertainment lVS Facilities Consulting Chicago,Illinois FIGURE 4-3 ROOM NIGHTS LOST BY CATEGORY Lack of headquarters,attached hotel 65% '- Prefer meeting space and hotel under one roof 20% Convention center too small,not available 20% Insufficient market hotel inventory 14% Shuttle concerns,prefer walkable amenities 11% .� Hotel rate too high and other budgetary 9% Geography,rotation,and delegate proximity 8% Competitor destination appeal,overall package 6% While event planners offer multiple reasons for not hosting at the VBCC, they attribute lost events in Virginia Beach to the lack of a headquarters hotel most often. Planners also cite the desire to host events "under one roof', also indicating their desire for a connection between an event's function spaces and attendee lodging. _ The development of a headquarters hotel would place Virginia Beach in a better position to compete for and recapture these lost events. Competitive Venues The VBCC competes with convention centers throughout the east coast and southeastern U.S. for a share of regional and national meetings. With consultation with VBCC management and the VBCVB, we have identified the following primary competitors of the VBCC. DRAFT June 20,2018 Impact on Convention Center Demand 32 Proposed headquarters hotel I Convention,Sports&Entertainment HvS Facilities Consulting IChicago,Illinois I I FIGURE 4-4 I Name of Venue PRIMARY V=;CC COMPETITORS Location Total Function Space I Primary Competitors Music City Center Nashville,TN 500,593 Charlotte Convention Center Charlotte, NC 406,875 Baltimore Convention Center Baltimore, MD 370,216 I Tampa Convention Center Tampa, FL 278,767 Birmingham Jefferson Convention Complex Birmingham,AL 277,605 Greater Richmond Convention Center Richmond,VA 256,059 I Raleigh Convention Center Raleigh, NC 211,061 Virginia Beach Convention Center Virginia Beach,VA 208,893 Savannah Convention Center Savannah,GA 143,212 Palm Beach County Convention Center Palm Beach, FL 140,575 I Lexington Center Lexington, KY 96,592 Headquarter Hotel Over the past decade convention centers in cities of all sizes have recognized the I Development importance of a headquarters hotel in attracting conventions and conferences that generate significant numbers of room nights in a market. Typically, a full-service hotel property,headquarters hotels are either attached to the convention center or Iimmediately adjacent and within an easy walking distance. Each of the above competitive convention centers has at least one connected or I adjacent headquarters hotel. The following figure identifies these properties and room counts. FIGURE 4-5 IHEADQUARTERS HOTELS AT PRIMARY VBCC COMPETITORS Venue Total Rooms Property Brand(room count) I Baltimore Convention Center Music City Center 1,582 Hilton(757),Hyatt(488),Sheraton (337) 1,308 Omni (854),Westin(454) Charlotte Convention Center 1,100 Westin (700),Hilton(400) Tampa Convention Center* 1,079 Marriott(719),Embassy Suites (360) I Birmingham-Jefferson Convention Complex 1,051 Lexington Center 532 Sheraton (757),Westin (294) Hyatt(366),Hilton(166) Greater Richmond Convention Center 410 Mariott(410) Savannah Convention Center* 403 Westin (403) I Raleigh Convention Center* 400 Marriott(400) Palm Beach County Convention Center 400 Hilton(400) *Planning or studying additional HQ hotel. ISources:VBCVB,HVS I DRAFT June 20,2018 Impact on Convention Center Demand 33 Proposed headquarters hotel im I Convention,Sports&Entertainment II VS Facilities Consulting Chicago,Illinois INN Several cities are contemplating or actively developing an additional headquarters - hotel. Among the above competitive cities, Savannah has selected a developer to construct a new Omni Hotel with at least 300 rooms. Raleigh and Tampa are both studying the feasibility of 400-room properties adjacent to their respective convention centers. Headquarters hotel development is not limited to large convention markets.Smaller — eastern regional markets, that could compete with Virginia Beach, have also recognized the competitive advantage of a headquarters hotel as presented below. FIGURE 4-6 — SMALLER REGIONAL CONVENTION CENTERS WITH HEADQUARTERS HOTELS Venue Function Hotel Guest Space(SF) Rooms Chattanooga Convention Center 144,700 Marriott/Staybridge 466 Myrtle Beach Convention Center 131,900 Sheraton 402 Columbus GA Convention &Trade Center 125,000 Marriott 177 — Charleston Area Convention Center 118,000 Embassy Suites 255 Grand Wayne Center 76,000 Hilton 749 Lancaster Convention Center 76,000 Marriott 300 Compared to competing large markets and small, Virginia Beach has fallen behind in a growing market trend. The lack of a connected or immediately adjacent headquarters hotel at the VBCC will continue to reduce its attractiveness against markets that are actively pursuing improvements to their meeting infrastructure. In addition to the above convention centers, the VBCC also faces local competition from hotels in Norfolk with large amounts of meeting space as presented below. These properties compete effectively against the VBCC, because they can offer smaller conventions and meetings function spaces and lodging under one roof. — FIGURE 4-7 COMPETITIVE NORFOLK PROPERTIES — Guest Function Space Property Rooms (SF) Sheraton Norfolk Waterside 468 44,600 .� Norfolk Waterside Marriott 405 44,800 Hilton Norfolk The Main 300 41,200 Sources: VBCVB,HVS DRAFT June 20,2018 Impact on Convention Center Demand 3ip, Proposed headquarters hotel "� --` Convention,Sports&Entertainment I.1`:`S Facilities Consulting Chicago,Illinois The addition of an attached hotel at the VBCC would create a meeting product that ' could compete more effectively against these integrated hotel properties and secure more small to medium-sized meetings and conferences. Demand Projections In developing the demand projections, HVS assumes that the proposed 400-room headquarters hotel is completed and in operation by July 1,2021.We estimate that ' event demand would stabilize in the fourth year of operation—fiscal year 2025.We also assume the continued presence of a highly qualified, professional sales and management team for the VBCC. ' HVS based event demand projections for VBCC on the following research and analysis: ' • The introduction of a 400-room hotel on a nearby site, • The opening of an indoor sports center on a nearby site, ' • Historical VBCC event and attendance data and lost business reports, • Comparable venue program and demand data,and ' • Discussions with representatives of VBCC management and the VBCVB. HVS's analysis of historical and lost VBCC demand and an analysis of comparable ' and competitive venues suggest that the proposed headquarters hotel should allow Virginia Beach to expand its convention and other group business from national corporations and associations, state associations, local corporations, and other groups. ' In developing demand projections, HVS considered the ongoing improvements to convention centers and hotels in other markets that compete with the VBCC for ' regional and national business.Prior to the proposed hotel development,we project that event demand reflects the average demand and attendance over the past five years. ' Virginia Beach currently plans the opening of an indoor sports center during the first or second quarter of 2020. Based on information provided by the VBCVB,we assume that nine annually recurring events would move from the VBCC to the new sports center. Our demand projections reflect this prior to the opening of the headquarters hotel. HVS projects the following demand for the VBCC from 2019 through stabilized demand which occurs four years after the opening of the headquarters hotel. The DRAFT June 20,2018 Impact on Convention Center Demand 35 Proposed headquarters hotel I Convention,Sports&Entertainment j I ` " Facilities Consulting Chicago,Illinois .r - figure below breaks out event projections by type of event. Total and average attendance figures represent individual event attendees. FIGURE 4-8 - SUMMARY OF VBCC DEMAND PROJECTIONS Sports Center Opening Stabilized Opens - FY FY FY FY FY FY FY 2019 2020 2021 2022 2023 2024 2025 Events Conventions 16 16 16 20 24 26 28 Trade Shows 6 6 6 7 8 8 8 Consumer Shows 47 47 47 47 47 47 47 Sports&Competitions 17 11 11 11 11 11 11 Meetings &Conferences 134 134 134 140 145 148 150 - Banquets 73 73 73 73 73 73 73 Assemblies 14 14 14 14 14 14 14 Other 8 8 8 8 8 8 8 ~ Local Support 5 2 2 2 2 2 2 Total 320 311 311 322 332 337 341 Attendees - Conventions 55,766 55,766 55,766 60,000 72,000 78,000 84,000 Trade Shows 6,850 6,850 6,850 7,700 8,800 8,800 8,800 Consumer Shows 165,246 165,246 165,246 202,100 202,100 202,100 202,100 Sports &Competitions 150,200 94,204 94,204 94,204 94,204 94,204 94,204 - Meetings &Conferences 28,880 28,880 28,880 30,800 31,900 32,560 33,000 Banquets 35,071 35,071 35,071 35,040 35,040 35,040 35,040 Assemblies 59,500 59,500 59,500 77,000 77,000 77,000 77,000 Other 14,500 14,500 14,500 14,400 14,400 14,400 14,400 - Local Support 106,000 26,000 26,000 26,000 26,000 26,000 26,000 Total 622,013 486,017 486,017 547,244 561,444 568,104 574,544 Event Types HVS classified events in the following categories. Conventions-Conventions require a combination of exhibition, banquet, and - meeting space. The source of conventions would be primarily state and regional associations and corporations with some national groups booking as well. This demand category also includes religious and other SMERF groups that would rotate to Virginia Beach for their annual events. Tradeshows-Tradeshows provide a means for wholesalers and retailers to transact business with industry buyers.As such, tradeshows are typically exhibit- - oriented events in which people display and demonstrate products. Tradeshows - DRAFT June 20,2018 impact on Convention Center Demand 36 .. Proposed headquarters hotel Convention,Sports&Entertainment `i'S Facilities Consulting Chicago,Illinois I I require some meeting and meal space;however,they require much less space than conventions. Consumer Shows—Consumer shows are ticketed public events that attract local and regional attendees, such as home and garden shows and car shows. These I events require some meeting space for support and back of house uses. Food and beverage services would be limited to concessions. Sports & Competitions—Sporting events include tournaments and other competitions that may set up courts,mats,and other playing surfaces in exhibit halls or ballrooms depending on space needs. This category also includes card tournaments, academic competitions, and video game competitions. The VBCC projects that six sporting events would move to the new sports center. Meetings & Conferences— Conferences are multi-day events like conventions; however, conferences typically have minimal exhibit requirements. Conferences require a mix of banquet and breakout space set-up and occasional assembly space, but they do not require any exhibit hall set-up.Meetings require breakout meeting I space but would not use banquet or exhibit space.Food service is limited to coffee breaks, breakfasts, or luncheons in meeting rooms. A variety of groups host meetings and conferences,including associations,corporations,Civic organizations, I religious groups, and government agencies. Meetings and conferences can take place in breakout meeting space. In addition to meals, ballrooms can also handle larger meetings or several smaller simultaneous meetings as needed. I Banquets—Banquets are stand-alone social events, luncheons, and other meals typically booked by local corporations, social and civic organizations, and private clients. The flexibility of the ballroom and pre-function spaces would allow for a Ivariety of banquet sizes and multiple simultaneous events. Assemblies—Assemblies include graduations, religious services, and lectures. Produced by any type of organization, assemblies are always public events. Additionally,assemblies only require a plenary set-up. ' Other—These include a host variety of concerts,health screenings and other civic events. Local Support—The VBCC supports local marathons and other sporting events as I a site for registration, expos, or banquets. The VBCVB projects that three local support events would move to the new sports center. I Room Night Projections HVS calculated the potential generation of room nights by the VBCC assuming the opening of the new sports center and the introduction of the headquarters hotel. DRAFT June 20,2018 Impact on Convention Center Demand 37 Proposed headquarters hotel I Convention,Sports&Entertainment I-1\/S Facilities Consulting Chicago,Illinois I I These room nights represent the total room nightsgenerated in the Virginia Beach g P g g area by the operations of the VBCC.The following figure presents the assumptions used to generate room night estimates. HVS based room night assumptions on 1 historical VBCC data and other industry research. This figure includes only those events that generate room nights in the market. FIGURE 4-9 I ASSUMPTIONS FOR ROOM NIGHTS Occupied Room Nights Parameters Event Type Percent Lodgers Length of Stay Lodgers per Room Pre-Open Stabilized Pre-Open Stabilized Pre-Open Stabilized Corwentions 18% 36% 3.0 3.0 1.50 1.25 Trade Shows 30% 30% 1.0 1.0 1.50 1.25 Consumer Shows 2% 2% 1.0 1.0 1.50 1.50 Sports&Competitions 46% 37% 2.0 2.0 3.50 3.50 Meetings&Conferences 8% 8% 1.0 1.0 1.50 1.50 Banquets 4% 4% 1.0 1.0 1.50 1.50 Assemblies 0% 0% 1.0 1.0 2.00 2.00 Other 0% 0% 0.0 0.0 1.00 1.00 Local Support 34% 59% 2.0 2.0 2.00 2.00 The introduction of the headquarters hotel would result in a greater number of higher impact conventions in Virginia Beach. The following figure presents an estimate of historical room nights and the resulting incremental room nights generated after the proposed hotel development through a stabilized year of demand. I FIGURE 4-10 ROOM NIGHT ESTIMATES Sports Center Opening Stabilized Opens FY FY FY FY FY FY FY 2019 2020 2021 2022 2023 2024 2025 Occupied Room Nights Conventions 20,076 20,076 20,076 51,840 62,208 67,392 72,576 Trade Shows 1,370 1,370 1,370 1,848 2,112 2,112 2,112 Consumer Shows 2,203 2,203 2,203 2,021 2,021 2,021 2,021 Sports &Competitions 39,481 19,917 19,917 19,917 19,917 19,917 19,917 Meetings &Conferences 1,444 1,444 1,444 1,540 1,595 1,628 1,650 Banquets 818 818 818 818 818 818 818 Assemblies 60 60 60 77 77 77 77 Local Support 36,040 15,340 15,340 15,340 15,340 15,340 15,340 Total 101,492 61,228 61,228 93,401 104,088 109,305 114,511 I DRAFT June 20,2018 Impact on Convention Center Demand Proposed headquarters hotel �� I Convention,Sports&Entertainment I `i 1 1 S Facilities Consulting Chicago,Illinois I I Following the opening of the sports center,the nine events that move from the VBCC I result in a transfer of around 40,700 room nights. In a stabilized year after the opening of the headquarters hotel, we estimate that the VBCC would generate approximately 114,000 room nights in the local area market,an increase of around 53,000 room nights. Some of these room nights would result from contract blocks I with groups and others would result from individual hotel reservations. Comparable Analysis While the primary indicator of demand is the ability to expand a venue's established I base of business,a good test for the reasonableness of these demand projections is an analysis of demand at comparable facilities and markets. The following figure compares the average convention, meeting, and other demand in comparable I venues with similar sized function spaces.These venues represent a wide range of markets with a mix of population size, economic breadth, and destination appeal. Because of the unique operating characteristics of exhibit and meeting facilities,no I single facility or market can be considered a direct comparable to the VBCC. The averages from a large set of event data provide evidence for the reasonableness of the projections for the VBCC. I FIGURE 4-11 COMPARABLE CONVENTION CENTER DEMAND Greater Savannah I Cobb Raleigh Charlotte Spokane Baltimore Tampa Intematlon VBCC with Gdleria Richmond Convention Convention Convention Convention Convention al Trade& Centre ConvCenteentionron Center HQ Hotel Center Center Center Center Convention Center Atlanta Richmond Raleigh Virginia' Charlotte Spokane Baltimore Tampa Savannah Beach GA VA NC VA NC WA MO FL GA Number of Events Conventions &Trades hows 77 28 35 36 34 42 52 53 21 I Consumer Shows 25 23 16 41 20 14 18 10 24 Banquets 108 41 86 73 0 54 5 29 41 Meetings &Conferences 389 95 131 150 0 106 76 47 58 Subtotal 599 187 268 300 54 216 151 139 144 I Sports,Concerts &Other 36 241 37 32 214 25 11 2 0 Total Events 635 428 352 332 268 241 162 147 144 Total Attendance Conventions &Tradeshows 64,418 27,003 107,005 62,616 na 95,095 266,876 482,936 21,000 I Consumer Shows 41,942 65,511 115,300 165,246 na 98,928 127,010 282,020 80,200 Banquets 38,981 15,275 49,298 35,071 na 16,012 5,495 10,950 188,770 Meetings &Conferences 58,736 22,677 34,446 28,880 na 22,232 61,558 127,141 8,556 Subtotal 204,077 130,466 306,049 291,813 na 232,267 460,939 903,047 298,526 I Sports,Concerts &Other 30,148 137,570 169,674 330,200 na 42,156 27,530 3,150 0 Total 234,224 268,036 527,151 622,013 265,046 274,423 488,469 906,842 128,526 Source: Respective Venues I I DRAFT June 20,2018 Impact on Convention Center Demand 39 Proposed headquarters hotel 7 I Convention,Sports&Entertainment I-I VS Facilities Consulting Chicago,Illinois 1 Taking historical performance and market factors into consideration,the demand projections for the VBCC are consistent with event demand currently found in similar sized venues throughout the U.S. HVS intends for demand projections to show the expected levels of event numbers and attendance. Projections show smooth growth over time. However, event demand and booking cycles do not always run smoothly. Unpredictable local and national economic factors can affect businesses. Event demand often moves in cycles based on rotation patterns and market conditions. Therefore, HVS recommends interpreting the demand projections as a mid-point of a range of possible outcomes and over a multi-year period,rather than relying on projections for any one specific year. I I 1 1 I I I I 1 DRAFT June 20,2018 Impact on Convention Center Demand Proposed headquarters hotel 4� I llVS 1 5. Supply and Demand Analysis for the Proposed Hotel National Hotel Market The Proposed Hotel's local lodging market is most directly affected by the supply Trends and demand trends within the immediate area. Other factors affecting the local ' market include changes in population, income, corporate offices, and communications technology. Changes in the national lodging market indirectly affect the local markets. We ' reviewed national lodging trends to provide a context for the forecast of the supply and demand for the Proposed Hotel's competitive set. ' Figure 5-1 presents annual hotel occupancy and average rate data since 1987. Figure 5-2 illustrates hotel performance, categorized by geography, price point, type of location, and chain scale. RevPAR, the product of occupancy and average ' rate provides a combined measure of rate and occupancy. The figure below shows the hotel occupancy, average rate, and RevPAR throughout the U.S.as shown in the figure below. ' FIGURE 5-1 U.S. OCCUPANCY,AVERAGE RATE,AND REVPAR TRENDS $140 100% $120 - 90% 80% $100 70% $S0 60% 50% ' $60 40% $40 30% 20% $20 RevPAR Occupancy 10% $0 0% . 0,' 0�0' Sim cP 8? cc) oT ��' g'' 4. ) �'e ti~ , ) ,? ' ti ti ti ti ti ti ti ti ti ti ti ti ti� ti� ti� ti_ Source:STR Following the significant RevPAR decline during the last recession, demand growth resumed in 2010,led by select markets that had recorded growth trends in I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 41 Proposed Headquarters Hotel-Virginia Beach,Virginia 1 the fourth quarter of 2009. A return of business travel and some group activity contributed to these positive trends. The resurgence in demand was partly fueled by the significant price discounts that were widely available in the first half of 2010. These discounting policies were largely phased out in the latter half of the year, balancing much of the early rate loss. Demand growth remained strong, but decelerated from 2011 through 2013,increasing at rates of 4.7%, 2.8%,and 2.0%, respectively. Demand growth then surged to 4.0% in 2014, driven by a strong economy,a robust oil and gas sector,and limited new supply,among other factors. By 2014, occupancy had surpassed the 64% mark. Average rate rebounded similarly during this time,bracketing 4.0%annual gains from 2011 through 2014. In 2015, demand growth continued to outpace supply growth, a relationship that had been in place since 2010. With a 2.9% increase in room nights, the nation's occupancy level reached a record high of 65.4%in 2015.Supply growth intensified modestly in 2015 (at 1.1%), following annual supply growth levels of 0.7% and 0.9% in 2013 and 2014, respectively. Average rate posted another strong year of growth, at 4.7% in 2015, in pace with the annual growth of the last four years. Robust job growth, heightened group and leisure travel, and waning price- sensitivity all contributed to the gains. In 2016, occupancy showed virtually no change, as demand growth kept pace with supply additions. Occupancy then moved even higher in 2017, to a new peak of 65.9%. Average rate increased roughly 3% and 2% in 2016 and 2017, respectively. By year-end 2017, the net ' change in RevPAR was 3.0%, reflecting a healthy lodging market overall.Year-to- date statistics through February 2018 show this trend continuing,with a 0.6-point occupancy increase,while average rate increased by just over$2.00,resulting in a 3.2%upward change in RevPAR. 1 1 I 1 1 DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia �� I I ' H VS I FIGURE 5-2 I COMPARISON OF U.S. REVPAR FEBRUARY 2018 VERSUS 2017 €€ote!Type 2018 Percent Change from 2017 RevPAR IUnited States $72.30 3.2% Region Pacific $109.48 3.4% I South Atlantic 80.65 3.0% Mountain 76.41 1.2% Middle Atlantic 76.39 5.4% -----Al I New England 64.23 3.6% West South Central 60.43 3.0% East North Central 47.75 3.5% East South Central 46.41 1.3% I West North Central 44.41 6.0% Class Luxury $191.76 3.7% I Upper-Upscale 117.07 0.9% Upscale 89.22 2.2% Upper-Midscale 64.36 2.9% Midscale 45.92 3.6% I Economy 34.57 5.0% Location Resort $127.54 3.7% I Urban 103.25 0.9% Airport 80.39 2.2% Suburban 63.35 2.9% I Small Metro/Town 44.08 3.6% Interstate 37.98 5.0% Chain Scale I Luxury $234.36 4.4% Upper-Upscale 121.66 0.9% Upscale 90.99 2.0% Independents 67.54 3.8% I Upper-Midscale 62.88 2.9% Midscale 41.70 3.4% Economy 29.61 5.1% inSource:STR-February 2018 Lodging Review The Proposed Hotel's local lodging market is most directly affected by the supply Iand demand trends within the immediate area. I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 43 I Proposed Headquarters Hotel-Virginia Beach,Virginia I 1 Defining the HVS selected a set of competitive local hotels.Four properties would compete with Competitive Set the Proposed Hotel on a primary basis and ten properties on a secondary basis,for a total of fourteen competitors. We weighted the room count of each secondary competitor based on its projected competitiveness with the Proposed Hotel. The following map illustrates the locations of the Proposed Hotel and its primary and secondary competitors. MAP OF COMPETITION BY HVS I `'1 ,. •r f�� a 60 to c.3 *CD? CD I 411) F.0. LIf l 13 7dr CD . 17 0 \, . S'Ay�D tD iso VIRGIfi,A BE�'.,:. 9TO,lk I ran rr 4 . ' is Beach 40 0 to „Naval Air Portsmouth Station Oceana CM ta. a40. s ",r 1;f.,r 1;I r. Chesapeake n ope t` 0 i ,itn to ra c inC Fs/AOKI y tat �3 <, g r'Uh I,G - -., 1 tip. GC? Cie i-ri) C+tti. 9 Wpdwtld1UdoopN TumaofU Report 4 map anar fos PI opined Headquarters Hotel 9 Hilton Garden Inn Virginia Beach Town Center(Secondary) I OPDouole ree by Hilton vlrginia Beach(Ptlmary) Hilton Norfolk The Main(Secondary) Hilton Garden Inn Virginia Beach Oceanfront(Primary) Holiday inn Virginia Beath Norfolk(Secondary) fHilton v)rglnia Beach Oceanfront(Primary) 9 Hyatt house Virginia Beath Oceanfront(Secondary) tWestin Virginia Beach Town Center(Primary) 4 Marriott Norfolk Waterside(Secondary) I 4 Courtyard by Marriott Virginia Beach Oceanfront North STth Street 9 Sheraton Norfolk Waterside(Secondary) (Secondary) ,�r Courtyard by Marriott Vhginie Beach Oceanfront South Sheraton Virginia Beath Oceanfront(Secondary) I 1 (Secondary) ))) 9 Founaerc Inn(Secondary) I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel I 44 Proposed Headquarters Hotel-Virginia Beach,Virginia I 1IVS I HVS relied on STR data and market research to determine the room count of each I hotel. The weighted competitive set currently includes 984 rooms in primary competitors and 2,567 rooms in the secondary competitors with a weighted room count of 1,419.The total number of primary and weighted secondary competitors is 2,403 rooms as shown in the figure below I FIGURE 5-3 THE WEIGHTED COMPETITIVE SET I Hotel Number Competitive Weighted Room of Rooms Level Count I Primary Competitors DoubleTree by Hilton Virginia Beach 292 100% 292 Hilton Virginia Beach Oceanfront 289 100% 289 Westin Virginia Beach Town Center 236 100% 236 I Hilton Garden Inn Virginia Beach Oceanfront 167 100% 167 Sub-total 984 984 Secondary Competitor:I Hilton Norfolk The Main 300 70% 210 Sheraton Norfolk Waterside 468 40% 187 Sheraton Virginia Beach Oceanfront 214 80% 171 I Founders Inn 240 70% 168 Marriott Norfolk Waterside 405 40% 162 Hilton Garden Inn Virginia Beach Town Center 176 70% 123 Holiday Inn Virginia Beach Norfolk 307 40% 123 I Courtyard by Marriott Virginia Beach Oceanfront North 160 60% 96 Hyatt House Virginia Beach Oceanfront 156 60% 94 Courtyard by Marriott Virginia Beach Oceanfront South 141 60% 85 Sub-total 2,567 1,419 ITotals 3,551 2,403 Sources:STR and HVS IOur survey of the primarily competitive hotels in the local market shows a range of lodging types and facilities.We inspected and evaluated each competitor. I Primary Competitors The figure below presents a summary of their operating performance for the past three years of the primary competitors. I I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 45 I Proposed Headquarters Hotel-Virginia Beach,Virginia 1-I VS FIGURE 5-4 2016&2017 PERFORMANCE OF THE PRIMARY COMPETITIVE SET Estimated 2016 Estimated 2017 Property Number of Occ. Average Rate RevPAR Occ. Average Rate RevPAR Rooms DoubleTree by Hilton Virginia 292 50-55% % $130-$140 $70-$75 50-55% % $130-$140 $70-$75 '— Hilton Garden Inn Virginia Beach 167 75-80% $190-$200 $140-$150 75-80% $190-$200 $150-$160 Hilton Virginia Beach Oceanfront 289 70-75% $210-$220 $150-$160 70-75% $210-$220 $150-$160 Westin Virginia Beach Town Center 236 75-80% $140-$150 $110-$115 75-80% $150-$160 $115-$120 Totals 984 69.2 % $174.52 $120.71 69.1 % $174.73 $120.74 Sources:STR and HVS Following are descriptions of the primary competitors. DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 46 Proposed Headquarters Hotel-Virginia Beach,Virginia I I. I PRIMARY COMPETITOR#1-DOUBLETREE BY HILTON VIRGINIA BEACH 1 r ,I`: f r 3 f Il r - k 1 .,. I L l FIGURE 5-5 ESTIMATED HISTORICAL OPERATING STATISTICS I Year Occupancy Average RevPAR Occupancy Yield Rate Penetration Penetration Est.2016 50-55% $130-$140 $70-$75 75-80% 65-70%I Est.2017 50-55% $130-$140 $70-$75 75-80% 65-70% History and Guestroom IDoubleTree by Hilton Location Virginia Beach,VA Virginia Beach PropertyOpening Date June-83 1900 Pavilion Drive Franchise Affiliation Date May-98 I Virginia Beach,VA 5TR Class Scale Room Count Upscale Class 292 Food&Beverage Facilities I Three-Meal Restaurant&Lounge Bar Meeting and Banquet Facilities Meeting Space(sf) Main Ballroom 5,251 Junior Ballroom 3,876 I Meeting Space 6,590 Boardroom 529 Total Meeting Space 16,246 I Outdoor Pool Amenities&Services Parking Exercise Center Corner Market Business Center I Sources:STR,HVS,Website I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 47 I Proposed Headquarters Hotel-Virginia Beach,Virginia II Vs NO bia PRIMARY COMPETITOR#2-HILTON GARDEN INN VIRGINIA BEACH OCEANFRONT ¢ f t.--. pi r' — — F r a , Hilton Garden Inn FIGURE 5-6 _ Virginia Beach ESTIMATED HISTORICAL OPERATING STATISTIC Oceanfront Average Occupancy Yield 3315 Atlantic Avenue Year Occupancy Rate RevPAR Penetration Penetration — Virginia Beach,VA Est. 2016 75-80% $190-$200 $140-$150 110- 120% 140- 150% Est. 2017 75-80% $190-$200 $150-$160 110- 120% 140- 150% — History and Guestroom Location Virginia Beach,VA Property Opening Date May-14 Franchise Affiliation Date May-14 STR Class Scale Upscale ClassII Room Count 167 Food&Beverage Facilities Garden Grill for Breakfast Pavilion Pantry Lager Bar&Grille for Lunch and Dinner Meeting and Banquet Facilities Meeting Space(sf) Main Ballroom 3,000 I Boardroom 450 Total Meeting Space 3,450 Amenities&Services I Indoor and Outdoor Pool Business Center Third Floor Sundeck Parking Exercise Room I Sources:STR,HVS,Website DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel f� I Proposed Headquarters Hotel-Virginia Beach,Virginia �`' I I I I PRIMARY COMPETITOR#3-HILTON VIRGINIA BEACH OCEANFRONT I r -- � i B P.,v p c Vn © 4 t t �' "' d @ o too o W Q I ., t , 4D it {�]` i "y, p y 4' Cam- 'I -1 t t p 1 It, 4,- ta-�re * cf Ills.i\ 'oR S. t t j ! 3 4. l -�. t �' ;rx�; _ .✓ Hilton Virginia Beach FIGURE 5-7 Oceanfront ESTIMATED HISTORICAL OPERATING STATISTICS 1' 3001 Atlantic Avenue Average Occupancy Yield Year Occupancy RevPAR Virginia Beach,VA Rate Penetration Penetration Est.2016 70-75% $210-$220 $150-$160 100- 110% 150- 160%I Est.2017 70-75% $210-$220 $150-$160 100-110% 140- 150% History and Guestroom I Location Virginia Beach,VA Property Opening Date April-05 Franchise Affiliation Date April-05 I STR Class Scale Room Count Upper Upscale Class 289 Food&Beverage Facilities Three-Meal Restaurant Lounge I Dinner Steakhouse Rooftop Bar Meeting and Banquet Facilities Meeting Space(sf{ Main Ballroom 7,140 I Meeting Space 2,616 Boardroom 294 Total Meeting Space 10,050 Amenities&Services I Rooftop Pool Beauty Salon Rooftop Whirlpool Clothing Store Exercise Room Concierge Desk Business Center Self Park&Valet ISources:STR,HVS,Website I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 49 Proposed Headquarters Hotel-Virginia Beach,Virginia em OAS ism Wei inn PRIMARY COMPETITOR#4-WESTIN VIRGINIA BEACH TOWN CENTER •ei 1 • .k a •ti � t ai ; y _ � r i' 1•i ".. tiei6 ' Westin Virginia Beach FIGURE 5-8 Town Center ESTIMATED HISTORICAL OPERATING STATISTICS 4535 Commerce Street Average Occupancy Yield Virginia Beach,VA Year Occupancy RevPAR Rate Penetration Penetration Est.2016 75-80% $140-$150 $110-$115 110- 120% 100- 110% Est. 2017 75-80% $150- $160 $115-$120 110- 120% 100- 110% History and Guestroom Location Virginia Beach,VA Property Opening Date November-07 Franchise Affiliation Date November-07 STR Class Scale Upper Upscale Class Room Count 236 Food&Beverage Facilities Three-Meal Restaurant Lounge Meeting and Banquet Facilities Meeting Space(sf) Main Ballroom 8,332 Meeting Space 2,265 Boardroom 525 Total Meeting Space 11,122 Amenities&Services Indoor Pool Self&Valet Parking Exercise Center Concierge Service Business Center Gift/Sundry Shop Sources:STR,HVS,Website DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 5Q Proposed Headquarters Hotel-Virginia Beach,Virginia •J I I IIVS I I HVS ranked the primary competitors on four criteria related to the attractiveness Iof the property to potential customers. 1. Access-the ease with which customers can gain vehicular or pedestrian access the property. Simple and direct access routes are rated higher than more Ito complicated routes. 2. Visibility - is particularly important to hotels that attract walk-in customers I who do not have prior reservations. Signage and building facades typically provide visibility. 3. Neighborhood - means the quality of the surrounding neighborhood, the I compatibility of adjacent land uses,the perceived safety of the neighborhood. 4. Physical condition - refers to the overall physical condition of the hotel. Based on an inspection of each property, HVS rated the physical condition of each Ihotel in comparison to other hotels of a similar scale or class. Each criterion was rated from one to five, with one indicating very poor compliance with the criteria and five meaning excellent compliance. The figure I below summarizes the results of the rankings for each criterion and shows an aggregate rating that is the average of all criteria. I FIGURE 5-9 RANK OF PRIMARY COMPETITORS ON CUSTOMER SELECTION CRITERIA* Access Access Visibility Neighbor- Physical Aggregate I hood Condition Rating Hilton Virginia Beach Oceanfront 4 5 5 4 4.50 Hilton Garden Inn Virginia Beach Oceanfront 4 5 5 4 4.50 I Proposed Headquarters Hotel 4 4 4 5 4.25 Westin Virginia Beach Town Center 4 4 4 4 4.00 DoubleTree by Hilton Virginia Beach 4 3 4 3 3.50 I *Ranked on a Scale of 1 to 5 where: 1=Very Poor,2=Poor,3=Average,4=Good,5=Excellent The Proposed Hotel customer selection criteria rank approximately average of the primary competitors. The Proposed Hotel ranks well on physical condition due to Inew construction. The following figure sets forth the pertinent operating characteristics of the Icombined secondary competitors I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 51 IProposed Headquarters Hotel-Virginia Beach,Virginia I I IVS i II pp FIGURE 5-10 RECENT PERFORMANCE OF THE SECONDARY COMPETITIVE SET 2017 Estimated 2016 Estimated 2017 Number Property ooms Weighting WRe�hted Occ. ADR RevPAR Occ. ADR RevPAR of ms Courtyard by Ma rriott Vi rgi ni a Beach 160 60% 96 70-75 % $180-$190$130-$140 70-75 % $180-$190$130-$140 Oceanfront North Courtyard by Marriott Virginia Beach 141 60% 85 70-75 160-170 120-125 70-75 160-170 120-125 Oceanfront South founders Inn 240 70% 168 55-60 120-125 70-75 60-65 120-125 70-75 Hilton Garden Inn Virginia Beach Town 176 70% 123 75-80 130-140 100-105 75-80 130-140 105-110 Center Hilton Norfolk The Main 300 70% 210 — — — 65-70 170-180 115-120 Holiday Inn Virginia Beach Norfolk 307 40% 123 55-60 100-105 55-60 55-60 110-115 60-65 Hyatt House Virginia Beach Oceanfront 156 60% 94 — — — 65-70 150-160 105-110 Marriott Norfolk Waterside 405 40% 162 70-75 120-125 85-90 65-70 120-125 80-85 Sheraton Norfolk Waterside 468 40% 187 70-75 90-95 60-65 65-70 85-90 60-65 Sheraton Virginia Beach Oceanfront 214 80% 171 55-60 170-180 100-105 60-65 170-180 105-110 Totals 2,567 1,419 67.6% $131 $89 68.0% $139 $94 Historical Supply The figures below summarize aggregate competitive set performance in the base and Demand Data year. Since 2017 was the most recent complete year of available data at the time of this study, we used it as the base year of our analysis. Performance analyses include guest room count, occupancy rate, average daily room rate ("ADR"), and revenue per available room, ("RevPAR"). RevPAR, a common hotel industry performance metric,is the product of occupancy rate and ADR. — DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 52 "- Proposed Headquarters Hotel-Virginia Beach,Virginia i 11 VS FIGURE 5-11 ' THE WEIGHTED COMPETITIVE SET HISTORICAL PERFORMANCE Room Count Secondary Competitors 1,362 I DoubleTree by Hilton Virginia Beach 292 Hilton Virginia Beach Oceanfront 289 Westin Virginia Beach Town Center 236 11 Hilton Garden Inn Virginia Beach Oceanfront 167 Occupancy Hilton Garden Inn Virginia Beach Oceanfront 75-80% Westin Virginia Beach Town Center 75-80% _111111111111111 ' Hilton Virginia Beach Oceanfront 70-75% Secondary Competitors 68% DoubleTree by Hilton Virginia Beach 50- 55% ADR Hilton Virginia Beach Oceanfront $210-$220 1111111/1111 Hilton Garden Inn Virginia Beach Oceanfront $190-$200 11111111111111 Westin Virginia Beach Town Center $150-$160 11111111111 ' Secondary Competitors $139 MEM DoubleTree by Hilton Virginia Beach $130-$140 RevPAR ' Hilton Virginia Beach Oceanfront $150-$160 10.1111111111 Hilton Garden Inn Virginia Beach Oceanfront $150-$160 Westin Virginia Beach Town Center $115-$120 ' Secondary Competitors $94 DoubleTree by Hilton Virginia Beach $70-$75 I_ Sources:STR and HVS ' The figure below shows year-to-date through January occupancy and average daily room rates compared to the prior year for the competitive hotels. FIGURE 5-12 YEAR-TO-DATE THROUGH JANUARY ' 2017 2018 Percent Change Occupancy 48.8% 48.1% -1.4% ADR $100.98 $105.25 4.2% ' Room Night Demand 46,820 52,945 13.1% Source:STR DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia �� vs p The competitive hotel's occupancy declined, ADR increased, and room night demand increased over the 2017 levels. Occupancy declined due to the market absorbing new supply of hotel rooms. Occupancy and Yield Market penetration measures how an individual hotel property performs in Penetration comparison to the market. Occupancy penetration is the occupancy of the hotel divided by the market occupancy. Yield penetration is the RevPAR of a hotel _ divided by the RevPAR of the market. A penetration factor greater than one indicates a property is performing better than the market. A penetration factor less than one indicates that a property is underperforming the market. The following figure shows occupancy and yield penetrations of the hotels in the competitive set. FIGURE 5-13 OCCUPANCY AND YIELD PENETRATION Occupancy Penetration Hilton Garden Inn Virginia Beach Oceanfront 110- 120% 1111.1MINEI Westin Virginia Beach Town Center 110- 120% Hilton Virginia Beach Oceanfront 100- 110% Secondary Competitors 99% DoubleTree by Hilton Virginia Beach 75-80% r-�-+-u .' Yield Penetration I Hilton Virginia Beach Oceanfront 140- 150% Hilton Garden Inn Virginia Beach Oceanfront 140- 150% Westin Virginia Beach Town Center 100- 110% ` 111 Secondary Competitors 90% P DoubleTree by Hilton Virginia Beach 65-70% MK Sources:STR and HVS Seasonality The hotel market shows significant seasonal variation,with summer displaying the highest average daily rates and occupancy and winter with the lowest average daily rates and occupancy. DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 5�{ Proposed Headquarters Hotel-Virginia Beach,Virginia 'r I 11 \ � I 1 FIGURE 5-14 ' SEASONALITY GRAPH OF THE WEIGHTED COMPETITIVE SET 100% $200 90% $180 80% $160 70% $140 60% $120 ' SO% $100 40% $80 30% —Occupancy —ADR $60 ' 20% $40 10% $20 0% $0 ' Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Source:STR Group demand is strongest in the spring and fall months, and tourists drive transient demand during its peak in the summer months. Historical Market STR data have certain limitations. Hotels are occasionally added to or removed ' Performance from the sample and not every property reports data in a consistent and timely manner. These factors can influence the overall quality of the information. These inconsistencies may also cause the STR data to differ from the results of our ' competitive survey.Nonetheless,STR data provide the best indication of aggregate growth or decline in existing supply and demand; thus, these trends are considered in our analysis. ' The figure below shows the historical performance of the competitive set including the occupancy rates,ADR,and RevPAR. I I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 55 Proposed Headquarters Hotel-Virginia Beach,Virginia _ I I I VS I I FIGURE 5-15 HISTORICAL ROOM NIGHT DEMAND,ADR,AND REVPAR $160 80% $140 70% $120 60% $100 50% $80 r 40% $60 30% $40 i ADR — — —RevPAR --- Occupancy 20% $20 10% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source:STR These data reflect an overall market occupancy level of 69% in 2017, an increase from 68% for 2016. The overall average occupancy level for the period shown in the above figure was 66%.The economic downturn of 2008 through 2019 resulted in lower demand and occupancy rates in the market.Occupancy increased in 2011, and 2012 but fell in 2013.Growth returned in 2014 and continued through 2017. The overall market average rate increased to $143.12 in 2017 from 140.26 for 2016.The average rate across to the period was $127.91 but has fluctuated from a low of$118.94 to a high of$143.12 from 2008 to 2017. Rates have been modestly increasing from 2010 levels including growth in 2017,which had the highest rate from 2008 to 2017.These occupancy and average rate trends resulted in a RevPAR level of$98.55 in 2017. Weekly Patterns of A review of the trends in occupancy, average rate,and RevPAR by the night of the Lodging Demand week over the past three fiscal years provides some insight into the impact that the current economic conditions have had on the competitive lodging market.The figure below shows the data provided by Smith Travel Research. I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia 56 1 I I II\ S I I FIGURE 5-16 I 90% OCCUPANCY AND AVERAGE RATE BY DAY OF WEEK $175 80% -- $150 , I 70% 60% — -. $125 50% _ -__-J. I I - $100 40% $75 - Ill III sm. 20% - IIIII 10f - _. $25 oge _ _ .b ---1 _. - $0 Sun Mon Tue Wed Thu Fri Sat IOccupancy ADR Source:STR I Leisure travelers and non-business-related groups generate high occupancy on Friday and Saturday nights. Commercial travel generates strong demand on Tuesday and Wednesday nights. The peak rate is on Friday and Saturday nights, Iwhich reflects the impact of leisure demand on weekends. Supply Changes New hotels may affect the Proposed Hotel's operating performance. Based on our research and inspection (as applicable), new supply considered in our analysis is Ipresented in the following figure. FIGURE 5-17 I ROOM SUPPLY PROJECTIONS(WEIGHTED DAILY ROOM COUNTS) Existing Primary New Primary Existing Secondary New Secondary I 2A03 2,624 2,863 3,064 3,263 3,263 2018 2019 2020 2021 2022 2023 IThe figure below summarizes our assumptions regarding new supply. I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 57 IProposed Headquarters Hotel-Virginia Beach,Virginia I-1 VS FIGURE 5-18 NEW SUPPLY Year Proposed Property Competitive Proposed Weighted Cumulative weighted Weight Rooms Room Count Room Count 2019 Resident Inn Town Center 50% 120 60 1 2019 Marriott Virginia Beach 100% 300 300 2019 Hyatt Place Town Center 50% 120 60 111111111111 2020 Hampton Inn &Suites 40% 100 40 111.1111111.1 2021 Proposed Hotel 100% 400 400 immimpt Tota Is 1,040 860 ..� Other potential new hotels were not factored directly into our analysis due to their location, market orientation, and size. Though not directly competitive, new hotel -- supply could affect absorption of room night demand in the competitive set. By 2021, we anticipate a cumulative increase of 1,040 available rooms of which 860 will be competitive. While we have taken reasonable steps to investigate proposed hotel projects and their status, due to the nature of real estate development, it is impossible to determine with certainty every hotel that would open in the future. Future improvement in market conditions would raise the risk of increased competition. Our forecasts reflect this risk. Demand The following figure presents data on the performance of the weighted competitive set. HVS estimated performance results and in some cases weighted data on secondary competitors. In this respect, this information differs from the previously presented STR data. FIGURE 5-19 COMPETITIVE SET RECENT MARKET PERFORMANCE Accommodated Room Blights Competitive Competitive Competitive Year Room Nights Available Hotels Hotels ADR Hotels RevPAR Occupancy .� Amount 2015 514,000 766,000 67.1% $147.63 $99.06 2016 524,000 766,000 68.4% $151.73 $103.79 ... 2017 586,000 856,000 68.5% $154.00 $105.42 Percent Change 2016 1.9% 0.0% 1.9% 2.8% 4.8% 2017 11.8% 11.7% 0.1% 1.5% 1.6% DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 58 Proposed Headquarters Hotel-Virginia Beach,Virginia I l I; -'S I I I In 2017, growth in demand (11.8%) kept pace with growth in available room ' nights(11.7%). Demand Analysis The purpose of segmenting the lodging market is to define each major type of Using Market demand, identify customer characteristics,and estimate future growth trends. For ' Segmentation the demand analysis, the overall market is divided into three segments based on the nature of travel. Based on our fieldwork and knowledge of the local lodging market, we estimate the 2017 distribution of accommodated room night demand ' as shown in the figure below. FIGURE 5-20 ' ACCOMMODATED ROOM NIGHT DEMAND Market Segment Room Nights Percent of Total Demand ' Commercial 208,492 36% Leisure 198,035 34% Meeting and Group 179,765 31% ' Total 586492 100% The commercial segment is the largest, generating 36% of total room night ' demand. Commercial Demand Commercial demand (36% of total demand) is mainly individual business people passing through the subject market or visiting area businesses,in addition to high- ' volume corporate accounts generated by local firms. Brand loyalty (particularly frequent-traveler programs), as well as location and convenience with respect to businesses and amenities, influence lodging choices in this segment. Companies ' typically designate hotels as "preferred" accommodations in return for more favorable rates. Commercial demand is strongest Monday through Thursday nights, declines significantly on Friday and Saturday, and increases somewhat on ' Sunday night. In markets where the weekday occupancy often exceeds 90%,some unaccommodated commercial demand is likely to be present. It is relatively constant throughout the year,with marginal declines in late December and during other holiday periods. ' Commercial demand in the subject property's market is generated by a wide variety of corporations, with telecommunications companies, healthcare, advance ' technologies/defense sectors, and government contractors generating significant demand. ' Meeting and Group Demand The meeting and group demand (31% of total demand) include meetings, seminars, conventions,trade shows,and similar gatherings of ten or more people. Peak convention demand typically occurs in the spring and fall.Although there are I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 59 Proposed Headquarters Hotel-Virginia Beach,Virginia I I-I VS I numerous classifications within the meeting and group segment, the primary categories considered in this analysis are corporate groups, associations, and SMERFE (social, military, educational, religious, fraternal, and ethnic) groups. Corporate groups typically meet during the business week most commonly in the spring and fall months. These groups often are the most profitable for hotels, as they typically pay higher rates and usually generate ancillary revenues including food,beverage,and banquet revenue. SMERFE groups are typically price-sensitive and tend to meet on weekends or during the summer months or holiday season when greater discounts are usually available. They generate limited ancillary revenues. The profile and revenue potential of associations varies depending on the group and the purpose of their meeting or event. Factors related to group demand considered in our development of growth rates for this segment include the market's local corporate sources, which generate some group business.In the greater market area,the SMERFE sub-segment within the meeting and group segment is the strongest. The Hampton Roads area is a popular drive-to location that attracts numerous church, youth, and sport groups to participate in the area's tourist attractions. We have also considered the Proposed Hotel's anticipated ability to market itself as a conference center hotel with the availability of ample meeting space in conjunction with the VBCC. The property will also benefit from room night demand generated by events held at the VBCC and the Sports Center. Leisure Demand Leisure demand (34% of total demand) is from individuals and families spending time in an area or passing through in route to other destinations. Travel purposes include sightseeing, recreation, or visiting friends and relatives. Leisure demand also includes room nights booked through Internet sites such as Expedia, hotels.com, and Priceline; however, leisure may not be the purpose of the stay. This demand may also include business travelers and group and convention attendees who use these channels to take advantage of any discounts that may be available on these sites. Leisure demand is strongest Friday and Saturday nights and all week during holiday periods and the summer months. These peak periods 111 represent the inverse of commercial visitation trends,underscoring the stabilizing effect of capturing weekend and summer tourist travel. Future leisure demand is related to the overall economic health of the region and the nation. Trends showing changes in state and regional unemployment and disposable personal income correlate strongly with leisure travel levels. The typical length of stay ranges from one to four days, depending on the destination and travel purpose, and the rate of double occupancy typically ranges from 1.8 to 2.5 people per room. Price sensitivity tends to vary with the product type. All-suite properties with inclusive food and beverage would tend to drive DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel �j Proposed Headquarters Hotel-Virginia Beach,Virginia "o 1 I I\Ts I strong leisure room rates while highway properties with limited amenities ' typically offer more discounted leisure room rates. Leisure demand in the area is generated primarily by the popularity of Virginia Beach during the summer months. During the shoulder months and the low season,leisure demand is driven primarily by transient travelers heading south for the winter or back north for the summer and spring break activity. ' Estimated Demand HVS applies growth rates to each segment to determine the level of future demand. Growth by Market HVS based demand growth rate estimates on interviews with hotel managers, Segment assessment of data on occupancy trends, economic and demographic data, and ' identification of demand generators. The figure below shows estimated base growth rates by market segment. FIGURE 5-21 ESTIMTED ANNUAL BASE GROWTH RATES BY MARKET SEGMENTS ' Segment 2018 2019 2020 2021 2022 2023 2024 2025 Average Commercial 3.5% 3.5% 4.0% 3.0% 3.0% 2.0% 1.5% 0i5% 2.6% Meeting and Group 4.0% 3.5% 4.5% 3.5% 4.0% 2.5% 2.0% 1.096 3.1% I Leisure Weighted Overall Change 3.0% 4.0% 7.0% 4.0% 3.5% 2.5% 2.0% 1.096 3.4% 3.5% 3.7% 5.2% 3.5% 3.5% 2.3% 1.8% 0.8% 3.0% The addition of four new hotels including the 300-room oceanfront Marriott to the market in 2019 and 2020 will generate significant growth in demand. ' Latent Demand Latent demand reflects potential room night demand that has not been realized by the existing competitive supply. Unaccommodated demand and induced demand make up latent demand. fUnaccommodated Unaccommodated demand refers to individuals who are unable to secure Demand accommodations in the market because all the local hotels are filled. These ' travelers must defer their trips, settle for less desirable accommodations, or stay in properties located outside the market area. Because this demand did not yield occupied room nights, it is not included in the estimate of historically accommodated room night demand. If additional lodging facilities are expected to ' enter the market, it is reasonable to assume that these guests would be able to secure hotel rooms in the future, and it is, therefore, necessary to quantify this demand. I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel G 1 Proposed Headquarters Hotel-Virginia Beach,Virginia V 1 I IVS I The seasonality of the market indicates that although year-end occupancy may not I average more than 70%, the market sells out many nights during the year indicating unaccommodated demand. The primary source of unaccommodated demand is the popular summer season, which has historically had the highest occupancy rates. The following figure presents our estimate of unaccommodated demand. I FIGURE 5-22 UNACCOMMODATED DEMAND ESTIMATE Market Segment Total Room of Room Nights Nights Total Leisure 198,035 7.5% 14,764 Meeting and Group 179,765 2.3% 4,218 SF Commercial 208,492 1.0% 2,109 r Total 586,292 3.6% 21,092 Utilizing monthly and weekly peak demand and sell-out trends, we estimate that 3.6%of the base-year demand is unaccommodated. Induced Demand Induced demand represents the additional room nights attracted to the market following the introduction of a new demand generator.Situations that can result in induced demand include the opening of a new manufacturing plant, the expansion of a convention center, or the addition of a new hotel with a distinct chain affiliation or unique facilities. In Section 4 of this study, we presented an estimate of induced demand from the VBCC due to the opening of the Proposed Hotel and the Sports Center. The competitive hotels represent only a subset of the rooms available in the local market. A portion of the demand induced by the opening of the Proposed Hotel and the Sports Center will flow to the competitive hotels,as shown in the following figure. FIGURE 5-23 ALLOCATION OF INDUCED DEMAND Total Induced %Allocated into Induced Demand Source of Induced Demand Room Nights Competitive into Competitive Hotels Hotels Opening of Sport Center 90,900 30% 27,270 Convention Center 53,300 90% 47,970 Proposed Hotel Meeting Space 15,000 100% 15,000 Totals 159,200 90,240 DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia V� I I 1I� I I The following figure shows estimated induced demand for room nights that would ' enter the competitive set over a four-year ramp-up period. FIGURE 5-24 ' TIMING OF INDUCED DEMAND Year Total Induced I 2020 8,181 I 2021 38,625 _ 2022 73,826 .111111. 2023 83,943 11111.11111 2024 90,240 Accommodated Using historical room night demand as a starting point and applying the previously Demand and Market- discussed assumptions, HVS estimated room night demand in the competitive set Market- wide Occupancy by market segment as shown in the figure below. I FIGURE 5-25 ROOM NIGHT DEMAND BY MARKET SEGMENT Market Segment Room Nights Percent of Total Demand Commercial 208,492 36% Leisure 198,035 34% • ' Meeting and Group 179,765 31% Total 586,292 100% I Four variables make up accommodated demand: 1) base demand—sources currently generating room nights, 2)previously unaccommodated demand absorbed due to growth in room supply,and 3) induced demand that is new to the market. These estimates are adjusted by 4) residual demand—the estimated number of room nights not accommodated due to supply constraints. The figure below breaks down room night demand by these sources. I I I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 63 Proposed Headquarters Hotel-Virginia Beach,Virginia I I-I VS I I FIGURE 5-26 ANNUAL ROOM NIGHT DEMAND BY SOURCE Source 2017 2018 2019 2020 2021 2022 2023 2024 2025 Base Accommodated 586,000 607,000 629,000 661,000 685,000 708,000 725,000 738,000 744,000 Previously Unaccommodated 21,000 21,000 21,000 21,000 21,000 21,000 26,000 27,000 27,000 Induced 0 0 0 8,000 39,000 74,000 84,000 90,000 90,000 Total Available Demand 607,000 628,000 650,000 690,000 745,000 803,000 835,000 855,000 861,000 (Less Residual Demand) (21,000) (23,000) (21,000) (11,000) (11,000) (4,000) (14,000) (25,000) (30,000) Total Accommodated Demand 586,000 605,000 629,000 679,000 734,000 799,000 821,000 830,000 831,000 I Accommodated Demand Change 12.0% 3.3% 4.1% 8.3% 8.0% 9.0% 2.2% 1.1% 0.2% Available Room Night Change 11.796 2.4% 9.2% 9.1% 7.0% 6.5% 0.0% 0.0% 0.0% Marketwide Occupancy 68% 69% 66% 65% 66% 67% 69% 70% 70% Over the projection period, room night demand is estimated to grow at a compound average annual rate of 4.0%. HVS used these demand projections to forecast the Proposed Hotel's occupancy and average rate. Projections of Along with average rate results, the occupancy levels achieved by the Proposed Occupancy and Hotel would be the foundation of the property's financial performance. To a Average Rate certain degree, management can manipulate the level of occupancy. For example, hotel operators may choose to lower rates to maximize occupancy. Our forecasts reflect an operating strategy that we believe would be implemented by a typical professional hotel management team to achieve an optimal mix of occupancy and average rate. 1 Penetration Rate The Proposed Hotel's forecasted market share and occupancy levels are based Analysis upon its anticipated competitive position within the market, as quantified by its penetration rate. The penetration rate is the ratio of a property's market share to its fair share.A hotel achieves a fair share when its share of occupied room nights equals its share of available room nights. Market Penetration HVS analyzed the market penetration of each of the properties in the competitive I set. The following figure ranks the market penetration of each hotel by market segment. I I I DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel I Proposed Headquarters Hotel-Virginia Beach,Virginia 64 i I I \ I I FIGURE 5-27 HISTORICAL OCCUPANCY PENETRATION RATES Commercial Penetration Westin Virginia Beach Town Center 140% Hilton Virginia Beach Oceanfront 118% Hilton Garden Inn Virginia Beach Oceanfront 114% Secondary Competition 92% DoubleTree by Hilton Virginia Beach 79% ' Meeting and Group Penetration Secondary Competition 111% Westin Virginia Beach Town Center 109% Hilton Virginia Beach Oceanfront 86% DoubleTree by Hilton Virginia Beach 79% Hilton Garden Inn Virginia Beach Oceanfront 56%t ' Leisure Penetration Hilton Garden Inn Virginia Beach Oceanfront 171% Hilton Virginia Beach Oceanfront 109% SecondaryCompetition 96% ' DoubleTree by Hilton Virginia Beach 83% Westin Virginia Beach Town Center 82% ' The Westin Virginia Beach Town Center had the highest commercial penetration due to extensive facilities,upscale brand,and town center location.The secondary competitors had the highest penetration of the meeting and group segment due to ' the inclusion of the large meeting-oriented hotels in Norfolk. The Hilton Garden Inn Virginia Beach Oceanfront had the highest penetration of the leisure segment due to oceanfront location,new construction,and strong brand. The Proposed Hotel was positioned within each market segment. The Proposed Hotel would under penetrate the commercial segment due to a location remote from the major sources of commercial demand.The Proposed Hotel would: t • over-penetrate the meeting and group segment due to the adjacent VBCC and Sports Center and • under penetrate the leisure segment due to a non-beachfront location. The figure below shows our estimates of market penetration of the Proposed Hotel. 1 1 DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel 65 Proposed Headquarters Hotel-Virginia Beach,Virginia I I I VS I FIGURE 5-28 OCCUPANCY PENETRATION OF THE PROPOSED HOTEL Meeting and Group 151% Leisure 72% Commercial 65% We estimate that the Proposed Hotel would achieve 100.1% overall occupancy penetration in a stabilized year of operation of 2024/25. As is typical of new hotels, it may take several years to ramp-up to its stabilized occupancy level. HVS assumes a four-year ramp up, after the opening of the Proposed Hotel. At I stabilization in 2024/25, the Proposed Hotel could achieve an occupancy rate as shown in the figure below. The occupancy rate is rounded to the nearest percentage when projecting room revenues in the Pro Forma. FIGURE 5-29 I PROPOSED HOTEL ROOM NIGHT ABSORPTION AND OCCUPANCY ESTIMATES FISCAL YEAR I 2021/22 2022/23 2023/24 2024/25 Available Room Nights 146,000 146,000 146,000 146,000 Absorption by Segment 1 Commercial 18,100 19,400 20,000 20,000 Meeting and Group 48,500 53,900 57,100 58,400 Leisure 20,600 22,500 23,500 23,600 Total Absorption 87,200 95,800 100,600 102,000 Projected Occupancy 60% 66% 69% 70% I Percent Segmentation Commercial 21% 20% 20% 20% Meeting and Group 56% 56% 57% 57% I Leisure 24% 23% 23% 23% The stabilized occupancy reflects the anticipated results of the property over its remaining economic life, given all changes in the life cycle of the hotel. Thus, the I stabilized occupancy excludes from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusually high or low occupancies. Although the Proposed Hotel may operate at occupancies above this stabilized level, new competition, and temporary economic downturns could force the occupancy below our stabilized projection. i DRAFT June 20,2018 Supply and Demand Analysis for the Proposed Hotel I 66 Proposed Headquarters Hotel-Virginia Beach,Virginia I I I ll\ s I I 6. Average Rate Analysis for the Proposed Hotel I I Average Rate Analysis The average rate is calculated by dividing the total rooms revenue achieved during a specified period by the number of rooms sold during the same period. The projected average rate and the anticipated occupancy percentage are used to I forecast rooms revenue,which in turn provides the basis for estimating most other income and expense categories. I Competitive Position Although average rate and occupancy are highly correlated, one cannot project occupancy without making specific assumptions regarding average rate. Revenue per available room ("RevPAR") reflects a property's ability to maximize rooms revenue with the optimal balance of rate and occupancy. The following figure I summarizes the historical average rate and the RevPAR of the subject property's future primary competitors. I FIGURE 6-1 BASE-YEAR AVERAGE RATE AND REVPAR OF THE COMPETITORS 2017 Average ADR RevPAR i ProPertY Room Rate Penetration RevPAR Penetration DoubleTree by Hilton Virginia Beach $130-$140 84% $71.50 68% I Hilton Garden Inn Virginia Beach Oceanfront 190-200 127% 154.05 146% Hilton Virginia Beach Oceanfront 210-220 140% 155.52 147% Westin Virginia Beach Town Center 140- 150 99% 115.52 110% Average-Primary Competitors $174.73 113% $120.74 114% IAverage-Secondary Competitors 138.78 90% 94.42 90% Overall Average $154.00 $105.46 I The primary competitors realized an overall average rate of$174.73 in the 2017 base year,improving from the 2016 level of$174.52. I The following figure illustrates the projected ADR in a calendar year.As a context for the average rate growth factors, note that we have applied a base underlying inflation rate of 2.5%annually throughout our projection period. I I DRAFT June 20,2018 Average Rate Analysis for the Proposed Hotel 67 I Proposed Headquarters Hotel-Virginia Beach,Virginia I I_lVS i 1 FIGURE 6-2 COMPETITIVE HOTELS AND PROPOSED HOTEL AVERAGE RATE FORECAST Competitive Hotels(Calendar Year) Proposed Hotel(Calendar Year) Average Average Average Year Occupancy Rate Average Occupancy Rate Average Rate Growth Rate Growth Rate Penetration Base Year 68.5 % - $154.00 - - $150.00 97.4 % 2018 69.1 2.0 % 157.08 - 2.0 % 153.00 97.4 2019 65.8 2.5 161.01 - 2.5 156.83 97.4 2020 65.3 2.5 165.03 - % 2.5 160.75 97.4 2021 65.9 2.5 169.16 57.0 2.5 164.76 97.4 2022 67.5 2.5 173.39 63.0 2.5 168.88 97.4 2023 69.0 2.5 177.72 68.0 2.5 173.11 97.4 - 2024 69.8 2.5 182.16 70.0 2.5 177.43 97.4 2025 69.9 2.5 186.72 70.0 2.5 181.87 97.4 A 2.0% rate of change is expected for the subject property's 2017 base year room rate in 2018 supported by the 0.9% STR estimated increase in the ADR,as of year- to-date through January, 2.0% increase in ADR in 2017,and 3.1% over the last five years. HVS projects growth rates of 2.5% and 2.5% in 2019 and 2020, respectively - as the market absorbs recent increases in supply and upscale oceanfront properties such as the 300-room Marriott open. The Proposed Hotel would achieve an ADR penetration rate of 97.4%by the stabillized period. - The projected calendar year ADR for the Proposed Hotel is converted to a July 1 fiscal year, as shown in the following figure. The projected ADR for the Proposed - Hotel is before the discount of 3% in 2021/22 and 1% in 2022/23 during the stabilization period. - a.. - DRAFT June 20,2018 Average Rate Analysis for the Proposed Hotel 68 - Proposed Headquarters Hotel-Virginia Beach,Virginia C7 I 1�VS I FIGURE 6-3 FISCAL YEAR COMPETITIVE HOTELS AND PROPOSED HOTEL AVERAGE RATE FORECAST Competitive Hotels Proposed Hotel 111 Base Year 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 2024/25 Competitive Hotels $154 $159 $163 $167 $171 $176 $180 $184 Proposed Hotel $0 $0 $0 $163 $162 $169 $175 $180 t 1 I p DRAFT June 20,2018 Average Rate Analysis for the Proposed Hotel 69 Proposed Headquarters Hotel-Virginia Beach,Virginia 1 7. Projection of Income and Expense for the Proposed Hotel 1 Methodology Estimates of average rate and occupancy allow the projection of room revenue, which forms the basis of income and expense projections. The number of guests drives other revenue sources of the Proposed Hotel such as food, beverages, and telephone income.Many expense levels also vary with occupancy. We assume operation would begin on July 1, 2021. The forecast of income and expense is stated in current dollars for each operating year. We expect hotel operations to ramp up during three years after opening. The stabilized year reflects the anticipated operating results of the property over its remaining I economic life. Thus, income and expense estimates from the stabilized year forward exclude from consideration any abnormal relationship between supply and demand, as well as any nonrecurring conditions that may result in unusual revenues or expenses. The projections of revenue (other than room revenue) and expense for the Proposed Hotel rely on comparable operating statements from the HVS database. We carefully selected comparable operating statements based on similarities with the Proposed Hotel including room count, property type, location in urban markets, amounts of function space, occupancy rates, and average daily room rates.A full year's data on each property is available within the last three years. The following figure shows the room count, meeting space, occupancy, average rate, and RevPAR of the comparable hotels and compares them with the Proposed Hotel. 1 I 1 DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia 7� I 1I1 I I FIGURE 7-1 OVERVIEW OF COMPARABLE OPERATING STATEMENTS Comp A Comp B Comp C Comp D Camp E Subject Hotel Year 2016/17 2016/17 2016 2015/16 2015 * Number of Rooms: 360 to 450 360 to 450 260 to 330 310 to 390 270 to 340 400 Meeting Space 60,000 18,166 22,000 40,000 42,000 37,400 IOccupied Rooms: 109,780 102,153 76,506 95,960 84,099 102,200 Occupancy: 74% 69% 71% 74% 75% 70% Average Rate: $122 $149 $150 $166 $151 $149 IRevPAR: $91 $103 $106 $123 $113 $104 •A stabilized year of operation.Dollaramounts shown in 2017 dollars. Sources:Respective Venues and HVS Further analysis of the comparable hotels provides benchmarks used in our forecast of income and expense. The three most common measures of industry I performance: ratio to sales ("RTS"), amounts per available room ("PAR"), and amounts per occupied room night ("POR") are used to present the financial data. The following figure compares our forecasts for the Proposed Hotel to the comparable properties on each of these metrics. I I I I I I I DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 7L i Proposed Headquarters Hotel-Virginia Beach,Virginia I I1VS I I FIGURE 7-2 COMPARABLE OPERATING STATEMENTS--RATIO TO SALES RANK-PERCENTAGES 1 2 3 4 5 6 REVENUE Rooms 78.7 65.7 63.6 61.8 59.3 51.0 Food&Beverage 45.8 34.8 34.1 33.5 29.8 19.2 Other Operated Departments 10.0 2.8 2.1 1.7 0.9 0.0 Miscellaneous Income 3.3 0.8 0.6 0.5 0.0 0.0 DEPARTMENTAL EXPENSES Rooms 23.8 23.1 23.0 22.3 22.2 21.4 Food&Beverage 81.7 67.7 66.0 61.2 57.9 46.2 Other Operated Departments 100.9 65.0 42.9 42.8 10.8 0.0 OPERATING EXPENSES Administrative &General 8.2 8.2 7.7 7.3 7.2 6.3 Info.and Telecom.Systems 2.1 0.9 0.1 0.0 0.0 0.0 Marketing 9.3 8.6 7.5 7.4 7.1 6.9 Franchise Fee 8.4 6.8 6.2 5.2 4.9 2.0 Property Operations&Maintenance 4.5 4.3 4.2 3.7 3.5 3.4 Utilities 5.5 5.0 4.2 3.8 3.5 3.4 - Total Operating Expenses 34.0 31.4 30.2 29.5 27.8 24.2 HOUSE PROFIT 40.1 39.2 34.1 33.2 31.5 29.7 indicates position of Proposed Hotel indicates position of comparable hotels OM IMMIN IIMII DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 72 Proposed Headquarters Hotel-Virginia Beach,Virginia I I IiVS I I FIGURE 7-3 I AMOUNTS PER AVAILABLE ROOM RANK-INCOME PER ROOM 1 2 3 4 5 6 REVENUE Rooms 45,036 41,185 38,680 38,137 37,628 33,133 I Food &Beverage 36,980 22,668 20,440 19,729 18,664 9,199 Other Operated Departments 7,631 1,482 Lon 986 501 0 Miscellaneous Income 2,653 620 338 319 24 0 I DEPARTMENTAL EXPENSES Rooms 9,810 9,617 8,941 8,772 8,342 7,396 Food&Beverage 18,524 17,102 13,490 11,423 11,414 6,224 Other Operated Departments 821 664 636 505 422 0 I OPERATING EXPENSES Administrative&General 6,204 5,079 4,813 4,300 4,132 3,505 Info.and Telecom.Systems 1,114 550 45 0 0 0 Marketing 6,982 5,406 4,966 4,500 4,386 3,298 Franchise Fee 4,045 4,010 3,717 3,637 2,782 1,651 I Property Operations &Maintenance 3,153 2,751 2,654 2,284 2,200 1,688 Utilities 3,085 2,969 2,928 2,629 2,500 1,618 Total Operating Expenses 21,109 19,548 18,504 18,207 18,095 14,119 I HOUSE PROFIT 32,438 25,883 19,546 18,897 18,730 15,956 indicates position of Proposed Hotel indicates position of comparable hotels IFIGURE 7-4 AMOUNTS PER OCCUPIED ROOM NIGHT RANK-PER OCCUPIED ROOM 1 2 3 4 5 6 I REVENUE Rooms 166 151 150 149 149 122 Food&Beverage 135 83 80 76 69 36 Other Operated Departments 28 5 4 4 2 0 I Miscellaneous Income 10 2 1 1 0 0 DEPARTMENTAL EXPENSES Rooms 36 35 35 34 33 27 I Food&Beverage 68 63 53 44 42 25 Other Operated Departments 3 3 2 2 2 0 OPERATING EXPENSES Administrative&General 23 19 19 17 15 14 I Info.and Telecom.Systems 4 2 0 0 0 0 Marketing 26 20 18 18 17 13 Franchise Fee 16 16 14 14 10 6 Property Operations &Maintenance 12 10 10 9 8 7 Utilities 11 11 11 10 10 6 ITotal Operating Expenses 78 72 72 71 67 56 HOUSE PROFIT 119 95 76 74 74 59 I indicates position of Proposed Hotel indicates position of comparable hotels I DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 73 IProposed Headquarters Hotel-Virginia Beach,Virginia I II VS I I I Fixed and Variable HVS uses a fixed and variable component model to project a lodging facility's Component Analysis revenue and expense levels. The following figure illustrates the revenue and expense categories that can be projected using this fixed and variable component model. FIGURE 7-5 I RANGE OF FIXED AND VARIABLE RATIOS Category Percent Variable Index of Variability Ratio Revenues I Food 25-50 % 50-75 % Occupancy 25 % Beverage 0-30 70-100 Occupancy 25 I Other 30-70 30-70 Occupancy 70 Rentals &Other Income 30-70 30-70 Occupancy 70 Departmental Expenses I Rooms 50-70 30-50 Revenue 60 Food &Beverage 35-60 40-65 Revenue 60 Other 30-70 30-70 Beverage Revenue 70 Undistributed Operating Expenses Administrative &General 65-85 15-35 Other 75 Marketing 65-85 15-35 Other 75 Prop.Operations &Maint. 55-75 25-45 Occupancy 75 I Utilities 75-95 5-25 Occupancy 75 HVS uses a fixed and variable component model to project a lodging facility's I revenue and expense levels. This model is based on the premise that hotel revenues and expenses have one component that is fixed and another that varies directly with occupancy and facility usage. A projection can be made by taking a I known level of revenue or expense and calculating its fixed and variable components.The fixed component is then increased in tandem with the underlying rate of inflation,while the variable component is adjusted for a specific measure of I volume such as total revenue. The actual forecast is derived by adjusting each year's revenue and expense by the amount fixed (the fixed expense multiplied by the inflated base-year amount) plus I the variable amount (the variable expense multiplied by the inflated base-year amount)multiplied by the ratio of the projection year's occupancy to the base-year occupancy (in the case of departmental revenue and expense) or the ratio of the I projection year's revenue to the base year's revenue (in the case of undistributed operating expenses). Fixed expenses remain fixed, increasing only with inflation. Our discussion of the revenue and expense forecast in this report is based upon I the output derived from the fixed and variable model.This forecast of revenue and DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel Proposed Headquarters Hotel-Virginia Beach,Virginia �� I I I T\'S I I expense is accomplished through a systematic approach, following the format of the Uniform System of Accounts for the Lodging Industry. Each category of revenue and expense is estimated separately and combined at the end in the final statement of income and expense. Forecast of Income and The Proposed Hotel would reach a stabilized level of operation in 2024/25. The Expense forecast is based on fiscal years beginning July 1, 2021, expressed in inflated dollars for each year. Rooms The estimated number of occupied room nights and the average daily room rate determine room revenue in any given year.The Proposed Hotel would stabilize at an occupancy level of 70%, with an average daily rate of $179.63 in 2024/25. Following the stabilized year, the subject property's average rate would increase with the rate of inflation. Food and Beverage A hotel's restaurants, lounges, coffee shops, snack bars,banquet rooms, and room Revenue service generate the food and beverage income. In addition to providing a source of revenue,these outlets serve as an amenity that assists in the sale of guestrooms. In the case of the Proposed Hotel,the food and beverage department will include a 160-seat restaurant with private dining, 60-seat lounge, and 20-seat coffee shop; moreover, meeting space is expected to span 37,400 square feet. Although a portion of food and beverage revenue varies directly with changes in occupancy, the portion generated by banquet sales and outside capture is relatively fixed.We project food and beverage revenue to be $96.28 per occupied room for hotel food service by the stabilized year. Other Operated Other operated departments include any major or minor operated department Departments Revenue other than rooms and food and beverage. Telephone revenue and expense is now considered a component of other operated departments. Based on our review of operations with similar other department operations, we have determined an appropriate revenue level for the Proposed Hotel at 1.7% of gross revenues. Rentals&Other The in-room movie and game charges will generate the Proposed Hotel's rentals Income and other income revenue.Based on our review of operations with a similar extent of offerings,we determined an appropriate revenue level for the Proposed Hotel at 0.5%of gross revenues. Department Expenses Rooms expense consists of items related to the sale and upkeep of guestrooms and public space. Salaries, wages, and employee benefits account for a substantial portion of this category. Although payroll varies somewhat with occupancy and managers can scale the level of service staff on hand to meet an expected occupancy level,much of a hotel's payroll is fixed.Hotel operations require a base level of front desk personnel, housekeepers, and supervisors at all times. As a I DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 7 Proposed Headquarters Hotel-Virginia Beach,Virginia J 1 I 1 VS result, salaries, wages, and employee benefits are only moderately sensitive to changes in occupancy. The rooms department is projected to average 23.0% of department revenues by the first stabilized year. Food and beverage departmental expenses consist of items necessary for the primary operation of a hotel's food and banquet facilities. Most of the cost of food and beverage sales and related payroll vary with the level of food revenues; however,this departmental operation has a fixed component.We have projected a stabilized expense ratio of 66%in the Proposed Hotel for hotel food&beverage. Other operated departments expense includes all expenses for the divisions associated with these categories.The other operated department's expense would average 65%of department revenues in the first stabilized year of 2024/25. In 2024/25, department level expenses average 38.3% of gross revenues, which would generate a department income of$17.8 million. Undistributed Administrative and general expense includes the salaries and wages of all Operating Expenses administrative personnel not directly associated with a department. Other costs include management and operation of the property. These expenses would average 7.2%of gross revenues in the first stabilized year of 2024/25. Information and telecommunications systems expense consists of all costs associated with a hotel's technology infrastructure. The costs include cell phones, telephone, and Internet services. Expenses in this category are typically organized by type of technology, or the area benefitting from the technology solution. These expenses would average 0.9% of gross revenues in the first stabilized year of 2024/25 Marketing expense consists of costs associated with advertising, sales, and ' promotion;these activities focus on attracting and retaining customers. Marketing creates an image, develops customer awareness, and stimulate patronage of a property's various facilities. Management controls the level of marketing expenditures. These expenses would average 7.5% of gross revenues by the first stabilized year of 2024/25. A brand has not been selected for the Proposed Hotel, and the terms of the franchise agreement have not been determined. For purposes of this study a franchse fee of 5.00% of gross room revenues and 3.00% of food and beverage sales,plus a 4.00%of gross room revenues brand marketing fee has been included in the expenses of operation. 1 DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 76 Proposed Headquarters Hotel-Virginia Beach,Virginia I 11 VS I I Property operations and maintenance expenditures maintain the functionality and appearance of the property. Management has certain discretion over this expense category due to the ability to delay certain maintenance. These expenses would average 3.7% of gross revenues in the first stabilized year of 2024/25 The consumption of various utilities by a lodging facility takes several forms, including water and space heating, air conditioning, lighting, cooking fuel, and other miscellaneous power requirements. The most common sources of hotel utilities are electricity, natural gas, fuel oil, and steam. This category also includes the cost of water service.These expenses would average 4.2%of gross revenues in the first stabilized year of 2024/25. IUndistributed operating expenses are expected to average 30.2% of gross revenues by the stabilized year of 2024/25, which generates a house profit of $9.10 million or 31.5%of gross revenues. Management Fees Details about management terms were not determined at the time of this report; however,we assume that the proposed hotel will be professionally managed,with fees deducted at rates consistent with the current market standard. We have assumed a market-appropriate total management fee of 3.0% of gross revenues. Property Taxes Property taxes are estimated at 2.5% of gross operating revenues in a stabilized year.The estimate of property taxes should be confirmed after a brand and site is selected,and a construction budget establish. Insurance The insurance expense covers the hotel and its contents against damage or destruction by fire, weather, sprinkler leakage, boiler explosion, plate glass breakage, and so forth. General insurance costs also include premiums relating to liability, fidelity, and theft coverage. Insurance rates consider many factors, including building design and construction, fire detection and extinguishing equipment,fire district,distance from the firehouse,and the area's fire experience. Insurance and related expenses projected at 0.8% of gross revenues. Reserve for The reserve for replacement for furniture,fixtures,and equipment are essential to I Replacement the operation of a lodging facility, and their quality often influences a property's class. The furniture, fixtures, and equipment of a hotel experience heavy use and should be replaced at regular intervals. The reserve for replacement expenses projected at 4.0%of gross revenues. Summary of The following figure presents a forecast for the first stabilized year, followed by a Projections detailed forecast of the first ten years of operation, including amounts per available room and per occupied room. The forecasts pertain to years beginning July 1,2021,in inflated dollars for each year. I DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 77 Proposed Headquarters Hotel-Virginia Beach,Virginia I I-I VS I I FIGURE 7-6 FIRST STABILIZED YEAR STATISTICS 2024/25 Number of Rooms: 400 Occupancy(Paid Rooms): 70% Average Rate: $179.63 RevPAR: $125.74 Days Open: 365 _, Occupied Rooms(Paid): 102,200 Pro Forma Statement (000°s) v0 of PAR POR Revenue _ Rooms $18,358 63.6 $45,895 $179.63 Food 8,609 29.8 21,524 84.24 Beverage 1,230 4.3 3,075 12.03 Other Operated Departments 492 1.7 1,230 4.81 - Miscellaneous Income 154 0.5 384 1.50 Total Revenues $28,843 100.0 $72,108 $282.22 Department Expenses Rooms $4,222 23.0 $10,556 $41.32 - Food &Beverage 6,494 66.0 16,235 63.54 Other Operated Departments 320 65.0 799 3.13 Total Expenses $11,036 38.3 $27,591 $107.99 - Departmental Income $17,807 61.7 $44,517 $174.24 Undistributed Operating Expense Administrative &General $2,070 7.2 $5,175 $20.25 Marketing 2,166 7.5 5,416 21.20 _, Franchise Fee 1,947 6.8 4,869 19.05 Prop.Operations & Maint. 1,059 3.7 2,648 10.36 Utilities 1,203 4.2 3,009 11.78 Info &Telecom Systems 265 0.9 662 2.59 - Total Expense $8,711 30.3 $21,777 $85.23 Gross House Profit $9,096 31.4 $22,740 $89.00 Management Fee $865 3.0 $2,163 $8.47 Income Before Non-Opr.Inc.&Exp. $8,231 28.4 $20,577 $80.54 Non-Operating Income&Expense Property Taxes $721 2.5 $1,803 $7.06 Insurance 241 0.8 602 2.36 ,,, Reserve for Replacement 1,154 4.0 2,884 11.29 Total Expense $2,115 7.3 $5,289 $20.70 EBITDA Less Reserve $6,115 21.1 $15,288 $59.84 `Departmental expenses are expressed as a percentage of departmental revenues. ' DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 78 - Proposed Headquarters Hotel-Virginia Beach,Virginia (3 I I I I II1VS IFIGURE 7-7 10 Year Pro Forma(000's) 2021/22 2022/23 2023/24 2024/25 2025/28 2026/27 2027/28 2028/29 2029/30 2030/31 I STATISTICS Number of Rooms 400 400 600 400 400 400 400400 400 400 Occupied Room 69996e7,600 %,360 IW,740 193,200 102,200102,200102200 103,200 102,200 102,200 Occupancy 66% 69% 70% 70% 70% 70% 70% 70% 70% Average Rate $16180 $16927 5175.25 6179,63 $184.22 $188.73 $193.44 $19828 520324 520832 RevPAR 597.0E $111.72 512092 $125.74 $12889 $132.11 $135.41 513880 514227 $14582 $000 %d � %d 6000 saw %d $0oD %d $aao %d sow %d$ $� %d $� %d $� %d $000 %d Grass Gross Gress Gross Gross Gross Gross Gross Gross Gross Operating Revenue Rooms 514,174 61.8 $16,311 63.0 $17,655 635 518,358 63.6 $18,817 63.6 $19,288 63.6 $19,770 63.6 520,264 63.6 $20,771 63.6 $21,290 63.6 Food 7,138 31.1 7,843 30.3 8,310 29.9 8,609 29.8 8,825 29.8 9,045 29.8 9,271 298 9,503 29.8 9,741 29.8 9,984 29.8 Beverage 1,050 4.6 1,133 4.4 1,190 4.3 1,230 4.3 1,261 4.3 1,292 4.3 1,324 4.3 1.358 4.3 1,392 4.3 1,426 4.3 Other Operated Depa rtments 437 1.9 460 1.8 478 1.7 492 1.7 504 1.7 517 1.7 530 1.7 543 1.7 557 1.7 571 1.7 i Miscellaneous Income 137 0,6 144 0.6 149 0.5 154 0.5 158 0.5 162 0.5 166 0.5 170 0.5 174 0.5 178 0.5 Total Operating Revenues $22,936 100.0 525,892 100.0 $27,782 100.0 $28,843 100.0 $29,564 100.0 $30,304 100.0 $31,061 100.0 $31,838 100.0 $32,634 100.0 $33,450 100.0 NDepartmental EoWnse° Rooms $3,697 26.1 $3,927 24.1 $4,096 23.2 $4,222 23.0 $4,328 23.0 54,436 23.0 54,547 23.0 $4,661 23.0 $4,777 23.0 $4,897 23.0 Food&Beverage 5,749 70.2 6,066 67.6 6,306 66.4 6,494 66.0 6,656 66.0 6,823 66.0 6,993 66.0 7,168 66.0 7,347 66.0 7,531 66.0 Other Operated Departments 293 67.0 303 65.8 312 65.2 320 65.0 328 65.0 336 65.0 344 65.0 353 65.0 362 65.0 371 65.0 I Total Expenses $9,739 42.5 $10,2% 39.E 510,714 38.6 111,036 38.3 $13,312 38.3 113,595 383 611,885 38.3 212,182 38.3 $12,487 38.3 $12,799 383 Departmental Income $13,198 57.5 615,596 60.2 517,069 61A $17,807 61.7 518,252 61.7 613,709 61.7 519,177 61.7 $19,656 6L7 $20,147 61.7 620,651 61.7 Undistributed Operating Evpense Administrative&General $1,853 8.1 $3,942 7.5 52,013 7.2 $2,070 7.2 $2,122 7.2 $2,175 7.2 $2,229 7.2 $2,285 7.2 $2,342 7.2 $2,400 7.2 Market)rag 1,939 6.5 2,033 7.9 2,107 7,6 2,166 7.5 2,220 7.5 2,276 75 2,333 7.5 2,391 7.5 2,451 7.5 2,512 75 Franchise Fee 1,521 6.6 1,737 6.7 1,874 6.7 1,947 6.8 1,996 6.8 2,046 6.8 2,097 6.8 2,150 6.8 2,203 6.8 2,258 6.8 831 Prop.Operations&Ma lnt. 948 4.1 994 3.8 1,030 3.7 1,059 3.7 1,086 3.7 1,113 3.7 1,140 3.7 1,169 3.7 1,198 3.7 1,22E 3.7 11 Utilities 1,077 4.7 1,129 4.4 1,170 4.2 1,203 4.2 1,234 4.21,264 4.1 1,296 4.2 1,328 4.2 1,362 4.21,396 4.2 Info&Telecom Systems 237 1.0 248 1.0 257 0.9 265 0.9 271 0.9 278 0.9 285 0.9 292 0.9 300 0.9 307 0.9 Total Expense 1,077 33.0 58,083 31.3 $8,451 30.4 $8,711 30.2 811y29 30.2 $9,152 30.2 09,381 30.2 $9,615 30.2 $9,856 30.2 510,102 30.2 Gross Nuese Profit $5,621 24.5 $7,513 28.9 $8,617 31.0 $9,096 31.6 $8°324 3115 $9,557 31.5 $9,796 31.5 810,041 31.5 $10,292 31.5 010,549 31.5 Management Fee $688 3.0 $777 3.0 $833 3.0 5865 3.0 $337 9.0 $909 3.0 $932 3.0 $955 3.0 $979 3.0 $1,003 3.0 Income Bet ore Non-Opr.Inc.&Exp. $4,933 21.5 $6,736 25.9 57,784 28.0 $8,231 28.6 $L437 28.5 $8,646 285 $8,864 28.5 $9,085 28.5 $9,313 28.5 $9,546 28.5 II Non-Operating Income&Eapense Property Taxes $670 2.9 5686 2.7 $703 2.5 $721 2.5 $739 2.5 $758 2.5 $777 2.5 $796 2.5 $816 2.5 $836 2.5 Insurance 224 1.0 229 0.9 235 0.8 241 0.8 247 0.8 253 0.8 259 0.8 266 0.8 272 0.8 279 0.8 Reserve for Replacement 459 2.0 777 3.0 1,111 4.0 1,154 4.0 1,183 4.0 1,212 4.0 1,242 4.0 1,274 4.0 1,305 4.0 1,338 4.0 Total Expense $1,352 5.9 $1,692 6.6 $2,050 7.3 $2,115 7.3 52,168 7.3 $2,223 7.3 $2,278 7.3 $2,335 7.3 $2,394 7.3 $2,453 7.3 ~ EBITDA less Reserve $3,582 15.6 $5,044 19.3 $5,734 20.7 $6,115 21.3 56,268 21.2 $6,425 21.2 66,586 21.2 $6,750 21.2 06,919 21.2 $7,092 21.2 IN 1 DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel �� I Proposed Headquarters Hotel-Virginia Beach,Virginia I I I I Convention,Sports&Entertainment 1-1 VS Facilities Consulting Chicago,Illinois I Pro Forma Conclusion Our analysis projects a profitable hotel operation. The stabilized total revenue comprises primarily of rooms and food and beverage revenue, with a relatively small portion derived from other income sources. On the cost side, departmental expenses total 38.3%of revenue in a stabilized year,while undistributed operating expenses total 30.2% of total revenues; this assumes that the property would be operated competently by a well-known hotel operator. After a 3.0% of total revenues management fee, and 7.3% of total revenues in fixed expenses, a net income ratio of 21.2% ($6.12 million)is forecast by 2024/25. I I 1 1 I I 1 I DRAFT June 20,2018 Projection of Income and Expense for the Proposed Hotel 80 Proposed Headquarters Hotel-Virginia Beach,Virginia I Convention,Sports&Entertainment I 1 VS Facilities Consulting Chicago,Illinois I 8. Convention Center Financial Analysis ' HVS uses a proprietary financial operating model to estimate revenues and expenses at conventions centers. This model quantifies the key variables and operating ratios that determine revenue potential and expenses levels. Unless otherwise indicated,the model assumes an annual inflation rate of 2.5%applies to both revenues and expenses. ' The convention center industry does not use a standardized set of accounting principles for reporting financial performance.Convention center operators employ a variety of accounting methods. Financial statements from different convention ' centers organize revenues and expenses differently.However,a few major revenue and expense categories are common to most convention facilities.HVS developed a financial operating model that organizes financial operations according to these primary revenue and expense categories. Therefore, the financial operating projections presented below are organized differently than the historical financial operating statements for the Virginia Beach Convention Center("VBCC"). ' Historical Financial HVS obtained data on historical VBCC operations for the fiscal years 2014 through Operations 2017 and restated that information into line items organized into two categories:1) operating revenues and 2) operating expenses. HVS uses this same categorization of revenue and expense for the financial projections to follow.The following figure presents the historical financial operations as restated by HVS. I I I I DRAFT June 20,2018 Convention Center Financial Analysis 81 Proposed Headquarters Hotel-Virginia Beach,Virginia I ` Convention,Sports&Entertainment I-1 S Facilities Consulting Chicago,Illinois I I I FIGURE 8-1 VBCC HISTORICAL FINANCIAL OPERATIONS FY FY FY FY 2014 2015 2016 2017 Revenue Facility Rental $1,717 $1,668 $1,615 $2,133 Food&Beverage (net) 1,060 1,114 1,418 1,462 Event Services 1,135 1,184 1,240 1,207 Other 18 25 41 23 Total Revenue $3,931 $3,991 $4,314 $4,825 Operating Expense Salaries&Benefits $3,152 $3,238 $3,213 $3,270 Contractual Services 1,015 1,088 1,044 1,019 Administrative&General 387 528 514 461 Supplies&Equipment 195 142 161 173 Repair&Maintenance 95 102 101 148 Utilities 790 845 828 869 Capital Outlay 0 0 0 12 Total Operating Expense $5,633 $5,943 $5,860 $5,952 TOTAL NET INCOME(LOSS) ($1,702) ($1,952) ($1,547) ($1,126) I Source:VBCC For the purposes of this financial analysis, HVS assumes that the City of Virginia Beach would continue to own and operate the VBCC The VBCC revenues and expenses described in this section refer to all direct event and non-event revenues and expense line items attributed to VBCC events as detailed in Section 4. Operating Revenues VBCC revenue line items include facility rental,food and beverage sales,and event services.HVS uses a series of revenue assumptions based on attendance measured I by the number of individual attendees of an event. To formulate the revenue assumptions, HVS relied on historical operations data, industry information, knowledge of the performance of comparable venues, and I information on price levels from local area sources.We adjusted the assumptions for inflation and other anticipated trends in price levels. The figure below summarizes the departmental income assumptions for the VBCC I by type of event.We present unit revenues both before and after the opening of the headquarters hotel. Post-opening revenues reflect to move of certain events to the I new Sports Center.A brief description of each revenue item follows. I DRAFT June 20,2018 Convention Center Financial Analysis Proposed Headquarters Hotel-Virginia Beach,Virginia "� I I Convention,Sports&Entertainment 11`%S Facilities Consulting IChicago,Illinois I I FIGURE 8-2 I REVENUE ASSUMPTIONS Revenue Amount per Unit Revenue Une Item and Demand Source Estimation Unit Pre- Post Opening Opening IFacility Rental Conventions Attendee $5.64 $5.64 Trade Shows Attendee 14.07 14.07 I Consumer Shows Attendee 4.54 4.54 Sports &Competitions Attendee 4.12 5.27 Meetings &Conferences Attendee 5.62 5.62 Banquets Attendee 0.80 0.80 IFood&Beverage(net) Conventions Attendee $6.74 $8.42 Trade Shows Attendee 8.58 10.73 I Consumer Shows Attendee 0.63 0.63 Sports&Competitions Attendee 2.28 2.50 Meetings &Conferences Attendee 4.96 6.20 Banquets Attendee 10.52 10.52 IEvent Services Conventions Attendee $2.57 $2.57 Trade Shows Attendee 7.24 7.24 I Consumer Shows Attendee 2.16 2.16 Sports&Competitions Attendee 3.77 4.19 Meetings &Conferences Attendee 2.37 2.37 Banquets Attendee 1.74 1.74 FacilityI Rental-Facilityrental revenue includes the revenue the VBCC receives e from clients that reserve one or more function areas in the facility. Despite having I published rates,convention centers typically charge rental fees based on negotiated daily rental fees. Not all events incur a facility rental fee.A facility may reduce or waive the exhibit rental charges in order to book an event that has a strong I economic impact on the local market.The above rates are based on the number of attendees,consistent with historic VBCC operations. I Food and Beverage-Most events that use the VBCC's function space will also arrange for food service for their attendees during their events. This food service includes catering which can range from coffee breaks associated with a meeting to a full dinner associated with a convention or banquet. Consumer shows, sporting Ievents,and other events may generate concessions revenue.Most conventions and conferences generate demand for multiple meals during the course of these multi- day events. Meetings and banquets generally include a single meal or refreshment I services.HVS projects estimated net food and beverage revenues on a per attendee basis depending on the type of event.Net revenues reflect the VBCC's share of food IDRAFT June 20,2018 Convention Center Financial Analysis Proposed Headquarters Hotel-Virginia Beach,Virginia "� I I Convention,Sports&Entertainment I-I VS Facilities Consulting Chicago,Illinois I and beverage income. Because a headquarter hotel would bring higher quality events to Virginia Beach,we have increased per capita food and beverage spending for some events by 25%over historical levels. I Event Services—Event Services include the fees charged to tenants for services that could include business services, audio and video technical assistance, set-up and take down of function spaces, cleaning services, security services, electricity and other utilities, commissions from decorators and other services provided by third-party contractors at events. Many events also require audio, video, communications and internet services.Banquets and other upscale events can often require elaborate decorating services.Almost all events require cleaning services; cleaning of common areas may be complimentary for most events while cleaning services offered to individual exhibitors can represent a significant source of revenue. Service charges vary by type of event. Some of these services may be included in the rental charges for using the facility,but others will be add-on service charges.The HVS model estimates event services revenues based on the number of attendees consistent with historical VBCC operations. Operating Expenses HVS estimated operating expenses as a blend of fixed costs and variable percentage of operating revenues as summarized in the figure below.HVS based these fixed and variable assumptions on multiple years of historical revenue and expense data and other industry standards. An explanation of these modifications and a brief description on each expense line item follows. I FIGURE 8-3 EXPENSE ASSUMPTIONS Amount Per Unit Estimation Fixed Expense Une Item Method Unit Pre-Opening Post Opening % Operating Expense I Salaries &Benefits Fixed Amount $3,269,625 $3,269,625 100% Contractual Services Fixed Amount $1,018,678 $1,018,678 100% Administrative&General Fixed Amount $460,500 $460,500 100% Supplies&Equipment Ratio to Sales Total Revenue 3.60% 3.60% 35% Repair&Maintenance Ratio to Sales Total Revenue 3.00% 3.00% 0% Utilities Ratio to Sales Total Revenue 18.00% 18.00% 58% Capital Outlay Ratio to Sales Total Revenue 0.30% 0.30% 0% Salaries & Benefits—Based on existing staffing level and VBCC salary &benefit expenses,HVS estimated the salaries and associated benefits for permanent full and part-time employees dedicated to administration, marketing, building operations, and other functions. This category does not include part time food & beverage staffing,which is included in vendor costs.The proposed salary and benefit levels reflect maintaining the current organization structure at the VBCC. DRAFT June 20,2018 Convention Center Financial Analysis p^ I Proposed Headquarters Hotel-Virginia Beach,Virginia v`T I i ` Convention,Sports&Entertainment 1 I `�S Facilities Consulting Chicago,Illinois I I Contractual Services—Contractual services include any outsourced operations I and maintenance and repair services, landscaping, and refuse disposal as well as professional services in conducting venue operations such as security, legal, accounting, tax, consulting or other advice. Historical contractual service expense I has remained relatively stable. We project these expenses will remain consistent with historical levels. Administrative&General—Office and administrative operations incur day-to-day I facility expenses. Such expenses typically include travel, telephone, printing, permits, and insurance. We project these expenses will remain consistent with historical levels. Supplies & Equipment—This category includes items such as office supplies, furniture, consumables, and chemicals that are required to support and maintain the operations of the facility.It also includes computers and other equipment.Based on historical operations, we project that a portion of this expense will vary with operating revenues. Repair&Maintenance—This category includes both routine and one-time facility maintenance expenses that are primarily the responsibility of in-house facility operations personnel. Based on historical operations,we project that this expense will vary directly with operating revenues. Utilities—Utilities, including electricity, gas, water, and other charges often represent one of the largest expenses incurred by facility operators. Based on historical operations, we project that a portion of this expense will vary with operating revenues. Capital Outlay—Capital outlay reflects costs for system and furnishing repair and replacement. The VBCC has a small capital outlay in 2017. We project that these costs,varying with operating revenues,will continue in the future. Operating Pro Forma The figure below presents the financial projections for the proposed VBCC through stabilized demand.We expect the Sports Center to open during the first quarter of 2019.The projections are in inflated dollars beginning July 1, 2019,two years prior to the opening of the proposed headquarter hotel oOn July 1,2021. I I I DRAFT June 20,2018 Convention Center Financial Analysis 85 Proposed Headquarters Hotel-Virginia Beach,Virginia I Convention,Sports&Entertainment I-I`7S Facilities Consulting Chicago,Illinois I I I FIGURE 8-4 VBCC FINANCIAL PROJECTIONS(INFLATED$000S) Base Year Sports Center Hotel Open Stabilized FY FY FY FY FY FY FY 2018 2020 2021 2022 2023 2024 2025 Revenue FacilityRental $2,178 $2,104 $2,157 $2,461 $2,626 $2,736 $2,849 Food&Beverage (net) 1,455 1,407 1,442 1,731 1,913 2,025 2,141 Event Services 1,395 1,266 1,298 1,464 1,549 1,607 1,668 Other 23 24 25 26 26 27 27 Total Revenue $5,051 $4,801 $4,921 $5,682 $6,114 $6,396 $6,685 Operating Expense Salaries&Benefits $3,343 $3,512 $3,600 $3,690 $3,783 $3,877 $3,974 Contractual Services 1,042 1,094 1,122 1,150 1,178 1,208 1,238 Administrative&General 471 495 507 520 533 546 560 Supplies &Equipment 182 179 184 211 223 232 241 Repair&Maintenance 152 144 148 170 183 192 201 Utilities 909 917 940 1,078 1,126 1,164 1,203 Capital Outlay 15 14 15 17 18 19 20 Total Operating Expense $6,113 $6,356 $6,515 $6,836 $7,045 $7,238 $7,436 NET OPERATING INCOME(LOSS) ($1,062) ($1,555) ($1,594) ($1,154) ($931) ($842) ($751) HVS intends for financial projections to show the expected levels of revenues and I expense. Projections show smooth growth over time. However, event demand and booking cycles are not always smooth. Unpredictable local and national economic factors can affect business. Event demand is often cyclical, based on rotation patterns and market conditions. Therefore, HVS recommends interpreting the financial projections as a mid-point of a range of possible outcomes and over a multi-year period rather than relying on projections for any one specific year. I Comparison with Do- The introduction of the proposed headquarters hotel would have a positive effect Nothing Scenario on the operations of the VBCC,producing significant increases in facility rental and food and beverage revenues.With the headquarters hotel,the VBCC would continue to generate increasing operating subsidies. As shown in the figure below, by a stabilized year of demand, the VBCC would cut is operating subsidy by more than 50%compared to a scenario with no hotel development. I I DRAFT June 20,2018 Convention Center Financial Analysis Proposed Headquarters Hotel-Virginia Beach,Virginia 86 Convention,Sports&Entertainment II-!�/I - S Facilities Consulting Chicago,Illinois I I FIGURE 8-5 I COMPARISON OF VBCC FINANCIAL PROJECTIONS(INFLATED$000S) Do-Nothing Scenario Headquarter Hotel Scenario Difference FY 2025 FY 2025 I Amount %Rev Amount %Rev Revenue Facility Rental $2,328 42% $2,849 43% $521 I Food &Beverage (net) 1,728 32% 2,141 32% 413 Event Services 1,401 26% 1,668 25% 267 Other 27 0% 27 0% 1 Total Revenue $5,484 100% $6,685 100% $1,201 I Operating Expense Salaries &Benefits $3,887 71% $3,974 59% $87 Contractual Services 1,211 22% 1,238 19% 27 I Administrative &General 547 10% 560 8% 12 Supplies &Equipment 197 4% 241 4% 43 Repair&Maintenance 165 3% 201 3% 36 Utilities 987 18% 1,203 18% 216 I Capital Outlay 16 0% 20 0% 4 Total Operating Expense $5,484 128% $7,436 111% $1,952 NET OPERATING INCOME(LOSS) ($1,526) -28% ($751) -11% $775 I I I I I I I DRAFT June 20,2018 Convention Center Financial Analysis 87 IProposed Headquarters Hotel-Virginia Beach,Virginia I Convention,Sports&Entertainment 1-1 VS Facilities Consulting Chicago,Illinois I I 9. Economic Impact Based on the demand projections presented in this report, HVS identified the new spending that would occur in the local economy due to the development of the proposed headquarters hotel. HVS estimated the amounts of income and employment that new visitors,event organizers,and exhibitors would generate in Direct,Indirect,and Spending falls into three categories: Induced Spending • Direct spending includes the new spending of event attendees and organizers. For example,an attendee's expenditure on a restaurant meal is a direct spending impact. Direct spending includes only new spending that originates from outside.Spending by attendees who live within the market area is a transfer of income from one sector of the area's economy to another; therefore, this analysis does not count spending by local residents as a new economic impact. • Indirect spending follows from the business spending resulting from the initial direct spending. For example, an event attendee's direct expenditure on a restaurant meal causes the restaurant to purchase food and other items from suppliers.The portion of these restaurant purchases that remain within count as indirect impacts. • Induced spending represents the change in local consumption due to the personal spending by employees whose incomes change from direct and indirect spending. For example, a waiter at a local restaurant may have more personal income because of an event attendee dining at the restaurant. The amount of the increased income that the waiter spends in the local economy is an induced impact. To generate direct spending estimates,HVS applied assumptions about the amounts of new spending generated by events.HVS used the IMPLAN input-output model of the local economy to estimate indirect and induced spending. The sum of direct, indirect, and induced spending estimates make up the total estimated spending impact of the proposed development of the headquarters hotel. Some refer to indirect and induced impacts as multiplier effects. The relationship between direct spending and the multiplier effects vary based upon the specific size and characteristics of a local area's economy. I DRAFT June 20,2018 Economic Impact pp Proposed Headquarters Hotel-Virginia Beach,Virginia 00 I i Convention,Sports&Entertainment I-I`/'S Facilities Consulting Chicago,Illinois 1 Sources of Direct HVS identified four sources of new direct spending impact: Spending • Overnight Guests: Visitors to who require overnight lodging, including convention delegates, meeting attendees, and attendees at other events. Overnight delegate spending includes the spending on meals, shopping, local transportation, recreation and entertainment, and other goods and services while in town. I . Daytrip Attendees:Visitors to the who do not require paid lodging.In most markets, day-trippers typically spend money on meals, shopping, local transportation,recreation and entertainment,and other goods and services ' while in town. • Event Organizers: Individuals, associations, or other organizations that plan, sponsor, organize, and coordinate events that take place at facilities. In addition to facility spending, event organizers also spend on lodging, meals, local transportation, facility rentals, equipment rentals, and other goods and services required to plan and organize a successful event. • Exhibitors: Individuals or companies that rent exhibition space, typically from event organizers, to display information or products at events. In addition to spending at the facility,exhibitors purchase lodging,meals,local ' transportation, vendor services, meeting room rentals, equipment rentals, and other goods and services. Estimation of new spending of each of these sources involves three sets of assumptions: 1) the number of new visitors to the market, 2) the geographic location of their spending,and 3)the amounts typically spent by each of the sources. ' New Visitors HVS estimated the percentage of each visitor type that would come from outside the market rather than from the local area. The spending estimates only include new visitor spending because non-residents import income,whereas residents transfer ' income already in the market area. • Overnight Guests - HVS assumes that all overnight guests are new to the ' market.Some overnight guests may stay with friends and family or outside the market. • Day Trips - We estimate the percentage of day trip visitors based on the ' percentage of local Virginia Beach residents in the metropolitan area. • Exhibitor/Organizer spending on Attendees/Delegates - HVS based estimates on the percentage of attendees by events organized and exhibited by companies that would otherwise not hold or participate in an event in Virginia Beach . 1 DRAFT June 20,2018 Economic Impact 89 Proposed Headquarters Hotel-Virginia Beach,Virginia 7 _ Convention,Sports&Entertainment H VS Facilities Consulting Chicago,Illinois I I The product of the visitor forecasts and the percent of demand new to the market yields an estimate of the sources of impact shown in the table below.That is: Total Overnight Guests X Percent New=New Overnight Stays Total Day Trips X Percent New=New Day Trips Total Delegate Days X Percent New=New Delegate Days 1 The figure below shows the number of new visitors to that generate new spending. We include only those VBCC event types that increase due to the presence of the headquarters hotel.Meeting and conference visitors include those attributed to in- house demand at the new hotel. FIGURE 9-1 1 SUMMARY OF NET NEW SPENDING GENERATORS Convention rnight Demand Type Vise y Delegate s Day Trips Days City of Virginia Beach Conventions 57,600 14,100 98,800 Trade Shows 600 1,000 2,900 Meetings &Conferences 21,700 1,900 4,100 Total 79,900 17,000 105,800 *Used to estimate organizer and exhibitor spending. Spending Parameters Delegates, attendees, event organizers, and exhibitors spend locally on lodging, meals,local transportation,facility rentals,vendor services,meeting room rentals, equipment rentals,and other goods and services. The"Daily Spending Parameters"include the daily spending by individual overnight I delegates, day-trippers, event organizers, and exhibitors. Adjusted DMAI data provides estimates of exhibitor and organizer spending per attendee day. Facility revenue estimates include event organizer and exhibitor spending on facility rental, facility services, and event food and beverage. The figure below states all daily spending parameters in 2018 dollars. I I I DRAFT June 20,2018 Economic Impact 90 Proposed Headquarters Hotel-Virginia Beach,Virginia I I Convention,Sports&Entertainment I II`i S Facilities Consulting Chicago,Illinois I I FIGURE 9-2 I VISITOR SPENDING PARAMETERS Overnight Convention Attendees $240.13 Hotel Average Daily Room Rate 37% I Food services and drinking places 21%IIIIIIIIIP Hotels and motels, including casino hotels 15% -1111117 Retail stores -general merchandise 10% Automotive equipment rental and leasing 4% II Museums, historical sites,zoos,and parks 4% Transit and ground passenger transportation 3%fir Retail stores -gasoline stations 2%I I Scenic and sightseeing transportation 2%1 Other personal services 1%1 State and local government passenger transit 1%1 Daytrip Convention Attendees $98.38 I Food services and drinking places 51%IIIIIIIIPSIONIPMProf Retail Stores General Merchandise 25% - Museums, Historical Sites,Zoos,and Parks 9% ' I Retail Stores -Gasoline Stations 5% Scenic and sightseeing transportation and support ac 4% Other personal services 3% State and local government passenger transit 1% I Motion picture and video industries 1% Exhibitor Spending Per Overnight Day $47.28 Food services and drinking places 33% I Event Catering and Concessions 23% Lodging Costs 17% Advertising and Related Services 6% Other amusement and recreation industries 6% I Automotive Equipment Rental and leasing 7% Commercial and industrial machinery and equipment 3% Retail Stores -General Merchandise 3% I Transit and ground passenger transportation 2% Retail Stores Gasoline Stations 1% Organizer Spending per Delegate Day $4.44 Retail Stores -General Merchandise 25% I Advertising and Related Services 19% Hotels and motels, including casino hotels 27% Hotel Room Rate 27% I Automotive Equipment Rental and leasing 1% State and local government passenger transit 1% Sources: DMAI,STR,CTI I I DRAFT June 20,2018 Economic Impact 91 I Proposed Headquarters Hotel-Virginia Beach,Virginia Convention,Sports&Entertainment 11 CIS Facilities Consulting Chicago,Illinois ' Facility Revenue from Event organizers and exhibitors create additional spending impacts through Outside Spending spending at the through facility rentals,the purchase of event food and beverage services, and other spending at the venue. Using operating revenue histories, HVS estimated future spending by exhibitors and event organizers at the including: Facility Rental—Facility rental revenue includes the revenue the receives from clients that reserve one or more function areas in the VBCC. Despite having published rates, facilities typically charge rental fees based on negotiated daily rental fees. Not all events incur a facility rental fee.A facility may waive the space rental charges if the event meets a certain minimum of food and beverage charges. Food and Beverage—Most events that use the VBCC's convention center's function space would also arrange for food service for their attendees during their events. This food service includes catering,which can range from coffee breaks associated with a meeting to a full dinner associated with a convention or banquet.Consumer shows,theatre performances,and arena events may generate concession revenue. Most conventions and conferences generate demand for multiple meals during these multi-day events. Meetings and banquets generally include a single meal or refreshment services. Events like conventions and tradeshows typically spend the most per attendee. Event Services—Event Services include the fees charged to tenants for services that could include business services, audio-visual rental and technical assistance, information technology set-up and take down of function spaces,cleaning services, security services,electricity and other utilities, commissions from decorators, and other services provided by third-party contractors at events. Banquets and other upscale events often require elaborate decorating services. Almost all events require cleaning services; cleaning of common areas may be complimentary for most events,while cleaning services offered to individual exhibitors can represent a significant source of revenue.Service charges vary by type of event.Some of these services may be included in the rental charges for using the facility,but others will be add-on service charges. Gross Direct Spending HVS applied the previous sources of spending impacts and spending parameters to estimate gross direct spending for a stabilized year.See the figure below. DRAFT June 20,2018 Economic Impact 92 Proposed Headquarters Hotel-Virginia Beach,Virginia Convention,Sports&Entertainment `/S Facilities Consulting III Chicago,Illinois 1 1 FIGURE 9-3 ' NET NEW GROSS DIRECT SPENDING City of Virginia Beach ' Directovemightvisitorspending = 79,800 overnight visitors x $240.13 = $19.2 M Direct day trip spending = 17,000 daytrip visitors x $98.38 = $1.7 Exhibitor Spending = 98,800 attendees x $47.28 = $4.7 Organizer Spending = 105,900 attendees x $4.44 = $0.5 ' Facility Revenue = $0.8 Total Gross Direct Spending = $26.7 M IMPLAN Impact HVS uses the IMPLAN input-output model to estimate indirect and induced Modeling spending and employment impacts. IMPLAN is a nationally recognized model developed at the University of Minnesota and commonly used to estimate economic impacts.An input-output model generally describes the commodities and income ' that normally flow through the various sectors of a given economy.The indirect and induced spending and employment effects represent the estimated changes in the flow of income, goods, and services caused by the estimated direct spending. The IMPLAN model accounts for the specific characteristics of the local area economy and estimates the share of indirect and induced spending that it would retain. HVS categorized new direct expenditures into spending categories that we provide inputs into the IMPLAN model. Specifically,the IMPLAN model relies on spending categories defined by the U.S.Census according to the NAICS.Because the spending data from the spending surveys used by HVS do not match the NAICS spending ' categories, HVS translates the spending categories into the NAICS spending categories that most closely match. I Annual Net Direct Not all of the gross direct spending counts as an economic impact because some of Spending the spending does not generate income within the market.HVS adjusts gross direct spending to account for income that leaks out of the local economy by estimating ' retail margins and local purchase parentages. As a result, the realized direct spending ("net direct spending") is lower than the gross direct spending in the market area. ' Retail Margins Spending at retailers creates a smaller economic impact compared to spending in other industries. Retailers add value equal to the margin or price increase of the good above the original price paid to obtain the good.The IMPLAN model is product based, so HVS uses IMPLAN margin numbers to account for the discrepancy between retail purchaser prices and producer prices. I Local Purchase Percentage To accurately measure spending impacts, HVS counts spending on products and services located in the market area. Some of the direct spending demand in the market area cannot be accommodated.For example, an event organizer may need I DRAFT June 20,2018 Economic impact n3 Proposed Headquarters Hotel-Virginia Beach,Virginia 7 __ ` Convention,Sports&Entertainment 1 1 `7S Facilities Consulting Chicago,Illinois ' I to buy novelty items for all attendees but find that the market area does not produce these items.This effect occurs for direct,indirect,and induced spending. HVS uses the IMPLAN SAM model values to track the percentage of a good purchased within the market area. Indirect and Induced The relationship between direct spending and the multiplier effects can vary based Spending on the specific size and characteristics of a local area's economy. HVS enters the gross direct spending estimate into the IMPLAN input output model of the local economy to estimate the net direct, indirect and induced spending. HVS obtained the most recent available data from IMPLAN for. The following figures present the output of the IMPLAN model-the net new direct, indirect, and induced economic impacts and that are attributable to the proposed headquarters hotel development of the.HVS also used IMPLAN to estimate the jobs created based on the direct,indirect,and induced spending estimates. Annual Net Spending The figure below shows the annual net direct, indirect and induced spending Impacts generated for. FIGURE 9-4 ' ANNUAL ECONOMIC IMPACT ESTIMATES City of Impact($millions) B Virginia Beach Spending Estimates Net Direct $25.1 Indirect 8.6 Induced 7.9 Total $41.5 ' Present Value of Net The proposed capital investment in the development of the would likely be repaid Spending over a 20-year period that coincides with the useful life of the asset.As a point of comparison with the capital investment,HVS calculated the present value of the net spending that it would generate over a 20-year period.We assumed a 5%discount rate that approximates weighted cost of public sector capital. The figure below shows the present value of spending impacts. FIGURE 9-5 NET PRESENT VALUE $Millions aty of Virginia Beach $511 *Stated In constant 2018 dollars. DRAFT June 20,2018 Economic Impact Proposed Headquarters Hotel-Virginia Beach,Virginia 94 1 Convention,Sports&Entertainment I-I`1S Facilities Consulting Chicago,Illinois I Over a 20-year period,the present value of net spending impact exceeds one-half a ' billion dollars.The amounts of impact should be compared to the potential capital investment in the project. Employment Impacts HVS calculated the full-time equivalent jobs supported by the spending in each ' economic sector.The figure below summarizes the results. FIGURE 9-6 ' EMPLOYMENT IMPACT IN A STABILIZED YEAR Full-Time Equivalent Jobs City of Virginia Beach ' Direct 218 Indirect 49 Induced 45 ' Total Permanent Jobs 312 By a stabilized year of operation, the project would support over 300 permanent ' full-time equivalent jobs. Fiscal Impacts Fiscal impacts represent the public-sector share of the economic impacts from tax collections on new spending.The previously discussed spending estimates provide ' a basis for estimating potential tax revenue, as will collect some of the spending through taxation. ' The IMPLAN analysis results in direct,indirect,and induced spending classified into hundreds of detailed spending categories. HVS evaluated each of these spending categories to determine which taxes would apply to each type of spending output. HVS then used the appropriate tax rates to estimate the amount of tax revenue. HVS applied these nominal tax rates to a detailed breakdown of spending and income categories that result from direct, indirect, and induced spending through ' operation of the . HVS then estimated the potential annual revenue from each tax source as shown in the following figures. 1 1 DRAFT June 20,2018 Economic Impact 95 Proposed Headquarters Hotel-Virginia Beach,Virginia _ i Convention,Sports&Entertainment h-I\'S Facilities Consulting Chicago,Illinois I I FIGURE 9-7 Tax Category Tax Base Effective Tax Estimated Rate Tax Revenue Local Sales&Use Tax $26,247,550 1.00% $262,500 Admissions Tax 324,273 10.00% $32,400 I Equipment Rental 1,188,412 1.00% $11,900 Restaurants Food&Beverage 7,932,764 5.50% $436,300 Lodging Tax $9,671,300 8.00% $773,700 Total $1,516,800 Five tax sources would generate approximately$1.5 million in annual tax revenue 1 to the City of Virginia Beach in a stabilized year of operation. The following figure summarizes recurring annual economic and fiscal impacts in a stabilized year. FIGURE 9-8 SUMMARY OF ECONOMIC AND FISCAL IMPACTS City of Summary of impacts' Virginia Beach Economic Impact(millions) $41.5 Fiscal Impact (millions) $1.5 Jobs 312 *In a stabilized year. These economic and fiscal impact estimates are subject to the assumptions and limiting conditions described throughout the report.Numerous assumptions about future events and circumstances form the basis for these estimates. Although we consider these assumptions reasonable, we cannot provide assurances that the project will achieve the forecasted results. Actual events and circumstances are likely to differ from the assumptions in this report and some of those differences may be material. The readers should consider these estimates as a mid-point in a range or potential outcomes. I I DRAFT June 20,2018 Economic Impact Proposed Headquarters Hotel-Virginia Beach,Virginia 96 i Convention,Sports&Entertainment II I`r S Facilities Consulting Chicago,Illinois 10. Statement of Assumptions and Limiting Conditions I 1. This report is to be used in whole and not in part. ' 2. All information, financial operating statements, estimates, and opinions obtained from parties not employed by HVS are assumed to be true and correct.We can assume no liability resulting from misinformation. ' 3. Unless noted, we assume that there are no encroachments, zoning violations, or building violations encumbering the Proposed Hotel. ' 4. The proposed facility is assumed to be in full compliance with all applicable federal,state,local,and private codes,laws,consents,licenses,and regulations (including a liquor license where appropriate). We assume that all licenses, permits, certificates, franchises, and so forth can be freely renewed or transferred to a purchaser. 5. We are not required to give testimony or attendance in court by reason of this ' analysis without previous arrangements, and only when our standard per- diem fees and travel costs are paid prior to the appearance. 6. If the reader is making a fiduciary or individual investment decision and has ' any questions concerning the material presented in this report, it is recommended that the reader contact us. 7. We take no responsibility for any events or circumstances that take place ' subsequent to the date of our report. 8. No responsibility is assumed for matters of a legal nature, nor do we render ' any opinion as to title,which is assumed to be marketable and free of any deed restrictions and easements. 9. We assume that there are no hidden or unapparent conditions of the sub-soil ' or structures, such as underground storage tanks, that would render the proposed property no more or less valuable. No responsibility is assumed for these conditions or for any engineering that may be required to discover them. ' 10. We have not considered the presence of potentially hazardous materials such as asbestos, urea formaldehyde foam insulation, any form of toxic waste, polychlorinated biphenyls (PCB), pesticides, mold, or lead-based paints. The ' appraisers are not qualified to detect hazardous substances, and we urge the client to retain an expert in this field if desired. 11. The Americans with Disabilities Act (ADA) became effective on January 26, 1992. We have assumed that the proposed property will be designed in accordance with the various detailed requirements of the ADA. DRAFT June 20,2018 Statement of Assumptions and Limiting Conditions 97 Proposed Headquarters Hotel-Virginia Beach,Virginia Convention,Sports&Entertainment I VS Facilities Consulting Chicago,Illinois 12. We have made no survey of the subject site, and we assume no responsibility I in connection with such matters. 13. The estimated operating results presented in this report are based on an evaluation of the overall economy and neither consider nor make provision for the effect of any sharp rise or decline in local or national economic conditions. To the extent that wages and other operating expenses may advance during the economic life of the property,we expect that the prices of food,beverages, and services will be adjusted to at least offset those advances. We do not warrant that the estimates will be attained, but they have been prepared on the basis of information obtained during the course of this study. 14. The quality of a facility's on-site management has a direct effect on a property's economic performance. The demand and financial forecasts presented in this analysis assume responsible ownership and competent management. Any departure from this assumption may have a significant impact on the projected operating results. 15. We do not warrant our estimates. We use information obtained during our market research and are intended to reflect reasonable expectations. 16. Many of the figures presented in this report were generated using sophisticated computer models that make calculations based on numbers carried out to three or more decimal places. In the interest of simplicity, most numbers have been rounded. Thus, these figures may be subject to small rounding errors. ' 17. It is agreed that our liability to the client is limited to the amount of the fee paid as liquidated damages. Our responsibility is limited to the client and use of this report by third parties shall be solely at the risk of the client or third parties. The use of this report is also subject to the terms and conditions outlined in our engagement letter with the client. 18. Although this analysis employs various mathematical calculations, the final estimates are subjective and may be influenced by our experience and other factors not specifically outlined in this report. 19. HVS Convention, Sports & Entertainment Facilities Consulting prepared this report.All opinions, recommendations, and conclusions expressed during this assignment are rendered by the staff of this organization,as employees, rather than as individuals. 20. This report is set forth as a market study of the Proposed Hotel; this is not an appraisal report. I 1 DRAFT June 20,2018 Statement of Assumptions and Limiting Conditions Q ' Proposed Headquarters Hotel-Virginia Beach,Virginia �" Convention,Sports&Entertainment I j-I `'S Facilities Consulting ' Chicago,Illinois 11. Certification ' The undersigned certify that,to the best of our knowledge and belief: 1. the statements of fact presented in this report are true and correct; ' 2. the reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions,and are our personal, impartial, and unbiased professional analyses,opinions,and conclusions; t3. we have no (or the specified) present or prospective interest in the property that is the subject of this report and no (or the specified) personal interest ' with respect to the parties involved; 4. we have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment; ' 5. our engagement in this assignment was not contingent upon developing or reporting predetermined results; 6. our compensation for completing this assignment is not contingent upon the ' development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion,the attainment of a stipulated result, or the occurrence of a subsequent event directly related ' to the intended use of this analysis;and 7. Catherine Sarrett and Brian Harris participated in the analysis. ' Draft ' Catherine Sarrett Senior Director Draft ' Brian Harris Director DRAFT June 20,2018 Certification 99 Proposed Headquarters Hotel-Virginia Beach,Virginia I Convention,Sports&Entertainment I-I VS Facilities Consulting Chicago,Illinois I I I L Penetration Explanation I Let us illustrate the penetration adjustment with an example. I A market has three existing hotels with the following operating statistics: BASE-YEAR OCCUPANCY AND PENETRATION LEVELS I Number Meeting and Property of Rooms Fair Share Commercial Group Leisure Occupancy Penetration Hotel A 100 23.5 % 60 % 20 % 20 % 75.0 % 100.8 % I Hotel B 125 29.4 70 10 20 65.0 87.4 Hotel C 200 47.1 30 60 10 80.0 107.5 I Totals/Average 425 100.0% 47 % 38 % 15 % 74.4 % 100.0% Based upon each hotel's room count,market segmentation,and annual occupancy, I the annual number of room nights accommodated in the market from each market segment can be quantified,as set forth below. MARKET-WIDE ROOM NIGHT DEMAND I Annual Room Market Night Percentage of Segment Demand Total I Commercial 54,704 47.4 % Meeting and Group 43,481 37.7 Leisure 17,246 14.9 I Total 115,431 100.0 % The following discussion will be based upon an analysis of the commercial market segment. The same methodology is applied for each market segment to derive an estimate of a hotel's overall occupancy.The table below sets forth the commercial demand accommodated by each hotel. Each hotel's commercial penetration factor I is computed by: 1) calculating the hotel's market share % of commercial demand (commercial room nights accommodated by subject hotel divided by total commercial room nights accommodated by all hotels)and 2) dividing the hotel's commercial market share%by the hotel's fair share%. I DRAFT June 20,2018 Penetration Explaination I Proposed Headquarters Hotel-Virginia Beach,Virginia 100 I Convention,Sports&Entertainment I S Facilities Consulting Chicago,Illinois i I I The following table sets forth each hotel's fair share, commercial market share, Iand commercial penetration factor. COMMERCIAL SEGMENT PENETRATION FACTORS I Property Number Commercial Capture Commercial Commercial of Rooms Fair Share Market Share Penetration Hotel A 100 23.5 % 16,425 30.0 % 127.6 % I Hotel B 125 29.4 20,759 37.9 129.0 Hotel C 200 47.1 17,520 32.0 68.1 Totals/Average 425 100.0 % 54,704 100.0 % 100.0 % IIf a new 100-room hotel enters the market, the fair share of each hotel changes because of the new denominator,which has increased by the 100 rooms that have Ibeen added to the market. COMMERCIAL SEGMENT FAIR SHARE Number of IProperty Rooms Fair Share Hotel A 100 19.0 % Hotel B 125 23.8 I Hotel C 200 38.1 New Hotel 100 19.0 Total 525 100.0 % I The new hotel's penetration factor is projected for its first year of operation. It is estimated that the hotel would capture (penetrate) only 85% of its fair share as it I establishes itself in the market. The new hotel's market share and room night capture can be calculated based upon the hotel's estimated penetration factor. When the market share of the existing hotels and that of the new hotel are added I up, they no longer equal 100% because of the new hotel's entry into the market. The market share of each hotel must be adjusted to reflect the change in the denominator that comprises the sum of each hotel's market share. I This adjustment can be mathematically calculated by dividing each hotel's market share percentages by the new denominator of 97.1%. The resulting calculations reflect each hotel's new adjusted market share. The sum of the adjusted market I shares equals 100%, indicating that the adjustment has been successfully completed. Once the market shares have been calculated, the penetration factors can be recalculated (adjusted market share divided by fair share) to derive the I adjusted penetration factors based upon the new hotel's entry into the market. Note that each existing hotel's penetration factor increases because the new hotel is capturing(penetrating)less than its fair share of demand. I DRAFT June 20,2018 Penetration Explaination 1 0i 1 IProposed Headquarters Hotel-Virginia Beach,Virginia 1 I Convention,Sports&Entertainment I 1 VS Facilities Consulting I Chicago,Illinois I I COMMERCIAL SEGMENT PROJECTIONS(YEAR 1) Hist./Proj. Hist./Proj. Adjusted Adjusted Number Penetration Market Market Penetration Projected Property of Rooms Fair Share Factor Share Share Factor Capture Hotel A 100 19.0 % 127.6 % 24.3 % 25.0 % 131.4 % 13,688 I Hotel B 125 23.8 129.0 30.7 31.6 132.8 17,299 Hotel C 200 38.1 68.1 25.9 26.7 70.1 14,600 New Hotel 100 19.0 85.0 16.2 16.7 87.5 9,117 Totals/Average 525 100.0 % 97.1 % 100.0 % 54,704 I In its second year of operation, the new hotel is projected to penetrate above its fair share of demand. A penetration rate of 130% has been chosen, as the new hotel is expected to perform at a level commensurate with Hotel A and Hotel B in this market segment. The same calculations are performed to adjust market share and penetration factors. Note that now the penetration factors of the existing hotels decline below their original penetration rates because of the new hotel's above-market penetration.Also, note that after the market share adjustment, the new hotel retains a penetration rate commensurate with Hotel A and Hotel B, though the penetration rates of all three hotels have declined by approximately nine percentage points because of the reapportionment of demand. Once the market shares of each hotel have been adjusted to reflect the entry of the I new hotel into the market, the commercial room nights captured by each hotel may be projected by multiplying the hotel's market share percentage by the total commercial room-night demand.This calculation is shown below. I COMMERCIAL SEGMENT PROJECTIONS(YEAR 2) Hist./Proj. Hist./Proj. Adjusted Adjusted Number Penetration Market Market Penetration Projected Property of Rooms Fair Share Factor Share Share Factor Capture Hotel A 100 19.0 % 131.4 % 25.0 % 23.1 % 121.5 % 12,662 Hotel B 125 23.8 132.8 31.6 29.3 122.9 16,004 Hotel C 200 38.1 70.1 26.7 24.7 64.8 13,507 New Hotel 100 19.0 130.0 24.8 22.9 120.3 12,531 Totals/Average 525 100.0 % 108.1 % 100.0 % 54,704 I I DRAFT June 20, 1 2018 Penetration Explaination 1 I Proposed Headquarters Hotel-Virginia Beach,Virginia 02 I VIRGINIA BEACH CVB CONCLUS ONS AND RECOMMENDATIONS I I I I I Virginia Beach Convention & Visitors I Bureau Management Analysis and I Recommendations Presented to the City of Virginia Beach By Academy Street Collaboration, LLC January 24, 2020 I I I I Academy Street Collaboration, LlC 1 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 1.0 Executive Summary Virginia Beach finds itself in a very competitive environment relative to the health of its visitor economy. The locations that Virginia Beach competes against are led by dynamic destination marketing organizations (DM0s) similar in mission to the Virginia Beach CVB. However, there are substantive distinctions between the Virginia Beach CVB and other high performance DMOs. America's best CVBs position themselves as "shared" community assets, playing an integral role in uplifting the destination's overall economy. This role not only includes marketing the destination, but also helping to "manage" the visitor product and experience. DMOs have transformed themselves into aggressive and business-oriented nonprofits that use marketing innovations and state-of-the-art technological expertise to maximize the community's investment in their mission. This industrywide DMO transformation has outpaced the rate of change at the Virginia Beach CVB. The CVB lags behind other competing destinations that have the support of both government officials and area stakeholders who believe in the extraordinary power of the visitor industry. In Virginia Beach, the City government strongly supports the CVB. However, many private sector visitor industry stakeholders don't support the CVB and have either lukewarm or even negative impressions of the organization. Importantly, without a high level of private sector stakeholder alignment and engagement, it can be challenging or even impossible to implement new strategic initiatives that elevate the destination's attractiveness and improve the traveler's experience. This Report contains several important observations about the management and structure of the CVB. The Report does not accentuate the positives, although there are many positives about the performance of the CVB staff. However, the consultant has attempted to constructively address issues noted in the Report and an evaluation of this nature is important to the organization's progress. r. The Report provides a series of recommendations to be considered by the City Council, City executive staff, CVB management, plus visitor industry and community stakeholders. A .. summation of these observations and recommendations follows: 1.1 Key Observations .. a. There are concerning economic trends across the national tourism sector which, in the not- too-distant future, could harm the Virginia Beach visitor industry. Closer to home, there are local economic trends (T) which indicate Virginia Beach is losing brand position to I Academy Street Collaboration, LLC 4 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS competitors. Visitor industry stakeholders are deeply concerned about the destination's i viability both from a marketing perspective and from the viewpoint of a declining tourism product. b. In comparison to its competitors, the Virginia Beach CVB's governance structure is not itypical. The majority of U.S. based DMOs are organized as separate entities, outside of direct reporting to municipal government. i c. DMOs globally are focusing on strategies related to community alignment and destination stewardship to improve their value to community and marketing performance. The consultant found limited focus on these types of strategic issues within the CVB. This could ibe an indication that the CVB is not addressing the defining strategic topics affecting a global tourism industry experiencing rapid growth and change. Further, there is no ievidence of a commitment to long-term strategic planning within the CVB. d. Compensation levels for Virginia Beach CVB employees run 30%to 40% below DMO i industry norms. The higher the position within the CVB, the greater the variance between Virginia Beach compensation versus other DMOs. This fact restricts Virginia Beach from recruiting highly competent A-team executives. e. The CVB has not kept pace with the latest technology, data and operational innovations being utilized by other best-in-class DMOs. These factors have constrained growth for the I Virginia Beach visitor economy. f. The world-class Virginia Beach Convention Center is underperforming within the meetings and conventions market segment due to the lack of an attached, full-service convention icenter hotel. Meeting planners won't even consider Virginia Beach because all their other options now include a connected or adjacent hotel to the convention center. This type of ihotel inventory is required to just get in the game. Without it, Virginia Beach will continue to be relegated to the sidelines. g. Local hoteliers and restaurateurs suggest the profile of the "typical" Virginia Beach visitor has changed and is now tracking to an "economy" or "mid-scale" versus an "upper-scale" visitor from an economic profile perspective. ' h. The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling behind its competitors, ' relative to product development, community collaboration and marketing/sales innovation. i. The CVB should strongly support the Virginia Beach Resort Area Strategic Action Plan (RASAP)2030. The organization should make a concerted effort to back the Plan's focus on beautification, placemaking, wayfinding, events and enhanced infrastructure. Further, the Plan's emphasis on adaptive reuse and rehabilitation of existing properties assures the I I Academy Street Collaboration, t_LC 5°. VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Virginia Beach tourism product remains authentic and sustainable, and thus preserves the "sense of place" that visitors love. j. The private sector has limited tangible methods of supporting the CVB, thus it has little opportunity to provide valuable direction and assistance. Industry stakeholders feel there are inadequate opportunities to "plug in" to the organization and thus they have relinquished responsibility for destination marketing to the City and CVB. k. The operational structure of the CVB places the Virginia Beach destination at a competitive disadvantage from an administrative, marketing and sales performance perspective. Industry wide, DMOs function as marketing and communications entities, not government bureaucracies. Due to the CVB's direct affiliation with the City, it's often required to act like a government agency. This sets structural limits on the CVB, which don't exist for other DMOs. I. A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability and a passion for making Virginia Beach a world-class destination. m. First-rate DMO senior management talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy. This objective will be difficult to achieve under the current governance structure. n. There are examples of DMO transitions from government to nonprofit entities which have .. been successfully executed and which have dramatically improved destination performance. San Antonio, Kissimmee, Puerto Pico, Bermuda and Washington, DC are five destinations which can be considered by Virginia Beach to model a future organizational structure. 1.2 Strategic Issues Five imperative strategic issues were identified during the consulting assignment: 1) The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling behind its competitors, relative to product development, community collaboration, innovation and marketing/sales effectiveness. 2)The private sector, a critical component in the success of any destination, needs to be given an opportunity to assure the success of the CVB and the overall tourism economy. I I Academy Street C;odaboration, LLC 6 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 3) Internal CVB management systems need to be improved, not only to enhance destination performance, but also to promote a more nurturing and collaborative employee environment within the CVB. ' 4)A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability Iand a passion for making Virginia Beach a world-class destination. 5)Additional DMO executive management talent needs to be recruited and retained to assure ' the CVB maximizes its value to the visitor economy. 1.3 Recommendations ' The consultant recommends to the City of Virginia Beach City Council the establishment of a ' Community Taskforce to: 1) Evaluate the possibility of transitioning the CVB to a new public/private 501c6 nonprofit ' organization.The 501c6 would be charted by and contracted to the City to perform the destination's marketing and sales activities. Governance would be shared between the City and the private sector.This proposed change would improve marketing, sales and ' operational capabilities,while providing for private sector involvement in the new entity. 2) If it was found too impractical to establish a 501c6 management structure outside of City ' government,the Taskforce would thoroughly review the CVB organization and make recommendations for operational and marketing improvements based on the existing ' governance format.Additionally,the taskforce may consider a possible hybrid governance model which would possibly include a 501c3 nonprofit foundation model, like the Virginia I Aquarium &Marine Science Center Foundation. The Community Taskforce would be comprised of private sector leaders and City ' representatives. The private sector leaders would come from both the business community and visitor industry sectors. These individuals would act as honest brokers for the City Council and assure a fair vetting of this important topic. The Chairperson of the Taskforce should be a highly ' trusted, private sector CEO. The Taskforce would convene over a 90-day time period and then present detailed recommendations to the City Council. The City Council would decide on these Irecommendations. I} IAcademy Street Collaboration, LLC 7 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS n approved bythe CityCouncil, a If a nonprofit option were recommended by the Taskforce and pp transition process could unfold over a to-be-determined timeframe. The transition would be carefully planned to assure organizational continuity with no harm to employees or to ongoing marketing and sales efforts. For the new nonprofit,the City would provide civic oversight, while the private sector would be engaged in a more substantial manner. This approach would assure strong fiduciary control and enhanced marketing/sales capabilities for the new organization. The new structure would encourage additional private sector financial and marketing support for the new CVB. Regardless, of what the final CVB structure would entail...either remaining within government or as a separate nonprofit...it's an economic necessity that the organization's mission, strategy, marketing, sales, governance and organizational management be realigned. For the Virginia Beach City Council, the opportunity cost of failing to respond to the current marketing and operational deficiencies are substantial. By not addressing the CVB's current limitations, the City is restricting its long-term economic growth. The City Council should be adamant about improving CVB performance, not only for tourism industry reasons, but also for the overall health of the entire Virginia Beach economy. CJ o' The City of Virginia Beach contracted with Academy Street Collaboration, LLC and its principal, Bill Hanbury, to provide destination organization and marketing advisory services.The assignment focused on the Virginia Beach Convention &Visitors Bureau (CVB) relative to its overall effectiveness and structural relationship to City government. With the departure of the CEO and other key employees, the CVB is at a pivotal point. The City of Virginia Beach sees an opportunity to redefine how the CVB is managed with the goal of improving the community's overall economy, which is vitally dependent upon tourism. Through this process, the City and local stakeholders could potentially build a new or improved "best practices" organizational structure. The timing for this review could not be better. The City of Virginia Beach has recently made substantial new investments in tourism infrastructure from the Sports Center and the Wave Park to added support for the Aquarium, plus arts and cultural institutions. In these projects alone, the City is investing over $150 million. This is a good time for the City Council to consider maximizing the return on these investments by assuring the City has a highly effective CVB capable of selling these new assets and the existing tourism products. I dcademy Street Collaboration, LLC 8 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS This advisory assignment was started by the consultant with no preconceived notions about the I future CVB structure and what may be best for Virginia Beach. Whatever the City decides, it should reflect a specific solution customized for Virginia Beach and its stakeholders. I As the City has instructed, the consultant assured that valued community stakeholders had a significant say in the Report's conclusions and recommendations. They have played a role in this process by providing direction and consensus concerning the defining topics confronting the Virginia Beach visitor economy. The consultant sought feedback from a wide range of community leaders and visitor industry partners. This included input from over 60 individuals. Academy Street Collaboration has analyzed the CVB relative to governance and oversight, marketing, communications, sales, product and visitor experience, plus community and ' industry support. The consultant is presenting recommendations to City leadership with the goal of improving the performance of the CVB, and the Virginia Beach's visitor economy overall. These recommendations should allow the City to more effectively compete for tourism dollars, ' which sustain and expand business opportunities while creating and retaining jobs. This, in turn, supports vital city services which add to an enhanced quality of life for all residents. ' 3.0 Methodology I In order to complete this assignment, Academy Street Collaboration, utilized the following methodology: ' a. Reviewed available data provided by the City of Virginia Beach and its CVB. b. Worked with City and CVB staff to compile and review organizational performance data. ' c. Analyzed market, organizational and public policy issues that impact the CVB's operations. d. Interviewed external civic and visitor industry stakeholders, department heads at the City and the CVB, plus staff regarding their thoughts on CVB structure, culture and performance. Ie. Analyzed various competitive sets both from the group and leisure market segments and examined Virginia Beach's management and performance relative to these destinations. ' f. Reviewed CVB performance measures, incentive plans and other management techniques in comparison to other industry best practices. g. Researched and summarized a wide range of industry data concerning DMO best practices ' relevant to the Virginia Beach CVB. ' Academy Street Collaboration, ILLC 9 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 4.0 Visitor Economy and the Competition The visitor economy is vital to the City of Virginia Beach. The following statistics support this I assertion: 19 million annual visitors, $132 million in local and state tax revenue, plus 14,000 jobs. This data indicates impressive impact from the visitor economy. ' However, other economic indicators suggest that Virginia Beach has additional potential, and there is more upside to the destination's overall performance. The Smith Travel Research (STR) chart below notes that Virginia Beach hotel revenue has outpaced the cumulative US inflation — rates (173%vs. 126%) over the last 30 years. However, hotel room demand has been relatively flat over time, and actually declined in the last ten years. — CITY OF VIRGINIA BEACH CONVENTION &VISITORS BUREAU Hotel Revenue and Demand — 1987 to 2018 Sim,l:m KV 3.000 00 SI'.0.000.010 I,SW;'10 s2fOr00 Ono pros. 5 p3�grS.In•? ewhom son iu �,p sa"' �`1'�.PI'.3 :fi Y"" t i4P11`'s+t6.9 o tio&,%. Pit 4 41"'13%5 . 'IOC' - — Source Smith!Covet Research STR notes in the following chart that 2019 hotel revenue year-to-date (YTD),through November, has only increased 1.7%. This statistic is particularly concerning as the nation continues to benefit from one of its most dynamic economic expansion. The chart also points out that hotels in destinations within the competitive set are all outperforming Virginia Beach. I I Academy Street Collaboration, LLC 10 I it , VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS REVENUE YTD I 2019 vs. 2018 --- - r I 10.2 7.6 I 3.0 3 A 1.7 2.2 2 3 2.3 I 0.6 v 5 0 2 csa csa ® o a> w 2 I :� g ® g v 1 Also of concern is STR data through November 2019 YTD for room supply, demand and occupancy as noted below. Room demand and supply has declined 0.3% and 2.9% respectively,I while occupancy has increased 2.7%. From a demand and room supply perspective, all the destinations in the competitive set are outperforming Virginia Beach. Again, this data needs to Ibe considered in the context of an extraordinarily healthy US economy. YTDROOIVI NIGHTS BOOKED a SUPPLY:. �._ _ 2019 vs_ 2018 _ r IN 8.15 1121 3.5 mu I 2.7 2.3 1.B 2.3 t. E o.B 1.2 n 0.s - g' 0.4- 1 .3 0.4 II --.. -0.9 -1.2 li MI -2.9! /11 State Region Williamsburg Ocean Virginia Myrtle Coastal City peach SeacPa Carolina US Demand i Supply u 0cc IFurther, Virginia Beach's brand image may be falling behind its primary competitors who are expending additional financial resources and may be deploying more ground-breaking Imarketing approaches. The following two charts from a 2018 SIR Survey reflect this trend. I I Academy Street Collaboration, tiC 11 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Respondents are less likely to visit Virginia Beach in the near future compared to Myrtle =each and the Outer Banks Myrtle Beach,SC 35% :4 , Outer Banks.NC 40is ��� Ocean City,MD 44, EE Virginia Beach.VP 49% c mmi Don't know Never likely to Visit (�����(f 4 \J Among key competitors, respondents are least familiar with Virginia Beach Myrtle Beach.SC 67% i Outer Banks.NC ,. MM. 47% Ocean City.MD -•in47% Virginia Beach,VA 37% 4 •5 Very IBm14 er ' This situation is exacerbated by trends across the national visitor economy which could negatively impact Virginia Beach. The following three charts from STR reflect this concern. _ First, the chart below notes that increases in U.S. hotel occupancy and ADR may be at the end of a long dynamic growth cycle. Academy Street Collaboration, DX 12 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS ILong Run Trends Point in One Direction: Do wn l 41111, I5 6.8 7.5 I O t ' 1.4 -0.0 -3.4 -5 ®cc % Change I ADR % Change -6.7 ' -10 -9.7 1990 2000 2010 I10131 U.S-,ADR 8 OCC 24 Chonge 12 MA9/\ 1/1993 -C9/2019 ISecond, the STR chart below reveals that through Q3 2019, ADR growth nationally has been negative for five consecutive quarters. IReal ADR Growth (ADR%minus CPI%) Has Now Been Negative For Five Quarters 5 i I I p ,..11lllrllllllllllii111llllltl i 11111111 IIIIIIIlI.II .,,,.I,h1i1111lll II<<11 i -5 - I , 10 1990 2000 2010 I Third, the STR chart below dis closes that the nation is experiencing the longest hotel RevPAR I "upcycle" in the past 30 years which, according to industry analysts, has run its course. itevmAR Growth: Longest RevPAR Upcycle (with two small interruptions) S ivni\14Abisi I 113 Months � MOIttiff �' -.5 (Out of 1]2) 56 Mon[hs lout 01115)to -25 1990 200G 2010 I I Academy Street Collaboration, tlC 13 • VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS rthe U.S. Travel Association is projectingsoft growth in 2020 for the domestic travel Further, market. The forecast suggests that U.S. Travel will only increase by 1.4%, the slowest pace in four years. Internationally, U.S. Travel is also predicting that the US-based market share of global tourism demand will continue a steady slide from a high of 13.7% in 2015 to a low of 10.4% by 2023.This equates to an economic loss of over$78 billion in overall U.S. visitor spending. As Virginia Beach City leadership evaluates the accompanying observations and recommendations, it's important to note that the most effective DMOs have the support of both government officials and area stakeholders who believe in the extraordinary power of the _ visitor industry. In Virginia Beach, the City government strongly supports the CVB. However, many private sector visitor industry stakeholders have either lukewarm or even negative impressions of the organization. Importantly, without a high level of community stakeholder alignment, support and engagement, it can be challenging or even impossible to implement new strategic initiatives that elevate the destination's market position. The destination's performance may not improve until industry stakeholders better engage in owning the future success of the CVB.In an extremely competitive environment, America's best performing CVBs are "shared" community assets. They play an integral role in uplifting the destination's overall economy. This role not only includes marketing the destination, but also helping to "manage" the visitor product and experience. This is accomplished by improving community buy-in regarding the _ organization's overall mission. Further, DMOs have transformed themselves into aggressive and business-oriented nonprofits that use marketing innovations and state-of-the-art technological, plus digital expertise to maximize the community's investment in their mission. As noted below, Academy Street Collaboration analyzed the Virginia Beach CVB relative to other DMOs from a governance, strategic alignment and employee compensation perspective. 5.1 Governance In comparison to its competitors, the Virginia Beach CVB's governance structure is not typical. The majority of U.S. based DMOs are organized as separate entities, outside of direct reporting lines to municipal government. Destinations International has recently published its latest broad-based analysis of the DMO industry. Over 520 destinations and industry leaders (including the Virginia Beach CVB) participated in the DestinationNEXT 2019 survey. As the Academy Street Collaboration, LLC 14 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS graph below notes, only 20.3%of all DMOs are government affiliated organizations, and most g of these entities are in the budget category of under$5 million. IConcerning the 31 DMOs within the Virginia Beach budget category of over$20 million in the U.S., there is only one other organization (Fort Lauderdale), besides Virginia Beach which is Igovernment affiliated. Chamber of commerce 2.4% Public/private ' partnership Public authority Government organization 4.8% , ' Other , , • ' Y. 32% Non-profit, no membership I .,r.. Non-profit,with membership The consultant was able to research more detailed information concerning nine competitive ' destinations in the tighter budget category of$20 to $30 million. This budget category better aligns with the Virginia Beach CVB. The research originated from the 2018 Search Wide DM0 ' Contract and CEO Employment Study, The Study information is presented in aggregate and does not reveal which CVB provided the information. However, the study provides an interesting comparison to the Virginia Beach CVB. Virginia Beach did not participate in the survey. Highlights of the Study include: a. Only one organization was under government authority (Fort Lauderdale). b. Relative to the comp set, Virginia Beach's employee "full time equivalent" count of 58 is on the lower end of the survey. ' c. All CEOs within the comp set had employment contracts. The former Virginia Beach CEO had no employment contract. I ' Academy Street Collaboration, LLC _ 1 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 111 d. The former Virginia Beach CEO's base salary was below eight of nine CEOs in the Study. Fort Lauderdale, the only organization in the survey currently under government authority, was at the bottom of the CEO pay scale. As a point of information: since this survey's completion, the Fort Lauderdale CEO has seen a significant increase in compensation due to Broward County reevaluating its compensation policies relative to the CVB, e. CEOs within the comp set earned bonus percentages of between 21% and more than 50%. The former Virginia Beach CEO had no opportunity to receive a bonus percentage f. Concerning "other benefits', there were six different types of benefits received at varying .. levels by the CEOs within the comp set. Of these six benefits the former CEO of the Virginia Beach CVB, received only two. 5.2 Strategic Alignment The DestinationNEXT 2019 survey provided persuasive information concerning the most compelling strategies that high performance DMOs are deploying to assure success. Of the top 20 strategies noted in the survey, 14 of them are related to "Community Alignment" and — "Destination Stewardship". Strategies associated with Community Alignment include: a. enhanced engagement with the local community b. improving the hospitality culture c. building new social networks within the community d. working with the community to build authentic experiences Strategies associated with Destination Stewardship included: a. building coalitions between the visitor industry and economic development agencies, academia, civic and philanthropic entities b. building strategic alliances outside of the tourism industry c. elevating quality of life for local citizens d. focusing on sustainability and issues like tourism overcrowding After staff interviews, and reviews of Virginia Beach CVB's 2020 departmental plans, the consultant found few references to these types of strategic issues within the CVB. This could be an indication that the CVB is not addressing the defining topics effecting a global tourism industry experiencing rapid growth and change. I t Academy Street Collaboration, LLC 16 ' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS The CVB is improving its community alignment with a new $100,000 local advertising campaign, but the thrust of the campaign is related to attracting local citizens to take more advantage of ' the local tourism economy, a laudable objective. However, the program doesn't include the goal of promoting the CVB as a community asset and stressing the overall value it contributes to the Virginia Beach economy. Importantly, as the CVB becomes more engaged in the implementation of the Resort Area IStrategic Action Plan (RASAP) 2030, the objective of building destination stewardship and community alignment should improve. ' 5.3 Employee Compensation, Another major difference between the Virginia Beach CVB and its competitors is relative to ' employee compensation and benefits. Destinations International's 2018 Compensation and Benefit Survey provides detailed information concerning these topics. Compensation levels for ' Virginia Beach CVB employees run 30%to 40% below DMO industry norms. The higher the position within the CVB,the greater the variance between Virginia Beach compensation versus ' other DMOs. For example, according to the Compensation Study, the former Virginia Beach CVB CEO had a total compensation of$167,000. In comparison, the CEOs for other US-based DMOs with budgets in the range of$20 to $30 million had a median total budgeted compensation of ' $471,018 (14 respondents-Destinations International 2018 Compensation and Benefits Survey). IBased upon these compensation details, Virginia Beach would have difficulty recruiting an A- Team CEO and other executive departmental leaders. Simply stated, the CVB is at a definite ' disadvantage when attempting to attract and retain highly talented employees. Based on conversations with the City of Virginia Beach Human Resources management, these compensation challenges may be difficult to resolve within the City's current structure. ' 6.0 Virginia Beach g a eac Versus a sus the Competitive Sets In order to understand if Virginia Beach is performing similar to national trends or is unique to the local market, a competitive set analysis is required. ' 6.1 Group Virginia Beach's competitive set for group business as identified by the Knowland's TAP Report includes: Baltimore, Birmingham, Charlotte, Chattanooga, Memphis, Nashville, Omaha, I ' Academy Street Collaboration, LLC VIRGINIA REACH CVB CONCLUSIONS AND RECOMMENDATIONS competitors for groupbusiness Richmond and Tampa. CVB staff has also identified as additionalc p to include: Savannah, Raleigh, Norfolk, Lexington and Louisville. The TAP Report is a foundational data management tool for CVBs to evaluate on a monthly basis current and forward-looking group demand for a destination. Over 60 of the top destinations across the nation use the tool to track group room night pace information across the entire multi-year future booking window. Up until 2019, the Virginia Beach CVB was a participant in the TAP Report system. However, in 2019, the CVB discontinued using the TAP Report. Thus, for this Report it's not possible to evaluate Virginia Beach's group performance versus it's competitive set. It is recommended that the CVB reengage in providing data to the TAP Report in order to monitor organizational and competitive set sales performance. .. 6.2 Leisure CVB staff and stakeholders have identified the following destinations within Virginia Beach's leisure tourism competitive set: Primary-Ocean City, Myrtle Beach, Coastal Carolina. Secondary- Outer Banks, Rehoboth, Hilton Head, Cape Cod and Daytona. For the primary competitors, hotel data - provided by STR from 2014 to 2018 is as follows: Occupancy 2014 2015 2016 2017 2018 Virginia Beach 58.2% 60.1% 62.6% 63.7% 63.1% _ Myrtle Beach,SC 55.3% 55.6% 57.3% 57.4% 58.9% Ocean City, MD 52.0% 55.8% 58.8% 59.2% 56.7% Coastal Carolina, NC 54.4% 55.8% 58.1% 55.8% 56.9% ADR 2014 2015 2016 2017 2018 Virginia Beach $118.34 $122.86 $124.98 $126.00 $128.30 Myrtle Beach, SC $115.23 $120.05 $123.04 $128.30 $131.68 Ocean City, MD $137.43 $139.57 $138.59 $142.85 $147.20 Coastal Carolina, NC $112.13 $120.83 $120.90 $125.63 $126.75 RevPAR 2014 2015 2016 2017 2018 Virginia Beach $68.84 $73.79 $78.24 $80.21 $80.96 Myrtle Beach, SC $63.75 $66.74 $70.54 $73.67 $77.62 Ocean City, MD $71.50 $77.93 $81.49 $84.60 $83.51 Coastal Carolina, NC $60.99 $67.46 $70.28 $70.09 $72.11 I 1 Academy Street Collaboration, LLC 18 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS This data indicates that the competitive set dynamic has remained stable during this five-year P Y timeframe. No particular destination dramatically outperformed or underperformed their ' competitors. STR YTD data, through November 2019, notes Virginia Beach occupancy increased 2.7 YOY to ' 66.6%. outpacing an expanded competitive set (now including Williamsburg). ADR YTD was up 1.9%to $134.74. RevPAR was up 4.7%to $89.77. The following chart provides additional detail. ' Yra Nov 201 Occupancy sh., R YTD "rha y- Again, these data points don't reveal any significant trends for any specific destination within ' the competitive set, including Virginia Beach. There is market stability among these competitors. However, it should be noted that these charts provide a limited perspective concerning Virginia Beach's performance versus its competitive set. Additional analysis would ' be required to truly judge the destination's performance versus primary and secondary competitors using the above noted measures and other market-related information (i.e., ' population, CVB budget, hotel inventory, room occupancy tax, convention center size, airlift, etc.). The consultant recommends that more analysis be conducted concerning both primary ' and secondary competitors relative to Virginia Beach. 7.0 SWOT Analysis ' A Strengths, Weaknesses, Opportunities and Threats (SWOT) Analysis was conducted using input from civic leaders and industry stakeholders, plus referring to industry best practices. The consultant has developed the following list for consideration: 7.1 Internal Environment ' Strengths ' a. Virginia Beach is one of America's premier family vacations spots, ranking 7th nationally in surveys as a "beach destination". In its competitive set,the destination ranks 2nd in awareness behind Myrtle Beach. ' Academy Street Collaboration, LLC 1' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS b. Virginia Beach was recently recognized bySafewise as the number one safest city in America. The 2019 listing ranked The Safest Cities (population 300,000 and higher) based on the rate of reported violent crime per 1,000 people in the city. _ c. Virginia Beach was ranked number 1 as the Best Big Cities to Live In for 2019. '` aIiettHta compared the 62 largest US cities based on 56 key indicators of attractiveness and Virginia Beach was rated the best in America. d. Virginia Beach has a diverse array of hotel accommodation offerings, both national brands and locally owned/operated. e. The destination has a large inventory of vacation rental properties which significantly contributes to Virginia Beach's attractiveness to a wide spectrum of customers. f. Virginia Beach has a rich collection of arts, culture, history, retail and family attractions. g. It has varying restaurant offerings across the full matrix of consumer interests. h. The destination's sports market has seen significant growth, and with the new Sports Center, this segment will continue to outperform other destinations. i. Virginia Beach occupancy rates continue to outpace its key beach competitors. j. The community has a dynamic and entrepreneurial private sector. k. Virginia Beach is blessed with a vibrant urban core well represented by the CBDA. I. There is tremendous economic energy supplied by the military sector of the economy. '— a. In a recent survey (SIR's Brand Awareness Report), consumers "in the future" were less likely to visit Virginia Beach compared to competitive beach destinations (Myrtle Beach, Ocean City, Outer Banks, Cape Cod, Hilton Head). b. The SIR Report notes that "familiarity with Virginia Beach" has only grown marginally between 2013 and 2018. c. In the same survey, Virginia Beach continues to be viewed as "less safe"than its key competitors. d. The CVB has not kept pace with the latest marketing, digital, sales and operational innovations being utilized by other best-in-class DMOs. Specific examples are noted below in section 8.1. These factors have constrained growth for the Virginia Beach visitor economy. e. The world-class Virginia Beach Convention Center is underperforming within the meetings and conventions market segment due to the lack of an attached, full-service headquarters hotel. Disturbingly, from FY 2016-17 to FY 2018-19, the number of room nights related to I Academy Street Collaboration, LLC 20 , • VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS convention center business declined by 47%, from 40,320 to 21,305 (Virginia CVB internal sales data). f. Human Resources, procurement, technology and administrative procedures associated with City government are limiting the CVB's effectiveness, flexibility and speed-to-market. ' g. With four executive positions vacant within the CVB management structure, there is a lack of departmental leadership which is affecting staff collaboration, and in the end, sales and marketing effectiveness. 7.2 External Environment ' Opportunities ' a. A new CVB organizational model and/or management approach could substantively improve overall destination performance. b. The private sector could be called upon to provide the CVB with significant additional ' financial and intellectual resources. c. The military establishment is an economic asset for the destination which could be better ' utilized by tapping into more ceremonial events staged by the military that travelers would be interested in, and by better catering to military families and affiliated travelers visiting the region. ' d. Shoulder seasons afford Virginia Beach an opportunity to stabilize employment, service levels, and overall economic activity on a year-round basis. ' e. A headquarters hotel attached to the Convention Center would improve long-term destination occupancy, ADR and RevPAR. It also would improve job prospects and overall ' economic activity across the entire visitor economy. l hreats ' a. Other competitive destinations are investing heavily, beyond Virginia Beach's current product and infrastructure investments, to improve market position. b. Once the new Sports Center is opened, the Convention Center will lose 4 to 6 events ' annually. In addition, less hotel room inventory close to the facility will be available for meetings and convention use which will further undermine the facility's occupancy and Iprofitability. c. From Fort Lauderdale and Daytona to Myrtle Beach and the Outer Banks, competitive destinations are aggressively improving their marketing performance using innovative technology and digital assets. I I Academy Street Collaboration, !IC • I VIRGINIA BEACH CVB CONCLUSIONS AND RL COMMI NDATIONS • Cape Cod and Puerto Rico) are attempting to steal d. Even far afield destinations (California, p p 8 market share from Virginia Beach by targeting existing or potential customers. e. Local hoteliers and restaurateurs suggest the profile of the "typical" Virginia Beach visitor has changed and is now tracking to an "economy" or "mid-scale" versus an "upper-scale" visitor from an economic profile perspective. This perceived trend may be reality. The latest City of Virginia Beach report of hotel tax revenue reveals a concerning trend emerging. Over the last five months (July to November 2019) hotel tax revenue has declined YOY by 10.2%, from $5,267,952 to $4,728,894 (City of Virginit :each 33 n get fface 11/19 Tway RceYen e Report). f. A national recession or reduced investments in the local military command could cause harm to the Virginia Beach visitor economy. g. Restaurateurs and retailers note revenue declines in Q3 and Q4 2019. However, the City of Virginia Beach reports that over the last five months (July to November 2018), restaurant meal tax revenue has actually increased YOY 9.96% from $19.5 million to $21.5 million (City if Virginia ;each cig t Office 11/19 Tway Revenue Report). More analysis should be conducted concerning these perceptions versus the actual economic data. h. The global tourism industry is in a constant state of change, and the rate of change is only accelerating based upon:travel technology innovations, big data analysis, the gig economy, over-the-top video technology, digital platforms, 3rd party intermediaries, plus tourism overcrowding and sustainable growth issues.Virginia Beach stakeholders suggest the CVB is not keeping pace with these market dynamics. Using the SWOT Analysis, stakeholder feedback and industry best practices, the consultant has _ identified what should be considered the defining strategic issues for the CVB and Virginia Beach visitor economy. They include: I 8.1 The City and the CVB should aggressively address the fact that other destinations are attempting to capture its market share. Virginia Beach is falling ' behind its competitors, relative to community collaboration, product development, innovation and marketing/sales effectiveness. 1 1 Academy Street Collaboration, LLC 22 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS w- Community Collaboration High performance DMOs in tourism dependent destinations exhibit astute skills in engaging the community in their critical economic mission. Other destinations rely on their CVB to act as a forum for consensus building, collaboration, information exchange, plus product and experience development. Virginia Beach does not have these attributes at a best practices level. Innovative CVBs also build community pride and civic esprit de corps...assets which are important in accomplishing major community initiatives. These are competencies which local Virginia Beach citizens believe are lacking within the current CVB structure. ' The CVB's CEO is responsible for achieving these performance metrics, and if they are not achieved, there are serious consequences. ' Without a new spirit of innovation and community collaboration, plus an aggressive defense of Virginia Beach's market share, the destination could see declines in demand. DMOs are rushing ' to adapt operational innovations which improve market position. The astute use of technology and digital applications are must haves in order to compete on a national or global stage. Although CVB improvements have been implemented in the last couple of years, there is a lack ' of urgency to accelerate change. This is a strategic mistake. Product Development ' The absence of a shared CVB mission, coupled with market liabilities such as the lack of a major convention center hotel and a deteriorating product within the destination's resort area, has also restricted the CVB's capabilities to best service the visitor industry. These facts restrict the overall impact of conventions and tourism to Virginia Beach's economic vitality. ' While the CVB is not directly responsible for the lack of a convention center hotel or for deteriorating hotel and retail product, the organization has not been an effective asset in ' developing sales and marketing strategies to combat product conditions or to distinguish Virginia Beach in the East Coast destination marketplace. ' These "product" challenges are impacting the visitor experience, and per industry stakeholders, it suggests reduced consumer demand particularly in the mid and upper scale personas which ' are most economically attractive to Virginia Beach. To counter the deteriorating product situation, the CVB should strongly support the Virginia Beach Resort Area Strc'teik Action Plan (i•ASAP)2030. As the plan notes: "Cities that focus on providing the highest quality spaces and experiences are seeing...visitors who keep coming back every year." The CVB should make a concerted effort to support the Alan's focus on beautification, placemaking, wayfinding, events 1 Academy Street Collaboration, LLC 23 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS and enhanced infrastructure. Further, the Plan's emphasis on adaptive reuse and rehabilitation of existing properties assures the Virginia Beach tourism product remains authentic and sustainable, and thus preserves the "sense of place" that visitors love. The recommended — facade grant program, support for enhance maintenance, community policing, plus code enforcement for repairs and upkeep could all go a long way in improving tourism product quality...and thus the visitor experience.The CVB should also strongly support the RASAP's proposed District Improvement Program which affords matching grants for small business and locally owned/operated businesses. This will assist with building improvements, modernization, and façade improvements. As the RASAP notes, small business is vital to the success of the Virginia Beach economy, and the Plan's .. recommended steps are a practical way to fix the tourism product to better match consumers' desires. One interesting note concerning the previous RASAP which was authored in 2008: Of the top eight priorities identified in the 2008 Plan, the only one not "completed" or "underway" was the construction of a convention center hotel. With this noted,the consultant strongly recommends that the City make another effort to bring to fruition the development of a convention center hotel project attached or immediately adjacent to the facility. With declines in bookings (which are approaching 50% YOY), the facility will see additional future occupancy declines and thus the need for more subsidies from City Government. This negative demand — trend will accelerate based on the November 2020 opening of the new Sports Center. Today's national convention center market conditions are unlike five years ago, when Virginia — Beach could be competitive with other facilities for some selected pieces of convention and tradeshow business. Now, hotel capacity within immediate proximity of the convention center is an absolute necessity. Meeting and event planners won't even consider Virginia Beach because now all their other options include a connected or adjacent hotel to the convention center. This type of hotel inventory is now "table stakes" to just get in the game. Without it, Virginia Beach will continue to be relegated to the sidelines. It's imperative that the City address this issue to reverse this dramatic deterioration in Virginia Beach's competitive position. if not, the destination will see more group market declines, reduced convention center occupancy and more payments from the City to subsidize facility operations. Innovation and Marketing/Sales Effectiveness Community stakeholders are concerned about the lack of innovation by the CVB relative to _ technology, data usage and state-of-the-art marketing and sales strategies. From the Academy Street Collaboration, LLC i VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS consultant's these issues are not considered "nice to haves" but rather "must perspective, haves now". ' Overall, within the CVB, there should be a better understanding of the meeting planner and leisure traveler booking process throughout the decision cycle. Further, the CVB should better ' understand, from a persona perspective, its unique generational cohorts (millennials, GenX, GenZ, Boomers, etc.) to assure that both marketing/sales messages and the destination's products/experiences match. More specifically, some of the most salient issues include: a. The Meetings and Conventions Sales Department receives less than 2% ($129,950) of an over $7 million CVB advertising budget. Best practices indicate that this number is completely inadequate to properly position Virginia Beach in this marketplace. Similar CVBs ' traditionally invest 15%to 20% of their advertising resources to this market segment. Further, Meetings and Conventions Department goals and objectives are not clearly defined. And, with some KPIs down by as much as 50% over the past year, there has been ' no organization-wide effort to remediate this lack of performance. b. Meetings and Conventions needs to more aggressively sell the Virginia Beach product to ' meeting and event planners. The consultant submits that the destination can be substantively more successful by currently focusing on individual hotel property business ' and meeting/event planners who are willing to compromise on the severe limitation surrounding the Convention Center. This is not an easy sell, but it's what's currently available. Also, the Department should embrace new emerging trends relative to meeting ' planners' interests, including more group excursions offers, community and charitable giving activities and creative experiences outside of the meeting room. ' c. In 2018 the CVB's media mix included allocating 15% of its resources to digital advertising. To the CVB's credit, this figure increased to 21.8% in 2019. More aggressive movement to digital advertising still needs to be achieved. Sojern's 2019 Digital State of the Industry ' eport notes that in 2018, 47% of all travel marketer ad budgets were directed to digital and that two-thirds of these advertisers planned to spend even more in the coming year. ' It's imperative that Virginia Beach continue along the path of utilizing evolving trends and new technical capabilities to maximum marketing impact. ' d. Virginia Beach continues to increase its emphasis on social advertising, from 9.9% in 2018 to 12.0% in 2019. (21.2% annualized growth). However, these increases may be too little for the circumstances. Tourism marketers are seizing on the growing sophistication of social ad- targeting tools by directing a greater portion of advertising budgets into this channel. Social media growth is expanding at a rate of over 30% annually for travel marketers according to ' Academy Street Collaboration, LLC 25 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS a report byInteractive AdvertisingBureau and Pricewotenc*useCoopers.This high growth p dynamic will continue over the next several years, and the CVB must continue to aggressively transition additional advertising resources to social channels. _ e. The CVB could benefit from a better understanding of the current and future short-term rental ecosystem relative to growth, convergence with other travel sectors, and local property management. To minimize the importance of the short-term rental market has been detrimental to many destinations. Virginia Beach should not make that mistake and aggressively support these important accommodations alternative. _ f. The CVB should consider additional emphasis on video advertising to take full advantage of the growing convergence between traditional and online video ad formats. The rising consumption of digital video versus TV will allow for better tracking of advertising performance and providing new layers of consumer interactivity. The CVB needs to react faster to adapt to this multiplatform, multiservice device world by better tailoring video to suit the way it's consumed. i'7is Video Advertising Spend Report 2019 found that 59% of ad buyers planned to increase their advanced TV spend in the next 12 months. Half of these buyers expect significant increases in over-the-top budgets (advertising integrated within TV and from content streamed over the internet). g. Although the Mar/Comm department is utilizing some advanced data metrics (Arrivalist, VVT, Adara, Google Analytics, Meltwater), the consultant notes two areas which are strategically problematic relative to the consumer booking cycle and the CVB's management _ of their media mix: Consumer Booking Cycle—There is a lack of coordination by the CVB concerning the consumer booking cycle. The consumer booking cycle is comprised of: dreaming, '— researching, booking, experiencing and sharing their travel experience. For each phase of this cycle, there are specific channel branding solutions to connect with and attract consumers. Throughout the cycle, different media can be used at different timeframes along the booking continuum. Progress has been made here, but additional business intelligence expertise within the CVB staff should be considered. } Media Mix—There are four types of media available to the CVB: Earned (publicity), Shared (social), Owned (content), and Paid (advertising and brand). The consultant suggests that more work needs to be accomplished by CVB leadership to assure that financial resources are deployed appropriately across these various channels. This needs to be an ongoing process to assure the destination optimizes the funds expended for this purpose. Again, additional business intelligence capabilities would aid this objective. Academy Street Collaboration, LLC 26 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS h. By addressing these topics, the CVB should have a better understanding of consumer ' demographics, geographic targets and personas which best match the destination's products and experiences. Using technology and data tools to connect with the right customers, at the right time, with the right messages, and at the right price is the winning Icombination. 8.2 The private sector, a critical component in the success of any destination, needs to be given an opportunity to assure the success of the CVB and the ' overall tourism economy. y ' The private sector has limited tangible methods of supporting the CVB, thus it has limited opportunity to provide valuable direction and assistance. Industry stakeholders may have some ' responsible for this situation, but they feel there are inadequate opportunities to "plug in" to the organization. Thus, they have relinquished responsibility for destination marketing back to ' the City and CVB. The consultant repeatedly heard from industry stakeholders that they had no established method to interact with the CVB. ' The Resort Advisory Committee (RAC) has many duties relative to the health of the local resort area. The RAC has led several major initiatives which have improved Virginia Beach's visitor experience. However, the Commission does not provide the kind of detailed oversight and ' sustained monitoring of the all-important KPIs relative to the CVB marketing and operations. This type of ongoing oversight and monitoring is typical of a high performance CVB Board of ' Directors which are intensely focused on organization performance. The Advertising Advisory Committee (AAC) was initially organized to provide input from ' industry experts in marketing, communications and sales. Currently, it's not functioning as originally designed. Some Committee members are not senior executives or "experts" in the Committee's areas of focus. Further, when dealing with CVB management topics,the members ' have limited involvement in actual decisions. Meetings are often structured in a way which afford members little, if any, feedback to staff. There is no real Committee "authority" to make ' decisions, and there is a common feeling among Committee members that they are there to provide tacit approval of predetermined decisions. ' Virginia Beach's visitor and business sectors are comprised of energized and entrepreneurial leaders who aren't being utilized by the CVB for their aggressiveness, intelligence, financial ' resources and collaboration skills. If these individuals had a way to access the CVB, the community's private sector would be more willing to provide significant financial and intellectual resources to boost CVB marketing and sales performance. This would allow for the Academy Street Collaboration, t LC 2, A_ VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS resort area,of resources for future unified campaigns, including not just for the r es but for the entire metro region. To reinforce this point, stakeholders in various sectors of the visitor economy have expressed these types of concerns: a. Although the CVB staff has tried to engage the hotel GMs on different occasions, they are " disconnected and not contributing to support marketing and sales initiatives (room blocks, FAM tours, tradeshow participation, PR activities, advertising co-ops). b. A disorganized retail community has no seat at the table. Although they comprise an important segment of the region's economy, they are seldom asked to contribute directionally to the CVB. c. The restaurant sector, which contributes a major component of tourism tax revenues has no say concerning the destination's strategy or tactics. d. Virginia Beach has a wide array of small businesses which are directly linked to the visitor economy. Many of these businesses are isolated from the CVB efforts and not fully benefitting from a dynamic visitor economy. With no ability to collaborate with the CVB, they dismiss the organization as a department of government. Thus, they don't take advantage of cooperative marketing programs, training opportunities, business intelligence or a sense of civic connection, which are common practices in competing destinations. e. Tourism promotion is one place where the beach community and the urban core (represented by the CBDA) could productively cooperate. There is an "us vs. them" mentality between the groups, which is counterproductive to building civic collaboration and brand strength. Under the right circumstances, the CVB could engage and better organize these two entities into a more cohesive force to economically benefit the entire region. The visitor economy is one area where the two competing entities should find common ground. It's an opportunity lost. For the Virginia Beach CVB to better engage the private sector, we can look to other DMOs that have had similar challenges. In an innovative 2005 study of American CVB Governance Models by Zeitgeist Consulting, 22 organizations were evaluated which had become independent (501c6 nonprofit)from either a government entity or a chamber of commerce. All organizations evaluated had at least three years of operations as separate entities, so opinions about the organization's performance were more solidified. In the study, regardless of whether they were originally government or chamber entities, the municipal entities that now contracted with the ' 1 cademy Street Collaboration, LLC 28 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS independent CVBs believed they received a higher ROI from their tax investment in destination marketing and promotion under the new nonprofit structure. These more positive performance results were attributed to newfound advantages in recruiting and retaining highly competent sales and marketing professionals. Also, the ability to better engage the private sector and generate additional revenue streams that were previously impossible when the entity was a unit of government supported better results. Further, industry partners were more interested in investing their money in a private nonprofit, which was one step removed from government. Additionally, other identified reasons for the success of the new nonprofit entities included: improved speed executing marketing and promotional ideas, rapid response to changing market conditions, more flexible procurement and HR procedures, and the private sector playing a more supportive role to attract major pieces of ' citywide convention and event business. 8.3 Internal CVB management systems need to be improved, not only to ' enhance destination performance, but also to promote a more nurturing and collaborative employee environment within the CVB. ' The operational structure of the CVB places the Virginia Beach destination at a competitive ' disadvantage from an administrative, marketing and sales performance perspective. Industry wide, DMOs function as marketing and communications entities, not government ' bureaucracies. Due to the CVB's direct affiliation with the City, it's often required to act like a government agency. This sets structural limits on the CVB, which don't exist for other DMOs. Due to these limiting factors, there are organizational problems which could be better ' addressed, if Virginia Beach adopted a different management model: a. The municipal procurement process doesn't allow the CVB to flexibly respond to market ' opportunities. The need to rely on City purchasing eliminates speed-to-market and the necessary nimbleness to take advantage of optimizing advertising placements, which maximize value for money. This is particularly true when purchasing media on digital platforms where "on the fly" decisions are the norm. _ b. One example of purchasing policy ineffectiveness relates to Mac computers, which are the industry standard for high quality graphic design. They are not allowed on the City's Microsoft-based IT system. Thus, the CVB's creative talent works around the City's IT ' restrictions to use superior software for design projects. Academy Street Collaboration, RC VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS c. In an emergency, when a laptop crashes, it could take up to four weeks to procure a new — laptop for an employee.This kind of inflexibility makes it difficult to effectively manage the organization. No high performing DMO has these restrictions on the management of their I valuable marketing assets. d. The restrictions placed on the CVB while adhering to the City's Human Resources Department's procedures is debilitating. Hiring, onboarding, performance evaluations and DMO-specific training opportunities are perceived by CVB employees as not being at an acceptable level. e. Restructuring a CVB department or changing an employee's job description to meet evolving organizational needs sometimes becomes an impossible task. One of the key traits ' of best practices DMOs is their ability to adapt staff resources to address evolving marketing and sales opportunities. This ability is not possible within the existing CVB structure. f. For more than two decades, the CVB had contracted all marketing and communications to an outside advertising agency. The effort has since been taken inhouse, where there was limited institutional knowledge and no historical context to operate Mar/Comm at a level of "best practices". By all accounts, the new Mar/Comm team is severely understaffed relative to the outside ad agency approach (currently 9 CVB employees versus formerly 20 agency employees working on the CVB account). Although well intended, the Mar/Comm team has — struggled to accommodate the needs of other internal departments which often have unrealistic expectations concerning timelines and internal capabilities. Crisis projects are — thrown at Mar/Comm, often at the last minute. Then, they become expensive to solve and tend to be improperly executed due to the lack of appropriate planning time. The result: other CVB departments continue to be dissatisfied with Mar/Comm's overall level of service and the final work products suffer. g. Business Intelligence (BI) and research don't have the stature within the CVB that they — deserve. The Department's Coordinator is overextended due to constant and wide-ranging requests from inside and outside the CVB. There is limited prioritization of the work, which is often spent responding to last minute requirements and inputting data, which could potentially be accomplished by individual department staff. In addition, BI is not a top organizational priority, something unimaginable in a high performance CVB. In comparable — DMOs, the BI coordinator is usually at a "Director" or "Vice President" level, with the position residing in the executive office, and directly reporting to the CEO. These individuals _ have wide ranging responsibilities including not just BI and research, but also organizational technology and data, management dashboards, and customer relationship management systems (CRM). Academy Street Collaboration, LLC .,; VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS With these internal management issues noted above, it is a top priority, regardless of what ' future governance structure is decided for the CVB, that these internal management challenges be expeditiously resolved. ' 8.4 A cultural shift needs to take place within the CVB to create a more nurturing and positive work environment which encourages employees to thrive ' and excel. The team should build a value system based on collaboration, performance, innovation, aggressiveness, accountability and a passion for ' making Virginia Beach a world-class destination. Viewed as a whole, the staff of the CVB is dedicated and believe in the mission of the organization.They view themselves as community ambassadors. They take pride in their mutual hard work and in the accomplishments they have achieved. However, there is ' uncertainty within the ranks regarding the recruitment of a new CEO and filling three other vacant executive positions. ' Further, the CVB's cultural climate does not allow for an aggressive, entrepreneurial, commercially oriented environment, which is conducive to operating a top performing, world- class DMO. People are the number one priority in high functioning DMOs, and under the current CVB management structure, a focus on employee wellbeing and engagement, plus career training and work/life balance are not top priorities. ' The lack of synergy between CVB departments, which hurts overall destination productivity, is obvious to internal and external observers. This disorder affects organizational mission, ' objectives, strategy and KPIs which are not commonly shared across CVB departments. And since the CVB is not driving these broad-based destination goals and KPls, the overall Virginia ' Beach visitor economy languishes without strategic direction. Candidly,the CVB is not a source of direction, inspiration or innovation for the local visitor economy. ' Of concern is the fact that there is no institutional commitment to strategic planning or to build an annual consolidated business/marketing plan for the organization. Individual departments do in fact "plan", but there is a miniscule effort to integrate these plans into a combined approach which maximizes financial, personnel and operational resources. It should be noted that all forms of planning can foster a better culture of staff cooperation within organizations. Furthermore, there is a practical need to develop consistent KPIs across the entire organization. There's currently an internal effort, using Simpleview technology, to build an organizational- 'I Academy Street Collaboration, Ile 31'-- VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS performance• dashboard. However, theprocess has not been completely embraced across 1 wide P Y the organization, and it remains in the development stage. This situation is further exacerbated by the fact that the Virginia Beach visitor industry doesn't have a clear comprehension of the — CVB's goals and objectives that they should be striving to achieve. Specifically, here are examples of internal asymmetry and workarounds currently within the r, organization: a. Universally, Sports is considered a very effective department of the CVB. However, they — tend to work in isolation from the rest of the CVB team. This situation may be further exaggerated once the Sports Department relocates to the new Sports Center. The value of sports marketing can't be overemphasized. In FY2019, the Department hosted 103 events, with a total attendance of 444,000 and generating 111,000 estimated room nights (CVB internal sales data). Additional support, direction and oversight from the CVB's senior — leadership, and a new sense of departmental cooperation, will only improve this high level of performance in the future. — b. Although there are published internal brand standards, CVB staff members sometimes disregard the standards. This approach hurts marketing, sales and event continuity, and diminishes brand value. — c. Meetings and Convention Sales continues to underperform. Department goals and objectives are not clearly defined and as noted above, some KPIs have declined by as much as 50% over the past year. In addition,the fact that the senior sales leadership position within the Meeting and Conventions Department has been vacant for more than one year reflects the lack of emphasis on this vital market segment. '— d. The Visitor Information Center staff believes they are isolated from the rest of the CVB team citing that they are often not included in organizational communications and activities. It should be noted that additional analysis is needed concerning the overall efficiency of the Visitor Information Centers and its employees. Further, video technology links may help resolve some of the communication and location issues noted by staff members during the consultant's interviews. e. The International, Canadian and Group Tourism Department efforts are disconnected from the rest of the CVB. They have separate PR, marketing tools, data anaiytics, and are not always adhering to brand standards or participating in consolidated planning efforts. _ Further, the Department Director who has expertise in "tourism marketing" provides little, if any, input into domestic tourism strategy. Academy Street Collaboration, LLC 32 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS f. The interim CVB leadership has made an effort at building staff collaboration. However, there is limited institutionalized communication between departments regarding Iconsequential strategic issues. And with no established and clearly defined strategic or tactical planning methodology in place, the senior leadership team has inadequate ability to Ieffectively collaborate on the most compelling challenges facing the organization and destination. Obviously, this situation will only be remediated by employing a new CEO and filing vacant leadership positions. go Overall, due to the lack of permanent executive leadership, the staff doesn't feel a collective sense of mission or purpose. Teamwork between departments is sometimes lacking, which damages both organizational and overall destination performance, plus individual employee morale. I 8.5 Additional DMO executive management talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy. Several positions within the CVB are currently vacant. Due to non-competitive compensation packages, plus organizational and tourism product deficiencies, it will be difficult to attract and retain high performance employees. Specifically: a. As previously noted,there are material differences between the Virginia Beach CVB and other DMOs relative to employee compensation and benefits. With compensation levels 30% to 40% below DMO industry norms, it's difficult, if not impossible to attract and retain highly talented employees. The higher the position within the CVB, the greater the variance between Virginia Beach compensation versus other DMOs. b. Employee career planning, team training programs, plus organizational succession planning, which are standard in most peer DMOs, is limited within the CVB. A case in point:to currently have four senior positions vacant at one time is an indication of a lack of succession planning, retention strategy and employee training initiatives. The lack of these Iemployee-centric management tools affects the organization's ability to attract A-team performers. c. It's impossible to adequately reward high achievers within the CVB. The current incentive plan is not workable and doesn't act as a real "incentive" for employees. It is only limited to a small group of sales employees which causes staff resentment. Plus, the minor Icompensation connected to the current plan doesn't stimulate higher performance by employees. Within other DMOs, incentive plans play an essential role in spurring I I Academy Street Collaboration, [LC VIRGINIA BEACH CVB CONCLUSIONS AND RFCOMMLNDATIONS performance and simultaneously compensating top-notch employees. These programs are built to be fair to all employees and transparent in how they are administered. Performance bonuses for personnel across an entire DMO organization can reach as high as 25%to 30% of annual salary. d. The process of terminating underperforming employees is problematic. It can take months, if not years, for the performance improvement process to conclude for a deficient —' employee. Further, employees don't have highly defined goals, objectives and KPls, so it's even more difficult to closely monitor and judge employee performance. In high performance DM0s, employee performance is built into the culture of the organization and is constantly monitored by staff leadership and the Board of Directors. If an employee is not performing up to clearly defined standards, they are aggressively counseled and trained to improve deficient competencies in a reasonable timeframe. This is particularly true concerning sales and marketing employees. If performance doesn't improve, they are asked to leave the organization. e. in conversations with the City of Virginia Beach Human Resources leadership, it was suggested that compensation levels for CVB senior executives could possibly be adjusted to better reflect market realities. Even so, there will be limits from both a compensation and benefits perspective in the organization's ability to attract high achieving industry — executives. Further, City HR leadership suggests that adjusting compensations for administrator, coordinator, manager and director level positions may be more difficult to _ resolve. Based on state employment mandates and the system currently utilized by City government for its 7,000 plus employees, there may be no opportunity within this current system to improve compensation levels for these positions. The City's HR leadership '! concurs with the consultant that the one possible solution to these compensation challenges may be the formation of a new CVB organizational structure. _ 9.0 Additional Management Observations Although the consulting assignment has predominantly focused on organizational challenges, there are several CVB programmatic areas, not mentioned above, which are functioning at a satisfactory level. These include: 9.1 the Operations of the Virginia Beach Convention Center The consultant has not evaluated the operational management of the Convention Center. There is consensus that the facility is well managed and maintained. The complex remains in excellent .. condition and the staff has a strong commitment to service and quality. The significant CVB Academy Street Collaboration, LLC 34 , VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS sales and marketing challenges es which have been documented above, have not hurt Convention Center operations. Obviously, the future challenge for the building will be to improve utilization ' based on better CVB sales and marketing strategies. It should be noted that building occupancy will be further challenged once the Sports Center is completed in November 2020. The loss of ' several sports related pieces of business will negatively impact the facility's revenue generation. Thus, there's even more urgency to maximize the sales and marketing capabilities of the CVB. 9.2 City budget, Audit and Financial Oversight The City provides strong oversight of the CVB's budget and financial position. The organization is well funded and adheres to strict master financial controls, procurement protocols, contract compliance, public transparency, and formal audit/risk procedures. IThe annual budget process is an important management tool for the CVB team. Although there needs to be better coordination between the staff's actual business/marketing plan and the budget, this doesn't preclude the fact that the budget process itself is well run. Further, the annual external audit by the City Auditor provides important oversight of the organization, thus assuring transparency and confidence in the CVB's program of work. ' 9.3 Policies and Procedures ' The CVB staff is governed by the City's Policies and Procedures, as well as Administrative Directives and Ordinances, which afford staff with stable and predictable internal management ' procedures. 10.0 Examples of Successful DMO Transitions ' There are five DMO examples with similarities to Virginia Beach, that have successfully transitioned from government to new organizational structures. Each had different ' management circumstances, and each had its own unique challenges. However, one common theme links all five destinations: There was noticeable improvement in market position and community support, once the transition was concluded. 10.1 San Antonio NFor several years, San Antonio was outspent and underperformed relative to its competitive set. From 2013 to 2015, there was a decline in visitor interest in San Antonio as visitation dropped during that timeframe (Rivard Report, Feb. 15, 2015). According to local news sources, the reasons for the declining numbers is varied. Well financed marketing efforts in Houston, I Academy Street Collaboration, LLC 35 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 1 Dallas, Austin, Nashville, New Orleans and Phoenix were capturing San Antonio's market share. All these cities invested heavily in redevelopment of cultural institutions, parks, convention centers, hotels and urban core infrastructure. According to Casandra Matej, CEO of the former San Antonio CVB, the City continued to present the same mix of tourism amenities, and the CVB budget remained flat as peer destinations significantly outspent them. Again, according to CEO Matej, the San Antonio CVB struggled with the bureaucratic complexities as a municipal agency and their inability to attract private sector engagement and investment into their overall mission. It also was difficult to attract and retain talented marketing and sales employees to compete with their primary competitors. Thus, in 2015,the Mayor and City Council charted a CVB Structure Taskforce to review the CVB's mission and organizational framework. The 13-member taskforce was comprised of city government officials and representatives from across the local hospitality industry. The Taskforce spent eight months studying how independent CVBs function, reviewing DMO best practices, and eventually formulating recommendations. The Taskforce outlined the relative merits of the CVB either staying with the City or going out on its own. Going independent would mean more support from the private sector and a more competitive marketing/sales effort. The Taskforce also pointed out the downside, which was — mostly logistical: added office and IT costs, new expenses for finance, legal and HR management, and less direct contact with city agencies. The Taskforce eventually recommended to the City Council that the CVB become an independent organization with its own board of directors, but closely aligned to the City government. The new Visit San Antonio (VSA) would obtain 501c6 status and take 12-18 months to transition from city governance. The new structure meant the City would contract with the VSA and provide approximately$23 million annually, allocated from 35% of the Hotel Occupancy Tax Fund. Once the City Council approved the plan with a 7 to 2 vote, they set up an internal transition group staffed by the City's HR, Legal and Finance departments, plus senior leadership at the existing CVB, including Ms. Matej. Some original Taskforce members were also asked to join the .• transition group along with outside contract counsel. During the process, there was great care taken to accommodate employees affected by the transition. CVB employees either "crossed over" to the new organization or transferred to other City departments. Special consideration was given to employees nearing retirement, so they would not lose any accrued benefits. 1111 Academy Street Collaboration, L.I.0 ' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS A highly detailed five-year Destination and Marketing Services Agreement authorized the VSA to assume the promotion duties of the City's former CVB. Initially, they would receive $23 Imillion annually from the City, but the VSA, per the Agreement, was also required to build a "revenue enhancement plan" to augment the City's public tax investment. This revenue was to Iinclude: co-op advertising programs, partnerships, selling tourist and convention delegate services, corporate sponsorships and eventually membership dues provided by the private sector. A Tax Improvement District was also under consideration where hotels would impose a tax on themselves to increase CVB marketing resources. These enhanced revenue strategies are similar to how other US cities effectively raise new resources, thus lessening the burden on Ipublic tax dollars. Under the agreement, the VSA is required to present to the City quarterly and annual reports, ' performance targets, plus an up-to-date revenue enhancement plan. VSA must maintain transparency in all its transactions. A 21-member Board was selected by a five-person Nominating Committee appointed by the Mayor and Ms. Matej, the new VSA CEO. 60 individuals applied for the 21 spots. Small and large ' businesses alike, plus city and suburbs were given equal consideration by the Committee to assure fair representation. The Board was comprised of the following appointments: ' Mayor appointments (2)—Council members City Manager appointment (1) Hotels and lodging (3) Leisure attractions (2) Restaurant and Culinary(2) ' Heritage and Preservation (1) Arts, Culture and Music (1) I Transportation (1) Chamber (1) I At large Business (3) Corporate CEO (1) Ex-Officio Voting (2)— Convention Center & City IEconomic Development Ex-Officio Non-Voting (2)— City Aviation & Military I I. I IAcademy Street Collaboration, LEC 37 1 • VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Since the transition to an independent DMO, which began in 2015, the destination has seen impressive gains in marketing and sales performance. Visitation has increased from 29.7 million to 37 million visitors, an increase of 24.5%). Economic impact has increased by$1.6 billion to over$15.2 billion annually. In addition, the hospitality industry employs 140,200 individuals, an increase of 9,400 positions since 2015. The industry contributed $214 million in taxes to the ' City in 2018(San Antonio Business Journal Nov. 30, 2018). Convention room nights booked have increased from 860,000 to 912,000 (Visit San Antonio Annual Report), with future TAP pace reports signifying more significant improvements (Per Ms. Matej). Additionally, online engagement has jumped 33% from 5.4 million to 7.2 million (Visit San Antonio Annual Report). Another performance indicator includes raising over $10 million in private sector resources annually for marketing and sales activities as the private sector has become more engaged. Importantly, since becoming independent,the VSA was selected by employees as a Top I Workplace in San Antonio for 2019 (San Antonio Business Journal September2019). San Antonio has also broken into the ranks of the top 15 best cities in the US, according to rankings by the prestigious Travel + Leisure Magazine (Travel+Leisure Magazine,June 2019). Further, — CEO Matej notes that talent recruitment and retention has now become more effective as VSA searches for top-notch talent. — 10.2 Kissimmee Kissimmee, FI, as a destination, has similarities to Virginia Beach. It is predominantly a leisure tourism destination, with a relatively small meeting and convention market share. Kissimmee has many vacation home rental units and a major position in sports marketing. The Osceola County Heritage Park is a 150 acres sports and entertainment complex featuring a 10,500-seat indoor arena and 90,000 sq.ft. of flexible space in an adjacent exhibit hall. Both destinations have built in advantages, one with world-class beaches and one with proximity to the world's most popular theme parks. Experience Kissimmee, the tourism authority for Osceola County, Florida has a similar budget to the Virginia Beach CVB ($22 million when you exclude Virginia Beach Convention Center costs). And, both destinations have similar staff sizes, 55-60 team members. _ The CVB was started in the 1980's as a department of County government. By 2013, there was a realization among private sector visitor industry stakeholders that the organization was not achieving its mission of expertly leading the marketing of the Kissimmee tourism experience to the world. The organization was constrained because of its inability to attract and retain I Academy Street Collaboration, ILLC 38 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS competent employees. Plus, procurement inflexibility and lack of marketing and sales innovation were hindering performance. Thus, in 2013 a taskforce was chartered by County ' government to evaluate the options to improve the organization. After six months of study, it was decided to move the CVB out of government and launch a 501c6 nonprofit with close ' affiliation to Osceola County Government. This move took place in 2014. A newly appointed 29-member Experience Kissimmee Board of Directors represented a diverse ' hospitality industry. The Board was comprised of: five (5) attractions representatives, nine (9) bed tax collectors (hotel industry representatives) , three (3) civic leaders, five (5) ex-officio ' members, three (3) restaurant/retail/transportation representatives, one (1) sports representative, and three (3) at-large members appointed by the board ehairman. The ex officio ' members include a County Commissioner, the County Manager and the Director of Osceola County Economic Development. The five attractions include, among others, representatives from Disney, Universal and SeaWorld. Members were elected to three-year terms with an ' option to serve an additional two-year term at the end of the first. Unless a Board member moves into a leadership role, they may serve for two consecutive terms. According to local stakeholders and industry analysts, since 2014, Kissimmee has seen a marked Improvement in their marketing and sales capabilities. Two areas of improvement include ' marketing performance and private sector involvement in the mission of the CVB. a. Marketing Performance— Due to a strong emphasis on improving marketing and sales ' efforts, Kissimmee has experienced solid growth in market position. Their commitment to digital media execution, business intelligence and improved tourism marketing strategy has I been recognized within the community and across the industry. This is best demonstrated by reviewing hotel tax collections over the last six years...beginning with the inception of the new CVB structure. In 2013/14 hotel tax collections totaled $40,581,713. By 2018/19 ' that figure was $61,097,777 (Experience Kissimmee 12/19 Board Presentation). This tax revenue increase of 50.5% far outpaces national trends and the growth of other Florida- based destinations. b. Private Sector Involvement- With the transition to a 501c6 nonprofit, the CVB had delivered ' on a mandate to engage the private sector in the business of improving Kissimmee's market position. While the CVB was a part of County Government there were no substantial contributions from the private sector to the organization. That has changed as the following ' Partnership Investments will attest. In FY2019, through November, the CVB has received $421,144 in contributions, including membership, in-kind and co-op marketing support I. ' Academy Street Collaboration, LLC 39 VIRGINIA BEACH CVB CONCLUSIONS AND RECO. ME I!' IONS 4 from itspartners (Experience Kissimmee 12 19 Board Presentation). Just as importantly, ( P / ) P y, the private sector is now more engaged in assuring the destination's success. On a day-to- day basis industry leader provide valuable guidance and engagement to support the CVB's _ mission. 10.3 Puerto Rico Before the traumatic events of Hurricane Maria,the Puerto Rico legislature had already decided to transition the convention and tourism marketing effort out of government. Puerto Rico tourism had been stagnant for over a decade due to image problems, reduced air lift and declining investment in tourism products. With the launch of Discover Puerto Rico, a new private/public partnership, the marketing and sales responsibilities were transferred to a nonprofit corporation. In concert with this transition, the island has seen a dramatic increase in visitation. Since 2011, visitation has increased by 24%, from 4.2 million to 5.2 million visitors (Puerto fico TouMsrru Company, Skift _ Report, roov. 2019). Remarkably, Discover Puerto Rico's aggressive hurricane recovery strategy is attributed with spurring a 13% increase in 2018 visitation versus pre-hurricane visitation in 2017 (Puerto Rico Tourism Company, Skift Report, Nov. 2019). The new organization has retained high performing former government employees, recruited energized new employees from the private sector, and attracted a dynamic new CEO (Brad Dean formerly of Myrtle Beach). The organization was built from the ground up using state of the art DMO management strategies and tactics. There is consensus island wide and within the U.S. tourism industry that Discover Puerto Rico has improved marketing and sales efforts, while simultaneously better engaging the private sector in the work of the DMO. Discover Puerto Rico leadership and the organization have been recognized with industry awards from the United States Travel Association and Destination International for their management and marketing expertise. Discover Puerto Rico's future hotel and convention center pace reports indicate a bright future for the island's tourism economy, which signifies a turnaround from their previous dire situation (Per Brwd Dean, as, Discover Puerto Rico). For a decade, from 2006 to 2015, Bermuda tourism had been in serious decline. Air arrivals declined 31% during that timeframe ( >ermuda Tourism ''athority(BTA). Hundreds of hotel rooms across the island were shuttered. Employment in the sector was at a historic low point. .. In a bold move by the ruling government, the tourism effort was removed from the Tourism Academy Street Collaboration, LLC 40 ' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Ministry. The new entitywas launched as an independent entitywhich still received Y p government funding but was charted as a private company. The Government still had strong Board representation (appointing 3 of 9 Board positions, plus the Chairman) and fiduciary oversight of the new Bermuda Tourism Authority, but the goal was to make the organization as Inimble and effective as possible. The move to privatization was started in late 2013, and beginning in 2015, the island nation started to experience dramatic growth in the tourism economy. The results have been spectacular. Visitor arrivals increased from a low of 584,457 in 2014 to a high of 770,683 in 2018 (BTA 2018 Annual Report). This is an increase of 32% during a four-year timeframe. Tourism GDP increased over 35% during the same time. Over 1,000 new jobs have been added to the economy, and four new hotel properties have opened (BTA 2019 Marketing Update). ' As a point of information, 80% of the new BTA employees transferred over from the Tourism Ministry as the start-up commenced. These individuals became the foundation for the new organization and, over the years, have performed at a very high level in the new private sector environment. iImportantly, significant growth has occurred in Bermuda's shoulder seasons, at a time when additional economic activity was urgently needed to stabilize employment levels, service ' quality and island-wide economic activity(Per BTA usiness Intelligence Department). Universally, Bermuda leaders and industry experts attribute this turnaround to the privatization ' of the BTA. An indication of Bermuda's new stature as a world-class destination came when it hosted the 2017 America's Cup, defeating San Francisco, San Diego and Chicago for the site designation. To its credit, Bermuda remains today as the fastest growing destination across its ' entire competitive set (STR hotel occupancy data promidecd by BTA). 10.5 Destination DC (DDC) ' Although a more dated example, Destination DC is often cited as a successful transition from ' government oversight to a public/private 501c6. Today, Washington, DC is one of America's, and the world's, premier convention and tourism destinations. That was not always the case. Throughout the 1980s and 1990s, the City was in steady decline both in real economic terms ' and from a destination marketing perspective. Civil unrest, high unemployment, business and population loss, plus government dysfunction ruled the day within the District. This all began to change in 2000 when Anthony Williams was elected as Mayor. He brought with him a competent team of senior government leaders which added stability, predictability Academy Street Collaboration, ITC 41; VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS and ethics to City government. approach This new a roach was a signal to the private sector that a return on investment was now possible. A tidal wave of pent up economic demand was unleashed, eager to acquire City real estate and access to all things connected to the federal government. This commercial energy allowed the City to make strategic investments in new or refurbished infrastructure. Over the next two decades, the urban core has been transformed with new restaurants, retailers and visitor attractions. The energy continues to this day, as the District benefits from strong economic growth. In 2001, as part of this extraordinary urban revival, the City separated the convention and —' tourism effort from City government, with the intention of taking full advantage of new municipal stability and the City's economic resurgence. The Washington, DC Convention and Tourism Corporation (Destination DC) was founded, and a new CEO was recruited as its first employee. Over the next decade,the organization was built into one of the highest performing DMOs in the industry. During this time frame, over 2,500 hotel rooms were placed on the drawing boards or constructed (STR data per DDC Business Intelligence). A new $900 million convention center was built, along with the magnificent Nationals Baseball Park, home of the World Series Champions. The DDC also played a key participant role in the construction of the World War II Memorial and the Martin Luther King Memorial. Further, the organization led the _ Mayor's Economic Recovery Taskforce after the events of 9/11, raising over$4 million to support the effort. From a marketing perspective during this timeframe, the District experienced spectacular growth. The Washington Convention Center became one of the world's most successful facilities of its kind hosting as many as 30 city-wide conventions/events annually. DDC increased overall room night booking performance from under 650,000 annually in 2002 to over 1,500,000 room nights in 2011, an increase of over 130% (DDC TAP Reprt). Today,that _ number stands at over 1.9 million room nights (DDC TAP Report). Between 2002 and 2010 the Capital Region increased international arrivals by 46%from 1.3 million to 1.9 million (CRUSH 2018 Annual Rer•ort data). And, in a five-year period, from 2004 to 2009, unique website visits increased from 2.4 million to over 5.7 million visits, an increase of 137.5% ('DC nnual Report 2010). Finally, in a ten-year timeframe, DDC led the District in hosting over 10 city-wide arts and cultural festivals, three presidential inaugurations, two national memorial dedications and two presidential funerals. Academy Street Collaboration, LLC 4 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Be ach Recommended Path Forward forVirginia gl a I 11.1 The Ultimate Goal IThere are significant issues to consider when evaluating changes of the CVB's structure which has been in existence for decades. Any potential organizational change will have ramifications ' that should be clearly understood. If a newly formed organization is approved, it must be committed...by mission and by law...to a partnership with the City which provides measurable benefits to the community's citizens and industry stakeholders. With struggling Convention Center sales performance, a resort product which needs refreshing, ' and a hyper-competitive regional and national visitor marketplace, performance criteria based on market dynamics would need to be negotiated and contracted between the City and the I new entity. In a transition of this nature, consideration must be given to issues of control and oversight. Historically, all control has rested with the City both on the management and policy- making sides. A transition to a more independent structure will require relinquishing a certain ' amount of control by the City in return for an increased private sector investment, both in time and financial support. In best practices DMOs,the board is comprised of private sector volunteers from the hospitality and broader business communities who dedicate their time and attention to achieve great results for their community. Typically included in the board composition are City Council and professional staff members who represent the City's interests and are responsible for the CVB's results to be delivered. ' At the end of the day, the ultimate goal for the City should be to place the very best team on the field which is unencumbered by non-competitive business practices and positioned to be innovative, opportunistic, responsive to clients, and nimble in a fast-paced and constantly ' evolving global marketplace. I11.2 Community Taskforce Based on the aforementioned conclusions,the consultant recommends to the City of Virginia IBeach City Council the establishment of a Community Taskforce to: I. I• Academy Street Collaboration, tIC 4 1 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 1) Evaluate the possibility of transitioning the CVB to a new a public/private 501c6 nonprofit - organization.The 501c6 would be charted by and contracted to the City to perform the destination's marketing and sales activities.Governance would be shared between the City and the private sector.This proposed change would improve marketing, sales and operational capabilities, while providin: for private sector involvement in the new entity. 2) If it was found too impractical to establish a 501c6 management structure outside of Cit y government,the Taskforce would thoroughly review the CVB organization and make recommendations for operational and marketing improvements based on the existing governance format. Additionally,the taskforce may consider a possible hybrid governance model which would possibly include a 501c3 nonprofit foundation, like the Virginia Aquarium .. & Marine Science Center Foundation. The Community Taskforce would be comprised of private sector leaders and City of Virginia Beach government representatives. The private sector leaders would come from both the business community and visitor industry sectors. These individuals would act as honest brokers for the City Council and assure a fair vetting of this important topic, keeping in mind what will be the best interests of the citizens of Virginia Beach. The Chairperson of the Taskforce should be a highly trusted, private sector CEO. The Taskforce would convene several times over a 90- — day time period and present detailed recommendations to the City Council at the end of the project. The City Council would then decide on these recommendations. If a nonprofit option were recommended by the Taskforce and approved by the City Council, a transition process could unfold over a to-be-determined timeframe through a logical and graceful process. The transition would be carefully planned to assure organizational continuity with no harm to employees or to ongoing marketing and sales efforts. For the new nonprofit, the City would provide civic oversight, while the private sector would be engaged in a more substantial manner. This approach would assure strong fiduciary control and enhanced marketing/sales capabilities for the new organization. The new structure would encourage additional private sector financial and marketing support for the new CVB. This could include, among other items: co-op advertising programs, partnerships, selling tourist and convention delegate services, corporate sponsorships, eventual membership dues, and even the possible creation of a Tourism Improvement District. The Taskforce would decide if the operations-oriented Virginia Beach Convention Center and CVB's Resort Management Department would remain under the management of the City of Virginia Beach or transition to the new CVB nonprofit. Regardless, the new CVB would continue Academy Street Collaboration, LLC 44 ' VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS to provide the sales and marketingservices for these departments as theyare currently P ' provided. It would be logical for all other departments of the current CVB to move to the new organization, including: Mar/Comm, Tourism, Sales, Services, Visitor Information, and Sports, but this would be a Taskforce decision. ' 11.3 A Necessary Realignment Regardless of what the final CVB structure would comprise...either remaining within government or as a separate nonprofit...it's an economic necessity that the organization's mission, strategy, marketing, sales, governance and management be realigned. This realignment will be required for the following: a. Redefining the organization's Mission and strategic imperatives. b. Private sector engagement and attraction of new financial resources. c. The development of specific KPIs and an accurate method to measure and report results ' through a sophisticated organizational dashboard metric tool and the use of best practices relative to individual employee performance management. ' d. A complete review and update of the CVB employee compensation strategy and incentive program to assure fairness, transparency and the need to retain talented individuals. e. A complete remake of employee performance management policies and procedures to ' assure high achieving individuals are rewarded and non-performing individuals are terminated. ' f. A realignment of the international tourism effort to reflect the current marketplace potential and available resources. g. A refocus of the CVB group sales effort to reflect the reality of deficient room inventory ' within immediate proximity of the Convention Center and an evolving product mix due to the new Sports Center. Further, the City should make another concerted effort to develop a convention center hotel attached or adjacent to the Convention Center. h. The reorganization of the CVB structure to include a new organizational chart,job ' descriptions, new methods of staff collaboration, etc. i. A reorganization of the CVB's internal marketing activities and a rebalance of the marketing effort using additional external resources. ' j. A reengagement of the hotel community and other key visitor industry stakeholders in the CVB's program of work. k. Close alignment with the objectives of the RASAP 2030 Plan to assure the Virginia Beach visitor product and experience is improved and better aligned with emerging consumer trends. i I cademy Street Collaboration, [LC 45 __)IAA( ,'I dr., 'e ;IL, ._IYA1\'1FN. 1. A dramatic pivot by the CVB to a business intelligence management model which relies on a — data-centric approach to sell and market the Virginia Beach destination. m. The development of formal organizational planning protocols, both strategic (3-5 years),and tactical (annually). 11.4 New Board of Directors If the 501c6 nonprofit concept was approved by the City Council,the Taskforce would work to establish a new CVB Board of Directors, which would provide oversight for the new organization. The Board's composition could be similar to Visit San Antonio, but customized to address Virginia Beach's specific needs. A five-member Nominating Committee could be — appointed by the City Council to decide on the Board's membership. The city would have strong representation on the Board. Outside legal counsel would be retained by the City to author a _ detailed Services Agreement between the City and the new CVB. The Board would have the following lines of authority: a. Redefine what success looks like for the destination with a new Strategic Plan to include: a new mission statement,vision and values, plus goals, objectives and long-range strategies. b. Assure the new organization's culture remains in constant adaptive mode in an ever- changing visitor industry. c. Have fiduciary oversight of the budget developed by the staff. Oversee an annual audit. d. Approve an annual business/marketing plan developed by the nonprofit's staff. e. Set goals, objectives and KPIs for the organization, both long term and annually. _ f. Hire, advise and have performance oversight of the CEO, requiring him or her to adhere to well defined annual personal and organizational )(Pls. g. Approve and provide oversight for organizational policies and procedures. h. Within the community, act as advocates for the organization specifically, and for the visitor industry in general. — r' Importantly, one of the Board's first orders of business would be the recruitment and selection of a new CEO. A national search firm with specific DIM experience should be retained. The new _ organization will require the CEO to complete the organization's transition as it builds out systems, policies and procedures, staff crossover from government, external recruitment, plus the need for Board and committee management throughout the transition. Academy Street Collaboration, LLC 46 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS { 11.6 The Cost of Inaction uul For the Virginia Beach City Council, the opportunity cost of failing to respond to the current marketing and operational deficiencies are substantial. By not addressing the strategy limitations noted above, the City is restricting its long-term economic growth and risking falling behind its market peers. Each of Virginia Beach's competitors are constantly refreshing market assets such as convention centers, hotels, attractions and image campaigns. As a result, destinations such as Norfolk, Myrtle Beach, Fort Lauderdale and Memphis have become destinations which both groups and leisure travelers want to visit. As market leaders, the ' positive impact on these communities, both economically and socially, has been dramatic. Let us assume Virginia Beach reorganizes the CVB marketing efforts. Additionally, let us assume ' that this new effort achieves performance like the successful CVB transitions referenced in this Report. Based on these examples, once the organization is stabilized, a 10% increase in hotel ' room occupancy would be a reasonable prediction. If that was the case and based on 2018 tax revenues generated by accommodations within Virginia Beach, the City would benefit from an additional $37.2 million in total direct accommodations revenue. The overall economic impact ' of indirect and induced spending across the destination would be substantially more than this figure. Also, for discussion purposes, you could add to this figure the lost opportunities cost due ' to the lack of a convention center hotel which is estimated at $41.5 million for new net direct, indirect and induced spending annually(noted in HVS's 2018 Virginia Beach Market Analysis). Both these figures represent significant additional economic activity, additional jobs and ' tangible new tax revenue to the City annually. The City Council should be adamant about improving CVB performance, not only for these ' tourism industry reasons, but also for the overall health of the entire Virginia Beach economy. Destination promotion acts as a catalyst for overall economic development to succeed in broader economic terms. ,oxford Economic, a highly regarded global economic advisory firm, notes four primary channels through which destination marketing drives economic ' development and community growth (A estination Promotion and Economic Development 11/2014): ' 1) Destination marketing builds awareness, familiarity and relationships in commercial and individual networks that attract investment. Oxford Economics notes that nearly one-third of new residents first visited their communities as tourists. I I I . IAcademy Street Collaboration, LLC 47 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 2) By developing the visitor economy, destination marketing supports transportation infrastructure, thus providing both greater public accessibility and business supply-chain logistics that are important to attracting community investments. _ 3) Visitor spending, attracted by CVB marketing, helps support a larger and higher quality of focal amenities than an area might otherwise sustain. The cultural, entertainment, culinary and retail attractions that visitors support make a place more attractive for both local citizens and potential investors. 4) By attracting business events (tradeshows and conventions), destinations appeal to the very prospects that economic development agencies target. These business events provide synergies with "economic clusters" (business sectors indigenous to Virginia Beach). Obviously, for Virginia Beach, these economic clusters revolve around the military sector. 11,7 Process Timefrarrve Once the Taskforce makes its recommendations, and if the City Council decides to reorganize the Virginia Beach CVB into a nonprofit, it would take approximately 6 to 8 months to complete the transition. This approach would require staff support from both the City and CVB, plus outside legal and organizational management counsel. There would be a long list of tasks to _ complete, which might be best managed using Smartsheet, to track project tasks, benchmarks, timelines, and financial controls. This management tool would allow the transition staff to streamline planning and communicate clearly with interested parties throughout the process. It should be noted that during the transition process, City Council, staff, industry stakeholders and the community will be kept appraised of developments as transparently as possible. If a nonprofit structure was approved, a timeframe could unfold in the following manner. This is a partial list, for illustrative purposes only, of some key process benchmarks. This list does not include every task necessary to complete the project. Ideally, these tasks would be tackled in a linear format, but some tasks could be accomplished out of sequence. Starting in April 2020, _ here is a month-by-month proposed timeline: p\r t' f City Council approves a "proof of concept" and reaffirms a Taskforce's responsibility to lead the next phase of the discovery process. • The Taskforce convenes and agrees on its new mandate, program of work and a project schedule. I I Academy Street Collaboration, LLC 48 I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 4 In concert with the Cityand CVB, an initial transition budget is developed to fund the g next phase of the transition, and a management plan is authored. I '+ The Taskforce begins a deeper analysis of comparable CVB structures. • The Taskforce researches nonprofit IRS status for the new entity. May • An organizational model is selected which best matches Virginia Beach's specific ' needs. • Financial, HR, operational and logistical issues are addressed by the Taskforce with ' support from City and CVB staff. + An organizational charter, by-laws, Board and committee structure are drafted. a An operational plan for transition management, financial resources and HR ' requirements is approved by the Taskforce. June • Outside legal counsel works with the Taskforce and the City to author a draft Services Agreement between the City and the new entity. II From the Taskforce, the City Council selects a five-member Nominating Committee to oversee the recruitment and selection of Board members. + The Taskforce selects a search firm to recruit the new CEO. a Board members are recruited and vetted. + The new Board is selected. + The new Board meets for the first time and approves the charter, by-laws and Board structure. a The Board establishes: specific leadership and committee responsibilities, code of conduct, financial authority parameters, confidentiality mandate, meeting schedules, ' etc. • The Board initially reviews the Services Agreement with the City and makes ' recommendations for revisions. • The Board, with staff support, authors and approves: master financial controls, audit/risk procedures, Board and employee code of conduct, procurement protocols, ' contract compliance, transaction documentation, expense accounts, etc. + CEO candidates are interviewed, and a final candidate is offered the position. 1 ' _ e einy tree Collaboration, tic 49 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS • The Board, in concert with the City and CVB, will work with an external, locally based HR firm to build the organization's new HR management system to include: payroll administration, benefits, insurance, incentive plans, performance reviews, on- IN. boarding, employee portal, etc. • The locally based HR firm works with City and CVB staff(with Board oversight) to assure compliance with all employment regulations and standards. The HR firm's primary focus will be City employees crossing over from the existing CVB to the new organization. They also will play a role in recruiting new employees, vetting existing and new employees, interviews and the administrative procedures. These HR issues will require time, systems, and sensitivity. 5ep'tgmbar ,• The CEO begins his or her employment. • The Service Agreement between the City and the new entity is signed by all parties. — • The CEO, using staff support, will approve a recommended technology platform and applications, plus approve purchases or transfers from the City of hardware, software, — tel-com, mobile devices, laptops, presentation software, etc. for organizational-wide usage. a The CEO approves policies and procedures, financial authorities and guidelines, expense account and contract compliance, procurement and transaction documentation. The Board ratifies these management items. — • CVB employees have final interviews for positions within the new organization. • Additional position recruiting may be necessary to fill specific competencies within the organization. Depending on the position, recruitment would be locally or nationally based. • Onboarding of new employees begins. • The CEO refines various employee management tools, including the organizational chart,job descriptions and performance objectives which reflect industry best practices and are approved by the Board. October .. • The transition is nearing completion, and the new entity begins its responsibility as the destination's DIM. L • The CEO initiates the strategic planning process with the Board. This process will also drive the development of the Annual Business/Marketing Plan by the new staff. 1 Academy Street Collaboration, LLC 1111.1W 50 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS Academy cede y Street LIC Travel, Tourism and Event Advisory Services 49 Academy Street Skaneateles, NY 13152 Ron Williams ' Deputy City Manager City of Virginia Beach IDear Ron, Academy Street Collaboration is pleased to submit this management analysis and irecommendations concerning the Virginia Beach Convention & Visitors Bureau and the overall visitor economy. ' Pursuant to our engagement agreement, this report represents impartial findings and independent research from various sources. The results presented are from primary and ' secondary sources of information. The consultant used information deemed reliable, and based recommendations on industry best practices, trends and assumptions. ' After a detailed review of the current destination marketing situation, we have provided the City with recommendations which should be closely examined by Virginia Beach's civic leadership. We've provided these findings by seeking input and consensus among the City's ' leadership and visitor industry stakeholders. It should be noted that organizational studies of this nature do not accentuate the ' positives. However, the consultant has attempted to constructively address issues relative to the scope of the report. The need for a high performing CVB in Virginia Beach is greater than ever, and its contribution to the overall economy is vital. An evaluation such ' as this is critical to the organization's evolution. The best practices recommended in this report are utilized by some of the nation's ' highest performing destination marketing organizations (DMOs). We suggest these innovative plans could place Virginia Beach at the forefront of the DMO industry. It's a winning approach for the City, its citizens and the visitor economy. IYours sincerely, ' Bill Hanbury Managing Principal I, Academy Street Collaboration, LLC 3 VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS 1.0 Executive Summary Virginia Beach finds itself in a very competitive environment relative to the health of its visitor economy. The locations that Virginia Beach competes against are led by dynamic destination marketing organizations (DM0s) similar in mission to the Virginia Beach CVB. However, there are substantive distinctions between the Virginia Beach CVB and other high performance DMOs. America's best CVBs position themselves as "shared" community assets, playing an integral role in uplifting the destination's overall economy. This role not only includes marketing the — destination, but also helping to "manage" the visitor product and experience. DMOs have transformed themselves into aggressive and business-oriented nonprofits that use marketing _ innovations and state-of-the-art technological expertise to maximize the community's investment in their mission. This industrywide DMO transformation has outpaced the rate of change at the Virginia Beach CVB. The CVB lags behind other competing destinations that have the support of both government officials and area stakeholders who believe in the extraordinary power of the visitor industry. In Virginia Beach, the City government strongly supports the CVB. However, many private sector visitor industry stakeholders don't support the CVB and have either lukewarm or even negative — impressions of the organization. Importantly, without a high level of private sector stakeholder alignment and engagement, it can be challenging or even impossible to implement new strategic initiatives that elevate the destination's attractiveness and improve the traveler's experience. This Report contains several important observations about the management and structure of the CVB. The Report does not accentuate the positives, although there are many positives about the performance of the CVB staff. However, the consultant has attempted to — constructively address issues noted in the Report and an evaluation of this nature is important to the organization's progress. ,. The Report provides a series of recommendations to be considered by the City Council, City executive staff, CVB management, plus visitor industry and community stakeholders. A summation of these observations and recommendations follows: 1.1 Key Observations — a. There are concerning economic trends across the national tourism sector which, in the not- too-distant future, could harm the Virginia Beach visitor industry. Closer to home, there are local economic trends (T) which indicate Virginia Beach is losing brand position to Academy Street Collaboration, LLC ; M 4 ' ' � c Virginia Beaci Convention and Visitors Bureau ' Community Taskforce ' October 9, 2020 Agenda 1. Welcome -Councilmembers Tower&Wil son ' 2. Housekeeping-Ron Williams ' 3. Virginia Beach Travel and Tourism Foundation Overview-Bill Hanbury 4. Academy Street Collaboration Analysis ' a. Key Strategic Issues b. Recommendations -Three Options c. Benchmarking ' i. San Antonio ii. Kissimmee iii. Puerto Rico ' iv. Bermuda v. Washington DC d. Necessary Realignment ' e. New Board of Directors f. Cost of Inaction ' 5. Discussion 6. Next Meeting- October 23, 2020 - 9am ' Mission To evaluate the three potential alternative new organizational structures(remain within the ' City governments, Hybrid public-private foundation or authority,Public-private nonprofit) and make recommendations to the City Council on the best path forward,provide input on the qualities sought in a new CVB director or Chief Executive Officer and perform any additional ' duties assigned to the Taskforce by the City Council. I Virginia Beach Convention&Visitors Bureau ' 2101 Parks Avenue, Suite 500 I Virginia Beach,VA 23451 I ph(757)385-4700 I fx(757)437-4747 Virginia Beach Convention and Visitors Bureau Community Taskforce CVBCT Members: B.J. Baumann,Z. Burden,T.Counts,J. Evans-Cox,C. Dyer, L.Habr, D.Howard, R. Melatti, P. Midgett, H. Richardson, M. Ryan, M.Standing,C.Thornton,G.Tower, ' R.Vogel, R.Wilson,J.Zirkle, City Staff: B. Hanbury, R.Williams, D.Harmeyer, B. Rumpf, P. Matthias ' Meeting Place: Virginia Beach Convention Center Meeting Date: October 9, 2020 Please report errors or omissions on these notes to Brande Rumpf(brumpf@visitvirginiabeach.com)within 24 hours of receipt of the notes. CVB will pursue the actions outlined in the"Action Items"sections of these notes. Councilmembers Wilson and Tower began the meeting with a welcome and a thank you to the Committee for their continued commitment to this important work. Mr. Hanbury reviewed the ' agenda and handouts that were requested from the previous meeting. Mr. Hanbury provided an overview of the Virginia Beach Travel and Tourism Foundation.The foundation was created to have ' an entity that assists in research projects for the hospitality industry and create programs to offer travel and tourism students the opportunity to receive scholarships and educational experiences. ' Mr. Hanbury continued with his analysis of the CVB he presented to the City Council in February. Mr. Hanbury explained that the research compiled for his analysis was done pre-pandemic, October through December of 2019. He interviewed roughly 60 stakeholders and through this process ' identified five key strategic issues:1) Virginia Beach is falling behind its competitors relative to community collaboration,innovation,product development,and marketing and sales effectiveness. Mr. Hanbury explained that he is comparing Virginia Beach to other high performing, destination marketing organizations. As it relates to community collaboration,Mr. Hanbury detailed how other high performance DMOs exhibit skills in engaging their community in the economic mission of the destination. Additionally, the CVB is acts as forums for building consensus on tourism product/experience development. As it relates to innovation, Mr. Hanbury found that the CVB is lacking as it relates to technology,innovation,business intelligence,as wells as strategic and tactical planning. As it relates to product development, Virginia Beach has a deteriorating resort product ' and the lack of a Convention Center hotel restricts the capabilities to market the destination. This limits visitor economy performance. Mr. Hanbury referenced the 2018 HVS Virginia Beach Market Analysis on lost opportunities due to the lack of a Convention Center hotel, estimating that loss at CVB Community Taskforce Meeting October 9, 2020 Page 2 $41.5 million for new net direct,indirect,and induced spending annually. As it relates to marketing and sales effectiveness, he explained additional financial and personnel assets need to be directed to business intelligence to better understand the unique leisure consumer persona and group business clients. Additional marketing dollars need to be directed to digital assets and video deployment, which is currently being done do too the pandemic. Additionally, the meetings and convention sales unit receive less than 2% of the CVB ad budget which is inadequate. He explained that similar destinations invest 15%to 20%of their ad dollars to this market segment. Mr. Hanbury used as an example the vacant Vice-President for Meetings and Conventions as leadership not being invested in this market segment. 2)The lack of private sector having an opportunity to contribute to the CVB's success and the overall tourism economy.Mr. Hanbury explained that without an organized board and committee structure the private sector feels they have little opportunity to provide direction and assistance to the CVB. They feel like they need a place to "plug in" to the organization and have currently relinquished responsibilities for destination marketing to the City and the CVB. 3) The internal CVB management system needs to be improved to enhance destination I performance. Meaning,the government affiliated structure places the destination at a disadvantage from administrative and operational performance. DMO's function as marketing and communication entities, not government bureaucracies. This sets operational limits that do not exist for other DMOs. Examples include navigating complicated procurement procedures, human resources,and compensation policies,management and performance oversight,plus marketing and communications effectiveness. Mr. Hanbury gave the example of it taking five weeks for an employee to get a new computer. There is a struggle working with the City's procurement process. He explained that in the marketing and advertising world there is a need for"nimbleness." Being in an environment that has complicated procurement procedures does not permit for"nimbleness." 4) A CVB cultural shift should create a more positive work environment. The team should develop new values based on performance, innovation,and accountability. Staff is dedicated and believes in the mission of the organization. However, there is a lot of uncertainty regarding the future, with staff vacancies and its perceived lack of team cooperation. There's a need to develop more organizational key performance indicators and staff does not have a clear consensus concerning the overall goals and objectives. He made clear that CVB does have a plan,but there is no clearly defined organizational planning methodology. The last strategic plan for the Department was authored in 2013. 5)The most defining strategic issue is Destination Marketing Organizational leadership talent needs to be recruited and retained to assure the CVB maximizes its value to the visitor economy.This issue is difficult to overcome due to the City's current compensation structure. Salaries and benefits, particularly for CVB senior executives, needs to be improved. As it relates to the current incentive I plan, it is impossible to adequately reward CVB high achievers. Not all employees of the CVB participate in the incentive plan and the plan does not act as a real "incentive" for those who are participating.Additionally,within the City's human resource structure,the process for terminating I I I ICVB Community Taskforce Meeting October 9, 2020 IPage 3 underperforming employees is problematic. Mr.Hanbury's recommendations included three items, I 1) Consideration of a new organizational format is considered. The Task force must assure a productive partnership with the City. 2) With a struggling Convention Center, a resort product which needs refreshing, and I aggressive competitors, explicit performance criteria will need to be negotiated. 3) In any transition, consideration must be given to issues of control and oversight. I Historically, all control has rested with the City. A transition to a more independent structure requires relinquishing some City control in return for increased private sector support. I Mr. Hanbury reviewed the different models, the first option is staying within government, keeping things the way, they are currently. But a new management approach would be introduced to improve organizational efficiencies. Governance would be shared between the City and private I sector board with specific duties focused exclusively on CVB oversight. It is important to note that the CVB has outperformed other destinations during the pandemic due to City emergency appropriations. This is not the case for other DMO competitors whose mission has been IDramatically curtailed due to lack of funding. Mr. Hanbury expresses concerns that currently, the private sector does not have anywhere to plug in, or oversight of the CVB. He uses the Advertising Advisory Committee and the Resort Advisory Committee as examples of council appointed Icommittees,that have an "advisory," not oversight role to the CVB. IThe second option is a hybrid public private organization. This hybrid public private governance model affords the City operational in fiduciary oversight, while concurrently engaging the private sector in the submission and management. It has similarities to the Virginia Tourism Corporation I or other authorities chartered by the Commonwealth of Virginia. Governance is shared by the City and the private sector with a new board of directors and committee structure. It also encourages private sector financial and marketing support to include co-op advertising,partnerships,corporate I sponsorships,and perhaps paid memberships. Mr. Hanbury was clear that he does not recommend starting off with paid memberships but explains that there are many ways for a CVB to raise additional resources. IThe third option is a public private 50106 non-profit. This organization is chartered by the City and contracted to perform destination marketing and sales functions. This approach allows flexibility I relative to procurement, compensation, marketing and sales, human resource policies and operations. Governance is shared between the City and the private sector,with a board of directors having CVB oversight authority. Mrs. Ryan asked Mr. Hanbury to describe what a contract between I the City and the nonprofit might look like. Mr. Hanbury explained that the contract would have very specific key performance indicators that the CVB would be required to achieve. Additionally, it would layout specifically what the CVB would provide to the City. Mrs Baumann asked if that would be the same with an authority or any other structure?Mr. Hanbury answered in the affirmative. The question was raised, can TIP or TAP money be given to a private entity? Mr.Williams indicated it is an annual decision made by the City Council. However, the answer is yes. Mrs. Howard asked, why I could a private organization not be a consideration? Mr. Hanbury explained that all the money is coming from the public side of the equation. Mrs. Howard's understanding was that funding would I be coming from other partners and business to be a part of the organization. Mr.Hanbury explained I CVB Community Taskforce Meeting October 9, 2020 Page 4 that they were already a part of the organization.The hotels and the restaurants are generating tax revenues for the City that comes from the hospitality industry, so they are acting as a conduit for the funds as part of the overall equation. Mr. Williams provided a different perspective explaining that this was Mr. Hanbury's analysis based on what we thought is the reality of Virginia Beach's environment.The notion of the private sector raising what we are currently putting into marketing and advertising our destination is not realistic. If we would like to put a totally private option on the table as a recommendation to Council, we can. Mr. Richardson asked, how do you quantify the funds currently flowing down to the CVB are not in jeopardy, due to political or other external forces? An example of a concern would be pulling the funding. Mr. Hanbury explained that other DMO's do this through a long-term contract. Mr. Williams followed up with there certainly would be contractual obligations, any contract with local governments is subject to appropriation. Mr. Richardson requested clarity on the issue of not being able to keep a future City Council from undoing any action of the current City Council. His concern is that any structure we set up could be subject to any future political whim. Mr. Dyer mentioned that Mrs. Howard may be inquiring more on the membership-based bureau, and asked Mr. Hanbury to reflect on how a private or membership-based bureau exist or if they even exist anymore. Mr. Hanbury indicated that the membership formula can help to alleviate some of the expenses that the public sector entails to promote a destination. Additionally, the hotels and restaurants feel like they're already contributing to the CVB through the tax revenues that are specifically put on the hotels and the restaurants to help promote the destination. Mrs. Howard responded by stating that,when you say contributing, it's actually the people that are dining or staying at the hotels, tourists or us that are actually paying the tax. The same as when you go to the store and buy clothes are you saying that you should get that back? Mrs. Baumann indicated that the industry agreed to those taxes. Mrs. Howard questioned if the 8%tax and the amusement tax put in place to fund government?Mr.Zirkle added that the TIP fund was created with hotels agreeing to increase the taxes for this fund and when the 1% new transient occupancy tax goes into effect,we will have the highest hotel tax in the country.Mr.Zirkle does not believe but there is a chance to get the CVB to be completely privatized, we are looking at$25 million.Mr. Hanbury explained that it is virtually impossible to raise that kind of money. Mr. Counts added from the Chamber of Commerce perspective,the Chamber is based on 100% of what they do. They could never reach the kind of numbers that this discussion describes. It would be impossible. Mrs. Howard clarifies that there are other parts of the city that pay into those funds as well and do not feel as if they get their money's worth. Mrs. Howard questions if the monies that were collecting from restaurants in hotels is adequate or is it being wasted with this current structure? Mr. Counts questions for those that are in favor of keeping the current government structure, can Mr. Hanbury provide some insite as to why that has been asked? There are some who still believe that the structure should remain within government, what are the reasons for keeping it within the government structure? Mr. William explained there are a few considerations which we've touched upon in previous meetings. This is just something we should understand and keep on the table. First, is accountability and the fiduciary responsibility of the City Council and the administration for the tax revenue; and second, we have 120 employees that subscribe to a certain type of employment with fringe benefits, retirement etc. However, we can discuss in future meetings other models with similar benefits. There are also cost savings being a part of the government structure. An example would be legal services, information technology services, etc. I ICVB Community Taskforce Meeting October 9, 2020 IPage 5 I Mr. Hanbury discussed the benchmarking of other destinations compared to Virginia Beach. Examples included San Antonio, Kissimmee, Puerto Rico, Bermuda, and Washington DC. Mr. Hanbury explained the common link to all of these destinations,following their transitions was that I their performance improved dramatically. Mrs. Baumann asked, as it related to the nominating committee for San Antonio's board of directors,was there criteria (before you could apply) that you must be knowledgeable of the hospitality industry? Mr. Hanbury was not sure but could look into I it. What he does know is that they set criteria around business and industry sectors, such as five hoteliers, five restaurateurs, three private citizens, five business leaders, etc. Councilman Tower asked if the slide from San Antonio showing visitation,hotel room nights, and online engagements, I are considered typical KPI's. Mr. Hanbury indicated,yes these are the kind of KPI's that would be in a contract between the City and the new entity.Mrs. Ryan question who was in control of the brand? Mr. Hanbury stated it would be the CVB. IMr. Hanbury made the recommendation to stop the presentation here and have a conversation to determine next steps. After returning from a break the Committee discussed the different structure I types presented and unanimously decided that we needed to do something different. For future discussion, additional information will be provided on both an authority and 50106 nonprofit. Mr. Standing and Mrs. Baumann requested the pros and cons of each structure and what an Iorganizational chart might look like. Mr. Williams explained that we would have an analysis between the two models at our next meeting. Mrs. Howard requested to see how much debt comes out of the TIP fund. Mr. Williams referenced the September 11 presentation given by the Interim IAdministrative Services Manager, Michelle Boyette on the CVB's portion of the TIP fund. The meeting adjourned at 11:20am. I IFollow Items: I • Nominating Committee criteria for San Antonio Board of Directors I Next Meeting: October 23, 2020 I 9a-12p Virginia Beach Convention Center I I I I I •• . .,,. ,...!.,.±....., ,-, , 0,,,,,4.,- ,:,..„, •,... • . ‘01,,, s ilk : , fr I Ifr' •.:. .. .. , . - , '' . L, , i , ., t 1., --.• f. -45i, , A. "I' L. , . -... . , -_.,- • • . -- -., N...„ e , I 7 .4---- % ''. : r4,.., it , . t, -- I _ :11 . - fook •4 ,, i 0 AK .,T4 I , ,_ ."''', "' ,- .,. , ; ,„t•. i * ' %,. . - '... 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I N O O V) N Q V •0 ON I NO . u v I I I Bus Tours and Bus Passengers: I Impact on Virginia Beach's Economy 013 • I I Prepared by Dr. Lisa Delpy Neirotti Associate Professor of Tourism and Sports Management School of Business The George Washington University Washington,D.C. September 2014 I I I I I I I Acknowledgements This is the seventh report prepared by The George Washington University through the sponsorship of the Virginia Beach Convention and Visitors Bureau. The George Washington University and the American Bus Association previously conducted a pilot economic impact analysis on New York City, Washington, D.C., and Lancaster, Pennsylvania and a full study in Chicago. More information on these studies is available at www.buses.org The George Washington University The George Washington University, chartered by Congress in 1821, is located in Washington, D.C., four blocks from the White House. The University enrolls more than 24,000 students from 130 countries, of which 10,500 are undergraduates and over 12,000 are graduate and professional students. For more information visit www.gwu.edu Virginia Beach Convention and Visitors Bureau — The mission of the Virginia Beach Convention and Visitors Bureau (CVB) is to facilitate the creation and enhancement of convention,tourism, special events programs and resort related improvements in order to maximize tax revenues. The Department focuses on Virginia Beach as a Convention and Tourist destination which appeals to diverse markets and generates a high return on its tourist advertising investment,which in turn supports — high quality local government services and programs enjoyed by our citizens. In February 2008,Virginia Beach hosted the American Bus Association's annual Marketplace appointment show playing host to thousands of motorcoach and tour — operators and travel industry executives. Bus Tours and Bus Passengers: Impact on Virginia Beach's 1 Economy • EXECUTIVE SUMMARY IBus Tours and Bus Passengers: Impact on Virginia Beach's Economy IBackground In January 2002,the American Bus Association (ABA)published a report on the I economic impact of motorcoach travel on local economies. The report was based on data collected in Washington,D.C.,Lancaster,Pennsylvania, and New York City by a group from The George Washington University(GWU) and attempted to characterize three I generic types of destinations: 1) historical/cultural; 2)rural/ethnic heritage; and 3) cosmopolitan/entertainment. In June 2005, a report on the economic impact of bus tours and bus passengers on the Chicago metropolitan area was published by the GWU and ' ABA. In all reports,the researchers found that,as is the case with Virginia Beach, motorcoaches have a significant impact on local economies. ' The Virginia Beach Convention and Visitors Bureau(CVB)commissioned a similar study in January 2007,to quantify the nature and economic impact of motorcoach business on the Virginia Beach market for a three year period(2007-2011). The results ' of the first year(2007 data)were presented at the 2008 American Bus Association's Marketplace held in Virginia Beach. In 2011 the study was extended for two years and this report covers the seventh year of the study. ' The primary objectives of the study were to: • Identify bus tour characteristics,including frequency,duration,accommodations, ' local attractions,tour size, and average price of tour package. • Determine the economic impact of motorcoach tours to the Virginia Beach area. • Determine impact of motorcoach tours on local businesses in the Virginia Beach ' area. • Understand the demographics of motorcoach tour passengers visiting Virginia Beach. Methodology The GWU team conducted four separate surveys to profile the nature and scope of bus tour expenditures in Virginia Beach. Data was collected via surveys from four distinct groups: • Operators: Motorcoach operators, operating day tours and overnight tours in the Virginia Beach area; • VendorsBusinesses: Local Virginia Beach businesses that serve travelers; • Overnight Passengers: Bus tour passengers using overnight accommodations in the Virginia Beach area; and • Day-trip Passengers: Bus tour passengers taking day-trips to the Virginia Beach area. Bus Tours and Bus Passengers:Impact on Virginia Beach's 2 Economy I I Similar to the previous six studies, the seventh year of the study was conducted between February and December of 2013. Data for this study was collected from 20 major bus companies, more than 400 bus tour passengers on day and overnight tours to Virginia Beach, and 11 local businesses(e.g., restaurants,retailers, and hotels). Data was collected from bus companies through mailed and e-mailed surveys and follow-up telephone interviews. The majority of data from bus tour passengers was collected in the field in Virginia Beach. Trained data collectors met bus tours at specific points in their itineraries and distributed questionnaires to individual bus tour passengers. For five groups, surveys were provided to the group leader who had passengers complete the survey on their return home. The completed surveys were then mailed to the researcher. An on-line survey was also created with a link provided to group leaders. Local businesses were interviewed in person or by telephone. In addition,hotel sales directors were surveyed to determine the average number of overnight motorcoach tours they receive per year,broken down by the number of nights. 2013 Survey Results Summary The survey results are summarized below. Data shown is based on bus company surveys, passenger surveys and surveys of local businesses. Bus Company Survey Findings. Bus companies (operators of motorcoach charters or tours)were asked to provide information on tour itineraries,passenger loads, and package — prices. On average,overnight bus tours spent 35 hours in Virginia Beach. For overnight tours, the bus companies tended to stay in accommodations with a price point between $51 and $149. Similar hotels to previous studies continue to be mentioned: Best Western, Comfort Inn, Clarion Inn & Suites, Holiday Inn,New Castle Hotel, and Marriott Courtyard,were cited most frequently. Both day-trip and overnight tours stated that they preferred restaurant buffets and full- service restaurants. Golden Corral and Captain George's was cited for buffets and Rockafeller's mentioned for full service. The majority of groups also included a Spirit of Norfolk meal cruise. These results were all very similar to previous years. Based on bus company estimates, approximately 25 percent of the total tour package price remained in Virginia Beach for day-trips,the same as in 2011. The percent for overnight trips continues to increase slightly to 64% vs. 63.5%. The price of the bus tour packages ranged from $65 for a day-trip to $875 for a four- night trip. In addition to accommodations and meals, expenses accounted for include attractions, fuel, and additional fees such as parking. Attraction expenses would include admissions fees or expenditures at museums and amusement parks. Similar to previous year, the attractions visited in Virginia Beach ranged from Virginia Aquarium and Marine Science Center, Ocean Breeze Water Park, The Old Coast Bus Tours and Bus Passengers:Impact on Virginia Beach's 3 Economy Guard Station, Cape Henry Light House, and the Naval Air Station Oceana to Funny Bone Comedy Club and Motor World. The majority of bus operators stated that they visited the board walk and beach as well as attractions in Williamsburg and Norfolk. The average amount spent per bus on accommodations, meals, attractions, fuel, and additional fees (parking, etc.) was $8,605. More than half of the spending was attributed to accommodations on overnight trips, followed by meals, attractions, fuel, and miscellaneous fees in that order. Table 1 provides a summary of the"average"motorcoach tour to Virginia Beach in I 2013 based on bus company survey response findings, including number of tours to Virginia Beach, per bus company, as well as the length of stay, distance traveled, and passenger count. I Table 1 The Average Motorcoach Tour to Virginia Beach, 2013 I Trips Tours per Overnight Stays Miles Passengers Year Traveled per Coach Day 4.25 N/A 225 46.5 ' Overnight 16 2.20 480 43 ' Local Businesses Survey Findings. Local restaurants,retailers, hotels, and attractions were surveyed to determine the importance of bus tours to their individual businesses. The estimated share of total business revenue generated from bus tours per quarter once ' again increased slightly ranging from a low of 2.5%in the first quarter(January through March) to a high of 65%in the second quarter(April through June). The quarterly rate for the third quarter(July through September)was 18% and 23.0% for the fourth quarter ' (October through December). As in the previous years, a contributing factor to the second quarter spike is the number of student band festivals organized in Virginia Beach and other student travel groups (e.g., Senior weekends)that travel by motorcoach. tOver 66 percent of the businesses rated bus tours as "Very Important"or"Somewhat Important"to their businesses. On average, the contribution per bus passenger to I businesses was $35.20 at retail locations, $42.00 at hotels, $31.22 at attractions, and $24.20 at restaurants. Estimated spending by individual passengers at businesses was similar to 2012. As indicated in the previous reports, visitors said they would have spent 111 more if access to different retail shops and restaurants along the boardwalk was available. Bus tour operators continue to request more evening entertainment venues. Many complained about the weather and that there was not much else to do if they could not go to beach. Day-Trip and Overnight Trip Passenger Survey Findings. Day and overnight bus trip passengers were asked to complete a survey regarding their expenditures and demographics. Table 2 summarizes passenger data reported by both groups. Bus Tours and Bus Passengers: Impact on Virginia Beach's 4 Economy Table 2 Comparison of Day and Overnight Passenger Surveys,Virginia Beach 2013 Passengers _ Overnight Passengers 1 Average Tour Price $85 4.$277 - Expenditures Above $31.50 $64.00 Tour Price* Age 55+ (59.5%) 18 years or under — -- — j (57.6%) Education Level 39% Completed College 31%Completed College JJ Income Level** < $50,000 (40%) <$50,000 (54%) Employment Retired(46%) Students(57%) Marital Status Married(53%) Married(33%) Would Return to : 95.5% ! 93% Virginia Beach Would Recommend 195% 95% Virginia Beach *This includes money spent on food,retail,transportation,and other activities not included in the tour package. Similar to all previous years' results,the day bus tour passengers to Virginia Beach ' are older,with many being retired,compared to the overnight passengers who are younger and students. Both type of passengers do not appear to have a great amount of disposable income with the majority reporting income under$50,000 per year. The percent that would return and would recommend continues to be high. This reflects well on the Virginia Beach tourism product and as mentioned in previous .. reports,this indicates that bus tours are a positive way to promote Virginia Beach. A continued emphasis should be placed on targeting the bus market. Those that said they would not return or recommend Virginia Beach expressed concern about the distance to attractions such as Busch Gardens and felt they spent too much time commuting. Rainy weather also played a factor. Economic Impact Analysis The total number of bus tours booked for 2013 slightly decreased compared to 2012. The average amount spent also remained fairly constant but the percent that stayed in the area increased slightly. By applying the survey data to a mathematical formula Bus Tours and Bus Passengers:Impact on Virginia Beach's 5 Economy I . that takes into account the survey findings(average package price,the percent that remains in the local area,the number of passengers per bus,the additional amount spent per passenger, and the number of motorcoach tours to Virginia Beach),the estimated total annual economic impact of motorcoaches on Virginia Beach is $21,674,177, a slight decrease of$131,450. Considering that two-night stays are most popular,this category still contributed the most revenue overall.As shown in Tables 3 and 5, the 700 two-night tours contribute$8,726,592. Historical comparisons are provided in Tables 6-8. Table 3 ,; ; irglni$lhl8 t Day-trips 215 One-Night Trips 564 Two-Night Trips 700 Three-Night Trips 418 Four-Night Trips 57 Table 4 Economic Impact Per Motorcoach,Virginia Beach 2013 1 Day-trips $2,503 One-Night Trips $7,809 Two-Night Trips $12,467 Three-Night Trips $16,534 Four-Night Trips S 19,189 I I I I I I Bus Tours and Bus Passengers:Impact on Virginia Beach's 6 Economy I I Table 5 Motorcoach Tour Total Economic Impact,Virginia Beach 2013 — Day-trips $ 538,160 — One-Night Trips $ 4,404,163 Two-Night Trips $ 8,726,592 -- Three-Night Trips $ 6,911,449 Four-Night Trips $ 1,093,813 — Total $21,674,177 Table 6 Historical Analysis of Economic Impact 2007-2013 One-Night Two-Night Three-Night Four-Night Year Day Trips Trips Trips Tr(ps Trips TOTAL 2007 $224,050 $3,107,954 $6,680,692 $5,473,008 $1,098,833 $16584,537 2008 $372,257 $3,666,802 $7,823,406 $6,488,578 $1,399,628 .19 690 671 2009 $463,573 $4,092,037 $7,926,170 $6,540,234 $1,240,138 ..20.262152 2010 $504,526 $4,012,351 $7_,890,570 , $6,408,659 $1,141,340 .19 957 447 2011 $455,592 $4,234,478 $8,345,763 $6,738,139 $1,233,982 $21,007,954 .. 2012 $516,810 _ $4,379,821 $8,663,463 $6,984,633 $1,260,900 .21 805.627 2013 $538,160 $4,404,163 1 ,726,592 $6,911,449 $1,093,813 $21,674,177 Bus Tours and Bus Passengers:Impact on Virginia Beach's 7 Economy r,. p { Table 7 Historical Analysis of Total B um p act 2007-2013 Total Economic Impact by Year $25,000,000.00 - $20,000,000.00 $15,000,000.00 $10,000,00000iil-iil'l'i' $5,000,000.00 - $0.00 2007 2008 2009 2010 2011 2012 2013 Veer Table 8 Historical Analysis of Economic Impact by Type of Trip 2007-2013 Year by Year Comparison by Type of Trip $10,000,000.00 $8,000,000.00 a Year h $6,000,000.00 -- Day Trips $4,000,000.00 8 One-Night Trips $2,000,000.00 i Two-Night Trips $- •Three-Night Trips 2007 2008 2009 2010 2011 2012 2013 r<Four-Night Trips Year 1 Bus Tour Planning and Itinerary Information In addition to the questions related to economic impact,tour operators were asked about general planning and itinerary information. The majority(97%)of bus tour companies book accommodations directly through local hotel sales offices and 84%by phone. Similar to past years,the main reasons they use the CVB are for attraction and restaurant Bus Tours and Bus Passengers: Impact on Virginia Beach's 8 Economy 1 information. As would be assumed,there is a continual increase the number of tour operators mentioning the use of the internet to research attractions,restaurants, and accommodations. In terms of restaurant selections,buffets were the preference of 44%. The Shops at MacArthur Center and the Boardwalk were most commonly listed for stores or shopping malls frequented. The majority of motorcoach business to Virginia Beach continues to be related to education,music performances, sport, sun and sand, and special events in that order. The number of tour operators who selected performance and sport related trips _ were consistent with 2012. For sport trips, it remains important that participants be encouraged to explore Virginia Beach beyond the competition venue, such as the Boardwalk where they could spend additional money. Conclusion Based on these figures, as well as those since 2007, it is evident that the economic impact of bus travel continues to be significant for the Virginia Beach area although it plateaued in 2013. Furthermore, charter and tour bus passengers experience a high level of satisfaction with both individual tour components and the destination visited. The local businesses studied also prove to be well aware of the economic importance of bus visits to their own business, in terms of both the revenues taken in from bus groups and their relative share of overall business. — The survey findings strongly demonstrate that motorcoach tour groups comprise a dynamic and powerful economic force that should be considered when formulating public policy,transportation initiatives, and overall city planning. In summary, with competition increasing for school groups and casinos attracting seniors,Virginia _ Beach should continue to push motor coach business and can do so by adding more special events during the shoulder season for both students and seniors. Another target group may be military reunions considering all the military related attractions in the area. The Virginia Beach CVB and others involved in tourism marketing can use this data to help shape their own marketing efforts and determine the appropriate level of attention and investment to dedicate to bus tour operators and the group travel segment. — Recommendations — Although the total economic impact of bus tours on Virginia Beach is significant,it remains important to attract more bus tours, increase their length of stay in Virginia Beach, and the amount spent in the local area to continue the trend. As mentioned in all seven reports since 2007, tour operators and visitors all suggest more entertainment options be available in Virginia Beach. The majority of the student music groups spend at least 14 hours of their already short stay outside of Virginia — Beach at Busch Gardens or other nearby attractions and the Williamsburg. This number increased again in 2013 and could identify a negative trend. Ideally, with more attractions (especially evening attractions)more time and money would be — spent directly in Virginia Beach. Bus Tours and Bus Passengers: Impact on Virginia Beach's 9 Economy - City of Virginia Beach,Virginia Convention and Visitors Bureau-Departmental Resource Summary FY 2019 FY 2020 FY 2021 Variance Actual Adjusted Adopted from FY 2020 Program Summary - 002 General Fund Expenditures Director's Office 1,397,638 1,673,837 1,582,643 (91,194) Marketing,PR and Communications 131,929 48,319 30,408 (17,911) Tourism Marketing and Sales 584,991 556,496 468,984 (87,512) Sports Marketing 504,223 642,818 595,035 (47,783) Convention Marketing and Sales 707,753 900,225 1,092,627 192,402 Convention Services 283,205 285,075 0 (285,075) Virginia Beach Convention Center 6,259,284 6,388,446 6,368,191 (20,255) -, Total Expenditures 9,869,022 10,495,216 10,137,888 (357,328) Revenues Fees 4,289,569 4,102,912 3,785,022 (317,890) - Total Revenues 4,289,569 4,102,912 3,785,022 (317,890) General City Support 5,579,452 6,392,304 6,352,866 (39,438) - 152 Tourism Investment Program Fund Expenditures TIP-Marketing,PR and Communications 686,112 728,844 698,618 (30,226) - TIP Resort Programs&Special Events 4,443,572 4,687,563 4,720,041 32,478 Total Expenditures 5,129,684 5,416,407 5,418,659 2,252 Revenues I Local Taxes 2,560,931 4,171,432 4,220,442 49,010 Fees 1,310,271 1,244,975 1,198,217 (46,758) Total Revenues 3,871,202 5,416,407 5,418,659 2,252 IGeneral City Support 1,258,482 0 0 0 163 Tourism Advertising Program Special Revenue Fund IExpenditures Visitor Information Center 589,879 722,905 725,836 2,931 w TAP-Marketing,PR and Communications 10,270,458 9,758,300 11,200,696 1,442,396 Sports Marketing&Sales 1,030,872 1,173,416 1,448,819 275,403 b Tourism Marketing&Sales 390;336 446,262 427,927 (18,335) Administration 47,165 197,577 236,006 38,429 I Convention Marketing&Sales 294,826 414,089 602,715 188,626 Convention Services 177,685 143,776 0 (143,776) Reserve for Contingencies 0 10,884 0 (10,884) I Transfer to Other Funds 56,838 56,838 56,838 0 Total Expenditures 12,858,059 12,924,047 14,698,837 1,774,790 Revenues ILocal Taxes 12,502,201 12,794,047 9,602,237 (3,191,810) Fees 102,885 130,000 96,600 (33,400) Transfers 0 0 5,000,000 5,000,000 iTotal Revenues 12,605,086 12,924,047 14,698,837 1,774,790 General City Support 252,973 0 0 0 IFiscal Year 2020-2021 131 Convention and Visitors Bureau I City of Virginia Beach,Virginia Convention and Visitors Bureau-Departmental Resource Summary FY 2019 FY 2020 FY 2021 Variance Actual Adjusted Adopted from FY 2020 Total Department Expenditure 27,856,764 28,835,670 30,255,384 1,419,714 Total Department Revenue 20,765,857 22,443,366 23,902,518 1,459,152 Total General City Support 7,090,907 6,392,304 6,352,866 (39,4381 I Position Summary by Program 002 General Fund Director's Office 10.00 11.00 12.00 1.00 Tourism Marketing and Sales 5.00 5.00 4.00 -1.00 Sports Marketing 5.00 6.00 6.00 0.00 Convention Marketing and Sales 10.00 8.00 11.00 3.00 Convention Services 3.00 3.00 0.00 -3.00 Virginia Beach Convention Center 61.89 60.89 60.89 0.00 Total 94.89 93.89 93.89 0.00 152 Tourism Investment Program Fund TIP Resort Programs&Special Events 9.00 9.00 9.00 0.00 Total 9.00 9.00 9.00 0.00 163 Tourism Advertising Program Special Revenue Fund Visitor Information Center 6.39 7.39 7.39 0.00 TAP-Marketing,PR and 10.00 10.00 10.00 0.00 Communications I Total 16.39 17.39 17.39 0.00 Total Position Summary 120.28 120.28 120.28 0.00 I Expenditure Category by Department Capital 325,263 0 0 0 I Operating 19,485,784 20,054,665 21,289,169 1,234,504 Personnel 7,988,879 8,713,283 8,909,377 196,094 Reserves 0 10,884 0 (10,884) Transfers 56,838 56,838 56,838 0 I Total Expenditures: 27,856,764 28,835,670 30,255,384 1,419,714 Revenue Category by Department Charges for Services 1,046,178 1,122,723 1,013,705 (109,018) - Fines and Forfeitures 189,255 0 0 From the Use of Money and Property 4,128,084 3,938,321 3,726,815 (211,506) Hotel Room Tax 8,782,004 9,635,652 7,765,795 (1,869,857) - Miscellaneous Revenue 26,108 33,489 27,089 (6,400) Permits,Privilege Fees,and Regulatory Licenses 313,101 383,354 312,230 (71,124) Restaurant Meal Tax 6,281,128 7,329,827 6,056,884 (1,272,943) Transfers from Other Funds 5,000,000 5,000,000 Total Revenue: 20,765,857 22,443,366 23,902,518 1,459,152 - Resource Summary Notes In FY 2020-21,$305,403 is included in the TIP Fund to fund staff and equipment to maintain Sports Center operations. Fiscal Year 2020-2021 132 Convention and Visitors Bureau - w w FY21 ADOPTED BUDGET TAP FUND SALARIES& FRINGE by POSITION Convention and Tourism Market Administrator $ 131,829 Public Relations Coordinator(PR) I $ 92,462 Public Relations Coordinator(Marketing) $ 114,594 IAdministrative Specialist 11 $ 67,475 Multimedia Communications Specialist 11 $ 74,432 IMedia and Communications Coordinator 11 $ 90,481 Media and Communications Coordinator I $ 64,166 IMedia and Communications Coordinator I $ 61,665 Media and Communications Coordinator 1 $ 59,997 IAdministrative Assistant $ 51,948 Contracted Manpower $ 87,631 ITOTAL $ 896,680 I I I I I I I I I O is * 0 0 MRo1 CO L.0 0 U y 70 O N ri tD O C C C 0 O La ro E 1O a > o Z a U En 0 0 a 00 y C lD N M N O O O 1-- 5ra o w O Z a •--1 .-1 O 00 w u io N mi V Ci r.i o o o O 0. W ID lD CI V tP) 0 N a e-1 .-1 fG O F- 1•- O O 0 O 0) GJ re MP III M lD M tD N C c O ` Iv a c I CU 0 V CO 0 0 0 I CZ c O CO C a Q ' C L U N o O O I m ems+ C O Y a v1 m I C CO 0 NJ .--1 • C7 CD O d :., c .E Y chi E ( I c M N 0 0 o O 7 I > O U j tz C 0- C \ v 0 0 0 VI E OAS v a/ v a o - o -0N id o ra 0) lD .ti '•I 0 0 e C E �.) N a = O U N e-1 .•-I O m I i v j > 1 a a u vN1 o 12 o ico m w m CO Ni 001 c7S c Y LL h W Y o 0 ul :_ v c C e , Q > c E _ u E u U CD N _ °� CO CU � a° o a v 3 o � o Q o z p cnO1 E o 3 UI Q I J hiJil i C O (D i V, C Y V O m 0 1 pe+1jr`1 L m m y 0 U 1— I CYO� amQ � � ; I City ref I Virginia Beach Convention and Visitors Bureau Community Taskforce I October 23, 2020 Agenda I 1. Welcome - Councilmembers Tower&Wilson 2. Housekeeping- Ron Williams 3. CVB Structure Option Review- Dana Harmeyer 4. Additional Benchmarking- Bill Hanbury 5. Discussion I 6. Elliott Ferguson, President&CEO, Destination DC and National Chair, U.S. Travel Association 7. Next Meeting- November 6, 2020 - 9am I I I Mission To evaluate the three potential alternative new organizational structures(remain within the City governments, Hybrid public-private foundation or authority, Public-private nonprofit) and make recommendations to the City Council on the best path forward,provide input on the ' qualities sought in a new CVB director or Chief Executive Officer and perform any additional duties assigned to the Taskforce by the City Council. ' Virginia Beach Convention&Visitors Bureau 2101 Parks Avenue,Suite 500 I Virginia Beach,VA 23451 I ph(757)385-4700 I fx(757)437-4747 7 ('itYof Virginia Beach ' Convention and Visitors Bureau Community Taskforce I CVBCT Members: B.J.Baumann,Z. Burden,T. Counts,J. Evans-Cox,C. Dyer, L. Habr, D. Howard, R. Melatti, P. Midgett, H.Richardson,C.Thornton,G.Tower, R.Vogel, R.Wilson,J. Zirkle IUn-Available: M.Standing, M.Ryan City Staff: B.Hanbury, R.Williams, D. Harmeyer, B.Rumpf, P. Matthias Meeting Place: Virginia Beach Convention Center IMeeting Date: October 23, 2020 Please report errors or omissions on these notes to Brande Rumpf(brumpf@visitvirginiabeach.com)within 24 hours of receipt of the notes. CVB will pursue the actions outlined in the"Action Items"sections of these notes. Councilmembers Wilson and Tower began the meeting with a welcome and thank you to Taskforce I members for their continued commitment to this important work. He turned the meeting over to Mr. Williams to review the housekeeping items. Mr. Williams reviewed the agenda for the meeting and announced that the next meeting will be November 6. Hopefully the Taskforce will have a I preliminary recommendation to provide to counsel at the end of the November 5 meeting.We will also be having a conversation with Rita McClenny, president and CEO of Virginia Tourism Corporation via WebEx. Mr. Williams turned the meeting over to Dana Harmeyer, public finance I attorney with the Office of the City Attorney to review the two dominant DMO models,which are an authority versus 501(C)6 models.Mr.Harmeyer reviewed the legal existence,purpose,government requirements, and tax status of both an authority and a 501(C)6. Specifically, under government I requirements Mr. Harmeyer provided additional detail as it relates to the Freedom of Information Act (FOIA), Conflict of Information Act (COIA), Virginia Public Procurement Act (VPPA), Government Data Collection and Dissemination Act (GDCDA), City Human Resources, Public Deposits Act and Audit. Mr. Harmeyer continued showing a list of items needed to establish a tourism authority. He also indicated that the State of Virginia's Tourism Authority is a good model that we would use as a guide. Lastly, Mr. Harmeyer showed a list of things that would be needed for articles of incorporation of a 501(C)6 tourism model. After asking for questions, he turned the meeting to Mr. Hanbury. Councilmember Tower thanked Mr. Harmeyer for his presentation. IMr. Hanbury was asked to do some additional benchmarking on destinations, the first being San Antonio as they are a 501(C)6. Mr. Hanbury described how the 21-member board was selected and what business area they represented. Their board is comprised of two council members, one city manager appointment,three representatives from hotels and or lodging,two leisure attractions, I I CVB Community Taskforce Meeting October 23, 2020 Page 2 two restaurants or culinary, one heritage or preservation representative, one person from arts and culture, one transportation representative, one representative from the chamber, three at large representatives, one corporate CEO and then there would be two voting ex officio - one from the convention center and one from economic development. There are also non-voting ex officio members from the city aviation and the military. City and suburb were given equal consideration the Mayor and the CEO appointed all members.Anyone could apply. The Visit San Antonio's board of directors' application was provided to Taskforce members. A few members of the Taskforce recommended that Mr. Hanbury look at the Charlotte Regional Visitors Authority in his benchmarking, as it is a state public authority established by the City of Charlotte. It provides destination development, marketing and venue management expertise. A 13-member board of directors guides the organization through a CEO and manages City owned assets with values exceeding $500 million. They employ 200 full-time and 1,500 part time employees on an annual basis. The facilities host more than 600 events attended by two million visitors and residents. In FY19 the Visit Charlotte sales team booked 528 events for future years totaling 443,298 room nights. Of those events,44 were booked for the convention center and will generate 162,573 future room nights.Youth and amateur sports accounted for 212,261 room nights representing 48%of the total. However, smaller meetings played a significant role in FY19 contributing 64,727 room nights 15% of the total bookings. Lastly, in 2019 more than 650 companies engaged with Visit Charlotte through its partners and tourism membership program. Mr. Dyer wanted to clarify with Mr. Hanbury that Charlotte is not really a leisure town it's more of a corporate town with the Spectrum Center and all the major corporations that are headquartered in Charlotte. Mrs. Howard ask for clarity on the bullet indicating that one in every nine people are employed in the hospitality industry in Charlotte and how do we compare. Mr. Kuhlman indicated that approximately 13,000 hospitality workers are in Virginia Beach. Mrs. Howard's second question was about the tourism membership program and if it was a paid membership? Mr. Hanbury confirmed that it is in fact a paid membership. Mrs. Howard inquired if Mr. Hanbury knew how much revenue that program brought into the organization. Mr. Hanbury explained that it is a tiered membership and dues structure. is based on how engaged you want your business to be. Mr. Thornton asked how the sports grant program would work. Would it fall under this new DMO structure? With the division heads that came and spoke to the Taskforce,would they still have positions,or would they be eliminated,when this new group takes over?Sports marketing and sales would remain within this organization while the operations of the buildings would perhaps stay with the City. Essentially, this organization would have a contract with the City to provide marketing and sales services. Mr. Thornton asked if the sports marketing grant program under a new model would be able to be expanded.Mr.Williams responded that it would be up to the new board of directors to make that decision on an annual basis. Mrs. Evans expressed concern with the two examples of an element that is missing,is a focus on business non-leisure, business meetings, city wide outside the convention center. Mr. Hanbury went on to present The Virginia Tourism Corporation (VTC). The VTC is a public authority of the Commonwealth that was established in 1999. Prior to that,tourism marketing was administered by the Division of Tourism within the Virginia Economic Development Partnership. The VTC has broad powers to stimulate the tourism segment of the economy by promoting and advertising and marketing the Commonwealth's tourist attractions and by coordinating other private and public efforts to do the same.The VTC has a 17-member board including the Lieutenant I I CVB Community Taskforce Meeting October 23, 2020 Page 3 Governor, Secretary of Commerce and Trade, Secretary of Finance, Secretary of Natural Resources, Secretary of Agriculture and Forestry and 12 citizens appointed by the Governor,who are subject to confirmation by the General Assembly.The Governor designates a Chairman of the Board and the President and CEO.The CEO reports to the Secretary of Commerce and Trade and the President and CEO serves as the Board's ex officio Secretary and Treasurer. The products and services that the VTC provides to the state are brand management, digital marketing, grants, film office, communications, international marketing, domestic sales, research, fulfillment, and welcome ' centers. In FY20 the VTC is operating on a $21 million general fund budget. VTC aggressively leverages funding, plus partnerships with industry and government entities to extend the reach of its limited budget. VTC receives $1.3 million annually from the Virginia Department of Transportation for operation of the state's 13 welcome centers. Additionally, VTC collects more than $1.7 million annually, from a variety of sources including partnerships, brochure rack fees, royalties from the"Virginia is for Lovers"merchandise,and other miscellaneous items.Mrs. Howard asked if Mr. Hanbury knew what taxes go into the $21 million VTC budget? General fund was the answer provided. One of the action items the Taskforce requested was to identify the services provided to the CVB by the City of Virginia Beach that may not end up on the balance sheet. Mr. Hanbury wanted to make clear that we have not assigned any dollar amount to these items, as some of these items are embedded within other departments and in some cases are part of the overall City's infrastructure. Mr. Hanbury reviewed a list of those services to include rent for the marketing and sales responsibilities, IT support to include a robust network and bandwidth reliability, IT security and ' application support, printing services and telecommunications,and fleet(vehicle) replacement and services.Mrs.Baumann asked if we looked at the authority versus the 501(C)6,would some of these services still be available through the authority, much like the Virginia Beach Development ' Authority (VBDA)? Mr. Harmeyer explained that the VBDA does not have any staff of its own. That would be a fundamental change on how the Authority interacts with the City, it would be worked out in a contractual relationship. Mrs. Baumann clarified that with the Authority we would be able ' to formulate an agreement. However, with a 501(C)6 that would not be an option? Mr. Harmeyer explain that it would depend on the type of service,for example IT support may be included but not ' legal services. City attorneys are not allowed to represent private entities. Mr. Hanbury used the example of the Virginia Retirement System and how we might be able to move the benefits program and the retirement program into the authority and take advantage of the operational efficiencies, protecting employees. However, with a 501(C)6 we are starting from scratch. Mr. Hanbury asked for clarity Mr. Harmeyer confirmed: yes, with those types of benefits. Mr. Hanbury responded with complete candor to select the authority over the 501(C)6. Ultimately leaving the decision up to the Taskforce. Mr. Zirkle asked if there would be some savings to the City In possibly turn over those savings to this Authority. Mr. Harmeyer explained that the overhead would still be considered tax money and would be part of the new entity.Mr.Zirkle asked how is the transfer of employees going ' to work from the City structure over to the new entity? Are they going to have to apply for these positions? How will this work? Mr. Harmeyer explained that there will be an Executive Director/CEO who will have oversight of hiring and firing,however it could be negotiated that there is a transition period. Mr. Hanbury interjected using Bermuda as an example from when they transitioned out of government. There were interviews with all employees and about 80% of those CVB Community Taskforce Meeting October 23, 2020 Page 4 employees transitioned over to the new organization the other 20% remained within government. Mr.Williams explained that this is a policy decision. Mr. Williams explained that many of the job descriptions currently in the CVB do not translate over to other department except for administrative assistants or front desk customer service. However, if we are given direction by Council to find positions for those in the current City structure then we will do so. Mr. Counts questioned if there's an organization that partners with other DMOs to get better rates on services such as IT services. Mr. Hanbury explained that he understands the benefits that Mr. Counts is referring (media and advertising and internet applications), and that Destinations International is that organization to a certain extent. Not for insurance and benefit programs. Mr. Williams referenced the September 11 presentation slide 33 that has the organizational chart. The numbers of employees is about 50. Mr. Zirkle commented that your cost would be minimal with 50 employees, however Mr. Williams stated that you also want to be an employer of choice. Additionally, the benefits program the City absorbs is a significant amount of the increases or can be leveraged through a consolidated benefits program. This year we had the same rate as last year for employees. An authority could contract consolidated benefits with the City to continue to provide those services. Mr. Dyer wanted to clarify that to attracted and retained employees you need a program that's comparable to the private market.Additionally,this list shown,take away the value of those services from how much you spend on advertising because now the new entity needs to buy those services. Mr. Zirkle asked for additional information on the VRS program and how it compares to what most businesses offer. Mr. Harmeyer explained the traditional VRS, basically closed seven years ago, provided a multiplier that was years of service times the number of 1.65%. If you do 30 years you are basically at 50% of your salary. The hybrid plan moved the multiplier from 1.65% down to 1%, but then it had a second piece which is top of it which is the cash match plan.Which is basically up to 3% and what the employee contributes,the City will match. It looks a lot like 401K, so it is market based. Then there is 457 which is an additional amount of deferred compensation that you can put in a market-based system. Mr. Richardson asked if there's been a value assigned to any of these services and if there is a matrix to determine what City services would be provided to an Authority versus a 501(C)6. He indicated it's difficult to determine which of these models without knowing which structure. Mr. Williams and Mr. Hanbury agreed and will be working on creating a matrix to assign values to these services with the understanding that the City is not typically equipped to set up a nonprofit. Mr. Williams reiterated that the task is about the structure. Considering that there is an appropriation of significant amount of tax dollars, gives governance and oversight of fiduciary connection to the entity.What gives the private sector input and guidance, direction, and control of the activities of the entity, and what gives you the best opportunity to transition a workforce and then replicating within perhaps a year or transition that has overarching goals. Mr. Hanbury indicated that it seems to be an obvious decision, and describe the current challenges within the CVB, talent acquisition, retaining and recruiting the right talent, and being able to reward and discipline talent;if you can do that in an authority environment,which he can I believes we can,then we're saving money and simplifying things and also assuring the City still has a very strong fiduciary roll in this organization, then he thinks we have a solution. Councilman Tower agrees and adds that the dollar amount that we're talking about is marginal. How the City is going to be providing,in one way or another,either by direct funding or by indirectly providing a service, the private sector is not going to have a significant amount on investment. It is a good question of should we get it from the City or should we buy it ourselves. If there's a I CVB Community Taskforce Meeting October 23, 2020 Page 5 Icompelling case to go with an authority over a 501(C)6, he doesn't think the individual costs are going to change at the margins.Whether we're going to buy it from the City or buy it ourselves. Mrs. ' Baumann gives an example of a $20 million budget for marketing and advertising; stakeholders want to ensure but they're spending the maximum of those dollars on that effort. A lot of the Taskforce members are hitting stumbling blocks on supporting one entity over the other without knowing what that number is,whatever we're having to pay for whether it's an authority whether it is 501(C)6, that's going to be money taken away from what is spent on advertising so it is an important question. One that can make a difference in the long run, because stakeholders want to ' maximize advertising dollars. Mr. Hanbury explained with the embedded cost associated with an Authority would less with then with a 501(C)6. He assured the group that regardless of whatever ' analysis is done, it's going to cost more money to do a 501(C)6 then it wouldn't do it authority. He reiterated that it is ultimately up to the Taskforce to determine their recommendation.Mrs.Howard asked if the Virginia Aquarium was a nonprofit? Mr. Harmeyer answered that the Aquarium has a ' partner foundation, but the Aquarium itself is a City Department. Mrs. Howard followed up inquiring what kind of agreement they have? The City Council has an agreement with the foundation. The foundation does fund raising and there are certain positions that the foundation ' reimburses the City for work. The primary function of the foundation is to provide the exhibits. Mr. Zirkle ask for clarity as to why every CVB is not going with the authority model if it is cheaper than a 501(C)6?Mr. Hanbury indicated that those CVB did not start out in government.They started out ' in a chamber of commerce and then were spun out and became separate entities and just replicated the 501(C)6 that they were in under the chamber of commerce. ' Mr.Hanbury continued with his presentation identifying the City services provided to the CVB those include financial payroll services,the City self-insurance for unemployment can be a plus or minus but an independent CVB would pay FUTA taxes, something the City does not currently pay. ' Procurement services which assure the best use of tax dollars, plus pricing based on city wide contracts, but can be complicated and drawn out. Employee funded retirement at a very low cost, because of the size of the Virginia Retirement System plan. Risk management- the CVB is included ' in the poll for the entire City, accounts payable services and banking costs, health insurance while there is a cost to employees and the employing agency, a group the size of the City and School offer very competitive rates, funding stability buffers the swings and funding,this is in reference to what ' has happened to DMOs across the country during the pandemic. Access to a network of professionals who work within City government, legal counsel there are advantages including ' contract review and shielding of liability, human resource recruitment and employee training well developed employee policies and procedures. The CVB director has access to every other department within the City and often calls on them for assistance, for half a century CVB leaders ' have developed these relationships for benefit of the tourism sector. Direct involvement by the CVB & CIP programs such as convention center, sports center, aquarium, seawall replacement, the CVB is also assisted other City agencies in achieving their goals event sponsorship requests, public ' relations support during emergencies, and free use of space in the convention center. Mr. Hanbury introduced Elliot Ferguson, President and CEO of Destination DC and the National Chairman of the US Travel Association. Destination DC is a 501(C)6 CVB, private, nonprofit corporation with 1,000 members. Mr. Ferguson shared how the COVID-19 pandemic has had an impact on him, his business and staff. He also spent the morning speaking with the CVB leadership CVB Community Taskforce Meeting October 23, 2020 Page 6 team and provided inspiring messages. He also discussed when challenges happen across the country be it natural disasters or domestic terrorism, civil unrest and how it affects the travel and tourism industry even if it doesn't happen in your destination. Mr. Ferguson described Destination DC's funding model $28 million budget solely funded by hotel tax and membership dues. 80% of funding comes from tax revenues from hotels,which clearly is not happening right now. Events DC, the organization that owns the assets, the Convention Center, the new Apple store in front of the Convention Center, stadium where the world champion baseball teams now plays, the Nats and everyone's favorite RFK stadium. Oversight for us is extremely important because, we're a private nonprofit technically we don't have to report to government, but we report to government at least twice a year. No one is going to tell our story better than us.A return on investment study is done in partnership with the City and the CFO. Destination DC signs a contract with Events DC who operates the Convention Center. The oversight of Destination DC consists of a board of directors, executive committee, and department committee chairs. The local involvement consists of hospitality alliance, City Council and executive office of the Mayor and local stakeholders.The divisions that make up Destination DC or the executive office,marketing and communications,finance and administration,tourism,sports and visitor services, partnerships an alliance, convention sales and services. Mr. Ferguson spoke about the importance of knowing what your destination's perception is outside of the market. It is incredibly important to make sure that you have a clear understanding of what the perceptions are of your destination when marketing and advertising. Mr. Ferguson gave an example of domestic travelers visiting Washington DC spend about$600 per day while international visitors spend about $6,000 per day.They stay longer and spend more. Mr. Ferguson gave additional information on the types of members that pay into Destinations DC. These include transportation, accommodations, convention services, restaurants, and see and do (attractions). Mr. Ferguson gave an example of their 2019 ROI Study showing an investment of$3.77 million, returned in spending$147.8 million, a return in taxes of$11.4 million and for every dollar spent on advertising campaigns $3.03 was returned in taxes. Mr. Ferguson showed the 2019 DC Visitation information pre-COVID,which were very impressive numbers. Then showed the impact of COVID-19 with 44 major cancellations 1 equaling $447 million in economic impact, domestic visitation is expected to fall 53%, visitors spending is down 80% or$6.9 billion, $313 million in lost DC tax revenue and finally hotel revenue down 89% or $1.2 billion. From a national perspective Mr. Ferguson shared that he is the National I Chair for the US Travel Association whose work includes policies and partnerships to expand travel, welcoming international travelers, making travel's economic impact to the United States clear, and diversity and inclusion. In 2019, the US travel projects devastating impacts including 30% decline in overall domestic travel, 63% decline in overall international travel, 45% decline in travel spending (a $505 billion dollar loss), and $1.2 trillion in total economic loss. We should note that the travel industry experienced an unemployment rate of 51% through May. Additionally, DMOs (501(c)6) are not eligible for the Payroll Protection Plan (PPP) through the cares act. Lastly, Mr. Ferguson spoke about US Travel's priorities the first being Coronavirus Relief Fund Flexibility, DMOs being eligible for PPP, Recovery Sector Loan Program, EDA grants to promote safe and healthy travel, testing improvements, employee retention tax credit, other tax incentives to stimulate travel, meetings, and events, safe harbor from COVID-19 lawsuits, safe and healthy workplace tax credit,and the per diem rate freeze. Mr. Ferguson opened the floor for any questions that the Taskforce members may have. Mrs. Baumann asked if Mr. Ferguson could give a broad 1 CVB Community Taskforce Meeting October 23, 2020 ' Page 7 brush on how his 501 operates as it relates to revenues versus what goes into sales and marketing versus what goes into operating costs. So, there is a clearer understanding of how that looks, Mr. ' Ferguson explained that DC has a graph that focuses on spending 70% of our revenue is tied to the marketing budget, the convention sales efforts, tourism efforts is primarily tied to promoting the ' destination. The other 30% is salaries and all the other things to effectively running the organization. We are very cognizant of the overall spend. Additionally, Mrs. Baumann wanted to know what the range is on their membership levels and fees? Mr. Ferguson explained that hotels ' pay the most, however there's a formula tied to proximity to the convention center, times the amount of exhibits meeting space, times the number of sleeping groups on an average. A DC hotel can make $30,000 membership fee average annually. A big hotel in New York pays them $150,000 ' in membership. Restaurants normally pay about$800 to$900 a year and if they had more than one restaurant, it would be a formula tied to the dues structure. We have a flat fee structure which is about$950.There are other structures that are tide to membership,but hotels pay the most because I they have the largest economic impact. Currently, during COVID, hotels are the only members paying membership dues if they are open. Mrs. Howard inquired as a 501(c)6 if they do fundraisers? Mr. Ferguson explained that they do partnerships. For example,they might do an 18- month partnership with an airline that gives 100 airline tickets a year,an in-kind value of$50,000. Mr.Thornton asked when they went from government to private if they retained,they're operating units. Mr. Ferguson explained that Destination DC was already a private bureau when he joined. ' Mr. Ferguson shared his meeting schedule with the City Council of DC . He meets with City Council every six months and then monthly with individual council members that want to meet with him. Mr. Williams asked as it relates to Events DC, within their charter or their bylaws, they need to ' check with the board of directors. It's within the structure of DC government they must follow a similar process of the small business development organization, that works as oversight with the City. Mrs. Howard inquired if convention center staff was a part of his organization or was it just ' sales and services? Additionally, does Destination DC get any admission tax from the convention center? Mr. Ferguson replied, Events DC gets those admissions taxes Destination DC only gets hotel ' tax. The sales team that brings major national conventions to the center work for Destination DC. Destination DC and the convention center work very closely with each other. ' Destination DC books 18 to 24 months out for events the convention center books within current to 18 months. However, they do work in tandem with each other on major conventions. Mr. Richardson asked regarding the Destination DC's revenue, only about 35% is being realized based ' on last year. Mr. Ferguson explained there's only about 35%based on last year for the City. Because of low occupancy and average daily rate, the budget that would be normally$28 million, next year is $8 million. Mr. Richardson questioned if there was any funding that was coming from the City of ' DC to help backstop the economic impact loss.Mr.Ferguson explain historically no,but that it's also because we've never been here before. The only time that the City of DC has ever given Destinations DC funding was for International Pow Wow when it was hosted in 2017. When money comes from I the government there's lots of checks and balances. Mr. Richardson asked if Destination DC ever saw a decrease in revenue? Mr. Ferguson explained post 911 was the first time they had seen a decrease. Any decreases are tied to the market because of majority of their funding comes from hotel tax. Lastly, Mr. Richardson asked if destinations DC only promotes their paid members or do they promote the destination as a whole?What memberships comes opportunity to participate in CVB Community Taskforce Meeting ' October 23, 2020 Page 8 tradeshows,another marketing and sales activities.When selling the destination experiences,what are the primary selling tactic?Mrs. Baumann asked what the composition of board of directors and how they were selected. Mr. Fergus explained that not all the members of our board are members ' of the hospitality industry. He encouraged non hospitality members to be members of our board of directors. However, the larger percentage of our membership represent hospitality industry. The membership formula includes hotel , transportation, and sports representatives. Mrs. Habr asked what is being done to help save restaurants? Mr. Ferguson explained that being transparent and sharing information via their website and other platforms on what they're doing to mitigate the COVID-19 virus. Visitors are visiting restaurant websites to see what is happening before attending. He is working with the DC restaurant association. Mr.Zirkle, question as to how many hotels are in the DC area? There are 190 hotels of various sizes and a very diverse product that have an inventory of 48,000 rooms,that contribute to the occupancy tax. Councilman Tower thanked Mr. Ferguson for his time and his presentation to the Taskforce. Councilman Tower stated the next meeting will be the most important meeting,because the group can come to some decision about this issue or at least structural support. The meeting adjourned at 11:55a.m. I Follow Items: • Number of hospitality workers in Virginia Beach • Identify the services provided to the CVB by the City of Virginia Beach I Next Meeting: November 6, 2020 I 9a-12p Virginia Beach Convention Center I I 1 II , . .., , „ 1 ' — . . • .1 i• - • ., t• ' NI..- ,• It , ., , I ' . . • '41i., ,,v,, , :; ••;;; '4.. ..,'••• .7:-,_ -s. Ili • . : f -- le° I - - '---Z 1.- id; • 42 , . ''''- '•' ; - 111 I '., .. , - , ' ' -7..•.#...vzi .1 1 • .,, '14. I „ i • 0;7 -, ...... _ , I _, ti • ' . • t 14 *1 ---. _ :::: • i ; i , .• • . I , ' ° . -, 'ii... ...-: •,' V ' - • 2 . ___ ,-.. 1 • ) - ., ,, . - • ' _ __ P 1 A • ilk? . . . - . • 1- N • •1 i :' , '‘,$ a: e "A; 1 • 11, ( i ip===.11221a1....z= • — - a Mk 1/111111POUNIMIAIMMU“ ....,............-........ ••-•(' ---... "."*.:-••••••••••=aw•—•;•jems=-..---, ...........- -,....r..*--....--....,s-- I I , 7 1, . ii, . . , 4 r.. 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Bill Hanbury Report page 37- Board of Director Structure 1 2. San Antonio Board of Director's Application Package (includes criteria) 1 3. Elliot Ferguson, Destination DC and US Travel Association Bio 1 1 1 1 I I I I I VIRGINIA BEACH CVB CONCLUSIONS AND RECOMMENDATIONS A highly detailed five-year Destination and Marketing Services Agreement authorized the VSA to assume the promotion duties of the City's former CVB. Initially, they would receive $23 million annually from the City, but the VSA, per the Agreement, was also required to build a "revenue enhancement plan" to augment the City's public tax investment. This revenue was to include: co-op advertising programs, partnerships, selling tourist and convention delegate services, corporate sponsorships and eventually membership dues provided by the private sector. A Tax Improvement District was also under consideration where hotels would impose a tax on themselves to increase CVB marketing resources. These enhanced revenue strategies are similar to how other US cities effectively raise new resources, thus lessening the burden on public tax dollars. Under the agreement, the VSA is required to present to the City quarterly and annual reports, ' performance targets, plus an up-to-date revenue enhancement plan. VSA must maintain transparency in all its transactions. A 21-member Board was selected by a five-person Nominating Committee appointed by the Mayor and Ms. Matej, the new VSA CEO. 60 individuals applied for the 21 spots. Small and large businesses alike, plus city and suburbs were given equal consideration by the Committee to ' assure fair representation. The Board was comprised of the following appointments: Mayor appointments (2) — Council members City Manager appointment (1) Hotels and lodging (3) Leisure attractions (2) Restaurant and Culinary (2) Heritage and Preservation (1) Arts, Culture and Music (1) Transportation (1) Chamber (1) At large Business (3) Corporate CEO (1) Ex-Officio Voting (2)—Convention Center & City Economic Development Ex-Officio Non-Voting (2) —City Aviation & Military I I I Academy Street Collaboration, LLC 37 SAN ANTONIO L Greetings! IVisit San Antonio is seeking qualified and interested individuals to serve on the inaugural Board of Directors with terms that will range from one to three years. Visit San Antonio ' is a 501 c6 organization recently created to serve as the destination marketing organization for San Antonio and the surrounding areas. ' The information contained in this packet is designed to provide you with an understanding of the candidate application and selection process. Please consider this packet an official invitation to apply for a position on the inaugural Visit San Antonio ' Board of Directors. Included in this packet, you will find: • Mission of Visit San Antonio I • Qualifications & Commitments I • Timelines for the Nominating Process • Official Application& Guidelines ' If you have questions about the process or the materials to be submitted, please do not hesitate to contact Shanna Smith, Chief of Staff, Visit San Antonio, 210.207.6737 / ' shannasmith@visitsanantonio.com. Please submit electronically or postmark this packet by Thursday, September 15 at 5 p.m. ' CST. Please ensure you include the official application, as well as an updated resume and two to three (2-3) letters of recommendation. Packets should be submitted to the following; ' Visit San Antonio 203 S. St. Mary's Street, Suite 200 San Antonio, Texas 78205 ' Tel: 210.207.6700 E-Mail: shannasmith(a visitsanantonio.com Website: www.visitsanantonio.com Sincerely, ' Frank J. Miceli, Chair,Visit San Antonio Board of Directors * VISIT SAN ANTONIO * AIF * SAN ANTONIO * 4.17 Please review the qualifications and commitments listed below to evaluate your ability to fulfill the responsibilities required of Visit San Antonio Board Members. The Visit San Antonio Board of Directors will be instated pending and contingent on the vote of the Management Agreement with the City of San Antonio. Mission Visit San Antonio promotes and markets San Antonio as a premier leisure visitor, convention and meeting destination for the purpose of positively affecting the city's economy. Responsibilities The 21-member diversified board represents various business sectors, community, and visitor industries as well as a mix of public and private representation. The inaugural term of the appointment may range from one to three years. The board provides policy direction to Visit San Antonio, which includes,but is not limited to budget review and approval, contributing to the formation of marketing strategies, advocating, and generally advising and assisting the President & CEO. The Board Composition is as follows: ' • Two (2) appointments by the Mayor(self or City Council Members) • One (1) appointment by the City Manager (self or designee/Assistant City Manager) • Members below would go through a nominating and interview process; o Three(3)representing Hotel & Lodging o Two (2)representing Leisure Attractions (e.g. Museums/Theme Parks) o One (1) representing Restaurant/Culinary Industry o One(1) representing Heritage & Preservation o One(1) representing Arts/Culture/Music o One(1) representing Transportation industry o One (1) Chamber representative (All Chambers would have opportunity to apply) o Three(3) At Large positions • One(1) CEO/President of Visit San Antonio I • Ex Officio positions/voting o Executive Director of Economic Development Foundation o Director of Convention and Sports Facilities I • Ex Officio positions/non-voting o Director of Aviation o Director/Assistant Director of Military Affairs * VISIT SAN ANTONIO * I Ile 4.1raL SAN ANTNIO I ' Qualifications • Knowledge: experience and demonstrated commitment to Visit San Antonio through San I Antonio general business community and/or hospitality industry • Strong awareness of critical issues and relationships, as well as new emerging business trends affecting business I • Skilled in multi-dimensional thinking and analysis • Interpersonal relations skills; approachable, savvy, an ambassador who personally values I and respects other people • Visionary: open to new ideas, able to prioritize and consider future directions • Knowledge of a fiduciary role of a governing body I • Desired (not mandatory)background in marketing • Establishes and maintains a personal code of conduct and ethics that serves as a model for others I • Support from employers/ colleagues for the time commitment required Board Commitment I • Board Orientation • Summer Board Retreat ' • Six Board Meetings per year • Review minutes of board and committee meetings • Participate in at least one (1)board committee, taskforce or advisory group ' • Attend the Visit San Antonio Annual Meeting • Attend a half-day Certified Tourism Ambassadors (CTA) Training o If already certified, continue to be a current, active ambassador who participates ' in the annual renewal process • Board members must be willing to serve up to a three(3) year term ISocial Time As a board member, you will receive invitations to functions sponsored by Visit San Antonio and Iyour attendance to as many functions as you can attend would be appreciated. Expense Reimbursement ' Board members who are asked to attend functions or meetings outside of San Antonio serving as in an official capacity will be asked to submit detailed expense reports for reimbursement. * VISIT SAN ANTONIO * ... 7 �f SAN ANTONIO * . Timelines for Nominating Process • Monday, August 1—Nomination process opens. Applicants may self-nominate. • Thursday, September 15 —Official applications due. Materials must be electronically submitted or postmarked by 5 p.m. CST. • Thursday, September 22 —Thursday, September 29—Board interviews will be conducted ' by the *Nominating Committee. o Interviews will be conducted at the discretion of the nominating committee. • Monday, October 3 —Full Visit San Antonio Board of Directors will be announced— pending and contingent on the vote of the Management Agreement with the City of San Antonio. *Nominating Committee is made up of the Visit San Antonio initial board that was appointed by Mayor Ivy Taylor. Nominating committee consists of: Chair, Frank Miceli, Spurs Sports & Entertainment Vice Chair, Marise McDermott, Witte Museum Secretary/Treasurer, Tim Sullivan, Marriott Rivercenter/Riverwalk Hotels ' Director, Rebecca Viagran, City Council District 3 Director, Rusty Wallace, Omni La Mansion/Mokara Hotels 1 Staff Liaison, Casandra Matej, San Antonio CVB Nominee Summary Sheet 1 The form, found on the last page, is a cover sheet for the materials you submit. Please fill it out completely. State your name, as you would want it to appear in all official references. Key Components of a Resume Please enclose a current resume. If your resume does not include the following key components, please attach an addendum to include the missing items. 1. Name 2. Formal Education 3. Work Experience t 4. Professional Associations & Community Service 5. Awards & Honors Letters of Recommendation Please include two to three(2-3) letters of recommendation. ' * VISIT SAN ANTONIO * I ' ��► * 1►a SAN ANTONIO VISIT SAN ANTO • 1\, ,t' OF DIRECTORS I OFFICIAL APPLICATION I Name: ' Title: Organization: Address: ' City: State: Zip: Work Number: Cell Phone Number: E-Mail Address: Optional ' Gender: Ethnicity: Mandatory Questions ' 1. Why do you want to serve on the Visit San Antonio Board of Directors? 2. What board position(s)/category are you interested in applying for? Please list as many as you are interested in. ' 3. What skills, education or experience of yours will benefit Visit San Antonio? ' 4. Do you foresee any conflicts of interest? I have reviewed and understand the commitments and am willing to serve if elected to the Visit San Antonio Board of Directors. Signature * VISIT SAN ANTONIO * DesTina-ion DC ELLIOTT L. FERGUSON, II, PRESIDENT & CEO _ Elliott Ferguson serves as President and CEO of Destination DC, the official destination marketing organization for Washington, DC. A 30-year veteran of the travel and hospitality industry, Ferguson leads Destination DC's efforts to generate economic opportunity for the District through meetings and tourism, overseeing the organization's convention and tourism sales, marketing, finance and business development operations. Ferguson began his tenure with Destination DC in December 2001 as the Vice President of Convention Sales, became Senior Vice President of Convention Sales and Services in 2005 and has served as ' President and CEO since 2009. Prior to working at Destination DC, he served as Director of Sales and Vice President of Sales at the Atlanta Convention and Visitors Bureau. He has also served as Director of Sales at the Savannah CVB. ' Ferguson currently serves as National Chair of the board of directors for the U.S. Travel Association, where he guides the board and association's efforts to advance policies that facilitate more international ' and domestic travel. He also serves on the board of directors for the following organizations: Advisory Board of the Smithsonian National Zoo; DC Jazz Festival; Ryan Kerrigan "Blitz for the Better" Foundation and the United Way of the National Capital Area. ' He represents Destination DC as part of the Hospitality Alliance of Washington, D.C. ' Ferguson received a Bachelor of Arts in Marketing and Business Administration from Savannah State University. His many industry memberships include Professional Conference Management Association, ' International Association of Exhibition Executives, Destinations International, National Coalition of Black Meeting Planners, Meeting Professionals International and American Society of Association Executives. .. Ferguson and his wife, Telesa Via, also a hospitality industry veteran, are longtime residents of Capitol Hill. He is active with Capital Partners for Education, Alpha Phi Alpha Fraternity, Inc., and Delta Sigma Pi. IDestination DC:the official destination marketing organization for Washington,DC. 901 7th Street NW,Suite 400•Washington,DC 20001 ®WASHINGTON.ORG I ('ity uJ Virginia Beach Convention and Visitors Bureau ICommunity Taskforce INovember 6, 2020 Agenda 1. Welcome - Councilmembers Tower&Wilson I2. Housekeeping- Ron Williams I3. Rita McClenny, President&CEO,Virginia Tourism Corporation (VTC) 4. Matrix Review - Staff I5. Recommendation Discussion 6. CEO Search Update- Ron Williams 7. Next Meeting- November 20, 2020 - 9am I I I I Mission To evaluate the three potential alternative new organizational structures(remain within the City governments, Hybrid public-private foundation or authority, Public-private nonprofit) and make recommendations to the City Council on the best path forward,provide input on the qualities sought in a new CVB director or Chief Executive Officer and perform any additional duties assigned to the Taskforce by the City Council. I Virginia Beach Convention&Visitors Bureau 2101 Parks Avenue, Suite 500 I Virginia Beach,VA 23451 I ph(757)385-4700 I fx(757)437-4747 ICity of Virginia Beach IConvention and Visitors Bureau Community Taskforce I ICVBCT Members: B.J. Baumann,Z. Burden,T.Counts,J. Evans-Cox,C. Dyer, L. Habr, D. Howard, R. Melatti, P. Midgett, H. Richardson, M. Ryan, M.Standing,C.Thornton,G.Tower, R. IVogel, R.Wilson,J.Zirkle City Staff: B. Hanbury, R.Williams, D. Harmeyer, B.Rumpf, P. Matthias, R.Kuhlman IMeeting Place: Virginia Beach Convention Center IMeeting Date: November 6, 2020 I Please report errors or omissions on these notes to Brande Rumpf(brumpf@visitvirginiabeach.com)within 24 hours of receipt of the notes. CVB will pursue the actions outlined in the"Action Items"sections of these notes. I Councilmembers Wilson and Tower began the meeting with a welcome and thank you to Taskforce members for their continued commitment to this important work. Tower turned the meeting over to Mr.Williams to review the housekeeping items.Mr.Williams reviewed the agenda for the meeting Iand introduced Rita McClenny, President and CEO of the Virginia Tourism Corporation (VTC) and Mitch Rosenfeld Vice President of Operations and Finance. Mr. William shared that he and Mr. Hanbury had a conversation with Rita McClenny last week discussing the work of the Taskforce. IToday Mrs. McClenny is going to share with the Taskforce members the organizational structure and operations of the VTC. Mrs. McClenny explained that the authority was established in 2000. In I 1986,the organization was part of the state agency and transitioned to a nonprofit under economic development then to an authority in 2000. Rita explained the organizational chart of the VTC to the group and the roles and responsibilities of the positions. Rita also explained the makeup of the 17- I member Board of Directors, 12 citizens and 5 ex-officio members.Those ex-officio members include the Secretary of Finance, Secretary of Agriculture and Forestry, Secretary of Commerce and Trade, the Lieutenant Governor of Virginia, and Secretary of Natural Resources. The Governor designates I the chair of the Virginia Tourism Authority (VTA). Rita shared additional information on the VTA explaining that the executive director is not a member of the board, however the executive director serves as the treasurer and secretary. The executive director and all staff members are eligible for I membership in the Virginia Retirement System and participate with all the health and related insurance and other benefits. The Authority is a public body as political subdivision of the Commonwealth. The Authority may execute contracts acquire real and personal property employ I officers' agents, advisors and consultants. The Authority may receive and accept, from any source, aid, grants contributions of money and property. They make grants to local governments, develop policies and procedures generally applicable to the procurement of goods and services. The I Authority may also raise money from corporate nonprofits and non-state communities to finance the Authority's activities.The Authority is also exempt from taxation and from the Personnel Act of Virginia as well as the Virginia Procurement Act. Mitch Rosenfeld,Vice President of Operations and I I r CVB Community Taskforce Meeting November 6, 2020 Page 2 Finance and his unit are responsible for developing and adhering to the policies and procedures for the VTA. Mr. Tower asked Rita to reiterate how the members of the Authority's board of directors are appointed.Rita explained that they are all appointed by the Governor of Virginia.Mrs.Howard asked how the VTA is funded. Rita explained that they are funded through the general fund, appropriated by the General Assembly. Mr. Counts asked for clarity as it related to the Personnel Act of Virginia and the Virginia procurement act and was the VTA exempt from these two acts. Rita responded in the affirmative. Which means every employee of the VTA works at will and the VTA sets their own procurement and employee policies. Mrs. Howard asked if the VTA's policies and procedures as it relates to employment are part of the Virginia code? Rita explained that it is in the legislation. Mr. Dyer inquired if she could describe the stability of her funding over the last 10 years. Rita deferred ' to Mitch Rosenfeld to answer. Mr. Rosenfeld explained the funding has been very stable for the last 10 years. They haven't had any major dips or cuts but, have asked for increases almost every year and received very little.The budget has basically been flat for the last 10 years.The fact is that they rely on the General Assembly and general fund dollars entirely for their budget and is about 95% additionally receiving funding from VDOT. Mr. Richardson asked if the Authority or any other authorities created by the Commonwealth have taxing authority? Rita stated VTA does not have taxing authority. Mrs. Howard asked if the Authority has fundraisers and if so, what type? Rita explained that the VTA does not have corporate fundraisers. They can, if they were managing a program with partners. They complement the costs and overhead of the event by having partners participation on a fee basis.They do generate revenue from their Virginia is for Lovers brand as well as through the welcome center brochure program. Mrs. Howard inquired if the VTA has any membership funding. Rita explained that they are not a membership-based organization. Mr. Hanbury inquired as to the amount of funding received from the private sector sources. Mrs. McClenny stated it changes from year but looking at the organization holistically it comes to about $2M. Keeping in mind that the programs provide a service to the VTA's partners. If someone is paying for advertising in a welcome center, they do receive a service for that and that is the exhibition of their brochures advertising in our welcome centers. From a donation or contribution standpoint we don't go out and raise funds directly from a community. Mrs. Howard asked what the budget is for the VTA annually.Mr. Rosenfeld explained that the budget is between $27M -$28M range with 97%to 98% of that being general fund dollars.The question was asked how much of the budget is film promotion versus destination promotion? Mr. Rosenfeld explained the film promotion office is about $950K for personnel and expenses. They have tax credits available to distribute annually and about $3M in motion picture opportunity funds. Mrs. Howard asked if the state tells you how much money should be allocated in film versus destination promotion. Mr. Rosenfeld answered with no. Mrs. Ryan asked when you go to the General Assembly to request funding what are the key deliverables. How do they evaluate how the effective agency has been and why do you think you haven't been able to gain additional funding especially with how well the economy has been doing in the past several years? During the budget process we are looking at the needs and act accordingly.This is led by the Governor and working with the Department of Planning and Budget and the Secretary of Finance. It really becomes about prioritization,what the needs are as determined by the administration. Mrs. Howard inquired if the VTA ever receives input as what I ICVB Community Taskforce Meeting November 6, 2020 IPage 3 to focus upon, from other visitors' bureaus throughout Virginia? Rita explained that they lead the I way as it relates to branding and recognition of the strength of the Virginia is for Lovers brand. So, looking at the targeted traveler, we're looking for families, growth area of luxury, as well as independent travelers,and our strengths. Lakes and any other water activity is a strong demand,as I well as the mountains. We are looking at building our sports as it continues to grow. Mrs. Howard inquired if members of the board are from different areas of the state?Mrs. McClenny answered in the affirmative and how diverse the VTA tries to be in representing all 10 regions of the state. Most I members of the board have background in marketing, sales, and the hospitality industry. Mr. Hanbury thanked Mrs. McClenny and Mr. Rosenfeld for their time and information as it relates to the VTA and its structure and operations. IMr. Williams shared with the Taskforce that we have retained the services of SearchWide Global which specializes in destination marketing executive recruitment. As Taskforce members he is I asking for participation to help build the job description and the qualities and experience for the next CEO. He explained that Brande will be coordinating meetings with Mark Gnatovic with SearchWide Global on November 17 and 18.We would like your input on qualities and qualifications Ithat you are looking for as a community. Then SearchWide will then shift into starting to recruit qualified candidates and in February we'll start interviewing and standing up of the new organization. Mr. Williams explained that Mr. Hanbury is going to review analysis of an authority Iversus a 501C(6) model. Mr. Harmeyer explained the history of the Community Development Corporation (CDC) and how and why it was established. Mr.Williams explained that the CDC is not I the ideal model because in order to stand up a 501C(6) we would have to retain the services of a significant number of consultants outside the skillset of the City.The Authority model comes with a certain set of parameters government that are very keen to what we do in government like the I Virginia Beach Development Authority. Mr. Hanbury will be showing some side by side costs associated with authority versus 501C(6). Some of this are still speculative because we would need General Assembly action and/or Virginia Beach City Council action to support some of the items. IMrs. Howard asked if it would have been better to establish the CDC as a 501C(3) versus a 501C(6). Mr. Harmeyer replied that the 501C(3) has the benefit of having a charitable purpose and they're I allowed to take options and have those as a deductible for the person that's giving, not only the government, but the 501C(6) does not have that benefit. The 501C(6) can do more lobbying whereas a charitable organization is very constrained in political activities. There's a tax benefit to I501C(3) versus 501C(6) model. Mr. Hanbury describe the parameters in which the following charts were created.Those include not I only consider an Authority as 501C(6) structures, not considering remaining in government, but only considered additional costs associated with two options, over and above current City support, initial financial analysis for illustrative purposes (only), estimate presented based on professional Iopinion of consultant or DM0 best practices, and additional financial analysis may be required by external accounting resources. IThe first expense that was detailed is rent. Currently cost is covered by the City of Virginia Beach The cost of$418,165 is to replicate the current office accommodations on a dollar for dollar basis Iin the local real estate market.As part of the transition for either entity the City could potentially I CVB Community Taskforce Meeting 1 November 6, 2020 Page 4 provide a determined level of support for rent. The Visitor Information Center is rent free and support systems fall under the Public Works maintenance department. Furniture fixtures and equipment is currently provided by the City . The 501C(6) would have a onetime expense to purchase similar items and then a 10%annual cost for replacement,repairs etc.The Authority could potentially be gifted these assets by the City and then incur an annual 10% replacement cost. IT support, software, hardware, security and maintenance components are currently provided by the City at no cost to the CVB. The CVB pays for hardware replacement and new software. For the 501C(6), this noted cost is associated with initially building out a new IT system. For the Authority model, possible cost savings of hardware is gifted to the new entity and then stabilized costs for replacement and upgrades estimated is approximately$100K annually. It should be noted that this cost also includes voice over IP phone system. Telecommunications is currently provided by the I City at no cost to the CVB. For a 501C(6) the $100K cost is associated with initially building out a new telecommunications system . For the Authority, possibly cost savings of hardwire was gifted by the City to the new entity. Then stabilized costs for annual replacement and upgrades is estimated at approximately$25K. Printing services is provided by the City at a reduced cost based on a citywide contract. Not all services are provided by the City some are contract out for professional quality and or large format. The dollar amounts associated with printing services. I Would be additional costs, depending upon the program. Fleet service, replacement, preventative maintenance services and gas at a reduced cost to the CVB, is currently provided by the City. The annual costs for either the Authority or a 501C(6) would now be based on the reimbursement to employees for mileage in their personal vehicles. The new CEO would require a business vehicle. Payroll and HR compensation related services, both currently provided by the City at no cost to the CVB. Both entities would require annual external payroll services and additional staff support. The cost associated for these services for both entities is estimated at $25K. Unemployment workers compensation etc.,City is self-insured for unemployment. Either proposed model would need to pay federal unemployment taxes, which we are estimating at approximately $21K. Something the City does not pay periodically, calculated at 6% of the first $7K paid to each employee annually theoretically based on 50 employees. Procurement and compliance service,assures the best pricing based on citywide contracts but can be complicated and drawn out, plus must adhere to state codes. No significant budget affect for either model, but there will be a to-be- determined staff implication that will need analysis. Employee funded retirement, $100K is the amount noted for 501C(6) which reflects the need to support and manage new employee retirement coverage at a commensurate level compared to the current City plan. Under the Authority model, employer retirement would remain within the City and can be managed at no cost to the CVB. Plus, employees can still take advantage of the superior benefit afforded by the size of the Virginia Retirement System plan. Risk management, CVB is included in the pool for the entire City at no cost to the CVB. Potentially, insurance costs under the Authority model could be shared with the City. The 501C(6) would need to purchase insurance separately. The cost to the Authority is $20K and the 501C(6) is $40K, keeping in mind these figures are estimates based on that assumption. Banking and investment management costs currently is provided by the City at no cost to the CVB. Both entities would need to pay for these financial services and allocate staff support for this function, if necessary. The cost for the authority and 501C(6) is estimated at $25K. Annual audit, both entities would be required to conduct an annual audit. It should be noted that the City would also have the right to conduct an annual audit based on its fiduciary oversight roles.The cost associated is estimated at$30K for each Imodel. Health insurance, while there is a cost to the individual employee and the CVB, a group the size of the ICVB Community Taskforce Meeting November 6, 2020 I Page 5 City/Schools plan offers very competitive rates. The Authority model would be able to take full I advantage of this situation at no additional cost to the organization. The estimated cost for the 501C(6) is approximately$150K.This amount reflects the anticipated CVB contribution to replicate the City's current coverage of employees. It should be noted that the quality of employee coverage I should be seriously considered an any model decision. Mr. Counts asked specifically as it relates to sales positions how this benefit would transfer over from government to authority, especially with Commission based employees. Mr. Hanbury explained that we have not addressed those issues at I this point, and that that we would bring in outside resources such as consultants to help facilitate the process. The amount for the 501C(6) model reflects the need to purchase new benefit coverage for employees. Under the Authority model, there will be no additional costs. Funding stability I relative to the organizations fund balance, funding stability buffers the swing and CVB resources. Look at what happened to other CVBs during the pandemic.Both Authority and 501C(6)would need to build a fund balance reserve at a rate of at least 2% of budget annually until the reserve reaches I20%,or more,of total annual budget.This level is considered best practices within the industry,but due to recent circumstances, we assume that future standards will increase. It should be noted Ireserve coverage by the City may be a topic to consider in any new contractual relationship with either model. Mr. Richardson asked, if Mr. Hanbury thought if that percentage was adequate? The concern is not having the funding for advertising during a down year. Mr. Williams indicated that I was a future decision the board of directors would make when establishing the budget on an annual basis. The disadvantages are limited risk assumption, slow and complex responses, adherence to rigid policies. Both models would need to retain new legal counsel. The estimated cost for both I models is $50K. HR recruitment, retention, training, currently these services are provided by the City at no cost to the CVB. This complicated function would need to be internalized within both models, with the cost estimated at $80 K, and would require additional staff, outsourcing and or I shared services with the City. Employee training is provided to the CVB at no cost. The CVB pays for specific DM0 based training. Additional costs required to replicate similar City based training activities, i.e. diversity and inclusion, first aid, strategic management training, leadership I development, defensive driving etc. The estimated cost for both models is $20K. Employee policies and procedures, are currently provided by the City at no cost to the CVB.There would be no cost to either model to build new policies and procedure protocols which would rely on existing industry I standards as a reference.As a City department,the CVB has access to every other Department within the City and often calls on them for assistance. In Both models this relationship would continue. Direct involvement by the CVB in Capital Improvement Program (CIP), the CVB has been directly I involved in the CIP such as the convention center, sports center, aquarium, seawall replacement, etc. This would continue for each model. The CVB has also assisted other City agencies in achieving their goals such as event sponsorship requests, Virginia Beach memorabilia, public relations Isupport during emergencies, free use of space at the Convention Center, lobbying services in state capital, etc. This would continue with each model. New stationary, signage, collateral, brand I revisions, we are estimating between each model approximately $100K to transition out of city government including apparel, domain, signage brand revisions etc. I I Mr. Hanbury explained that he used the IRS 990's from GuideStar,for the other destinations that we I have benchmarked to come up with these estimated costs of service. Mr. Hanbury provided an Excel spreadsheet of this information and explained the rationale of each DMO. CVB Community Taskforce Meeting November 6, 2020 Page 6 Mr. Midgett indicated that the analysis does not show the cost the City is currently paying. Mr. Hanbury clarified that the city has spent approximately$400,000 to furnish the current office space. Mr. Midgett also inquired if these expenses were one-time expenses or are, they in perpetuity. Mr. Hanbury explained yes,they are onetime expenses? However annually,using furniture and fixtures as the example,it would be about$40K or 10%of the cost. Mr.Zirkle thought it would be interesting to see Virginia Beach as an additional column to compare the Authority versus 501C(6) costs. Mr. Hanbury explained that the City of Virginia Beach does not do its financials in the same way the I 501C(6) does, because they are a municipality. Mr. Hanbury and Mr. Williams explained that the structure will really determine the funding mechanisms and that a 501C(6) would cost the organization significantly more to stand up then an Authority. The September 11 presentation also details where the current CVB organization is spending the money allocated to them on an annualized basis. Once a determination of a structure has been identified then we can have an estimate of the budget. There will also be a policy decision and how future actions of the City Council I support the new entity. Mr. Zirkle also inquired about current items the City's already paying for and feels that should be rolled into the new budget.Items such as furniture and fixtures depreciated, and the City should gift them to whatever organization is decided upon. He also indicated that the I items listed on the slides seems a little high on the 501C(6) side and doesn't understand why they would give something to Authority but not a 501C(6). He also indicated that some of the software and telecommunications items should be able to transfer over to a new entity. Mr. Hanbury explained as it relates to software and information technology there are security issues transferring to a non-governmental agency and that would be a decision for the City Council. Mrs. Ryan ask for clarity on the relationship with the General Assembly? Mr. Williams explained that the General Assembly establishes the Authority through legislation. Mrs. Ryan asked which entity has a more secure funding source. Is there a difference between how they source their money and what the variability of likelihood of getting the money that they need? Mr. Harmeyer explained that it would be City Council decision. Additionally, structure in the TAP would seem to be something that the City Council would use in its funding model for either of these structures. Mr. Richardson inquired about the TIP and ATP funds sunset clauses and if those were going to be taken away and then also inquired what are the advantages to the City from moving out of government? Mr. Williams responded with the advantage of the Authority.There is a model for procurement,that is extremely more flexible than the current model. Human Resources is the same, you don't have to follow the City's human resources policies, the Authority can develop its own. The main benefits from the operation the Authority gives you an arm's length with this quasi-governmental entity in the assurance of the use of the monies,as well as FOIA and the audit requirements. The 501C(6) which is separate, doesn't have the same regulation requirements. The ability to be nipple certainly is attractive outside of the government for CEO and executive recruitment.The fact that you can have ' a community based, stakeholder-based board that has the direct integration in the activities and it offers more flexible than within the governmental structure. This new board takes on that role of all advertising and CEO recruitment and the annual allocation of the line items and establish requirements of reporting make sure that the use of tax monies is above board. Mr. Thornton inquired about the flexibility of the CEO as it relates to human resources and financial flexibilities. I I Mr. Williams explained it is up to the board as to the CEO authority. Mrs. Baumann wanted to just step back and review for a minute how we started this conversation because there were issues specifically in procurement and with employee management that were deemed not acceptable in CVB Community Taskforce Meeting November 6, 2020 Page 7 ' our current situation and that's what prompted all this discussion. If I'm hearing correctly from what Rita said this morning and the information that you've given us is that we can get out of the procurement quagmire that we're in,with an Authority?We can still make this thing happen quickly ' that right now we're not able to do. I want to confirm that that's the case with the Authority. Mr. Williams explained if it's written into legislation yes.Additionally, Mrs. Baumann asked as it relates to employee management, currently it's very difficult to do anything with an underperforming ' employee.With the Authority model,we would be able take remedial action,and ultimately fire that employee in a relatively what is the short period of time. Mr.Williams explained that the City does have that process now, however yes. The policies and procedures would be established by the ' board and the CEO. Mrs. Baumann ask for clarity on how the board of directors is established. Mr. Harmeyer explained that the legislation will specify if it wants to be constraint as far as membership or whether it was the diversity council. Mrs. Baumann expressed the importance of this board and ' that its membership needs to understand the Virginia Beach hospitality industry, as opposed to a randomly appointed board, that is made up just at the general citizenship of Virginia Beach. Additionally,Mrs. Baumann asked about gifting City owned assets to an Authority or 501C(6),is this ' something that the City has done previously or are we charting new territory. Mr. Williams responded with it's a policy decision. Mr. Richardson asked for the Authority who would write the ' legislation and does the City need outside counsel. Mr. Williams indicated that in the November 6 City Council package, had one additional item that mentioned the work in the Taskforce and an Authority would need to be considered for part of legislative package and a future consideration ' that by December 1 will bring a recommendation to Council. Mr. Harmeyer has already predominantly written a draft which is a lift of the VTA. Additionally,this was done so that we had a place holder so that we can quickly react.Mrs. Howard inquired that it appeared that we had made the case to staying with the City as it relates to funding. The question is do you want to be independent or still be dependent upon the City? Mr. Hanbury explained that the DMOs Mrs. Howard mentioned were in fact all 501C(6) models.Mr.Counts had a clarifying question as it related ' to the boards structure. Are we looking at an advisory board or a governing board? Mr. Williams responded with a governing board. Mr. Standing inquired what was Mr. Hanbury's thoughts and recommendation?Mr. Hanbury share that he thought that the Authority would give the city a better ' sense of transparency and of fiduciary rule. They're going to write us a check for $20M+ per year and they want to make sure that that money is well spent. In the Authority environment he believes that the City Council would have more oversight over the money and gives them assurances. Mr. ' Williams mentioned there are three things: 1)what gives City Council assurances the money is being spent reasonably. 2) what gives the stake holders of community, the industry direct engagement and direction of the activities 3) then how do you transfer a current workforce of employees. The Authority model presents that. If we could get the Authority to be VRS eligible and if we could get the City Council to grant the ability for the Authority to be a part of the City's consolidated benefits program. Councilwoman Wilson mentioned that she feels that the Council will want to give the CEO ' the ability to bring in business. However,these are tax dollars and are not going to just let it go and not have any control over it. Council is very concerned about who is appointed to this board and so I think the Authority will make the City Council a lot more comfortable. This is a big step, and this will be a big step for the council to take. The Authority would be less of a big step then the 501C(6). ' Employees are very important,and we need to also be concerned with them. Mr. Zirkle asked about the retirement funding in the health insurance. If the CVB Community Taskforce Meeting Authority doesn't pay anything health November 6, 2020 Page 8 1 insurance or for retirement plan, will the City still pay 100% of that? Mr. Williams responded that 1 there is the additional cost of overhead and what is currently embedded in the compensation for each individual employee that we pay out of the salaries and benefits line. I Mr. Hanbury indicated that this is not purposely tilted. This is conversations internally about what the City thinks it could do under an Authority model and what they think they could do under 501C(6) model.We can certainly go back in and do further analysis and speculate that the City can perhaps give some of that to us. But he thinks we start losing the point of the exercise. The more valid point is what's doable for the City Council. Councilman Tower indicated that he hasn't done any surveying of other Council members as to their preferences. But he agrees with Mrs.Wilson and her sense of how Council might feel. The driver of it is kind of where you start from. We're starting with a fully funded internal City operation, with no real alternative being offered. If we had our corporate or a group that was ready to step up and take on 30% of the funding from membership dues and offer to the City, where they were willing to put this money in, at this rate, it'll cost us a lot and we understand. However,the cost a certain level of control and management.The first thing Council members are going to ask is what are we getting in exchange for giving up more controlled? His take in terms of the actual management of the Authority is, if we can't control that, we're not even a board of directors, were a Taskforce charged with taking a big picture look at structural issues. He believed it is a practical matter given the small amount of difference. He thinks the expense of it is more of a distraction and the real structural issues are based on comfort level of Council. Where the money is coming from, existing institutional momentum and the employees. Employees to the Council,will be very sensitive issue whether you agree with it or not. Council will want to have control over the board, and it will be Rosemary and my job to try to convince council to form that organization with people that have the kind of experience needed. The industry's responsibility will be to push these people forward and have them ready willing and able to make that kind of commitment in terms of cooperation and energy and creativity. Councilwoman Wilson explained that her only experience with a 501C(6) was with the CDC,and it was not a good one. She indicated that the City Council is going to be very reluctant with a 501C(6) with what we've just gone through. Mr.Williams added that the analysis that Mr. Hanbury and he have done, is achieving everything that they have heard from the community. With somewhat autonomy and control, and flexibility. Because it gives you the benefit package in perpetuity of the Authority in Virginia Code. To attract and retain employees,having that extra oomph of a benefits package of their VRS system, as well as joining the Virginia Beach consolidated benefits would help.Additionally,he believes that it gives what the stakeholder in the communities have been asking for, that direct control and comfort of the Council having engagement and much more sunshine of the activities. Going to a 501C(6) is a stretch and while maybe we don't agree with the analysis here,there is additional costs that would be associated with it,that you just don't receive. Having legislation that directs you to be a part of the systems and again it was staying in perpetuity until the General Assembly exaction. Mr. Dyer added one thing he did not see in the comparison, that will impact the bottom line, is the disparity in pay and salary increases to attract the people you're looking for. Secondly, as it relates I Ito health care contributions what is the cost per employee for health care? Mr. Williams indicated approximately $6K per person per year. Mr. Dyer posed the question to the Taskforce if they were I willing to reduce the amount of advertising your trade off of the procurement and employment issues,are you willing to pay$2M a year to get rid of those? CVB Community Taskforce Meeting Mrs. Howard indicated to Rosemary's I November 6, 2020 Page 9 Ipoint that the CDC was a charity, so that is different than the 501C(6) right, which is more of a business model. If that's correct and to Guy Towers point about the ability of the Council to get on I board with this because we don't have a corporate sponsor already set in place. Have we even tried to do that to see if we could get businesses on board with funding for a 501C(6) maybe an SSD tax or membership or anything like that?To see if they would be amicable to a 501C(6) or the Authority. I Mr. Williams explained that taxing districts are not typical for destination marketing organization, that would be something for example our Resort Management Office.That were standing up is more reflective of a taxing district, that property owners would want to be a part. Marketing is usually I separate apart from a taxing district. Mr. Hanbury added looking at the IRS comparisons you can see the amount of funding that these entities bring from the private sector into their organizations. In San Antonio it is $1.4 million, Washington DC $4.5M and Kissimmee is $1.5M. We don't believe, Ithat in Virginia Beach the private sector will contribute $1.5M per year to the CVB. Mr. Williams asked the question to the Restaurant Association member and the Hotel Association member that were in the room, if they can answer the question about whether not with those organizations be Iwilling to step up and assume this role? Mrs. Baumann with the restaurant association answered with, no. Mr. Zirkle with the hotel association responded with the hotels feel like they already tax I themselves with the TIP and the TAP Funds. This began a brief conversation as it relates to taxing of visitors versus hotel property owners and restaurant property owners. Mr. Zirkle explained all of the taxes that his particular property pays from occupancy tax to property tax, and business use I and sales tax. He explained that there's no appetite in the hotel industry to fund an authority. Mrs. Howard asked about taking some of those business taxes and putting it in the Authority. Mr. Zirkle indicated that would be a question for Council. Mr. counts explained the operations of the Hampton I Roads Chamber of Commerce, they are a regional organization and can-do sponsorships and do membership and he agrees with Mr. Williams without getting into their numbers, they won't hit these donation numbers just for Virginia Beach. Mrs. Evans-Cox mentioned that the Central I Business District is a 501C(6) and it's a membership-based organization and members pay into it. She really thinks that that's not something that's going to be amenable of the industry and the stakeholders. Plus,it really would cut into our marketing and the big vision of our marketing for the I industry.She is leaning towards the authority. But, knowing what she knows about 501C(6), there's very little flexibility,you must abide by the federal laws. However,with an authority you can almost create what you want within certain parameters. There's a fairness and flexibility structuring an I authority, for the General Assembly, for City Council. I realized that we have state guidelines for employment and federal guidelines, but I'm concerned about how much flexibility we will have as it relates to creating human resources guidelines. As an example, could we take someone from Icategory"A" and move them into category"B" give them a higher level of salary and appropriately structured their job a little bit differently within this authority? Mr. Williams answered with 100% and it is a blank slate. Mrs. Baumann indicated that when she looks at the comparison of the other IDMOs and look at what gets spent on advertising versus the revenues come in it ranges from 37% to 64%. She inquires if there is a way of modeling from an authority standpoint, that a certain Iamount of the dollars received,would have to be spent on advertising,as opposed to administrative I or operational cost. Because we're looking at a substantial decrease in our real advertising dollars I when you start looking at these models. Mr. Williams explained, that currently just in TAP monies, we spend about 9% on salaries, but overall, for CVB we are at about 30%. The City is willing to I support this new entity, I think that formula and the amount is still to be determined. CVB Community Taskforce Meeting I November 6, 2020 Page 10 In other words, we have a blending of three funds right now supporting the operation so we're I going to have to do the analysis to help City Council Mrs. Baumann asked is there a way to protect advertising dollars? Mr. Hanbury and Mr. Williams explained that's the work of the board of I directors. That is what has essentially happened over the years when Mr. Van Dommelen brought an advertising in house, we cut out a significant amount of overhead and redirected those dollars into the market. Mr. Richardson the TAP and TIP funds have a sunset clause every five years,to fund this organization, it would appear to him, that you must eliminate the sunset clause. Mr. Williams indicated that it's a policy decision. Looking at visit Norfolk,they get an annual appropriation,which is a Council decision. They are 93 - 97% City funded and that is an annual appropriation scenario. I It's really a future discussion that after getting over the structure hurdle, then a future community discussion with you all and the Council to determine what's the best approach. Mr. Richardson continued with,would you have a funding formula to have a percentage of City general fund money dedicated to this organization, that would be at the whim of Councils political decision whether or not to fund it? Mr. Harmeyer explained that we cannot bind a future City Council. So stuck with an annual appropriation is sort of the furthest out they can commit. Mr. Richardson responded, the organization at that point just must take it on good faith that it is going to be funded and if you don't have a dedicated formula i.e. what the school board has done, for school funding. Is there a mechanism that can get you to a certain level that will be able to grow incrementally year over year? 1 So,you're not at the same$20M 10 years from now. Mr.Williams agrees and why he would advocate for a formula. It is still legally subject to appropriation on an annual basis. Mrs. Habr made the recommendation the restaurant and hotel associations that are 501C(6) restructure and merge together to be a partner in this endeavor. With respect to the General Assembly, who carries this, and is it bi-partisan and do you have a deadline for it?Would the City lobbyist advocate or is there any danger? Is this a sure thing,that you have by in right now and does this group help advocate in that capacity. Mr. Harmeyer indicated that the general process would be that this would be added to the City's legislative agenda, the lobbyist can search for a patron and then the legislation gets introduced. Mrs. Habr asked if this legislation does not get passed what are our options? Mr. Harmeyer explained that the Authority would have to go through the General Assembly. So, we would continue with the current CVB structure for another year and build support for the Authority or City Council could pivot to the 501C(6). Mr. Melatti indicated that he appreciated the amount of work that has gone in to presenting all opportunities to the Taskforce and agreed with Mr. Standing's comments. He spoke about the struggles that he has experience while working with CVB staff as it relates to procurement. Mr. Hanbury turned the meeting back over to Councilman Tower who asked Taskforce members what direction they were leaning towards as it relates to the structure of the Convention and Visitors Bureau. Understanding that we are not a formal body but would like to currently entertain a motion in terms of this choices between staying within government, the 501C(6) versus the Authority. Mrs. Randi Vogel made the motion to approve the Authority model and opened for discussion. Mr.Midget is in agreement for the Authority model and believes that it accomplishes everything that we're trying to do. He thinks it's amenable to the City and believes it does everything from a business model that we can do. His biggest concern is we I I Idon't have a baseline cost on what the City is spending right now to manage the CVB. That cost year to year will affect our bottom line and what would be able to spend on advertising. It is a City policy I that they can gift some of these things to the new Authority, but every dollar that we can verify is part of what the City is spending right now in the structure and what they are willing to gift, really helps the bottom line.He is supportive of the Authority,but I CVB Community Taskforce Meeting I would like to know what our bottom November 6, 2020 Page 11 I line, and fixed costs. So that the future City Council members and say hey we were spending "X" to I maintain CVB. Mr. Williams referred the group page 42 in the September 11 PowerPoint showing the director's office in administration it's embedded in that number which is currently general fund funded. There is some administration in the TAP Fund but it's minimal and its more in the salaries I for the director and other executives. Councilman Tower spoke about the first meeting he had with Mr. Hanbury most of their discussion was about how holding an executive director accountable for targeted amount.We're talking now about methodologies to get to those targets but the bottom line I to me will be, are we getting the payoff through advertising. It is that existing executives be held accountable. Mr. Hanbury added that's where the board of directors is judged on whether or not they're achieving those targets and it's actually in the contract in the in the in the performance Ireview parameters that a CEO would have with the organization. Councilman Tower asked if there was any further discussion. Mr.Zirkle added no matter which way we go it's going to be better than where we have been. It's going to help lead the City in the right direction. He appreciates the Council Imembers letting the group know that the Authority will probably be more applicable to the rest of Council, because he feels like we have one shot with this. Mrs. Ryan indicated but whatever we do I she wants to make sure that we set up this organization to be successful and not to fail. Councilman Tower agrees. Mr. Williams added after getting over the hump of what structure the Taskforce is recommending, our next meeting that we would ask that if you still be willing to give your time to I come back and work through some of these items like the board make up, a recommendation for a transition committee. We are going to need lobbying assistance from all the associations and individuals to get General Assembly members to approve. Councilman Tower calls for the question I and any further discussion. He asked for show of hands for all in favor of the recommending to Council the Authority model as previously discussed. All members of the Taskforce approved the Authority recommendation with one abstention. Councilman Tower concluded that a lot of work I still needs to be done. Councilman Tower gives Councilwoman Wilsons apologies she had to leave early today but he thinks she will be very pleased with what we've done here. Additionally, we've just unleashed a lot of work on staff but there is a clock ticking on the General Assembly issue. Mr. I Hanbury wanted to share one final comment that this has been an unbelievable display of community collaboration. The participation is been amazing and is grateful to each one of you for the work you've done. Councilman Tower echoed what Mr. Hanbury said with the support that I we've had from each of you and in some cases the organizations you represent,he is very optimistic that we're going to make this happen. 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O O CO00 O Cr)Ol 00 M lD N� Q) N. 4, Oi t\ 00 00 O% O Ln ,7t L Ll1 O Oi C C M 00 r-1 Cr) N� O 00 N N Ln en N 00 Ll) Cr) Q enTr ‘-1 LD 00 CT) N il} M N tD VI- M en M (/� c M c-I LI) 00 M iJ i th Cr)- •L N if)- th iN ih t!? t/')- CO I • O V X 1 o U al X of N a1 c V) bA 0 c —73 , II CC a) CO co "p • O L cca ,} a , l"I U C G f0 �` 0 O v> vi ■ I aJ U N en • �' °J -� '�' o `� L. a) E I - 0 E O tap 46 O I co • O *'' c11 E oc }' U c to O 0 U - C �' a) 0 O O U m U U v) U -S O SZ a) cc N OD ++ C i Q v S? C G c ~ fo of 4_, O . v t� O to a) >, to U c U co ra U . Lf) v, O co v, d c c_ U a1 .0 0 1- 4- I a = a) U }, X ro c U N U ca p '- in _0 m v c E L� f° c }, o Q I- 0• c > 0 cu c c O 0) U o u = > c X O ai o V 0 co = Q c c Q U c 0 N IW U L_ IZ C I— LL I I VIRGINIA IS FOR LOVERS I 'irginia Beach I2015 2016 2017 2018 2019 I Travel Economic Impacts Employment 12,924 13,650 13,862 13,999 13,618 Expenditures $1,406,353,374 $1,493,988,762 $1,562,120,630 $1,630,633,248 $1,662,342,964 ILocal Tax Receipts $54,930,151 $59,492,519 $61,158,567 $62,560,565 $63,740,383 Payroll $256,263,175 $277,939,324 $291,260,436 $301,565,814 $305,268,940 State Tax Receipts $67,097,188 $72,586,421 $74,980,697 $77,172,670 $79,403,808 I IBackground These summary profiles represent locality-specific travel-related data kept by the Virginia Tourism Corporatior Ifor the years 2015-2019. ITravel Economic Impacts (TEIM) The studies to estimate the domestic travelers'spending estimates were conducted by the Research Department of the U.S.Travel Association(formerly known as TIA). The studies provide estimates of I -mestic traveler expenditures in Virginia and its 133 counties and independent cities,as well as the employment, payroll income,and state and local tax revenue directly generated by these expenditures. IThe data represent the direct travel impact estimates for the locality. These five impact estimates EXCLUDE indirect,or multiplier impacts. I Expenditures represent the direct spending by domestic travelers including food,accommodations,auto transportation, public transportation, incidental purchases,entertainment/recreation and travel generated- tax receipts. IPayroll represents the direct wages,salaries and tips corresponding to the direct travel-related employment. IEmployment represents the estimates of direct travel-related employment in the locality. State Tax Receipts represents the estimates of direct travel-related state taxes generated within the locality. These receipts include corporate income taxes, individual income taxes,sales and gross receipts taxes,and excise taxes Local Travel Receipts represents the estimates of direct travel-related local taxes generated within the locality.I These include county and city receipts from individual and corporate income taxes,sales, excise and gross receipts taxes,and property taxes IPercent Change column represents the percentage change in each category over the previous year. ttp://www.vatc.org/research/economicimpact/ I 10/23/2020 Virginia Tourism Corporation Page 1 Of 2 I VIRGINIA IS FOR LOSERS I I 1 I 1 I I I 10/23/2020 Virginia Tourism Corporation Page 2 Of 2 I. PUBLIC HEARING 1. ACQUISITION OF AGRICULTURAL LAND PRESERVATION (ARP) EASEMENT 328.90 acres at 4152 Blackwater Road 1•s •is • n° NOTICE OF PUBLIC HEARING ON THE EXECUTION AND DELIVERY OF AN INSTALLMENT PURCHASE AGREEMENT FOR THE ACQUISITION OF DEVELOPMENT RIGHTS ON CERTAIN PROPERTY BY THE CITY OF VIRGINIA BEACH,VIRGINIA Notice is hereby given that the City Council of the City of Virginia Beach,Virginia,will hold a public hearing with respect to the execution and delivery of an Installment Purchase Agreement for the acquisition of an agricultural land preservation easement with respect to 328.90 acres of land located at 4152 Blackwater Road and adjacent parcels, in the City of Virginia Beach, Virginia(GPINs:1481-82-2688,1481-92-9643,1491- 01-6403, 1481-70-9924 and 1490-09-2242), pursuant to Ordinance No. 95-2319, as amended, known as the Agricultural Lands Preservation Ordinance, which establishes an agricultural reserve program for the southern portion of the City designated to (a) promote and encourage the preservation of farmland,(b)preserve open spaces and the area's rural character, (c) conserve and protect environmentally sensitive resources,(d)reduce and defer the need for major infrastructure improvements and the expenditure of public funds for such improvements,and(e)assist in shaping the character, direction and timing of community development Such easement will be purchased pursuant to an Installment Purchase Agreement for an estimated maximum purchase price of $2,012,868. The City's obligation to pay the purchase price under the Installment Purchase Agreement is a general obligation of the City,and the full faith and credit and the unlimited taxing power of the City will be irrevocably pledged to the punctual payment of the purchase price and the interest on the unpaid principal balance of the purchase price as and when the same respectively become due and payable.The public hearing,which may be continued or adjourned,will be held by the City Council on December 8,2020,at 6:00 p.m.in the Virginia Beach Convention Center,Suite 5, 1000 19"Street,Virginia Beach,Virginia. Any person interested in this matter may appear and be heard. If you wish to make comments virtually during the public hearing, please follow the tw0step process provided below: 1. Register for the WebEx at httns://vbenv webex com/vheov/onctage/g ntut ?MTI D=e24881fc90bR 70hBe29dRRR930hfa j33 to 2. Register with the City Clerk's Office by calling 757-385-4303 or via email at abarnes@vbgov.com prior to 5:00 p.m. on December 8,2020. If you require a reasonable accommodation for this meeting due to a disability,please call the City Clerk's Office at 757-385-4303.If you are hearing impaired, you can contact Virginia Relay at 711 for TDD service. Please provide the Virginia Relay operator the login information for the WebEx and the operator will login to allow participation for individuals with hearing disabilities.The meeting will be broadcast on cable TV, www.vbgov.com and Facebook Live. All interested parties are invited to attend. Amanda Barnes City Clerk BEACON: 11/22/20 and 11/29/20 J. FORMAL SESSION AGENDA 1. CONSENT AGENDA K. ORDINANCES 1. Ordinance to AMEND Section 2-109 City Code re temporary pay adjustments (Deferred from December 1, 2020) 2. Ordinances to DESIGNATE as EXEMPT re Real and Personal Property Taxes: a. East Coast Volleyball Club b. Hospice and Palliative Care of Tidewater c. Luv All Warriors,Inc. d. One Step Ministries e. The Pink Ride,Inc. f. Trails of Purpose 3. Ordinance to AUTHORIZE: a. Acquisition of an Agricultural Land Preservation (ARP) easement from Ives Farm, LLC, (328.90+/-acres) b. issuance by the City of its contract obligation in the maximum principal amount of$2,012,868; and c. TRANSFER funds to purchase U.S.Treasury Strips 4. Ordinance to DECLARE 2.812 +/- acres of land at the intersection of Princess Anne and South Witchduck Road(formerly Kempsville Road)in EXCESS of the City's needs and AUTHORIZE the City Manager to sell same to Princess Anne/Witchduck Associates 1,LC re construct a multi-tenant commercial development with architectural components consistent with Historic Kempsville Plan 5. Ordinance to AUTHORIZE the acquisition of property in fee simple re Princess Anne Plaza North London Bridge Creek Pump Station Project, CIP# 7-089 and the acquisition of temporary and permanent easements,either by agreement or condemnation(Deferred from October 20,2020) 6. Ordinance to APPROPRIATE$1,163,295 in Fund Balance of the City Garage Internal Service Fund re purchase of horizontal grinder 7. Ordinances to ACCEPT and APPROPRIATE from the Commonwealth of Virginia: a. $463,672 to the FY2020-21 Voter Registration and Elections Operating Budget re November 3,2020 General Election additional costs b. $6,571,166 to FY2020-21 Department of Public Utilities Operating Budget re direct customer subsidies 8. Ordinances to ACCEPT and APPROPRIATE $49,286 of CARES Act Funds from the Governor's Fast Track Broadband Program to the FY2020-21 Information and Technology Operating Budget re eligible broadband projects 9. Ordinance to REALIGN and TRANSFER CARES Act Funds in accordance with actual eligible expenses 10. Ordinance to ESTABLISH Capital Projects#100559, "Three Oaks Elementary Multi-Use Path,"and #100558, "Violet Bank Trail"and TRANSFER funds from Capital Project#100119 "City Bikeways and Trails Plan Implementation"to newly established Capital Projects. 11. Ordinance to TRANSFER$3.7-Million from Capital Project#100147"Dome Site Parking"to Capital Project #100145 "Dome Site Development Acquisition" at 18th Street and MODIFY the description and scope of Capital Project#100145 re costs of decommissioning the Dominion Energy Substation Ioirtal... 4\ fr1 .- --..,-. ..,r*, ,L2t.._ . l!i CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance to Amend Section 2-109 of the City Code Pertaining to Changes in Pay Generally MEETING DATE: December 8, 2020 • Background: Section 2-109 of the Code of the City of Virginia Beach provides the City Manager authority to grant permanent administrative increases, upon submission of a letter of justification by the respective department head to the Director of Human Resources. There is currently a need to also allow for temporary pay adjustments, but temporary adjustments are not permitted or contemplated in the current Code section. • Considerations: The City Manager would like discretion to make temporary pay adjustments to reflect a temporary role, project, or program assigned to an employee. The City Council deferred this item to December 8, 2020 during their December 1 , 2020 meeting. • Recommendation: Approval of ordinance. • Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: Human Resources City Manager: ( ,e.. - 1 COUNCILMEMBER MOSS VERSION 2 3 AN ORDINANCE TO AMEND SECTION 2-109 4 OF THE CITY CODE PERTAINING TO 5 CHANGES IN PAY GENERALLY 6 7 SECTION AMENDED: § 2-109 8 9 BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF VIRGINIA BEACH, 10 VIRGINIA: 11 12 That Section 2-109 of the Code of the City of Virginia Beach, Virginia, is hereby 13 amended and reordained to read as follows: 14 15 Sec. 2-109. - Changes in pay generally. 16 17 (a) Administrative increase. An administrative increase shall be defined as an increase 18 within a class that is awarded to an employee based on criteria established by 19 administrative directive. Employees may be recommended for an administrative 20 increase upon submission of a letter of justification by the respective department head 21 to the director of human resources, subject to the approval of the city manager. An 22 administrative increase does not affect the employee's merit date. A temporary 23 administrative increase may be granted to a City employee by the City Manager, at 24 his/her sole discretion, when the City Manager has assigned the employee a 25 temporary new role; temporary oversight responsibilities for a program, department 26 or office; or due to a temporary reorganization. The temporary bi-weekly pay 27 adjustment cannot exceed ten percent of the incumbents current bi-weekly salary or 28 exceed eighty percent of the City Manager's direct salary and not exceed six months 29 unless the City Council is notified in writing and by email fourteen calendar days in 30 advance with no funds coming from the General Fund Reserves for Contingencies. 31 Furthermore, no performance awards may paid for accomplishments during Under 32 no circumstances without City Council approval shall more than ten employees at 33 one-time and no more than twenty in total in a fiscal year be compensated under this 34 provision. Within 30 days of the end of the fiscal year the City Manager shall submit 35 to City Council a written report accounting for on an itemized basis each temporary 36 position established pursuant to this provision to include its duration, additional 37 compensation paid, and the accomplishments produced by the position. 38 39 (b) Merit increase. A merit increase shall be defined as a salary increase within the pay 40 range of the class to which the employee is assigned that is awarded based on job 41 performance in accordance with the city's performance appraisal program. A formal 42 performance appraisal shall be conducted for each employee on the employee's 43 respective merit date and each succeeding merit date thereafter. Merit increases shall 44 become effective on the employee's merit date as provided in section 2-116 and shall 45 only be awarded to full-time permanent employees. Merit increases shall be prorated 46 if a promotion, career progression, or a change in job duties occurs prior to the merit 47 date. The amount of the merit increase shall be prorated based on the length of time 48 assigned to the classification during the appraisal period. 49 (c) Administrative decrease. An administrative decrease shall be defined as a salary 50 reduction within a class as disciplinary action resulting from unsatisfactory job 51 performance or misconduct as defined by the applicable administrative directive. An 52 administrative decrease may be recommended at any time and requires a letter of 53 justification submitted by the appropriate department head. This action is subject to 54 approval by the director of human resources and the city manager. Merit dates are 55 not affected by an administrative decrease. The effective date of all administrative 56 decreases will be the first day of the pay period. 57 (d) Market adjustment. A market adjustment shall be defined as a percentage increase 58 to pay ranges on the city's compensation plans that may be provided to employees 59 whose job classification is assigned to an affected pay range. A market adjustment 60 shall be recommended by the city manager and approved by the city council. Market 61 adjustments are not dependent on an employee's individual performance within a job 62 class. 63 (e) Shift differential. A shift differential shall be authorized whenever an employee 64 compensated in a classification which is not designated by the director of human 65 resources to require shift work is permanently assigned to work a shift which 66 commences on or between the hours of 3:00 p.m. to 3:00 a.m. Such employee shall 67 receive the equivalent of a five (5) percent increase in his or her normal salary rate 68 for all hours worked during such time period only. Employees assigned to regularly 69 scheduled rotating shift as designated by the director of human resources and the 70 city manager, and employees designated by the director of human resources as 71 "exempt" under the Fair Labor Standards Act, work shall be ineligible under the 72 provisions of this subsection. 73 (f) [Bonuses.]The city manager is authorized to establish bonus programs to address a 74 variety of needs, including recruitment, retention, and performance. Bonuses may be 75 provided to employees in accordance with applicable administrative directives and 76 guidelines. A "bonus" shall be defined as a lump-sum payment to an employee that 77 is not part of the base salary. Adopted by the City Council of the City of Virginia Beach, Virginia, on this day of , 2020. APPROVED AS TO LEGAL SUFFICIENCY: City ttor ey's Office CA15247 R-5 December 2, 2020 N 4 I'y -,' 4 roZ gz, f'-, si i,, CITY OF VIRGINIA BEACH AGENDA ITEM J ITEMS: Ordinances to Designate East Coast Volleyball Club, Hospice and Palliative Care of Tidewater, Luv All Warriors, Inc., One Step Ministries, The Pink Ride, Inc., and Trails of Purpose as Being Exempt from Local Property Taxation MEETING DATE: December 8, 2020 ■ Background: Article X, Section 6 (a)(6) of the Virginia Constitution provides that property used by its owner for religious, charitable, patriotic, historical, benevolent, cultural, or public park and playground purposes may be exempted from taxation by classification or designation by an ordinance adopted by the local governing body. Section 58.1-3651 of the Virginia Code sets forth the process for designating specific organizations as being exempt from local taxation and a list of factors for the local governing body to consider is set forth. They are: 1. Whether the organization is exempt from taxation pursuant to § 501 (c) of the Internal Revenue Code of 1954; 2. Whether a current annual alcoholic beverage license for serving alcoholic beverages has been issued by the Virginia Alcoholic Beverage Control Board to such organization, for use on such property; 3. Whether any director, officer, or employee of the organization is paid compensation in excess of a reasonable allowance for salaries or other compensation for personal services which such director, officer, or employee actually renders; 4. Whether any part of the net earnings of such organization inures to the benefit of any individual, and whether any significant portion of the service provided by such organization is generated by funds received from donations, contributions, or local, state or federal grants; 5. Whether the organization provides services for the common good of the public; 6. Whether a substantial part of the activities of the organization involves carrying on propaganda, or otherwise attempting to influence legislation and whether the organization participates in, or intervenes in, any political campaign on behalf of any candidate for public office; 7. The revenue impact to the locality and its taxpayers of exempting the property; and 8. Any other criteria, facts and circumstances that the governing body deems pertinent to the adoption of such ordinance. The City Council adopted a revised policy regarding applications for Tax Exemption by Designation on May 6, 2008 (attached). • Considerations: The Commissioner of the Revenue has received six applications for tax exemption by designation. The Commissioner has reviewed the applications and finds each meets the City Council policy for Tax Exemption by Designation. • Alternatives: City Council is not required to approve exemption requests. • Public Information: A public hearing for these items was held on December 1, 2020, during the Council Formal Session. An advertisement for the public hearing appeared in the Beacon more than five days prior to that hearing as required by statute. Also, this item will be advertised in the normal Council Agenda Process. • Attachments: Ordinances (6); Commissioner of Revenue Summary of the Applications (6); Disclosure Forms (6); Council Policy Recommended Action: Approval of Ordinances Submitting Department/Agency: Commissioner of the Revenue City Manager: iZ A 1 AN ORDINANCE TO DESIGNATE EAST COAST 2 VOLLEYBALL CLUB AS BEING EXEMPT FROM REAL 3 AND PERSONAL PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to East Coast Volleyball Club; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 10 VIRGINIA BEACH, VIRGINIA: 11 12 1. That the Council of the City of Virginia Beach, Virginia, hereby designates East 13 Coast Volleyball Club a charitable organization within the context of§6(a)(6)of Article X of the 14 Constitution of Virginia and §58.1-3651 of the Code of Virginia. 15 16 2. That real and personal property owned by East Coast Volleyball Club located within 17 the City of Virginia Beach that is used exclusively for charitable purposes on a nonprofit basis is 18 hereby exempt from local property taxation. 19 20 3. This exemption is contingent on the following: 21 22 (a) continued use of the property by East Coast Volleyball Club for exclusively 23 charitable purposes; 24 25 (b)that each July 1, East Coast Volleyball Club shall file with the Commissioner of 26 the Revenue a copy of its most recent federal income tax return, or if no such 27 return is required, it shall certify its continuing tax exempt status to the 28 Commissioner of the Revenue; 29 30 (c) that every three years, beginning on January 1,2024, East Coast Volleyball Club 31 shall file an exemption application with the Commissioner of the Revenue as a 32 requirement for retention of the exempt status of the property; and 33 34 (d) that East Coast Volleyball Club cooperate fully with the Commissioner of the 35 Revenue with respect to audit of its financial records and compliance with the 36 terms of this ordinance. 37 38 4. That the effective date of this exemption shall be January 1, 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of . 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT APPROVED AS TO LEGAL SUFF NCY issioner e Revenue tt ey's Office CA152731R-1/November 9,2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: East Coast Volleyball Club Website: https://www.eastcoastvolleyballclub.net SUMMARY OF NONPROFIT BUSINESS ACTIVITY To teach players how to implement courage,tenacity, perseverance, and resilience to achieve excellence.To give our players unforgettable experiences that teach them the life skills necessary for success. ECVC believes that players who strive towards excellence in volleyball, necessarily learn skills that can be applied towards achieving excellence throughout all aspects of their lives. ECVC believes in the importance of education. High achieving players should have equally high expectations for their academic performances. ECVC believes that playing time should be earned, and never given. ECVC believes that families who engage in our mission will be part of a process that molds the future leaders and great achievers of the new generation. TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessment: $2,221.20 Tax: $88.85 RELEVANT INFORMATION IRS Granted 501 (c)3 status May I0, 2019 DISCLOSURE STATEMENT FORM, The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICANT DISCLOSURE Organization name: East Coast Volleyball Club SECTION 2. SERVICES DISCLOSURE Are any of the following services being provided in connection with the applicant? If the answer to any item is YES, please identify the firm or individual providing the service: YES] NO1 SERVICE PROVIDER (use additional sheets if needed) Accounting and/or preparer of Virginia Accounting Srvcs. your tax return Norfolk, Va. 23513 j Financial Services (include Wells Fargo/Providence lending/banking institutions and Sq. Location - Va. Beach current mortgage holders as applicable) N/A El U Legal Services N/A Broker/Contractor/Engineer/Other Service Providers CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete, true, and accurate. I understand I am responsible for updating the information provided herein if it changes prior to the Council action upon this Application. Valerie Kallam 1 1 .23.20 APPLICANT'S SIGNATURE PRINT NAME DATE 1 AN ORDINANCE TO DESIGNATE HOSPICE AND 2 PALLIATIVE CARE OF TIDEWATER AS BEING EXEMPT 3 FROM REAL AND PERSONAL PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to Hospice and Palliative Care of 8 Tidewater; 9 10 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 11 VIRGINIA BEACH, VIRGINIA. 12 13 1. That the Council of the City of Virginia Beach, Virginia, hereby designates Hospice 14 and Palliative Care of Tidewater a charitable organization within the context of § 6(a)(6) of 15 Article X of the Constitution of Virginia and §58.1-3651 of the Code of Virginia. 16 17 2. That real and personal property owned by Hospice and Palliative Care of Tidewater 18 located within the City of Virginia Beach that is used exclusively for charitable purposes on a 19 nonprofit basis is hereby exempt from local property taxation. 20 21 3. This exemption is contingent on the following: 22 23 (a) continued use of the property by Hospice and Palliative Care of Tidewater for 24 exclusively charitable purposes; 25 26 (b)that each July 1, Hospice and Palliative Care of Tidewater shall file with the 27 Commissioner of the Revenue a copy of its most recent federal income tax 28 return, or if no such return is required, it shall certify its continuing tax exempt 29 status to the Commissioner of the Revenue; 30 31 (c) that every three years, beginning on January 1, 2024, Hospice and Palliative 32 Care of Tidewater shall file an exemption application with the Commissioner of 33 the Revenue as a requirement for retention of the exempt status of the property; 34 and 35 36 (d) that Hospice and Palliative Care of Tidewater cooperate fully with the 37 Commissioner of the Revenue with respect to audit of its financial records and 38 compliance with the terms of this ordinance. 39 40 4. That the effective date of this exemption shall be January 1, 2021 Adopted by the Council of the City of Virginia Beach, Virginia, on the _ day of , 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL 1 t?, IEN Y: Corinmissioner oktpe Revenue ' A fir' ice CA15271/R-1/November 9, 2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: Hospice and Palliative Care of Tidewater Website: https://www.hpctidewater.com SUMMARY OF NONPROFIT BUSINESS ACTIVITY HPCT's vision is to exceed the expectations of our patients and families in providing outstanding care, and encourage patient choice resulting in improved quality of life. Our hospice team is committed to providing comfort and dignity through physical, emotional,and spiritual support. As health professionals,we are dedicated to educating the community about hospice benefits. We offer a comprehensive array of services for adults who want to manage their end-of- life healthcare needs in their own homes, nursing home or assisted living. We Provide Hospice Care, Palliative Care,and Grief/Caregiver Support. TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessment: $31,928.05 Tax: $1,277.12 RELEVANT INFORMATION IRS Granted 501 (c) 3 status-- February 23, 2013 DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICANT DISCLOSURE Organization name: -H°`s�'I�'' PO�� SECTION 2. SERVICES DISCLOSURE �T`�.,d cam...-era-• - r Are any of the following services being provided in connection with the applicant? if the answer to any item is YES, please Identify the firm or individual providing the service: Ys_S F N SERVICE I PROVIDER (use additional sheets if I �-; needed) Accounting and/or preparer of7 t lfl , ° SrPres- C'h$ I your tax return L El IFinancial Services (include r� lending/banking institutions and To ILu t1&) --f .. - .__ L"� current mortgage holders as applicable) — ® 0 ; Legal Services El Broker/Contractor/Engineer/Other Service Providers CERTIFICATION: I certify that-all of the information contained in this Disclosure Statement Form is complete,true, and accurate. I understand I am responsible for updating the information provided herein if it 1 changes prior to the Council action upon this Application. lot 112a� 4a. w r i)A r k I YYt nek le. m. r 4] APPUCANT'S SIGNATURE PRINT NAME I DATE 1 AN ORDINANCE TO DESIGNATE LUV ALL WARRIORS, 2 INC. AS BEING EXEMPT FROM REAL AND PERSONAL 3 PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to Luv All Warriors, Inc.; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 10 VIRGINIA BEACH, VIRGINIA: 11 12 1. That the Council of the City of Virginia Beach, Virginia, hereby designates Luv All 13 Warriors, Inc. a charitable organization within the context of § 6(a)(6) of Article X of the 14 Constitution of Virginia and §58.1-3651 of the Code of Virginia. 15 16 2. That real and personal property owned by Luv All Warriors, Inc. located within the 17 City of Virginia Beach that is used exclusively for charitable purposes on a nonprofit basis is 18 hereby exempt from local property taxation. 19 20 3. This exemption is contingent on the following: 21 22 (a) continued use of the property by Luv All Warriors, Inc.for exclusively charitable 23 purposes; 24 25 (b) that each July 1, Luv All Warriors, Inc. shall file with the Commissioner of the 26 Revenue a copy of its most recent federal income tax return, or if no such return 27 is required, it shall certify its continuing tax exempt status to the Commissioner 28 of the Revenue; 29 30 (c) that every three years, beginning on January 1,2024,Luv All Warriors,Inc.shall 31 file an exemption application with the Commissioner of the Revenue as a 32 requirement for retention of the exempt status of the property; and 33 34 (d1 that l_uv All Warriors Inc. rnnnpratp ft illy with the r..nmmiceinnor of thin Pavane is 35 with respect to audit of its financial records and compliance with the terms of this 36 ordinance. 37 38 4. That the effective date of this exemption shall be January 1, 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of , 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL f. SUFFICIENCY r.J4t1:),./ Coriimissionth of tf e Revenue • o ey's Office CA15272/R-1/November 9, 2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: Luv all Warriors, Inc. Website: https://luvallwarriors.org/ SUMMARY OF NONPROFIT BUSINESS ACTIVITY Luv All Warriors' critical vision is to create awareness and raise funds to help nurture support for first responders and the members of the armed services. These people put their lives on the line every single day for the good of others, keeping people safe and out of harm's way. We want to support them in their invaluable service to the community and the people of this country. TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessment: $5,216.00 Tax: $208.64 RELEVANT INFORMATION IRS Granted 501 (c)3 status—May 17, 2019 DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICART DISCLOSURE Organization name: Luv All Warriors. Inc. SECTION 2. SERVICES DISCLOSURE Are any of the following services being provided in connection with the applicant? If the answer to any Item is YES, please Identify the firm or individual providing the service: YES NO SERVICE PROVIDER (use additional sheets if t_ _ needed) ® El Accounting and/or preparer of (DDoonnnaiTat�p8�Services your tax return 437 Gotham Rd Vi inia Beach VA 23452 Financial Services (include IEilending/banking institutions and ' BB&T 930 First Colonial Road current mortgage holders as Virginia Beach,VA 23454 applicable) _ _ xi Legal Services I Ei 52 Broker/Contractor/Engineer/Other 4�J Service Providers J CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete, true, and accurate. I understand I am responsible for updating the information provided herein if it • changes prior to the Council action upon this Application. --- tal, / Patrick McAfee, President 05101/2020 APPLICANT'S SIGNATURE PRINT NAME DATE 1 AN ORDINANCE TO DESIGNATE ONE STEP MINISTRIES 2 AS BEING EXEMPT FROM REAL AND PERSONAL 3 PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to One Step Ministries; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 10 VIRGINIA BEACH, VIRGINIA: 11 12 1. That the Council of the City of Virginia Beach,Virginia, hereby designates One Step 13 Ministries a charitable organization within the context of§6(a)(6)of Article X of the Constitution 14 of Virginia and §58.1-3651 of the Code of Virginia. 15 16 2. That real and personal property owned by One Step Ministries located within the City 17 of Virginia Beach that is used exclusively for charitable purposes on a nonprofit basis is hereby 18 exempt from local property taxation. 19 20 3. This exemption is contingent on the following: 21 22 (a) continued use of the property by One Step Ministries for exclusively charitable 23 purposes; 24 25 (b) that each July 1, One Step Ministries shall file with the Commissioner of the 26 Revenue a copy of its most recent federal income tax return, or if no such return 27 is required, it shall certify its continuing tax exempt status to the Commissioner 28 of the Revenue; 29 30 (c) that every three years, beginning on January 1, 2024, One Step Ministries shall 31 file an exemption application with the Commissioner of the Revenue as a 32 requirement for retention of the exempt status of the property; and 33 34 (d)that One Step Ministries cooperate fully with the Commissioner of the Revenue 35 with respect to audit of its financial records and compliance with the terms of this 36 ordinance. 37 38 4. That the effective date of this exemption shall be January 1, 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the _ day of , 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT APPROVED AS TO LEGAL NC yt://,44x1 Co-nmission of t'he Revenue • tt ey's Office CA15269/R-1/November 9,2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: One Step Ministries Website: https://www.naturespathacademy.org SUMMARY OF NONPROFIT BUSINESS ACTIVITY At Nature's Path,we recognize that children are born with the natural ability and desire to explore, learn and develop their God given potential. It is our responsibility,as facilitators,to guide them on their journey of discovery. The world is our curriculum. through it, we provide a program rich in literacy, creativity, and problem solving, as well as physical and spiritual well-being. TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessment: $1,292.80 Tax: $51.71 RELEVANT INFORMATION IRS Granted 501 (c)3 status May 7, 2018 DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICANT DISCLOSURE Organization name: Oat-_a4..filitisifiscis SECTION 2. SERVICES DISCLOSURE Are any of the following services being provided in connection with the applicant? If the answer to any item is YES, please identify the firm or individual providing the service: F/Eil NO SERVICE LPROVIDER(use additional sheets if I needed) ri 0', Accounting and/or preparer of j your tax return Financial Services (indude lumwk- ,, 0 lending/banking institutions andOld �i.x current mortgage holders as applicable) 0 Legal Services �11ctciti gi tt' s (-jams 21 0� Broker/Contractor/Engineer/Other Service Providers CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true, and accurate. I understand I am responsible for updating the information provided herein if it changes prior to the Council action upon this Application. APPLICANTS SIGNATURE PRINT NAME DATE 1 AN ORDINANCE TO DESIGNATE THE PINK RIDE, INC.AS 2 BEING EXEMPT FROM REAL AND PERSONAL 3 PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to The Pink Ride, Inc.; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 10 VIRGINIA BEACH, VIRGINIA: 11 12 1. That the Council of the City of Virginia Beach, Virginia, hereby designates The Pink 13 Ride, Inc.a charitable organization within the context of§6(a)(6)of Article X of the Constitution 14 of Virginia and §58.1-3651 of the Code of Virginia. 15 16 2. That real and personal property owned by The Pink Ride, Inc.located within the City 17 of Virginia Beach that is used exclusively for charitable purposes on a nonprofit basis is hereby 18 exempt from local property taxation. 19 20 3. This exemption is contingent on the following: 21 22 (a) continued use of the property by The Pink Ride, Inc. for exclusively charitable 23 purposes; 24 25 (b)that each July 1, The Pink Ride, Inc. shall file with the Commissioner of the 26 Revenue a copy of its most recent federal income tax return,or if no such return 27 is required, it shall certify its continuing tax exempt status to the Commissioner 28 of the Revenue; 29 30 (c) that every three years, beginning on January 1, 2024, The Pink Ride, Inc. shall 31 file an exemption application with the Commissioner of the Revenue as a 32 requirement for retention of the exempt status of the property; and 33 34 (d)that The Pink Ride, Inc. cooperate fully with the Commissioner of the Revenue 35 with respect to audit of its financial records and compliance with the terms of this 36 ordinance. 37 38 4. That the effective date of this exemption shall be January 1, 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of , 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT APPROVED AS TO LEGAL SU NCY: \.1 Corhmissioner of the Revenue Ci y's Office CA15270/R-1/November 9, 2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: The Pink Ride,Inc Website: https://www.thepinkride.org SUMMARY OF NONPROFIT BUSINESS ACTIVITY With your help,The Pink Ride provides financial gifts to those battling Breast Cancer in our LOCAL community.The Pink Ride supports those in need by providing assistance with medical bills, household or other expenses, creating hope for a brighter tomorrow! We thrive on supporting EARLY BREAST CANCER DETECTION! TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessed Value: $16,720.00 Tax Due: $668.80 RELEVANT INFORMATION IRS Granted 501 (c) 3 status-June 30, 2016 DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICA T DISCLOSURE Organization name: SECTION 2. SERVICES DISCLOSURE Are any of the following services being provided in connection with the applicant? If the answer to any item is YES, please identify the firm or Individual providing the service: YES] I NO] SERVICE PROVIDER(use additional sheets it needed) " Accounting and/or preparer of a your tax return Lde3r erAv$7 Financial Services (include [r D lending/banking institutions and current mortgage holders as applicable) [ [] Legal Services n Broker/Contractor/Engineer/Other Service Providers --`CERTIFICATION: - — -- -- --- _- -� ERTWI I certify that all of the information contained in this Disclosure Statement Form is complete, true, and accurate. ! understand I am responsible for updating the information provided herein if It i changes prjor ouncil action upon this Application. • L APPLIE Si.GNATUtE • PRINT/NAME DATE 1 AN ORDINANCE TO DESIGNATE TRAILS OF PURPOSE 2 AS BEING EXEMPT FROM REAL AND PERSONAL 3 PROPERTY TAXATION 4 5 WHEREAS, in accordance with § 58.1-3651 of the Code of Virginia, the Council of the 6 City of Virginia Beach has advertised and conducted a public hearing on the issue of granting 7 an exemption from local real and personal property taxes to Trails of Purpose; 8 9 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 10 VIRGINIA BEACH, VIRGINIA: 11 12 1. That the Council of the City of Virginia Beach, Virginia, hereby designates Trails of 13 Purpose a charitable organization within the context of§6(a)(6)of Article X of the Constitution 14 of Virginia and §58.1-3651 of the Code of Virginia. 15 16 2. That real and personal property owned by Trails of Purpose located within the City of 17 Virginia Beach that is used exclusively for charitable purposes on a nonprofit basis is hereby 18 exempt from local property taxation. 19 20 3. This exemption is contingent on the following: 21 22 (a) continued use of the property by Trails of Purpose for exclusively charitable 23 purposes; 24 25 (b) that each July 1, Trails of Purpose shall file with the Commissioner of the 26 Revenue a copy of its most recent federal income tax return, or if no such return 27 is required, it shall certify its continuing tax exempt status to the Commissioner 28 of the Revenue; 29 30 (c) that every three years, beginning on January 1,2024,Trails of Purpose shall file 31 an exemption application with the Commissioner of the Revenue as a 32 requirement for retention of the exempt status of the property; and 33 34 (d)that Trails of Purpose cooperate fully with the Commissioner of the Revenue with 35 respect to audit of its financial records and compliance with the terms of this 36 ordinance. 37 38 4. That the effective date of this exemption shall be January 1, 2021. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of , 2020. Requires an affirmative vote of three-fourths of the members of the City Council. APPROVED AS TO CONTENT. APPROVED AS TO LEGAL SUFFICIENCY Commissioner of the Revenue i o 's ice CA15274/R-1/November 9, 2020 OVERVIEW OF NONPROFIT APPLICATION FOR EXEMPTION ENTITY NAME: Trails of Purpose Website: https://trailsofpurpose.com/ SUMMARY OF NONPROFIT BUSINESS ACTIVITY Trails of Purpose is a 501c3 established in 2019. Our Mission is to support veterans in their fight to overcome the negative effects of trauma,transition,and trials that result from their service in the military.We do this through the use of equine assisted therapies and nature-based approaches. We are working to restore wellness to our veterans through community and equine assisted therapies. We are passionate about creating a safe environment in which relationships with both humans and horses can thrive in. We believe in natures ability to heal. We see the imperative need to assist in reigniting purpose in the lives of veterans. In addition,we also believe in the healing capabilities of equine partnerships. Horses, as prey animals, have mastered the skill of listening and sensing over the previous centuries. They are highly sensitive and incredibly honest.They cause their human partners to be open to trust and willing to work. Our program utilizes Equine Assisted Therapies to grow the bond between horses and humans alike. TAX IMPACT Real Property Parcel Assessment: None Tax: None Personal Property Assessment: $2,325.20 Tax: $93.01 RELEVANT INFORMATION IRS Granted 501 (c)3 status—April 5, 2019 DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications wherein such applicant may utilize certain service providers or financial institutions, and the City seeks to know of the existence of such relationships in advance of any vote upon such application. SECTION 1 / APPLICANT DISCLOSURE Organization name: -Reds of Prose SECTION 2. SERVICES DISCLOSURE Are any of the following services being provided in connection with the applicant? If the answer to any item is YES, please identify the firm or individual providing the service: r____— PROVIDER (use additional sheets if YES NO SERVICE needed) 2C1 El Accounting and/or preparer of Abbe La/f?arco/a 7 your tax return eeSpfj,�by Financial Services (include ��{��' � rEl lending/banking institutions and ilekkiy current mortgage holders as applicable) n tJ Legal Services 0 rt Broker/Contractor/Engineer/Other Service Providers CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete, true, and accurate. I understand I am responsible for updating the information provided herein if it. changes prior to the Council action upon this Application. ,[ r r(r�� - 1 / 'C/ K' / Ar Z AP A:-"S SIGNATURE PRINT NAME DATE �-,r is..u.P�cy Original Proposal 4 poi"b— ;t oT/ S�o CityCouncil Policy Title: City Council Policy Regarding Applications for Tax Exemption by Designation Date of Adoption February 3, 2004 Dates of Revisions:May 6,2008 Page I of 4 1.0 Purpose and Need Purpose: To establish criteria for approval of resolutions by City Council to exempt, by designation, local nonprofit organizations from real and personal property taxes. Need: City Council has requested guidance as to criteria for considering exemptions as well as a procedure for reviewing requests for exemption from local property taxes. The Commissioner of the Revenue has offered revisions to Council's policy adopted on February 2, 2004 in an effort to streamline the exemption review process for local nonprofit organizations and provide necessary analysis and oversight of the application process. Legislative Background: The Virginia Constitution provides that, after January 1, 2003, local governments may, by designation, exempt the real and personal property of nonprofit organizations from local property taxes if used exclusively for religious, charitable, patriotic, historical, benevolent,cultural,or public park and playground purposes. However,as provided in Virginia Code § 58.1-3651, the local governing body must adopt an ordinance to exempt the property. . 2.0 PoIicy The City Council is not required to designate any organization properly applying for exemption from taxation, and every designation of an organization is conditioned upon compliance with the terms of this policy and any ordinance granting the exemption. If an organization does not comply with these requirements, the City Council may revoke the tax exemption after providing notice and a hearing to the organization. Any revocation of an exemption shall be effective at the beginning of the tax year during which the revocation occurs. The applicant or a representative of the applicant shall provide the Commissioner of the Revenue detailed information necessary to determine the benefits to the public that will result from granting tax exemption. In considering applications, the Commissioner of the Revenue shall employ the following guidelines: Title: City Council Policy Regarding Applications for Tax Exemption by Designation Date of Adoption: February 3, 2004 Dates of Revisions: May 6, 2008 Page 2 ,of 4 • 1. The organization must be exempt from federal income tax pursuant to Internal Revenue Code § 501(c). 2. Personal or real property for which an exemption is sought cannot be used by any member of the organization or other persons except for non-profit purposes benefiting the non-profit organization applying for exemption. 3. The organization must be in compliance with all City ordinances and regulations (including but not limited to building, property maintenance, and zoning codes) and all applicable tax obligations. 4. The organization must provide a service to the residents of the City that results in a benefit to the public (tangible or intangible). The following requirements apply to each entity exempted from local property taxes by the City Council: 1. Upon obtaining exemption, the organization must annually submit (by July 1 of each year) its Internal Revenue Service Form 990 or 990 EZ to the Commissioner of the Revenue. If not required to file Form 990 or 990 EZ, then the organization must annually certify on form(s) prescribed by the Commissioner of the Revenue its continuing tax exempt status. Loss of 501(c)status must immediately be reported to the Commissioner of the Revenue and City Attorney, and is grounds for revocation of tax exempt status. 2, Pursuant to Virginia Code§ 58.1-3605, each entity exempted from local property taxes shall, every three years, file an exemption application with the Commissioner of the Revenue as a requirement for retention of the exempt status of the property. The application form shall be approved as to form by the City Attorney. 3. Each entity exempted from local property taxes must cooperate fully with the Commissioner of the Revenue with respect to audit of its financial records,compliance with the terms of this policy, and compliance with any ordinance granting tax exemption. 3.0 Procedure to Accomplish Policy 1. Organizations applying for exemption must request a determination from the Commissioner of the Revenue as to whether the organization is or may be tax-exempt by classification, pursuant to Article 2 (§58.1-3606 et seq.) orcA.rticie 3 (§58.1-3609 et seq.) of Title 58.1 of the Virginia Code. if the organization is not exempt, but meets the criteria of organizations that can be exempted by designation (see Virginia Code§58.1-3651), the organization will receive Title: City Council Policy Regarding Applications for Tax Exemption by Designation Date of Adoption: February 3, 2004 Dates of Revisions: May 6, 2008 Page 3 of 4 an application from the Commissioner of the Revenue. The application form shall request all information required by Virginia Code §58.1-3651 and be approved as to form by the City Attorney. 2. Applications for exemption shall be considered quarterly. Applications for exemption must be submitted to the Commissioner of the Revenue. Applications shall be submitted no later than October 1 of the year preceding the effective date of the exemption. Based on the criteria set forth in section 2.0 of this policy, the Commissioner of the Revenue will review each application and make a report to City Council regarding whether an organization qualifies for exemption under law and City policy. The Commissioner of the Revenue will not submit applications he deems incomplete to City Council for a determination. 3. The Commissioner of the Revenue shall forward copies of the applications along with his written findings to the City Attorney. The City Attorney shall prepare the necessary ordinances for City Council and coordinate with the City CIerk to ensure that the applications are properly advertised and placed on the City Council's agenda for a public hearing and formal consideration. 4. The City Council will conduct a public hearing and consider the criteria set forth in Virginia Code §58.1-3651, section 2.0 of this policy, and the findings of the Commissioner of the Revenue. 5. Any exemptions granted shall be effective as of the next January L 6. Exemptions, as well as any departure from these guidelines, shall require approval by three- fourths (3/4) of the members of City Council. 4.0 Responsibility and Authority Responsibility for initiating application for exemption and timely providing any information or application required by the Commissioner of the Revenue shall rest with the organization seeking exemption. Responsibility for making available information, application for exemption,verifying submitted tax information and reporting on the initial and continuing status of the taxpayer shall rest with the Commissioner of the Revenue. Responsibility for preparing required ordinances, arranging for the advertising of public hearings, and placing items on the City Council's agenda for a vote on proposed exemptions shall rest with the City Attorney. Responsibility for the final determination of the public benefits resulting from tax exemption shall rest exclusively with the City Council. Tide: City Council Policy Regarding Applications for Tax Exemption by Designation Date of Adoption: February 3, 2004 Dates of Revisions: May 6,2008 Page 4 of 4 5.0 Definitions PUBLIC BENEFli- Any benefit or advantage expected to be realized by the public, whether tangible or intangible, which may accompany the tax exemption. LOCAL PROPERTY TAXES- Ad valorem taxes levied by the City of Virginia Beach on real estate or tangible personal property. 6.0 Specific Requirements In addition to the procedures and responsibilities set forth in paragraphs 3.0 and 4.0,respectively, documentation forwarded to the City Council shall include submission of an application form in form and substance substantially as presented in the attached Exhibit A, as well as any additional information that the applicant wishes to present to the City Council. [ --i-Ai-44,t, g . -_,--,,,, ,,, ,, _ i z - r� ...„. ,z,=.„.,,, CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance Authorizing 1) the Acquisition of an Agricultural Land Preservation Easement from Ives Farm, LLC (328.90+/- Acres), 2) the Issuance by the City of its Contract Obligations in the Maximum Principal Amount of $2,012,868, and 3) Transfer of Funds to Purchase U.S. Treasury STRIPS PUBLIC HEARING DATE: December 8, 2020 • Background: In May 1995, the Agricultural Lands Preservation Ordinance (the "Ordinance") was adopted by the City Council for the purpose of promoting and encouraging the preservation of farmland in the rural southern portion of the City. Under the Agricultural Reserve Program established by the Ordinance, the City purchases the development rights of eligible parcels of land, leaving the fee simple ownership of the land unchanged. These purchases are embodied by perpetual agricultural land preservation easements pursuant to which only agricultural uses, as defined in the Ordinance, are allowed on the land. The subject property has been appraised by an independent appraiser retained by the City. The appraiser has determined the fair market value of the property, based upon eight (8) comparable sales. From the fair market value, the value of the development rights has been determined by subtracting $1,800 per acre, which has previously been established as the farm value (i.e., value of the land restricted to agricultural uses) for land throughout the southern rural area of the City. The resulting amount is the value of the development rights of the property. All offers by the City to purchase the development rights of property are expressly made contingent upon the absence of any title defects or other conditions which, in the opinion of the City Attorney, may adversely affect the City' s interests, and other standard contingencies. • Considerations: The subject property, which consists of five (5) parcels of land having approximately 328.90 acres outside of marshland and swampland, is owned by Ives Farm, LLC. The parcels are located at or adjacent to 4152 Blackwater Road in the Princess Anne District (GPINs: 1481-82-2688, 1481-92-9643, 1491-01-6403, 1481-70- 9924 and 1490-09-2242) and are shown on the attached Location Map. Under current development regulations, there is a total development potential of twenty (20) single- family dwelling building sites, of which three (3) building sites have been reserved for future development. The proposed purchase price, as stated in the ordinance, is $2,012,868. This price is the equivalent of approximately $6,120 per acre. The terms of the proposed acquisition are that the City would pay only interest for a period of 25 years, with the principal amount being due and payable 25 years from the date of closing. The interest rate to be paid by the City will be the greater of 1.366% per annum or the per annum rate which is equal to the yield on U.S. Treasury STRIPS purchased by the City to fund its principal obligation under the Installment Purchase Agreement, not to exceed 3.366% without the further approval of the City Council. The ordinance authorizes the transfer of the amount needed to purchase the U.S. Treasury STRIPS from the Agriculture Reserve Program Special Revenue Fund to the General Debt Fund. The proposed terms and conditions of the purchase of the development rights pursuant to the Installment Purchase Agreement, including the purchase price and manner of payment, are fair and reasonable and in furtherance of the purposes of the Ordinance. • Public Information: Notice of Public Hearing has been advertised by publication in a newspaper having general circulation in the City once per week for two successive weeks (November 22, 2020 and November 29, 2020). The Public Hearing will be held on December 8, 2020. Public notice will be provided via the normal City Council agenda process. • Alternatives: The City Council may decline to purchase the development rights to the property. • Recommendations: Adoption of the ordinance and acquisition of the development rights, assuming all contingencies are met. • Attachments: Ordinance Summary of Terms of Installment Purchase Agreement Location Map Disclosure Statement Form Recommended Action: Adoption Submitting Department/Agency: Agriculture Department d .„---------- City Manager: A \- ./Z !� 1 AN ORDINANCE AUTHORIZING 1) THE ACQUISITION OF 2 AN AGRICULTURAL LAND PRESERVATION EASEMENT 3 FROM IVES FARM, LLC (328.90+/- ACRES), 2) THE 4 ISSUANCE BY THE CITY OF ITS CONTRACT OBLIGATIONS 5 IN THE MAXIMUM PRINCIPAL AMOUNT OF $2,012,868, 6 AND 3) TRANSFER OF FUNDS TO PURCHASE U.S. 7 TREASURY STRIPS 8 9 WHEREAS, pursuant to the Agricultural Lands Preservation Ordinance (the 10 "Ordinance"), Appendix J of the Code of the City of Virginia Beach, there has been 11 presented to the City Council a request for approval of an Installment Purchase Agreement 12 (the form and standard provisions of which have been previously approved by the City 13 Council, a summary of terms of which is hereto attached, and a copy of which is on file in 14 the City Attorney's Office)for the acquisition of the Development Rights (as defined in the 15 Installment Purchase Agreement) on certain property located in the City and more fully 16 described in Exhibit B of the Installment Purchase Agreement for a purchase price of 17 $2,012,868; and 18 19 WHEREAS, the aforesaid Development Rights shall be acquired through the 20 acquisition of a perpetual agricultural land preservation easement, as defined in, and in 21 compliance with, the requirements of the Ordinance; and 22 23 WHEREAS, the City Council has reviewed the proposed terms and conditions of the 24 purchase as evidenced by the Installment Purchase Agreement. 25 26 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF 27 VIRGINIA BEACH, VIRGINIA: 28 29 1. The City Council hereby determines and finds that the proposed terms and 30 conditions of the purchase of the Development Rights pursuant to the Installment Purchase 31 Agreement, including the purchase price and manner of payment, are fair and reasonable 32 and in furtherance of the purposes of the Ordinance, and the City Manager or his designee 33 is hereby authorized to approve, upon or before the execution and delivery of the 34 Installment Purchase Agreement, the rate of interest to accrue on the unpaid principal 35 balance of the purchase price set forth hereinabove as the greater of 1.366% per annum or 36 the per annum rate which is equal to the yield on United States Treasury STRIPS 37 purchased by the City to fund such unpaid principal balance; provided, however, that such 38 rate of interest shall not exceed 3.366% unless the approval of the City Council by 39 resolution duly adopted is first obtained. 40 41 2. The City Council hereby further determines that funding is available for the 42 acquisition of the Development Rights pursuant to the Installment Purchase Agreement on 43 the terms and conditions set forth therein. 44 45 3. The City Council hereby expressly approves the Installment Purchase 46 Agreement and, subject to the determination of the City Attorney that there are no defects 47 in title to the property or other restrictions or encumbrances thereon which may, in the 48 opinion of the City Attorney, adversely affect the City's interests, authorizes the City 49 Manager or his designee to execute and deliver the Installment Purchase Agreement in 50 substantially the same form and substance as approved hereby with such minor 51 modifications, insertions, completions or omissions which do not materially alter the 52 purchase price or manner of payment, as the City Manager or his designee shall approve. 53 The City Council further directs the City Clerk to affix the seal of the City to, and attest 54 same on, the Installment Purchase Agreement. The City Council expressly authorizes the 55 incurrence of the indebtedness represented by the issuance and delivery of the Installment 56 Purchase Agreement. 57 58 4. The City Council hereby elects to issue the indebtedness under the Charter of 59 the City rather than pursuant to the Public Finance Act of 1991 and hereby constitutes the 60 indebtedness a contractual obligation bearing the full faith and credit of the City. 61 62 5. The City Council hereby authorizes the transfer of $1,384,266.75 from the 63 Agricultural Reserve Program Special Revenue Fund to the General Debt Fund , and the 64 City Manager is empowered to transfer sufficient additional funds or return funds not 65 required from the Agricultural Reserve Program Special Revenue Fund notwithstanding the 66 dollar limits provided by the Annual Appropriation Ordinance,to purchase the United States 67 Treasury STRIPS as described in the Installment Purchase Agreement. 68 69 Adoption requires an affirmative vote of a majority of all members of the City Council. 70 71 Adopted by the Council of the City of Virginia Beach, Virginia, on this day of 72 , 2020. APPROVED AS TO CONTENT: APPROVED AS TO CONTENT: 1/1, j,:tyi Agriculture Department udget and anagement Services CERTIFIED AS TO AVAIL ILITY APPROVED AS TO LEGAL SUFFICIENCY: OF FUN? • • ‘(/!C Directo inn City Attorney' Office CA15194 \\vbgov c om\dfs I\applications\citylaw\cycom32\wpdocs\d012\p037\00681849.doc R-1 November 20, 2020 2 AGRICULTURAL RESERVE PROGRAM INSTALLMENT PURCHASE AGREEMENT NO. 2020-160 SUMMARY OF TERMS SELLER: Ives Farm,LLC, a Virginia limited liability company PROPERTY LOCATION:4152 Blackwater Road and adjacent parcels GPINs: 1481-82-2688, 1481-92-9643, 1491-01-6403, 1481-70-9924 and 1490-09-2242 PURCHASE PRICE: $2,012,868 EASEMENT AREA: 328.90 acres,more or less DEVELOPMENT POTENTIAL: 20 single-family dwelling sites(3 reserved by Seller) DURATION: Perpetual INTEREST RATE: Equal to yield on U.S. Treasury STRIPS acquired by City to fund purchase price,but not less than 1.366% (actual rate to be determined when STRIPS are purchased prior to execution of Installment Purchase Agreement("IPA")). Rate may not exceed 3.366%without approval of City Council. TERMS: Interest only,twice per year for 25 years,with payment of principal due 25 years from IPA date. RESTRICTIONS ON TRANSFER: IPA ownership may not be transferred(except for Estate Settlement Transfer) for one(1)year following execution and delivery of the IPA. —1 City I � � *�; r w� Virginia Beach 4144*-I~• °�N'L , L Ives Farm, LLC j� 4, 1481 92 9643 ' { ':' „, Idµ a * A t. GPINs: 1481 82 2688 4:1-82 8MI 1481-92-9643 w 1491 01 6403 42) Li1, 1490-09-2242 m : 1481-70-9924 a ..+ " 1491-01-6403 t. + 481-70-9924 liiiiiivAerial Map ; all , 1490-09-2242 • rJr � - r r 1 r{ •. 4 , J a • , ..- P.';'::----------- \\.:'''..**''''',:)::01'.,:,:-','',F:'',.* i ' - ' Disclosure Statement N/13 City of Vrryinta Beach Planning & Community Development The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a City board, commission or other body. Applicant Disclosure Applicant Name Iv c s f p t 4. L L C. Does the applicant have a representative? cif Yes ❑ No • If yes, list the name of the representative. n ; c. i do ` l S. I vcs Is the applicant a corporation,partnership,firm,business,trust or an unincorporated business?I Yes 0 No • If yes, list the names of all officers, directors,members,trustees,etc. below. (Attach a list if necessary) Ike. n►e�,b(/s ole rla c),oc) S. Ivcs � (, I S4�NC Ivac �ried&lea anj >�i ca.cl S. 1vLS Jr_ • If yes,list the businesses that have a parent-subsidiary'or affiliated business entity2 relationship with the applicant. (Attach a list if necessary) I V'S Fvr,`. CI4s•ptoki.r LL C (rtct j OuLrICp f.N, (' i j c ..+* acmt c • 11 '"Parent-subsidiary relationship" means"a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,VA.Code§2.2-3101. 2 "Affiliated business entity relationship"means"a relationship,other than parent-subsidiary relationship,that exists when (i)one business entity has a controlling ownership interest in the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or(iii)there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities,resources or personnel on a regular basis;or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act,Va. Code§2.2-3101. 1 ) Disclosure Statement i'ifut+f�'rrt;irua&tech Planning & Community Development Known Interest by Public Official or Employee Does an official or employee of the City of Virginia Beach have an interest in the subject land or any proposed development contingent on the subject public action? 0 Yes PI No • If yes,what is the name of the official or employee and what is the nature of the interest? Applicant Services Disclosure 1. Does the applicant have any existing financing(mortgage,deeds of trust,cross-collateralization,etc)or are they considering any financing in connection with the subject of the application or any business operating or to be operated on the property? ❑ Yes RI No • If yes,identify the financial institutions providing the serice. 2. Does the applicant have a real estate broker/agent/realtor for current and anticipated future sales of the subject property? ❑ Yes (V No • If yes,identify the company and individual providing the service. 3. Does the applicant have services for accounting and/or preparation of tax returns provided in connection with the subject of the application or any business operating or to be operated on the property?.® Yes ❑ No • If yes,identify the firm and individual1 providing the service. C•v a p v � Nt'sr.t P LC ` cc 4s_.+�) 4. Does the applicant have services from an architect/landscape architect/land planner provided in connection with the subject of the application or any business operating or to be operated on the property? ❑ Yes tif No • If yes,identify the firm and individual providing the service. S. Is there any other pending or proposed purchaser of the subject property? ❑ Yes 14 No • If yes,identify the purchaser and purchaser's service providers. 21 Disclosure Statement t itu of imm a Raid) Planning &Community Development 6. Does the applicant have a construction contractor in connection with the subject of the application or any business operating or to be operated on the property? ❑ Yes {$( No • If yes,identify the company and individual providing the service. 7. Does the applicant have an engineer/surveyor/agent in connection with the subject of the application or any business operating or to be operated on the property? ❑ Yes J No • If yes,identify the firm and individual providing the service. 8. Is the applicant receiving legal services in connection with the subject of the application or any business operating or to be operated on the property? ;El Yes ❑ No • If yes,identify the firm and individual providing the service. \N M caN & S a v ors c P. C. ' tt,► Geoder Es it Applicant Signature I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing, I am responsible for updating the information provided herein two weeks prior to the meeting of Planning Commission,City Council,VBDA,CBPA,Wetlands Board or any public body or committee in connection with this application. .L vcr Foe,rhi LLc. 13) qt9 ,� Clpap,oa,re Applicant Signature niGlL C441 a] . ( 'ics 1lt,,Yp re D•.Y ' lew. to Print Name and Title Na%)c.Are 2o, a020 Date Is the applicant also the owner of the subject property? [ Yes ❑ No • If yes,you do not need to fill out the owner disclosure statement. FOR CITY USE ONLY/All disclosures must be updated two(2)weeks prior to any Planning Commission and City Council meeting that pertains to the applications El No changes as of Date Signature Print Name 3IPage • CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance declaring 2.812+/- acres of land located at the intersection of Princess Anne Road and S. Witchduck Road (formerly Kempsville Road) to be in excess of the City's needs and authorizing the City Manager to sell same to Princess Anne/Witchduck Associates 1, LC PUBLIC HEARING DATE: December 1, 2020 MEETING DATE: December 8, 2020 ■ Background: The City of Virginia Beach (the "City") owns the 2.123+/- acre parcel of land located at 5161 Princess Anne Road (GPIN 1466-78-3845) at the intersection of Princess Anne Road and S. Witchduck Road, which is an assemblage of remnant parcels acquired by voluntary sale as part of the Princess Anne Road/Kempsville Road Intersection Improvements Project, CIP 2-048 (the "Project"). During the course of the Project, the right-of-way was altered, leaving a 0.689+/- acre portion of right-of-way adjacent to 5161 Princess Anne Road not needed for public use (the "Right-of-Way"). City Council approved vacating the Right-of-Way on April 24, 2014 and has authorized extensions of time to complete the conditions through April 22, 2021. The Right-of-Way, 5161 Princess Anne Road, and any gaps or gores, if any, between the Right-of-Way and 5161 Princess Anne Road, are collectively referenced herein as the "Property." In 2006, the City Council adopted the Historic Kempsville Plan (the "HK Plan") to guide the development and redevelopment of Historic Kempsville. Princess Anne/Witchduck Associates 1, LC, a Virginia limited liability company ("Developer") presented an unsolicited proposal to purchase the Property and develop multi-tenant shops (the "Proposed Development") utilizing architectural elements consistent with the HK Plan. The City and Developer have negotiated the terms of a sale of the Property for the Proposed Development, which are being presented for Council's approval. The elements of the Proposed Development have been approved by the Historic Kempsville Citizen Advisory Committee. The City would retain approval rights over aspects of the Proposed Development for three (3) years from issuance of a Certificate of Occupancy to ensure conformity with the Proposed Development. Portions of the Property have environmental contamination that pre-existed the City owning the Property. The City enrolled in the Voluntary Remediation Program ("VRP") with the Virginia Department of Environmental Quality ("DEQ") to properly address and mitigate the contamination. Once issued, a VRP Certification of Satisfactory Completion provides enforcement immunity to the City from regulatory authorities. In addition to a cash payment for the Property in the amount of $1,420,000, the Developer has agreed to take responsibility for completion of the VRP and to pay costs associated therewith. The terms of the sale are set forth in the Summary of Terms, attached to the Ordinance as Exhibit B. • Considerations: The Proposed Development contributes to the City's goal of revitalizing the Historic Kempsville area. Further, the Developer's agreement to remediate the environmental contamination to the DEQ's satisfaction and complete the VRP relieves the City of this important responsibility. Since a portion of the Property was previously put to a public use, an affirmative vote of three-fourths of the members of City Council is required to authorize the sale. Pursuant to the guidelines established by the Virginia Department of Transportation, the sales proceeds must be appropriated to a transportation project. The funds will be split between the Laskin Road Phase I-A Project #100242 ($710,000) and the Laskin Road Bridge Project#100240 ($710,000). • Public Information: Advertisement for public hearing as required by Section 15.2-1800 Code of Virginia and via the normal City Council agenda process. • Alternatives: Retain ownership of the Property. • Recommendations: Approval. • Attachments: Ordinance, Legal Description, Summary of Terms, Location Map, Disclosure Statement. Recommended Action: Approval of the Ordinance. 6---c7 Submitting Department/Agency: Economic Development City Manager: 1 AN ORDINANCE DECLARING 2.812+/- ACRES OF 2 LAND LOCATED AT THE INTERSECTION OF 3 PRINCESS ANNE ROAD AND S. WITCHDUCK ROAD 4 (FORMERLY KEMPSVILLE ROAD) TO BE IN 5 EXCESS OF THE CITY'S NEEDS AND AUTHORIZING 6 THE CITY MANAGER TO SELL SAME TO PRINCESS 7 ANNE/WITCHDUCK ASSOCIATES 1, LC 8 9 WHEREAS, the City of Virginia Beach (the "City") is the owner of approximately 10 2.812+/- acres of land consisting of 1) 2.123+/- acres known as 5161 Princess Anne 11 Road (GPIN: 1466-78-3845), 2) 0.689+/- acre of right-of-way proposed to be closed (the 12 "Right-of-Way"), and 3) gaps or gores, if any, between 5161 Princess Anne Road and 13 the Right-of-Way, as further described on Exhibit A attached hereto (collectively, the 14 "Property"); 15 16 WHEREAS, the City has adopted the Historic Kempsville Plan (the "HK Plan") to 17 set forth the City's goals for the development and redevelopment of the Historic 18 Kempsville area; 19 20 WHEREAS, Princess Anne/Witchduck Associates 1, LC (the "Developer") 21 proposes to purchase the Property and construct a multi-tenant commercial 22 development, with architectural components that are consistent with the HK Plan (the 23 "Proposed Development"); 24 25 WHEREAS, the Historic Kempsville Citizen Advisory Committee has reviewed 2, the Proposed Development and recommended the sale of the Property to the Developer 27 for that purpose; 2E 2 WHEREAS, the Property has environmental contamination that pre-existed the 3L. City's ownership; 31 32 WHEREAS, to address the environmental contamination, the City enrolled the 33 Property in the Voluntary Remediation Program ("VRP") offered by the Virginia 34 Department of Environmental Quality ("DEQ"); 35 36 WHEREAS, the Developer has offered as the purchase price for the Property 37 $1,420,000 and completion of the VRP, including all costs associated therewith; 38 39 WHEREAS, the completion of the VRP will result in DEQ issuing to the City a 40 Certification of Satisfactory Completion; 41 42 WHEREAS, Developer will purchase and develop the Property consistent with 43 the terms and conditions set forth in the Summary of Terms attached hereto as Exhibit 44 B; and 45 46 WHEREAS, City Council is of the opinion that the Property is in excess of the 47 City's needs and the sale of the Property to Developer furthers the City's goals for 48 redevelopment consistent with the HK Plan. 49 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 50 VIRGINIA BEACH, VIRGINIA: 51 52 1. That the 2.812+/- acres of land, including 5161 Princess Anne Road, the 53 Right-of-Way, and gaps or gores, if any, between 5161 Princess Anne Road and the 54 Right-of-Way are hereby declared to be in excess of the needs of the City of Virginia 55 Beach. 56 57 2. That the City Manager is hereby authorized to execute all documents 58 necessary to convey the Property to Princess Anne/Witchduck Associates 1, LC, in 59 accordance with the Summary of Terms attached hereto as Exhibit B and made a part 60 hereof, and such other terms, conditions or modifications as may be acceptable to the 61 City Manager and in a form deemed satisfactory by the City Attorney. 62 63 3. That the proceeds from this transaction shall be appropriated as follows: $710, 64 000 to the Laskin Road Phase I-A Project #100242 and $710,000 to the Laskin Road 65 Bridge Project#100240. 66 67 This Ordinance shall be effective from the date of its adoption. 68 69 Adopted by the Council of the City of Virginia Beach, Virginia, on the day 70 of , 2020. THIS ORDINANCE REQUIRES AN AFFIRMATIVE VOTE OF THREE- FOURTHS OF ALL COUNCIL MEMBERS ELECTED TO COUNCIL. CA151 \a c pplicahons1rAty4awkycom321wpdocs1d02911)035\00679135.doc R-1 10/29/20 APPROVED AS TO CONTENT APPROVED AS TO CONTENT Economic Development udget& Management Services APPROVED AS TO LEGAL SUFFICIENCY City At ney's ffice EXHIBIT "A" LEGAL DESCRIPTION ALL THAT certain lot, piece or parcel of land, lying, being and situate in the City of Virginia Beach, Virginia, together with the improvements thereunto belonging, being designated and described as "PARCEL D GPIN: 1466-78-3845" as shown on Sheet 3 & 4 of that certain plat titled "RESUBDIVISION OF PROPERTY OF EMMANUEL PROTESTANT EPISCOPAL CHURCH OF KEMPSVILLE AND CITY OF VIRGINIA BEACH FOR CIP 2- 048, Scale: 1" = 50', dated July 24, 2012, prepared by Rouse-Sirine Associates, Ltd., and recorded in the Clerk's Office of the Circuit Court of the City of Virginia Beach, Virginia as Instrument No. 20130315000305320, to which reference is made for a more particular description. TOGETHER WITH that certain 0.689 acres of public right of way to be closed, described as "AREA OF PROPOSED STREET CLOSURE 'D 1' (28,095 SQ. FT., 0.645 AC.)" and "AREA OF PROPOSED STREET CLOSURE 'D 2' (1,931 SQ. FT., 0.044 AC.)", and more particularly described in Ordinance ORD 3345B, adopted by the City Council of the City of Virginia Beach on April 22, 2014, and extended by various Ordinances to April 22, 2021, as outlined in ORD-3584B, attached hereto as Exhibit A-1. TOGETHER WITH all easements, covenants and other rights, if any, appurtenant to Parcel D and the public right-of-way to be closed, and all right, title and interest of City, if any, in and to any gaps and gores, if any, between Parcel D and the public right-of-way to be closed. RESERVING UNTO the City all adjacent rights-of-way that have not been closed or otherwise extinguished and all public easements or any other rights that benefit the public. IT BEING a portion of the property conveyed to the City of Virginia Beach by deed from The Runnymede Corporation dated January 10, 2001 and recorded in the aforesaid Clerk's Office in Deed Book 4348, at page 605. IT FURTHER BEING a portion of the property conveyed to the City of Virginia Beach by deed from Vincente N. Rono, Jr. and Conchita N. Rono, husband and wife, dated September 25, 2009 and recorded in the aforesaid Clerk's Office as Instrument Number 20090930001151390. IT FURTHER BEING a portion of the property conveyed to the City of Virginia Beach by deed from the School Board of the City of Virginia Beach dated April 9, 2010 and recorded in the aforesaid Clerk's Office as Instrument Number 20100409000331610. IT FURTHER BEING a portion of the property conveyed to the City of Virginia Beach by deed from Emmanuel Protestant Episcopal Church of Kempsville dated February 13, 2013 and recorded in the aforesaid Clerk's Office as Instrument Number 20130315000305800. EXHIBIT "B" SUMMARY OF TERMS 2.812+/- Acres Located at 5161 Princess Anne Road SELLER: City of Virginia Beach (the "City") PURCHASER: Princess Anne / Witchduck Associates 1, LC PROPERTY: Approximately 2.812 acres consisting of(a) 2.123+/- acre parcel known as 5161 Princess Anne Road (GPIN 1466-78-3845); (b) 0.689+/- acres of former right-of-way adjacent to the 2.123-acre parcel; (c) gaps or gores, if any, between (a) and (b) PURCHASE PRICE: $1,420,000 INTENDED USE: Property will be developed into multi-tenant shops, including traditional retail users, specialty uses (medical or dental), and/or restaurants RIGHTS, RESPONSIBILITIES, and OBLIGATIONS OF CITY: • City will designate Purchaser to be its Authorized Agent to act on its behalf with Department of Environmental Quality's ("DEQ") and complete the Voluntary Remediation Program ("VRP"), subject to City's right of rescind agency status • City will receive a Certification of Satisfactory Completion ("Certification") of the VRP, providing the City with enforcement immunity, as a condition of closing • City retains right to terminate if Purchaser does not complete the VRP • City will have approval rights if the Intended Use changes within three (3) years of a Certificate of Occupancy • City will have approval rights for first three (3) years of occupancy over any tenancy associated with a drive-thru service window, unless such tenancy is a bakery, local or national brand coffee shop, or cafe/restaurant with not more than five (5) other locations, in which case Purchaser need not obtain further City approval • City retains right to reacquire Property if construction has not commenced within one hundred eighty (180) days after closing RIGHTS, RESPONSIBILITIES, and OBLIGATIONS OF PURCHASER: • Property is purchased "As Is, Where Is," with notice of environmental contamination • Purchaser will perform as the City's Authorized Agent with DEQ and will provide truthful, accurate, and complete information to DEQ in the completion of the VRP and will provide the City with the Certification prior to closing. • Purchaser will be responsible for all costs incurred after September 9, 2020 to complete VRP and obtain the Certification • Purchaser retains right to terminate in the event it elects to not complete the VRP • Purchaser shall be responsible for resubdivision to incorporate former right-of- way with 5161 Princess Anne Road • Purchaser has a due diligence period of 300 days to confirm satisfactory title, obtain approval of resubdivision and site plan, and complete VRP • Deposit of $50,000 refundable during due diligence period • Purchaser shall commence construction of the Intended Use within 180 days from Settlement • Purchaser shall complete shell construction for at least two buildings, plus all exterior site work, within 365 days after commencement of construction • Construction of all improvements to be consistent with the elevations and design criteria approved by the Historic Kempsville Citizen Advisory Committee • Purchaser may not assign the contract except to another legal entity in which membership is the same. • Purchaser and City shall each be responsible for their own costs and attorney's fees Approval of this sale shall be revoked if closing has not occurred on or before June 30, 2023, unless extended by City Council prior to such date. _ L1_L -- a + �� + W�� E .,m N ING�ET . N ° � ��,if,..._---_________ , 1.11.1 „0,411/4,,, i s O s. L ..- , 0 pr b ' ' - t - *i 1 - - / / ., . '. * l r/ /y f r 4 A` E . -i E1/2," \\ 1 / ,i / / / , 1 i i • it j l �D 1,', , :; i / , ,,,,, 4,,t' ' - 4/ , r mo { j i y • Legend , / / �► _ PRINCESS 1466-78-3845 1 _ ANNE -o LOCATION MAP P. 4 Area of Proposed Street Closure __ • EXCESS CITY PROPERTY City Properties - �<:. 5161 PRINCESS ANNE ROAD \ GPIN 1466-78-3845 ., Note: This property is located \. Feet in AICUZ Noise Zone < 65 dB 0 50 100 200 Disclosure Statement 1,43 rK. Vrr...ha".4 a. �. Planning 8t Commmnity. Development The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a City board,commission or other body. Applicant Disclosure Applicant Name Princess AnnelWltchduck Associates 1, LC Does the applicant have a representative? R Yes 0 No • if yes,list the name of the representative. Chits Sanders Is the applicant a corporation,partnership,firm,business,trust or an unincorporated business? ■ Yes 0 No • If yes,list the names of all officers,directors,members,trustees,etc.below. (Attach a list if necessary) Chris Sanders Is the sole owner as of October 29,2020 • if yes,list the businesses that have a parent-subsldlaryl or affiliated business entity'relationship with the applicant. (Attach a list if necessary) None 1"Panmt-subsidiary relationship"means"a relationship that exists when one corporation directly or Indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,VA.Code §2.2-3101. 2"Affiliated business entity relationship"means"a relationship,other than parent-subsidiary relationship,that exists when(I)one business entity has a controlling ownership Interest in the other business entity,(II)a controlling owner In one entity is also a controlling owner in the other entity,or(ill)there is shared management or control between the business entitles. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities,resources or personnel on a regular basis;or there is otherwise a close working relationship between the entitles." See State and Local Government Conflict of Interests Act,Va. Code§2.2-3101. if Page Disclosure Statement trr=l13- en r.,L* Planning& Community Development Known interest by Public Official or Employee Does an official or employee of the City of Virginia Beach have an interest In the subject land or any proposed development contingent on the subject public action?❑Yes ■ No • If yes,what Is the name of the official or employee and what is the nature of the Interest? Applicant Services Disclosure 1. Does the applicant have any existing flnandng(mortgage,deeds of trust,cross-collateralitation,etc)or are they considering any financing in connection with the subject of the application or any business operating or to be operated on the property? ■ Yes No • If yes,identify the financial institutions. Towne bank 2. Does the applicant have a real estate broker/agent/realtor for current and anticipated future sales of the subject property? ❑Yes III No • If yes,identify the real estate broker/realtor, 3. Does the applicant have services for accounting and/or preparation of tax mums provided In connection with the subject of the application or any business operating or to be operated on the property?❑Yes •No • If yes,Identify the firm or individual providing the service. 4. Does the applicant have services from an architect/lantiscape architect/land planner provided in connection with the subject of the application or any business operating or to be operated on the property? ■ Yes ❑No • tf yes,identify the firm or individual providing the service. Kimley Home for civil engineering; Randolph Hicks,AlA is the Architect 5. Is there any other pending or proposed purchaser of the subject property?❑Yes II No • If yes,Identify the purchaser and purchaser's service providers. 2IPage Disclosure Statement Q.r.1 V.cans nd+ Planning&Community - Development 6. Does the applicant have a construction contractor In connection with the subject of the application or any business operating or to be operated on the property?0 Yes ilk No • If yes,Identify the construction contractor. 7. Does the applicant have an engineer/surveyor/agent in connection with the subject of the application or any business operating or to be operated on the property? Y! Yes 0 No • If yes,identify the engineer/surveyor/agent. Kimley Home 8. Is the applicant receiving legal services In connection with the subject of the application or any business operating or to be operated on the property?IN Yes 0 No • If yes,identify the name of the attorney or firm providing legal services. Kaufman&Canoles Applicant Signature I certify that an of the Information contained In this Disclosure Statement Form is complete,true,and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing,I am responsible for updating the information provided herein two weeks prior to the meeting of Planning Commission,City Council,VBDA,CBPA,Wetlands Board or any public body or committee In connection with this application. Applicant Signature I Chris Sanders Print Name and Title October 29,2020 Date is the applicant also the owner of the subject property? ❑Yes ■ No • if yes,you do not need to fill out the owner disclosure statement. FOR CITY USE ONLY/All disclosures must be updated two(2)weeks prior to any Planning Commission and City Council meeting that pertains to the applications No champs a+d I Dur. spawns Print Name Wage ,•�,ec, fO�,i's�tiS iTT 44. CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance to authorize the acquisition of property in fee simple for the Princess Anne Plaza North London Bridge Creek Pump Station Project, CIP 7- 089 and the acquisition of temporary and permanent easements, either by agreement or condemnation PUBLIC HEARING DATE: September 15, 2020 MEETING DATE: December 8, 2020 This item was deferred at the October 20, 2020 Council meeting until December 8, 2020. Background: The Princess Anne Plaza North London Bridge Creek Pump Station Project, CIP 7-089 (the "Project") is for the construction of a tide gate, stormwater pump station, and tide barriers along London Bridge Creek at the South Lynnhaven Road crossing. The Project will improve stormwater management and relieve widespread tidal and storm flooding of public and private structures and public streets and highways throughout the Princess Anne Plaza and The Lakes neighborhoods. These neighborhoods were among the hardest hit by flooding caused by Hurricane Matthew in 2016. The Princess Anne Plaza area consists primarily of medium-density residential neighborhoods, with some commercial development along major roads. The area has experienced repeated flooding mainly due to its low-lying topography, tidal influence and lack of stormwater storage. Most of the homes in the Project area were constructed in the early 1960s to the early 1970s and are concrete slab on grade with finished floors less than one foot above top of curb. The existing stormwater infrastructure is inadequate or non-existent and will not protect these homes against the intense storms the region is expected to experience with increased frequency. A preliminary engineering analysis was completed in November 2019 and concluded that a tide gate, barriers and a large pump station are required along North London Bridge Creek in order to mitigate flooding in the Princess Anne Plaza area. The tide gate and barriers will block the incoming tide to increase available storage capacity within the system, and the pump station will drawdown water levels prior to a storm event to maintain them below flood stage. The Project includes a 1 ,400 cubic feet per second pump station, a 120-foot-wide Tide Gate, and adjacent flood barriers. The Project is intended to mitigate flooding up to the 100-year storm event (equating to 9.5 inches of rain in 24 hours). The Level of Service that has been adopted for the Princess Anne Plaza neighborhood includes limiting peak flood stages to three (3) inches or less above the crown of the roads for the 10-year design storm (i.e., street flooding, 5.6 inches in 24 hours) and preventing structures from flooding for the 100-year design storm. Based on modeling, approximately 583 buildings will be mitigated from flooding during the 100-year storm and 6.9 miles of roadway will be mitigated from flooding during the 10-year storm. However, there are 18 buildings that may flood during a 100-year storm and one mile of street flooding that may still occur during a 10-year storm. • Considerations: The Project will require property and easements from three privately owned parcels in the area shown on the Location Map. Authority is requested to acquire the necessary property and easements (temporary and permanent) by agreement and/or condemnation. The Project is expected to be completed in phases occurring over the next 10 years. • Public Information: A Public Information Meeting was held on October 3, 2019. A public hearing was held on September 15, 2020 after advertisement in The Virginian- Pilot, Beacon, and public notice was provided via the normal City Council agenda process. • Alternatives: Deny the request • Recommendations: Approve the Ordinance • Attachments: Ordinance and Location Map Recommended Action: Approval Submitting Department/Agency: Public Works City Manager: %� i AN ORDINANCE TO AUTHORIZE 2 ACQUISITION OF PROPERTY IN FEE SIMPLE 3 FOR THE PRINCESS ANNE PLAZA NORTH 4 LONDON BRIDGE CREEK PUMP STATION 5 PROJECT, CIP 7-089, AND THE ACQUISITION 6 OF TEMPORARY AND PERMANENT 7 EASEMENTS, BY AGREEMENT OR 8 CONDEMNATION 9 10 WHEREAS, in the opinion of the Council of the City of Virginia Beach, Virginia, a li public necessity exists for the construction of this important flood mitigation project to 12 improve drainage within the City to relieve widespread tidal and storm flooding of public 13 and private structures and public streets and highways, to treat stormwater, to improve 14 traffic circulation especially during rain and tidal flood events, and for other related public i5 purposes for the preservation of the safety, health, peace, good order, comfort, 16 convenience, and for the welfare of the people in the City of Virginia Beach. 17 18 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 19 VIRGINIA BEACH, VIRGINIA: 20 21 Section 1 . That the City Council authorizes the acquisition by purchase or 22 condemnation pursuant to Sections 15.2-1901 , et seq., Sections 33.2-1007, et seq., and 23 Title 25.1 of the Code of Virginia of 1950, as amended, of all that certain real property in fee 24 simple, including temporary and permanent easements and entire tracts upon which such 25 rights-of-way or easements shall be located, within the limitations and conditions of Section 26 33.2-1007 of the Code of Virginia of 1950, as amended (the "Property"), as shown on the 27 plan entitled "Princess Anne Plaza North London Bridge Creek Pump Station (CIP#7-089) 28 —Site Plan Layout" (the"Project"), and also as shown on the Location Map attached hereto 29 as Exhibit A and made a part hereof (plans and Location Map collectively referred to as the 30 "Plans"), the Plans being on file in the Engineering Division, Department of Public Works, 31 City of Virginia Beach, Virginia. 32 33 Section 2. That the City Manager is hereby authorized to make or cause to be made 34 on behalf of the City of Virginia Beach, to the extent that funds are available, a reasonable 35 offer to the owners or persons having an interest in said Property. If refused, the City 36 Attorney is hereby authorized to institute, prosecute and settle or resolve proceedings to 37 condemn said Property. 38 39 Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 4 0 , 2020. CA14876 PREPARED: 9/2/20 R-1 \\vbgov.com\dfsl\applications\citylaw\cycom 32\wpdocs\d020\p035\00653565.doc APPROVED AS TO CONTENT APPROVED AS TO LEGAL SUFFICIENCY PUBLIC WORKS/REAL ESTATE CITY ATTORNEY FLORENCEtST I N r W � ' E r�� � r rrrrrx�' 4 s' In o L S VARK1S1 Mr ,, , ,. `J � o2, rU . + ,►> _ Property Acquisition -` _ art (/\\Partial (2877 Guardian Lane) ,'1 11111114: , r,r � �`_ GUA' DI ILN iri& - iiivitio. e . , :# - zz . 004 .0 it immillia Pie. IF4 g . tilli II 7,A.lips �_:R ►� rtabbies' NE SPartial Property Acquisition alp mlif 516 S. Lynnhaven a ...._.. ..........„_____________-.: `,41 , ' j � m I .-^ ,1116,11446. 11116: 8. .40ip IV 07. ,, 41 r 4 I .r.4,041 • .IN, 401'4 — ‘,. ''', --'10 '� sb \- Fi SABRE ST Partial Property Acquisition (2900 Sabre) $' Legend - lai MIN III Property and Easements to be Acquired i N Property and Easements to be Acquired IA itic Property and Easements to be Acquired ` °. 1496-28-9928 • 1496-28-7345 - 03 LOCATION MAP 1498-28-2215 D ,r' GPIN 1495-28-7345 City Properties GPIN 1495-28-9928 Cn GPIN Property Address Owner Zoning --I3 II -�— GPIN 1495-28-2215 1496-28-9928 2877 Guardian Lane Guardian Lane West LLC 11 Feet 1496-28-7345 2900 Sabre Street Micheal D Sifen INC 11 0 200 400 800 1498-28-2215 516 S.Lynnhaven Road 516 S Lynnhaven Rd LLC 11 _ Prepared by P.W./Eng./Eng.Support Services Bureau 08/11/2020 X:\CADD\Projects\ARC Files\AGENDA MAPS\1496-28-7345 Aerial / (`�3 tr J N 264 (^ f o \v.,_ore- E cci' ____r_F ----' ro s l� j �� 0 Partial Property Acquisition w i a ___, I t lamt (2877 Guardian Lane) I -Z o SITE 9m . ( 1 -lfX 77 \.r GUARDIAN-:N - 0r-- 0 fl-,,,_ ok. ° „Li-i - „, ..z , , c., .. _,____, ,______ s Ai ,,,.,,,,., , ,,.. u, Ujt 71.________ " --- ,11- 'AL" 13) aillOr 411% ((il z \-) AO ,r• .v 4,,AOF , ri Ji0 - -.'1 Ljiiiiiiii., ite#1 Or /— ri -�7i� Qi tt ± Partial Property Acquisition r J 516 S. Lynnhaven ; k I1 llitetwogin Aar, \k.17,, —41.---..r,"- 411 r3Iø 0 L.____, _ ,, .10,- i ,,..., 6, ,. 1 . SABRE ST= \\\ / . ,., i Partial Property Acquisition (2900 Sabre) Legend o::. \ iffilli I I y Property and Easements to be Acquired t— I , a r Property and Easements to be Acquired-.1% # \ .. 0 ! ,,..,), Property and Easements to be Acquired r 1496 28 9928 `? / 1496 28 7345 __ c _il ... . LOCATION MAP .., \ 1498 28 2215 GPIN 1495-28-7345 City Properties \\ GPIN 1495-28-9928 GPIN Property Address Owner Zoning 73 - GPIN 1495-28-2215 1496-28-9928 2877 Guardian Lane Guardian Lane West LLC 11 r Feet 1496-28-7345 2900 Sabre Street Micheal D Sifen INC 11 -�I 1y D— / 0 200 400 800 1498-28-2215 516 S. Lynnhaven Road 516 S Lynnhaven Rd LLC 11 • / Prepared by P.W./Eng./Eng.Support Services Bureau 08/11/2020 X:\CADD\Projects\ARC Files\AGENDA MAPS11 4 96-2 8-7 34 5 I[ 411.1A ICF:P n r CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance to Appropriate $1,163,295 in Fund Balance of the City Garage Internal Service Fund for the Purchase of a Horizontal Grinder MEETING DATE: December 8, 2020 • Background: Public Works currently uses a tub grinder at the landfill to process yard debris brought by residents. The resulting mulch is used by the Department of Parks & Recreation's Landscape Service throughout the City. The current grinder is 20 years old, is not mobile, and is frequently out of operation due to repairs. In order to keep up with the demand for mulching debris across the City, a new horizontal grinder is needed. Funding was included in the Adopted FY 2020-21 Operating Budget of the Waste Management Enterprise Fund for the purchase of a replacement grinder. However, Waste Management has other equipment needs, and for a piece of equipment of this size and purpose, the ownership of the horizontal grinder is better suited for the City Garage. With the funding that would have otherwise been used to purchase a replacement grinder, the Waste Management Fund will purchase other replacement equipment, such as explosion/fire-proof hazardous waste storage containers at locations that accept hazardous materials and roll off containers as part of the improved West Neck Road Convenience Center. • Considerations: A new horizontal grinder will increase the production capacity of the current grinder by three times. More importantly, the new grinder will be mobile, so it can be deployed across the City to meet demand. Once purchased, the grinder will be used by Public Works, Parks and Recreation, and other departments on an as-needed basis for debris cleanup. Instead of all debris having to be transported to the landfill for mulching, the grinder can be deployed in the most needed areas for faster storm clean up and more efficient usage of staff time. The horizontal grinder will cost $1,163,295 and will be purchased with the City Garage Internal Service Fund's fund balance. The City Garage Internal Service Fund has approximately $2.5 million in its fund balance, so this appropriation makes use of, but does not deplete, its fund balance. • Public Information: Normal City Council agenda process. • Recommendations: Adopt the attached ordinance. • Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: Public Works City Manager: 4... /9-----------?------ 1 AN ORDINANCE TO APPROPRIATE $1,163,295 IN FUND 2 BALANCE OF THE CITY GARAGE INTERNAL SERVICE 3 FUND TO PURCHASE A HORIZONTAL GRINDER 4 5 NOW, THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY 6 OF VIRGINIA BEACH, THAT: 7 8 S1,163,295 from the fund balance of the City Garage Internal Service Fund is 9 hereby appropriated, with miscellaneous revenue increased accordingly, to the City 10 Garage Internal Service Fund for the purchase of a horizontal grinder. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of , 2020. Requires an affirmative vote by a majority of all of the members of City Council. APPROVED AS TO CONTENT. APPROVED AS TO LEGAL SUFFICIENCY: Budget& Management Services o ey's 0 ce CM 5284 R-1 November 23, 2020 � 'yeti��� fZ 1,Z7 CITY OF VIRGINIA BEACH AGENDA ITEM ITEMS: An Ordinance to Accept and Appropriate Funds for the November 3, 2020 General Election from the Commonwealth of Virginia to the Department of Voter Registration and Elections MEETING DATE: December 8, 2020 • Background: In Item 479.10 of Chapter 56 of the 2020 Acts of Assembly Special Session I, the General Assembly directed that $10 million from the Commonwealth of Virginia's share of the Coronavirus Aid, Relief, and Economic Security (CARES) Act's Coronavirus Relief Fund (CRF) be set aside for local General Registrars to fund costs related to the November 3, 2020 General Election. The General Assembly directed that the Commissioner of the Virginia Department of Elections distribute these funds "based on population or need." According to information communicated by the Department of Elections, the current plan is to distribute on need, and a survey of local General Registrar needs is forthcoming. After receipt of responses, the Commissioner of Elections will determine each county or independent city's portion of the $10 million set-aside. • Considerations: The General Assembly instructed the Commissioner of Elections to distribute the funds within 30 days of enactment of the budget. As with other CARES Act CRF provisions, all funds must be spent by December 30, 2020. Therefore, the City needs appropriation authority to accept the funds and post expenditures. However, as the period of receipt of funds may extend beyond the date of Council's last session in 2020, Council action is required before full knowledge of Virginia Beach's share is known. Thus, it is requested that the Council approve of funds equal to the amount of needs submitted by the Virginia Beach General Registrar's office to the Department of Elections. Adjustments will be made based on actual revenue collection either through the powers granted to the City Manager in the City's Operating Budget ordinance or through authorization granted through the attached ordinance. The General Assembly restricted these funds for the following purposes if such activities resulted in additional to normal costs: printing, postage, voting equipment, drop-box installation and security; contracted manpower, cleaning supplies and PPE, laptops and cellphones, automated letter opening equipment, advertisement costs related to voting changes, and voter safety costs. The Virginia Beach Registrar's Office submitted $463,672 in needs request in response to the survey. • Public Information: Normal Council agenda process. • Recommendations: Adopt the attached ordinance. • Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: Virginia Beach General Registrar City Manager: 4 ,/,______ ___Th___ 1 AN ORDINANCE TO ACCEPT AND APPROPRIATE FUNDS 2 FOR THE NOVEMBER 3, 2020 GENERAL ELECTION 3 FROM THE COMMONWEALTH OF VIRGINIA TO THE 4 DEPARTMENT OF VOTER REGISTRATION AND 5 ELECTIONS 6 7 WHEREAS, the General Assembly has provided $10 million from the 8 Commonwealth of Virginia's Coronavirus Relief Funds to General Registrars throughout 9 the Commonwealth for additional costs related to the November 3, 2020 General Election; 10 and 11 12 WHEREAS, any funds provided through this grant are required to be spent or 13 returned by December 30, 2020. 14 15 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 16 VIRGINIA BEACH, VIRGINIA THAT: 17 18 1. $463,672 in federal funds passed through by the Commonwealth of Virginia are 19 hereby appropriated, with revenues increased accordingly, to the FY 2020-21 20 Operating Budget of the Virginia Beach Department of Voter Registration and 21 Elections. These funds shall be used for additional costs related to the November 22 3, 2020 General Election consistent with the restrictions imposed by Item 479.10 23 of Chapter 56 of the 2020 Acts of Assembly Special Session I. 24 25 2. Upon the receipt of actual funds from the Commonwealth of Virginia, the City 26 Manager shall use his authority under Section 12 of the City's Annual Appropriation 27 Ordinance to adjust the revenue to reflect the actual amount awarded and restrict 28 expenditure of funds above such amount. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 2020. Requires an affirmative vote by a majority of all of the members of City Council. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: Budget and Management Services orn s Office CA15288 R-1 November 23, 2020 CITY OF VIRGINIA BEACH AGENDA ITEM ITEMS: An Ordinance to Accept and Appropriate Funds for Direct Utility Assistance to Customers from the Commonwealth of Virginia to the Department of Public Utilities MEETING DATE: December 8, 2020 • Background: In Item 479.10 of House Bill 5005 (the Commonwealth of Virginia's revised Budget Bill), the General Assembly directed that $100 million from the Commonwealth of Virginia's share of the Coronavirus Aid, Relief, and Economic Security (CARES) Act's Coronavirus Relief Fund (CRF) be set aside to provide direct assistance to utility customers in the Commonwealth who have been unable to pay their bills due to pandemic related hardships. The General Assembly charged the State Corporation Commission (SCC), in partnership with the Virginia Department of Housing and Community Development (DHCD), with the authority to distribute these funds to utilities throughout the Commonwealth to help subsidize customer accounts. Utilities eligible to receive payments under paragraph five of Item 479.10 are electric companies, natural gas supplies, electric and gas municipal utilities, and water suppliers and wastewater service providers, including those "constituting a municipal utility." This definition encompasses the Virginia Beach Department of Public Utilities. According to paragraph 5.a. of Item 479.10, assistance first will be provided on accounts over 60 days in arrears. Once all claims are paid out on this pool, then accounts over 30 days in arrears will be eligible for assistance. Only the principal water and sewer charges are subject to this assistance; all other fees remain the responsibility of the consumer. In addition, the City may require the consumer to provide documentation that the pandemic is the cause of the failure to pay. • Considerations: The SCC required that an application form that details eligible amounts be submitted by November 30. Subsequently, once amounts are determined, all municipal utilities claims will be referred to the DHCD, which may require additional information and a certification process prior to the dispersal of funds. As with other CARES Act CRF provisions, all funds must be spent by December 30, 2020. Therefore, the City needs appropriation authority to accept the funds and post expenditures. However, as the period of receipt of funds may extend beyond the date of Council's last session of 2020, Council action is required before full knowledge of Virginia Beach's share is known. Thus, it is requested that the Council approve of funds equal to the amount of needs submitted by the Virginia Beach Department of Public Utilities to the SCC. Adjustments will be made based on actual revenue collection that reflects the amount approved and distributed to the City of Virginia Beach on behalf of eligible delinquent City Services Bill customers either through the powers granted to the City Manager in the City's Operating Budget ordinance or through authorization granted through the attached ordinance. Public Utilities has a total of 33,472 accounts that met the 30-or-more days in arrears criteria between as of October 31, 2020, of which 24,999 are 60 or more days in arrears. The total for eligible charges for customers' delinquent balances is $6,571,166, with charges that are 60-days in arrears totaling $5,384,198 and the charges that are 30-to- 59-days in arrears totaling $1,186,968. The City has requested these amounts from the SCC on behalf of the City's utility customers. The updated guidance from the Commonwealth limits the application for CARES Act funding to water and sewer charges. Accordingly, the Department of Public Utilities recommends that any amounts for eligible applicants not covered by the CARES Act funding, such as storm water or solid waste collection charges, be covered by the City Services Pandemic Relief Program funding that was established in the adopted FY 2021 Operating Budget. This use of funds would not otherwise limit the relief previously adopted in the budget process, but it would allow the orderly discharge of amounts owed on City Services Bills. In addition, Item 479.10 mandated that all utilities establish a COVID-19 Utility Assistance Fund to account for these funds. The City will adhere to that requirement through the use of a specific grant number that will not be part of the Water and Sewer Enterprise Fund but will be within the Operating Budget of the Department of Public Utilities. • Public Information: Normal Council agenda process. • Recommendations: Adopt the attached ordinance. ■ Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: Public Utilities City Manager: 1 AN ORDINANCE TO ACCEPT AND APPROPRIATE FUNDS 2 FOR DIRECT UTILITY ASSISTANCE TO CUSTOMERS 3 FROM THE COMMONWEALTH OF VIRGINIA TO THE 4 DEPARTMENT OF PUBLIC UTILITIES 5 6 WHEREAS, the General Assembly has provided $100 million from the 7 Commonwealth of Virginia's Coronavirus Relief Funds to utilities throughout the 8 Commonwealth, via the State Corporation Commission, to provide for direct assistance 9 to utility customers in arrears of over 30 days on their utility bills: 10 11 WHEREAS, as a utility owned by a municipality of the Commonwealth,the Virginia 12 Beach Department of Public Utilities is eligible to participate in this program; and 13 14 WHEREAS, any funds provided through this grant are required to be spent or 15 returned by December 30, 2020. 16 17 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 18 VIRGINIA BEACH, VIRGINIA THAT: 19 20 1. A COVID-19 Utility Assistance Fund is hereby created separate and distinct from 21 the Water and Sewer Enterprise Fund in the FY 2020-21 Operating Budget of the 22 Department of Public Utilities. 23 24 2. $6,571,166 in federal funds passed through by the Commonwealth of Virginia are 25 hereby accepted and appropriated, with federal revenues increased accordingly, 26 to the FY 2020-21 Operating Budget of the Virginia Beach Department of Public 27 Utilities. These funds shall be used for direct customer subsidies consistent with 28 the terms imposed by Item 479.10, specifically paragraph 5, of Chapter 56 of the 29 Virginia Acts of Assembly of 2020 Special Session I. 30 31 3. Upon the receipt of actual funds from the Commonwealth of Virginia, the City 32 Manager shall use his authority under Section 12 of the City's Annual Appropriation 33 Ordinance to adjust the revenue to reflect the actual amount awarded and restrict 34 expenditure of funds above such amount. 35 36 4. The City Manager and any other necessary official of the City of Virginia Beach 37 are hereby authorized to sign and execute any documents that may be required 38 by the Department of Housing and Community Development in their certification 39 process for the disbursement of funds from this appropriation of Coronavirus Relief 40 Fund funds by the Commonwealth of Virginia. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 2020. Requires an affirmative vote by a majority of all of the members of City Council. APPROVED AS TO CONTENT- APPROVED AS TO LEGAL SUFFICIENCY/ —(74- Budget and Management Services rney's Office CA15287 I R-2/November 25, 2020 I • e4,, xpE.F I 1ry r =f ?J� CITY OF VIRGINIA BEACH AGENDA ITEM I ITEM: An Ordinance to Accept and Appropriate CARES Act Funds from the Governor's Fast Track Broadband Program for Eligible Broadband Projects MEETING DATE: December 8, 2020 • Background: On October 8, 2020, the Governor's Chief Broadband Advisor announced the Administration had additional federal Coronavirus Relief Fund (CRF) funds available pursuant to the federal Coronavirus Aid, Relief and Economic Security Act(CARES Act). The Governor seeks to apply$30 million of these CRF funds to projects that that can be developed and deployed quickly to address the need for increased broadband connectivity for distance learning and telework as a result of the public health emergency. The Governor's Chief Broadband Advisor is accepting proposals from localities on a rolling basis until all funds are fully obligated. The City has received an award of CRF funding for 2 projects: 0 1) a "smart pole" to be located in the Pungo Library parking lot to provide wireless internet connection to the Pungo Library/Senior Resource Center, parking lots, the ballfield, and several residences in the surrounding area; and 0 2) a "smart pole" to be located in Lake Edward Park, future site of the Virginia African American Cultural Center, to provide wireless internet to the park and surrounding area. • Considerations: The attached ordinance appropriates the amount of the award for the two "smart poles." As with other CARES Act funding, the expenditures have to be made by December 30, 2020. There is no local match required for these funds. • Public Information: Normal agenda process. • Recommendations: Adopt the attached ordinance. • Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: Information Technology City Manager: 4_ c2-- 1 AN ORDINANCE TO ACCEPT AND APPROPRIATE 2 CARES ACT FUNDS FROM THE GOVERNOR'S FAST 3 TRACK BROADBAND PROGRAM FOR ELIGIBLE 4 BROADBAND PROJECTS 5 6 BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, 7 VIRGINIA, THAT: 8 9 $49,286 of Coronavirus Aid, Relief and Economic Security (CARES) Act funding is 10 hereby accepted from the Governor's Fast Track Broadband Program and appropriated, 11 with federal revenue increased accordingly, to the FY 2020-21 Operating Budget of the 12 Information Technology Department for costs associated with increasing broadband 13 connectivity for distance learning and telework as a result of the public health emergency. Adopted by the Council of the City of Virginia Beach, Virginia on the _ day of —___--- , 2020. Requires an affirmative vote by a majority of all members of the City Council. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: Budget and Management Services City A o ey's Office CA14872 R-2 November 30, 2020 54 EZ i CITY OF VIRGINIA BEACH AGENDA ITEM f ITEMS: An Ordinance to Realign and Transfer CARES Act Funds in Accordance with Actual Eligible Expenses MEETING DATE: December 8, 2020 • Background: In the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Public Law 116-136), the United States Congress appropriated $150 billion to the United States Treasury to operate a Coronavirus Relief Fund (CRF) for assistance to states, tribes, and local governments. These funds were intended to help these units of government in their response to the coronavirus pandemic. In May 2020, the Commonwealth of Virginia announced an initial distribution to counties and cities of the Commonwealth. Through a per capita formula, the City of Virginia Beach received $39,258,497 in the initial allocation. In response, on July 7, 2020, the City Council accepted these funds and appropriated them to a specific CARES Act CRF grant within the Consolidated Grant Fund. Funds set aside in the grant were placed into the following categories, as derived from the United States Treasury's official guidance: (1) medical expenses; (2) public health expenses; (3) payroll costs; (4) compliance with public health regulations; (5) economic support; and (6) a reserve for contingencies. At the time, it was noted that there would be a need to return to Council before the end of the year to reconcile actual spending as a result of the pandemic with the budgeted categories as they were anticipated in June 2020. The City received a second allocation of $39,258,497 later in July, and the City Council appropriated this allocation in October. • Considerations: Since May, City administration has worked with City departments to ensure that all pandemic eligible expenses are captured and charged to the CARES Act CRF grant. During this time, the City attempted to acquire equipment and cover enhanced operating expenses, as outlined to Council earlier in the year. Nevertheless, due to the unexpected length of the pandemic, knowledge derived from increased experience with pandemic, and the inability for certain projects to be delivered due to constraints, especially the December 30, 2020 deadline, actual costs were different than the amounts originally estimated in early July. Accordingly, City administration approached the categories set aside for internal City usage flexibly, as some expenses once envisioned to be covered by one category ultimately, upon the receipt of more regulation from the federal government, fit better in another category. Even after all these operational changes and likely resulting from other forms of federal intervention, such as enhanced unemployment insurance, the City administration simptydid not find it possible to spend to thelevels approved by Council in July. Moreover, at the time of adoption, a significant amount of funds was held in reserve, and these reserves must be liquidated and reassigned prior to the end of the eligibility period. Based on the projected actual need, it is estimated that approximately $28.6 million of the original $39.25 million appropriated as part of first CARES Act CRF allocation will be expended prior to the December 30 deadline. This results in an unexpended grant balance of $10.6 million. The payroll reimbursement approach for the second allocation avoided a further unexpended grant balance. To prevent any left-over funds from being returned to the Commonwealth of Virginia and the United States Treasury, the attached ordinance will realign funds from categories that underspent their initial appropriation and have no path to being able to spent prior to the December 30 deadline. This ordinance therefore deallocates excess appropriations and realigns the funds through enhanced appropriations to the alternative categories, with any residual balance being placed into payroll compensation expenses. In addition, this ordinance will empower the City Manager to make any adjustments that may be necessary subsequent to this Council action, but prior to the final deadline imposed by the Congress of the United States. This will enable to City to make payment should any bills arrive from vendors that are inconsistent, positive or negative, with their purchase orders. A full report of budget to actuals will be provided to Council in early 2021 . • Public Information: This item will be advertised through the normal Council agenda process. In addition, a presentation was provided to Council on this topic at Council's November 24, 2020 meeting. • Recommendations: Adopt the attached ordinance. • Attachments: Ordinance Recommended Action: Approval Submitting Department/Agency: City Manager's Office City Manager: /L 9 --- 1 AN ORDINANCE TO REALIGN AND TRANSFER CARES 2 ACT FUNDS IN ACCORDANCE WITH ACTUAL ELIGIBLE 3 EXPENSES 4 5 WHEREAS, the Commonwealth of Virginia received a payment from the United 6 States Treasury through the Coronavirus Aid, Relief, and Economic Security (CARES) 7 Act's Coronavirus Relief Fund (CRF), and distributed to the City an initial payment of 8 $39,258,497; 9 10 WHEREAS, on July 7, 2020, the City Council of the City of Virginia Beach 11 appropriated the initial allocation of $39,258,497 to the categories provided in the 12 authorizing legislation, and such funds were placed into its own grant, titled "CARES Act 13 CRF Grant," within the City's Consolidated Grant Fund; 14 15 WHEREAS, on August 18, 2020, the City Council released $4,581,300 of 16 previously reserved funding within the initial allocation for hazard pay and volunteer 17 recognition, leaving an unallocated amount of $5,418,700 in the reserve that was 18 established in the July 7, 2020 City Council ordinance; 19 20 WHEREAS, the second allocation of $39,258,497 was provided to the City and 21 appropriated by the City Council on October 20, 2020, with such funds to be used to pay 22 for eligible public safety and public health payroll expenditures; 23 24 WHEREAS, any funds provided by the United States Treasury from the CARES 25 Act are required to be spent for eligible expenses or returned by December 30, 2020; and 26 27 WHEREAS, to allow the full expenditure of CARES Act funding prior to the 28 expenditure deadline, the City Council desires to realign the funds previously 29 appropriated in accordance with the expenditures, commitments, and obligations made 30 by the City of Virginia Beach. 31 32 NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF 33 VIRGINIA BEACH, VIRGINIA THAT: 34 35 1 . Notwithstanding the City Council ordinance of July 7, 2020, appropriating CARES 36 Act funds to various categories, the City Council hereby directs the utilization of 37 any such funds not previously committed or expended or expected to be committed 38 or expended prior to December 30, 2020, to be directed to the reimbursement of 39 eligible public safety and public health payroll expenditures. 40 41 2. The $5,418,700 remaining of the $10,000,000 previously reserved by the City 42 Council is hereby released and authorized to be used for reimbursement of public 43 safety and public health payroll expenses. 44 45 3. If, prior to December 30, 2020, there is need to transfer funds within the categories 46 outlined in the July 7, 2020, ordinance appropriating CARES Act funds, the City 47 Manager is hereby authorized to transfer such funds notwithstanding the limits set 48 forth in Section 10 of the Annual Appropriation Ordinance to shift and finalize 49 categorical allocations in accordance with actual, eligible expenditures. These 50 transfers shall first be used to pay for any other actual incurred obligation; however, 51 if the City Manager determines that no additional need exists, the Manager may 52 authorize the remaining unspent amounts to be used for reimbursement of public 53 safety and public health payroll expenses. 54 55 4. After the conclusion of the December 30, 2020 period, and any residual time period 56 necessary to close out any outstanding purchase orders in accordance with federal 57 guidelines, the City Manager shall make a report of the remaining balance that was 58 used for public safety payroll expenses to the City Council. Adopted by the Council of the City of Virginia Beach, Virginia, on the day of 2020. Requires an affirmative vote by a majority of all of the members of City Council. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY: Budget and Management Services City ney's Office CA15286 R-1 November 23, 2020 z. s, CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance to Establish Capital Projects #100559, "Three Oaks Elementary Multi-Use Path," and #100558, "Violet Bank Trail," and to Transfer Funding from Capital Project #100119, "City Bikeways and Trails Plan Implementation" MEETING DATE: December 8, 2020 • Background: "Violet Bank Trail" and "Three Oaks Elementary Multi-Use Path" are two projects currently funded within Capital Project #100119, "City Bikeways and Trails Plan Implementation." However, due to growing project costs and the need to track federal funding, project expenditures and reimbursements, the Department of Parks and Recreation would like to establish two separate capital projects and transfer any related appropriations to date to each of the two component projects. Capital Project #100559, "Three Oaks Elementary Multi-Use Path," will provide a 10-foot wide asphalt path connecting the Sherwood Lakes and Highgate Greens neighborhoods to Three Oaks Elementary School, a distance of approximately 1,700 feet (0.3 miles). The proposed path will connect to the end of Tallwood Trail. The shared use path will be located along the western side of a planned City park site. No site acquisition will be required. As evident through the worn-down pathway at the project site, this route is highly used by pedestrians. This project includes a small footbridge and vegetation removal. This project will provide safe mobility for members of the community to Three Oaks Elementary School and the future Three Oaks Park. This new path will qualify as a Safe Routes to Schools project. Safe Routes to Schools is a federal program identifying routes for children to safely travel by bicycle or walking to their schools. If approved, Project #100559, "Three Oaks Elementary Multi-Use Path," will receive a transfer of$485,873 of funding appropriated to date from Project#100119, "City Bikeways and Trails Plan Implementation." This includes Transportation Alternatives Set-Aside Program funding in the amount of $290,672 for construction, that was previously appropriated and designated for the Three Oaks Elementary Multi-Use Path within Prjoect #100119. Additionally, Capital Project #100558, "Violet Bank Trail," will provide a 10-foot wide asphalt path connecting the eastern end of Violet Bank Drive to Selwood Drive, approximately 0.6 miles, along a "paper street" in the City's transportation system. This route is also a heavily used, existing worn dirt path. The Violet Bank Drive right-of-way parallels and is about 1,200-feet south of Providence Road, a 2-lane 35-mph roadway with approximately 16,000 vehicles per day and lacking sidewalks or shoulders. This project will provide a valued and needed alternate route for pedestrian and bike travel. This project enhances pedestrian and bicycle access from local neighborhoods to several area schools and a local recreation center by connecting to a shared use path along Indian Lakes Boulevard and sidewalks along Churchill Drive. The Violet Bank Trail project will connect to the existing sidewalks in the neighborhoods west of this project providing additional connections for pedestrians and cyclists to reach commercial areas and the Kempsville Area Library on Kempsville Road. The project will also upgrade existing drainage facilities in the corridor from a poorly maintained `v' ditch to a trapezoidal swale that will be easier to maintain, convey a larger volume of water and may provide water quality benefits. If approved, Project #100559, "Violet Bank Trail," will receive a transfer of $900,000, in appropriations to date funding from Project #100119, "City Bikeways and Trails Plan Implementation." This includes $262,848 of Transportation Alternatives Set-Aside Program funding previously appropriated and designated for "Violet Bank Trail" improvements within Project #100119. • Considerations: The attached ordinance establishes two new projects that will be specific to the "Three Oaks Elementary Multi-Use Path" project and the "Violet Bank Trail" project. All preliminary engineering (design) costs and associated federal funding will remain in the current Project #100119. The "Violet Bank Trail" project, funded by both federal Transportation Alternatives Set-Aside Program funding and local funding, includes right-of-way acquisition, utilities and construction of the trail and drainage improvements. • Public Information: Normal City Council agenda process. • Attachments: Ordinance; Location Maps (2); and Project Pages (2) Recommended Action: Approval Submitting Department/Agency: Parks and Recreation City Manager: additional connections for pedestrians and cyclists to reach commercial areas and the Kempsville Area Library on Kempsville Road. The project will also upgrade existing drainage facilities in the corridor from a poorly maintained `v' ditch to a trapezoidal swale that will be easier to maintain, convey a larger volume of water and may provide water quality benefits. If approved, Project #100559, "Violet Bank Trail," will receive a transfer of $900,000, in appropriations to date funding from Project #100119, "City Bikeways and Trails Plan Implementation." This includes $262,848 of Transportation Alternatives Set-Aside Program funding previously appropriated and designated for "Violet Bank Trail" improvements within Project #100119. • Considerations: The attached ordinance establishes two new projects that will be specific to the "Three Oaks Elementary Multi-Use Path" project and the "Violet Bank Trail" project. All preliminary engineering (design) costs and associated federal funding will remain in the current Project#100119. The "Violet Bank Trail" project, funded by both federal Transportation Alternatives Set-Aside Program funding and local funding, includes right-of-way acquisition, utilities and construction of the trail and drainage improvements. • Public Information: Normal City Council agenda process. • Attachments: Ordinance; Location Maps (2); and Project Pages (2) Recommended Action: Approval Submitting Department/Agency: Parks and Recreation City Manager: 1 AN ORDINANCE TO ESTABLISH CAPITAL PROJECTS 2 #100559, "THREE OAKS ELEMENTARY MULTI-USE 3 PATH," AND #100558, "VIOLET BANK TRAIL," AND TO 4 TRANSFER FUNDING FROM CAPITAL PROJECT#100119, 5 "CITY BIKEWAYS AND TRAILS PLAN IMPLEMENTATION" 6 7 NOW, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, 8 VIRGINIA, THAT: 9 10 1. Capital Project #100559, "Three Oaks Elementary Multi-Use Path" is hereby 11 established in the FY 2020-21 Capital Improvement Program. 12 13 2. $485,873 is hereby transferred from Capital Project #100119, "City Bikeways 14 and Trails Plan Implementation" to Capital Project #100559, with federal 15 revenues increasing by $290,672 and local funds providing the balance of 16 funding. 17 18 3. Capital Project #100558, "Violet Bank Trail" is hereby established in the FY 19 2020-21 Capital Improvement Program. 20 21 4. $900,000 is hereby transferred from Capital Project #100119, "City Bikeways 22 and Trails Plan Implementation" to Project #100558, to pay for right-of-way 23 acquisition, utilities, construction of the trail and drainage improvements, with 24 federal revenue increasing by $262,848 and local funds providing the balance 25 of funding. Adopted by the Council of the City of Virginia Beach, Virginia on the day of 2020. 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A -,w,j) Ku A -tot ..:; � * ,Ufk FOR== ' ° ��Q-ch i 0,_ lirdi a , le Eu. 4, a ALa \ \Se\-) 4 ,i. , ,,D 44riv,,,--77 . ,.. ,x..,,-,,. - toi\ i _1:) ,, ,!)------ "1',1„,;.1 \,gia kt P CI tn Toit‘//4141 >/ cll,n(' ' 1151 w-'''` v_S : 104*-' ' - '4 ° Ilia . \c \ y5 - ; 111 % 4t!r _,�� � �� ,*got .,. t�;�� j=r t-! - 't „i. 0Feet � .•j� f� d nn *� fli., .NG0 LOCATION MAP -� z_. r 40 i vii4,izzi, f- VIOLET BANK TRAIL Prepared by P.W./EngJEng.Support Services Bureau 9/10/2016 X:\CADD\Projects\ARC Files1AGENDA MAPS\Violet Bank Trail City of Virginia Beach FY 2021 thru FY 2026 Capital Improvement Program Project: Title:Violet Bank Trail Status: Approved Category: Parks and Recreation I Department: Parks and Recreation Ranking: Project Type Project Location Project Type: Rehabilitation/Replacement District:Citywide Programmed Funding Programmed Appropriated Budgeted Non-Appropriated Programmed CIP Funding Future Funding To Date FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Funding 900,000 0 0 0 0 0 0 0 0 Description and Scope This project will provide a 10-foot wide asphalt path connecting the eastern end of Violet Bank Drive to Selwood Drive,approximately 0.6 miles,along a"paper street"in the City's transportation system.This route is already a heavily used existing worn dirt path.The Violet Bank Drive right-of-way(ROW)parallels and is about 1,200-feet south of Providence Road,a 2-lane 35-mph roadway with approximately 16,000 vehicles per day and lacking sidewalks or shoulders. Purpose and Need The Violet Bank Trail project will connect to the existing sidewalks in the neighborhoods west of this project providing additional connections for pedestrians and cyclists to reach commercial areas and the Kempsville Area Library on Kempsville Rd.The project also will upgrade existing drainage facilities in the corridor from a poorly maintained 'v'ditch to a trapezoidal swale that will be easier to maintain,will convey a larger volume of water and may provide water quality benefits. History and Current Status This project first appeared in the FY 2020-21 CIP.The City received Transportation Alternatives Set-Aside Program funding of$70,000 in FY 2018-19 and$248,848 in FY2019- 20,which was appropriated in CIP 100119,"City Bikeways and Trails Plan Implementation,"(formely CIP 4-064),In December 2020,$262,848 in Transportation Alternatives Operating Budget Impacts Project Map Schedule of Activities Project Activities From-To Amount Construction 1/22-6/24 Right-of-way Acquisition Utility Relocation Total Budgetary Cost Estimate: 900,000 NO MAP REQUIRED Means of Financing Funding Subclass Amount Federal Contribution 262,848 Local Funding 637,152 Total Funding: 900,000 GovMax 1 11/16/2020 • N • *��t •• - r J S. '�. ,,, w _ 1,--, E. _ N7 . ^+ • a / - Au N ODD/ ' f‘.7.' i Lr 3 4c..%' cl ° • '-' a- /1- ° i .. -,,,z P�i. `, 'G 0 -5\ U41 �' • 0 0 / �, 1 - - RNERR. C � `- ` �� J f 4', _p---II'� 7 , /� / , , ______ _ 3\. 7 _: , 0 ° S' S 0 -✓G, 1-1.3 L.-I /lit) / , . • •,J z f /; _��> °� f,f 77 t 3 Three Oaks Elementa �'� " Multi-Use Path r o �... tli ' gyp\ ,S`�- /ji-1 s') e,_'-'4--.9-1y 4\,,^''' ',\-. (;) , '`--- ,. - --,01- i--, ,- *Nrj31.00\ , iz ri lowall5„,-) c? , / 016 ck)... o,„ 0 0 ' --.- a , zip1/4, --- -- N ',44; . -, GH ‘_ ,,_ -O.,---_-;---- , ,411 ,(;..litifs .,,,,, /4 //OP / I IPPL, 0 _, • 64, / t. 0 200 400 800 / / / Fimmoiimillimmm.Feet N// / , �, LOCATION MAP ,/ ,-' THREE OAKS ELEMENTARY 1 MULTI-USE PATH Prepared by P.WJEngJEng.Support Services Bureau 9/10/2018 XACADD Projects\ARC Fies1AGENDA MAPS\Three Oaks Elementary Multi❑use Path City of Virginia Beach FY 2021 thru FY 2026 Capital Improvement Program Project: Title:Three Oaks Elementary Multi-Use Path Status: Approved Category: Parks and Recreation I Department:Parks and Recreation Ranking: Project Type Project Location Project Type: Rehabilitation/Replacement District: Citywide Programmed Funding Programmed Appropriated Budgeted Non-Appropriated Programmed CIP Funding Future Funding To Date FY 2021 FY 2022 FY 2023 FY 2024 FY 2025 FY 2026 Funding 485,873 0 0 0 0 0 0 0 0 Description and Scope This project will provide a 10-foot wide asphalt path connecting the Sherwood Lakes and Highgate Greens neighborhoods to Three Oaks Elementary School,approximately 1,700 feet(0.3 miles).The proposed path will connect to the end of Tallwood Trail. Purpose and Need As evident through the worn-down pathway at the project site,this route is highly used by pedestrians.This project includes a small footbridge and vegetation removal.This project will provide safe mobility for members of the community to the Three Oaks Elementary School and the future Three Oaks Park.This new path will qualify as a Safe Routes to Schools project. History and Current Status This project first appeared in the FY2020-21 CIP.The City received Transportation Alternatives Set-Aside Program funding of$100,000 in FY 2018-19 and$270,672 in FY 2019-20,which was appropriated in CIP 100119,"City Bikeways and Trails Plan Implementation,"(formerly CIP 4-064).In December 2020,$290,672 in Transportation Alternatives Set-Aside Program funding was transferred to this project. Operating Budget Impacts Project Map Schedule of Activities Project Activities From-To Amount Construction 1/22-6/24 485,873 Total Budgetary Cost Estimate: 485,873 NO MAP REQUIRED Means of Financing Funding Subclass Amount Federal Contribution 290,672 Local Funding 195,201 Total Funding: 485,873 GovMax 1 11/16/2020 iE p�NU�6fA�1 • CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: An Ordinance to Transfer $3,700,000 from Capital Project #100147, "Dome Site Parking", to Capital Project #100145, "Dome Site Development Acquisition", for the Cost of Decommissioning the Dominion Energy Substation Located at 18th Street and to Modify the Description and Scope of Capital Project #100145 MEETING DATE: December 8, 2020 • Background: The City of Virginia Beach Development Authority (the "Authority") owns property at the Oceanfront, consisting of approximately 10.5 acres (the "Dome Site"). On November 19, 2020, City Council approved a development agreement (the "Development Agreement") between Atlantic Park, LLC, a Virginia limited liability company ("Developer") and the Authority for the development of a mixed- use development consisting of office, retail, residential, entertainment, recreational and parking uses at the Dome Site (the "Project"). The Development Agreement sets forth the terms, conditions and obligations of the parties. In connection with the Project, the City of Virginia Beach (the "City") has appropriated funds for various specific purposes, including Dome Site Development Acquisition (#100145). Norfolk Southern Railway Company ("Norfolk Southern") owns a parcel of land located on 18th Street(GPIN: 2427-17-2254) (the "NS Parcel"). The NS Parcel is subject to a certain lease agreement dated 1930 (the "Lease") between Norfolk Southern and Dominion Energy. The NS Parcel is currently the location of Dominion Energy's electrical substation and related facilities (the "Facilities"). Dominion Energy plans to decommission the Facilities before 2029; however, the City desires that the Facilities be removed from the NS Parcel sooner so that the NS Parcel can be utilized for the Project. The City has entered into a contract with Norfolk Southern for the acquisition of the NS Parcel, together with a portion of 1 8th Street, as a part of the Project. The City's acquisition of the NS Parcel is contingent upon Norfolk Southern being released from all its obligations related to the Lease. The City, Norfolk Southern and Dominion Energy have negotiated the terms and conditions by which Norfolk Southern would assign and be released from all obligations under the lease in connection with the NS Parcel (the "Partial Termination"). As a part of the Partial Termination, Dominion Energy has agreed to decommission the Facilities earlier on the condition that the Authority pay for a portion of the cost to decommission the Facilities. The Authority's portion of the costs would be approximately $3,700,000; however, Dominion Energy has agreed to give the City a credit against future undergrounding costs in the area in the amount of$1,000,000. ■ Considerations: To fund the Authority's portion of decommissioning the Facilities, the attached ordinance will transfer funds currently appropriated to the Dome Site Parking Project (#100147) to the Dome Site Development Acquisition Project #100145)for the sole purpose of funding the costs associated with decommissioning the Facilities located on the NS Parcel. The ordinance will also modify the Description and Scope of Project #100145 to expressly describe decommissioning of the Facilities as part of the required activities. Acquisition of the NS Parcel is a critical component to the Project. This action will allow timely acquisition and use of that parcel for the Project. The City and its residents will benefit from the decommissioning and upgrading of the Facilities, which will allow Dominion Energy to provide increased redundancies in its system to provide more reliable efficient resilient and expanded service. • Public Information: Public information will be provided through the normal City Council agenda process. ■ Attachments: Ordinance Recommended Action: Approval of Ordinance Submitting Department/Agency: Economic Development City Manager: / Y 1 AN ORDINANCE TO TRANSFER $3,700,000 FROM 2 CAPITAL PROJECT #100147, "DOME SITE PARKING," TO 3 CAPITAL PROJECT #100145, "DOME SITE 4 DEVELOPMENT ACQUISITION," FOR THE COST OF 5 DECOMMISSIONING THE DOMINION ENERGY 6 SUBSTATION LOCATED AT 18TH STREET AND TO 7 MODIFY THE DESCRIPTION AND SCOPE OF CAPITAL 8 PROJECT#100145 9 10 NOW, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF VIRGINIA BEACH, 11 VIRGINIA, THAT: 12 13 1. $3,700,000 is hereby transferred from Capital Project #100147, "Dome Site 14 Parking,"to Capital Project#100145, "Dome Site Development Acquisition,"for 15 the cost of decommissioning the Dominion Energy electrical substation located 16 at 18th Street. 17 18 2. The Description and Scope of Capital Project #100145 is hereby modified to 19 include decommissioning of Dominion Energy electrical substation located at 20 18th Street and related facilities. Adopted by the Council of the City of Virginia Beach, Virginia on the day of 2020. APPROVED AS TO CONTENT: APPROVED AS TO LEGAL SUFFICIENCY 4': f i _ Budget and Management Services ity A orney's Office CA15200 R-1 November 24, 2020 L. PLANNING 1. RACHEL A. DIO for a Conditional Use Permit re short term rental at 5528 Cabin John Drive DISTRICT 1 —CENTERVILLE RECOMMENDATION: APPROVAL 2. ANITA WEST for a Conditional Use Permit re short term rental at 121 South Kellam Road DISTRICT 4—BAYSIDE RECOMMENDATION: STAFF—APPROVAL PLANNING COMMISSION—DENIAL 3. ARICA & MELVIN L. ATKINS III for a Conditional Use Permit re short term rental at 598 Pinewood Drive,Unit 205 DISTRICT 6—BEACH RECOMMENDATION: APPROVAL 4. HDS PROPERTIES,LLC/RUTH VOGEL for a Conditional Use Permit re short term rental at 600 South Atlantic Avenue DISTRICT 6—BEACH RECOMMENDATION: STAFF—APPROVAL PLANNING COMMISSION—DENIAL 5. RICKERT FAMILY LIVING TRUST for a Conditional Use Permit re short term rental at 349 Norfolk Avenue DISTRICT 6—BEACH RECOMMENDATION: APPROVAL a •e m-tu'�s ht1 list r i4"y"`�• NOTICE OF PUBLIC HEARING A Regular Public Hearing of the Virginia Beach City Council will be held in the Virginia Beach Convention Center, located at 1000 19th Street,Virginia Beach, Virginia 23451,on Tuesday,December 8,2020 at 6:00 p.m.,at which time the following applications will be heard: Rickert Family Living Trust(Applicant&Property Owner) Conditional Use Permit(Short Term Rental)Address: 349 Norfolk Avenue GPIN(s): 24271464730042 Council District:Beach Rachel A.Dio(Applicant&Property Owner)Conditional Use Permit(Short Term Rental)Address:5528 Cabin John Drive GPIN(s): 1454779746 Council District Centerville Anita West(Applicant&Property Owner)Conditional Use Permit(Short Term Rental)Address:121 South Kellam Road GPIN(s):1477334326 Council District Bayside Arica & Melvin L Atkins Ill (Applicants & Property Owners) Conditional Use Permit (Short Term Rental) Address: 598 Pinewood Drive Unit 205 GPIN(s): 24270434561043 Council District Beach HDS Properties, LLC (Applicant) Ruth Vogel (Property Owner) Conditional Use Permit (Short Term Rental) Address: 600 South Atlantic Avenue GPIN(s): 2426396896 Council District Beach Copies of the proposed plans,ordinances,resolutions and amendments are on file and may be examined by appointment in the Planning Department at 2875 Sabre St,Suite 500,Virginia Beach,VA 23452 or online at http://www.vbgov.cOm/oc. For information call 757- 385-4621. If you wish to make comments virtually during the public hearing, please follow the two-step process provided below: 1. Register for the WebEx at rttns://vbgov webex comlvbeov/onstage/g oho ?M TI D=e24881fr.90h870h6e29r1888230hfaRA to 2. Register with the City Clerk's Office by calling 757-3854303 or via email at abarnes@vbgov.com prior to 5:00 p.m. on December 8,2020. If you require a reasonable accommodation for this meeting due to a disability,please call the City Clerk's Office at 757-385-4303.If you are hearing impaired, you can contact Virginia Relay at 711 for TDD service. Please provide the Virginia Relay operator the login information for the WebEx and the operator will login to allow participation for individuals with hearing disabilities.The meeting will be broadcast on cable TV, www.vbgov.com and Facebook Live. All interested parties are invited to attend. Amanda Barnes City Clerk BEACON-NOVEMBER 22&29,2020-1 TIME EACH i \ \\\\ \1—----\ U , 0 lk ,„\ ,,, ,,,,1 'we' ___\_--\.--- AI \ R5\I?_---\ 0 47,10,,,,, - ' r NY'il I 100:41 6,* \ \ ,- CI iii, ). - \ \ , 00 3# ` vio‘e -10 sa 4i& A24 ) IP „,, n 0\ ~�L♦ " R5D♦ G R5D 8C2, 0 \ 'R�SD o • , co sa , \ ..\ 114 11 lij y . / e --____—_-:„ I 1 -..? \I:l . den View it..-0 ______---- __ Driv �, cl) ...,- -,,, / 0 v I 0/ (>4 i _..-- --- `14 0 0 / or \- i_N,400. ' II% -6N no. ST RSD ft _iv \ • o I ^ VO,,1/4 '// N /// Site Rachel A. Dio W , E Property_Polygons 5528 Cabin John Drive s Zoning L I Parking Lot Drive Aisle - 1 .11. Immo Feet I IBuilding 0 2040 80 120 160 200 240 �S` ��h;'Gggqq7 f� 'TT! `4 CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: RACHEL A. DIO [Applicant & Property Owner] Conditional Use Permit (Short Term Rental) for the property located at 5528 Cabin John Drive (GPIN 1454779746). COUNCIL DISTRICT — CENTERVILLE MEETING DATE: December 8, 2020 ■ Background: The applicant is requesting a Conditional Use Permit for a Short Term Rental on a 11,189 square-foot parcel zoned R-5D Residential District. The lot consists of one single-family dwelling containing three bedrooms. The minimum number of parking spaces required for the Short Term Rental use is one per bedroom, or three spaces in this instance. The maximum occupancy for guests on-site after 11:00 p.m. for a three-bedroom Short Term Rental is nine; however, at the time of this writing, the applicant accepts City Council's recent Short Term Rental condition revisions reducing the number of overnight guests permitted to two per bedroom and limiting the number of bookings in a seven day period from two to one. These changes are reflected in the conditions below. • Considerations: This property is located in the single-family subdivision of Alexandria. The applicant indicated during the Planning Commission public hearing that her plan is to offer the Short Term Rental primarily to travelling medical workers, such as nurses and doctors, and not necessarily to tourists. The parking plan depicts the three required off-street parking spaces within the existing driveway, thereby meeting the parking requirement. Furthermore, all other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Additional details pertaining to the application are provided in the attached Staff report. There were two speakers in opposition at the Planning Commission public hearing. The concerns raised included concern regarding the use of the public street for parking, the incompatibility of proposed use within a residential neighborhood, the lack of nearby tourist attractions, and potential for excessive trash. • Recommendation: On November 4, 2020, the Planning Commission recommends approval of the application by a recorded vote of 8 to 0. Rachel A. Dio Page 2 of 3 1 . The following conditions shall only apply to the dwelling unit addressed as 5528 Cabin John Drive, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through `c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23- Rachel A. Dio Page 3 of 3 71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31- 28. 10.Accessory structures shall not be used or occupied as Short Term Rentals. 11 .No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12.The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13.The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14.There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15.The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 16.To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. • Attachments: Staff Report and Disclosure Statements Location Map STR Vicinity Map Minutes of Planning Commission Hearing Recommended Action: Staff recommends Approval. Planning Commission recommends Approval. Submitting Department/Agency: Planning Department 'ff� City Manager: It.� �' Applicant & Property Owner: Rachel A. Dio Agenda Item PC Public Hearing: November 4, 2020 City Council Election District: Centerville 13 City of Virginia Beach Request Conditional Use Permit (Short Term Rental) Staff Recommendation Approval 411:00,,N 10 , Staff Planner 1011 4111,41P47 I* 111* - - Summer Peebles 3 c r —.p vol Location If.. 5528 Cabin John Drive i4/ 400e:,_ . GPIN 1454779746 Site Size 11,189 square feet Existing Land Use and Zoning District Single-family dwelling/ R-5D Residential Surrounding Land Uses and Zoning Districts North Apartments/A-24 Apartment South Glen View Drive . ' Single-family dwellings/ R-5D Residential _. 0 A East • Single-family dwellings/ R-5D Residential 10 West ; j. y Cabin John Drive Single-family dwellings/ R-5D Residential 4%4, d t ate,_ #, t. 4. `' .� ` • Rachel A. Dio Agenda Item 13 Page 1 Background & Summary of Proposal Site Conditions and History • This 11,189 square foot parcel is zoned R-5D Residential District. • City records indicate this single-family home was built in 1991. • Staff inspected the site on September 10, 2020 to observe site conditions and take photographs for this report. • On-street parking is permitted 24-hours per day,therefore any overflow parking beyond the minimum parking spaces required could occur within the public street. • The applicant agrees with City Council's recently imposed conditions reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Short Term Rentals in the Vicinity _ r AVW AIN i isr 10.),.00.----Irv..fi, 0 \_i I r �i 11►��rN #+ ,,,.. t :,. .ii, ,i,,•40,,,„tt„ i, ;,,,,,,,, ,_.______,--/______-_ ,a„e , 4/®'10®�* ►�a��;1"it ', -wig� �t -'lit ♦ rS i?,q �'! 4:6 =a:`�� E: ak . 4) at . VP* STATUS ,t ',�. AVA • Approved 44 • Denied 43 l Q Under Review ,° , ,�� O Registered Summary of Proposal The applicant submitted a Conditional Use Permit request to operate a Short Term Rental on the subject site. The regulations for Short Term Rental use are identified in Section 241.2 of the City Zoning Ordinance. Specific details pertaining to this application are listed below. • Number of bedrooms in the Short Term Rental: 3 • Maximum number of guests permitted on the property after 11:00 pm: 6-As recommended in condition 15 • Number of parking spaces required (1 space per bedroom required): 3 Rachel A. Dio Agenda Item 13 Page 2 • Number of parking spaces provided on-site:3 1 ° A-24 7 Zoning History �, ` fy' c. 1 j # Request ,i1 R ,f� 1 CRZ(A-12 Apartment to A-24 Apartment)Approved �l 03/17/2015 j; f CUP(Borrow Pit)Approved 01/12/1999 AL GI • ieso e __I /o\t �,X 'v, ' Application Types CUP—Conditional Use Permit MOD—Modification of Conditions or Proffers FVR—Floodplain Variance LUP—Land Use Plan REZ—Rezoning NON—Nonconforming Use ALT—Alternative Compliance STR—Short Term Rental CRZ—Conditional Rezoning STC—Street Closure SVR—Subdivision Variance Evaluation & Recommendation This property is located in the Alexandria subdivision which is compromised of single-family dwellings. Short Term Rental use appears to not be common in this area of the city.Three off-street parking spaces are required and all are provided on-site within the driveway in front of the dwelling unit. Staff believes that all other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short-Term Rentals can reasonably be met.There are no other Short Term Rental uses within the general vicinity of this use.Staff is not aware of any opposition to this request. Based on the considerations above, Staff recommends approval of this request with the conditions listed below.These conditions do reflect City Council's Short Term Rental revisions by reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Recommended Conditions 1. The following conditions shall only apply to the dwelling unit addressed as 5528 Cabin John Drive, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5)years from the date of approval.The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however,the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Rachel A. Dio Agenda Item 13 Page 3 Term Rental where the Short Term Rental has been the subject of neighborhood complaints,violations of its conditions or violations of any building, housing,zoning,fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight(number of bedrooms times two(2))on the property where the Short Term Rental is located.This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person,who may be the owner, operator or an agent of the owner or operator,who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when,the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements'a'through 'c' below.This information must be submitted to the Planning Department for review and approval.This shall be done within six(6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration;and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law,each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise),31-26,31-27 and 31-28 (solid waste collection), 12-5(fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles,where provided,and comply with the requirements of City Code sections 31-26,31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site,except one(1),four(4)square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7)day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers")shall be two (2) individuals per bedroom. 16. To the extent permissible under state law, interconnected smoke detectors(which may be wireless),a fire extinguisher and,where natural gas or propane is present, carbon monoxide detectors,shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Rachel A. Dio Agenda Item 13 Page 4 Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED)concepts and strategies as they pertain to this site. Public Outreach Information Planning Commission • As required by the Zoning Ordinance,the public notice sign(s)was placed on the property on October 5, 2020. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, October 18, 2020, and October 25,2020. • As required by City Code,the adjacent property owners were notified regarding the request and the date of the Planning Commission public hearing on October 19, 2020. • This Staff report, as well as all reports for this Planning Commission's meeting, was posted on the Commission's webpage of www.vbgov.com/pc on October 29, 2020. City Council • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, November 22, 2020,and November 29, 2020. • As required by City Code,the adjacent property owners were notified regarding both the request and the date of the City Council's public hearing on November 23, 2020. • The City Clerk's Office posted the materials associated with the application on the City Council website of https://www.vbgov.com/government/departments/city-clerk/city-council/Documents/BookmarkedAgenda.pdf on December 4, 2020. Rachel A. Dio Agenda Item 13 Page 5 Site Layout & Parking Plan NIf' . o ,ssoc & 11U 5 63•4610 p 4YE r 6 �AWAGE EASE `'~r/ T *. r ^ ' / / / � / /t/b, / /' i iW / 1 /4' v I / / // !' //• I / f o I / /1 /l iw" I l - I / f oF. wA / / tM rJ/f_ /o. /////r A / — / // / � / . / / : /4 /i 833 . 834 /?/ / / /o I� 2t /. x- % o f /a/;� r /o/4 % " • r /2 / t / ' ; II ; 6.151 /% 1 !e l 1 f // // / -"II / / / w W • • 1 / / �Illn:4 •►• �/�4/°• I:•' • r� /•4i - / / 43 • q. / , i C ,P, pyp c/H�oo. t3 �, Co k'L 1/it.6'. c, nth • Gyp ``tt`\`` yt"4,lQ Rachel A. Dio Agenda Item 13 Page 6 Site Photos , r • . 'pg. ' - 0 . , .-4-.bi — . .. ':,..:, 7'. .• -......vt ... . . ....°- . . lit...,._. r a‘1.14•P/40,40.7.40 • •,— • , a, , ,4, .,, Nit.", • ., i" 111 II — ... . — AI • - -- -- -- — —— " -- -.. - 14 I — i , 11 .._ ,.11.,•, . ',., .1,..- * .--,....7.,40,:_,,,,,t., r..._ ,.... • : .. ,„ ,' 't... .‘, '-i' 1•4 '•4'.''•' ..---", ' ,!, N., • ; e-,•:'. ,- ••-;,•• -__ / „, .......„....... ... ... - - - ---="-_.= -411111106Millik L_:..,.-_;1\ , = .• ....= . - r 177---• ' =, •Lam _ - ,,diemisorA I P .', •' ...„ - .....= .4stimomatmor: ...KA Rachel A. Dio Agenda Item 13 Page 7 Site Photos 0.4 GLEN VIE.44 STOP Rachel A. Dio Agenda Item 13 Page 8 Disclosure Statement 11/4113 APPLICANT'S NAME Rachel A Dio DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a board, commission, or other body appointed by the City Council. Such applications and matters include,but are not limited to,the following: Acquisition of Property Disposition of City Modification of by City Property Conditions or Proffers Alternative Economic Development Nonconforming Use Compliance,Special Investment Program Changes Exception for (EDIP) Board of Zoning Encroachment Request Rezoning Appeals - Certificate of Floodplain Variance 1 Appropriateness Street Closure (Historic Review Board) Franchise Agreement Chesapeake Bay Preservation Area Lease of City Property Subdivision Variance Board -- Conditional Use Permit License Agreement Wetlands Board • • The disclosures contained In this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. • ._____. SECTION 1 / APPLICANT DISCLOSURE FOR CITY USE ONLY/All disclosures must be updated two(2)weeks prior to any j Page 1 of 7 Plannin,.Commission and Cit.Council meetln:;that.,ertains to the a;;nlicat(on(s). 0 APPLICANT NOTIFIED OF HEARING DATE_ _11-05-2020. .-SP O NO CHANGES AS OF DATE:_11-16-2020 -SP la REVISIONS SUBMITTED DATE- , AS PER THE APPLICANT,THERE ARE Date: 11 16 2020-SP NO ANTICIPATED CHANGES BEFORE THE DEC. 8TH CC PUBLIC HEARING Rachel A. Dio Agenda Item 13 Page 9 Disclosure Statement Check here if the APPLICANT_IS_NOT a corporation, partnership, firm, business,or other unincorporated organization. ECheck here if the APPLICANT IS a corporation, partnership, firm, business, or other unincorporated organization. (A) List the Applicant'sIf an LLC,list all member's names: If a CORPORATION,list the the names of all officers,directors, members, trustees, etc.below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Applicant: (Attach list if necessary) N/A See next page for information pertaining to footnotes and 2 IO SECTION 2 / PROPERTY OWNER DISCLOSURE V Complete Section 2 only property owner is Aferent from Applicant. _ Check here if the PROPERTY OWNER IS NOT a corporation,partnership,firm, business,or other unincorporated organization. E Check here if the PROPERTY OWNER IS a corporation, partnership,firm, business,or other unincorporated organization,AND THEN,complete the following. (A) List the Property Owner's name:________ If an LLC, list the member's names: Page 2 of 7 Rachel A. Dio Agenda Item 13 Page 10 Disclosure Statement Virginia Beach If a Corporation, list the names ofall officers,directors, members,trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Property Owner: (Attach list if necessary) "Parent-subsidiary relationship" means "a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation. See State and Local Government Conflict of Interests Act,Va. Code§2.2.3101. 2 "Affiliated business entity relationship" means "a relationship, other than parent-subsidiary relationship,that exists when(i)one business entity has a controlling ownership interest In the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or (iii) there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entitles share the use of the same offices or employees or otherwise share activities, resources or personnel on a regular basis: or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act, Va.Code§ 2.2-3101 SECTION 3. SERVICES DISCLOSURE Are any of the following services being provided in connection with the subject of the application or any kusiness operating or to be operated on the Property. If the answer to any item is YES, please identify the firm or individual providing the service: IF THE OWNER AND APPLICANT ARE DIFFERENT, EACH MUST COMPLETE THE SECTION SEPERATELY Page 3 of 7 Rachel A. Dio Agenda Item 13 Page 11 Disclosure Statement APPLICANT Virginia Beach YES NO SERVICE PROVIDER(use additional sheets if needed,'_- - C " Accounting and/or preparer of your tax return n ® Architect/Landscape Architect/ Land Planner n ' Contract Purchaser(if other than 2 the Applicant)-identify purchaser and purchaser's service providers Any other pending or proposed purchaser of the subject property (identify purchaser(s)and purchaser's service providers) ® Construction Contractors ® Engineers/Surveyors/Agents Financing(include current Navy Federal Credit Union-current r mortgage holders and lenders lender X // selected or being considered to provide financing for acquisition or construction of the property) nL Legal Services Real Estate Brokers/ r, Agents/Realtors for current and anticipated future sales of the subject property SECTION 4. KNOWN INTEREST BY PUBLIC OFFICIAL OR EMPLOYEE YES NO Does an official or employee of the City of Virginia Beach have n N an interest in the subject land or any proposed development contingent on the subject public action? If yes, what is the name of the official or employee and what is the nature of the interest? Page 4 of 7 Rachel A. Dio Agenda Item 13 Page 12 Disclosure Statement Virginia Bea' CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing, I am responsible for updating the information !provided herein two weeks prior to the Planning Commission, Council, VBDA 1 meeting, or meeting of any public body or committee in connection with this A lication. ;. &. Rachel A Dio 0I�'�4D A CANTS SIGNATURE PRINT NAME DATE Page 5 of 7 Rachel A. Dio Agenda Item 13 Page 13 Next Steps • Upon receiving a recommendation from Planning Commission,this request will be scheduled for a City Council public hearing. Staff will inform the applicant and/or their representative of the date of the hearing in the upcoming days. • Following City Council's decision,the applicant will receive a decision letter from Staff. • Once the conditions of approval are in place and/or completed,the applicant must contact the Zoning Division of the Planning Department to obtain verification that the conditions have been met. Contact the Zoning Division at 757-385-8074. • If the request requires land disturbance and/or a subdivision of property, please contact the Development Services Center(DSC)to discuss next steps for site plan/plat review. Contact the DSC at 757-385-4621 or the Development Liaison Team at 757-385-8610. • Please note that further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/ Permits and Inspections Division,and the issuance of a Certificate of Occupancy,are required before any approvals allowed by this application are valid. • The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED)concepts and strategies as they pertain to this site. Rachel A. Dio Agenda Item 13 Page 14 so ‘-‘14-11t4VP ______ -__-------- tok \\ - 1 \\ k 44 7,_ L -,\c-s . VIA '‘ \k, *** cli '4 \ to-..... INF. _. ___, Spook * - .v1tv - 2 . . . - _.:--1--- a '' 0 1,10,0i\-4(t/ an. =Z _74a VI co \ 4109 I - Q firC 1—__ Z lag irgj ::.1 -.4N)i ir / >- Ca—‹ -4P:Sigir Iiiii.,••,,dr •4 iz: it it)0 I— U \Ors4 \ , ---.., 00 IS .116 iii. ‘*,,4 ''\. 4 N' SI - N „--------:: lik' Ail. * ,&,,,,„.....kAtir gr ,..,,,,,. (. .) L-ft,1 41,\%., 4, :w.tdip-iirli -___-_-_ Piw / -4'44, 44 > 1 / . . ,** 0-A1110 Iii ' ( E IWill. till, 1'. 0 • '. ia‘,i ; ' **1 V ' J ! ' 4-1 ft 4- for." -IV / - W ---A---. Aa-gill' , ._: 11 AWiii` e / r. / \Iliiik , , -.til , . t air r4aiI ` / N a a�i c a�i / _ --`- illk----__%-,---*-- / < t � 'fCO Item # 13. Rachel A. Dio [Applicant & Property Owner] Conditional Use Permit (Short Term Rental) 5528 Cabin John Drive November 4, 2020 RECOMMENDED FOR APPROVAL — HEARD Ms. Sandloop: Okay our next item of business is agenda item number 13, and Madam Chair, we do have two speakers on this one, it is Rachel A. Dio an application for a Conditional Use Permit Short Term Rental on property located 5528, Cabin John Drive in the Centerville District, will the applicant or the applicant's representative please step forward. Ms. Dio: Hi, my name is Rachel Dio and I am a registered nurse, I am applying for a CUP for my single family detached home. I have noticed that there is a housing need for travel nurses and other essential employees with small pets. Hotels don't have dog parks and after a long shift people just want, you know, they just want to go home relax and, you know, play with their pets in peace. So I have kind of wanted to open my home up to people in that type of situation, thank you. Ms. Sandloop: Our first speaker is Michael Kumetz followed by Barbara Messner. Ms. Oliver: Welcome, if you will state your name for the record please, Mr. Kumetz: My name is Michael Kumetz and I am, I live at 5869 Glen View Drive with my 98 year old Mother suffers from Lewy body dementia. I had open heart surgery this past February and I oppose the short term rental application. First of all there is not enough parking on the Cabin John. People, it is residential community, it lies in Centreville District subdivision of Alexandria. There are lots of people, lot of families that live on Cabin John, they have multiple cars, they can't put all their cars on the driveways so they park on the street. Perfectly normal, my understanding is that you have got to have a 9 x 18 foot space to park a vehicle according to the ordinance. One for each room, she wants to rent three rooms, this is a bedroom community, it is not a commercial business community. I, we don't need to have a Conditional Use Permit for Short Term Rentals; this is in, as I said, Alexandria subdivision in Centerville. There are no major or, actually I can say, there are no tourist attractions there. There is nothing, unless you consider Mount Trashmore too, which is down the road on Centerville Turnpike across from the church that is there as a major tourist attraction or 1 a historical attraction. Nothing exists there, I don't believe that, that we need to have a, what I would consider a flop house, ultimately, you know, I don't want to live next to a flop house. And so I ask that you deny the request, the application because there is no, there is no reason to have a Short Term Rental in a residential community. And if I might, Appendix (A) of Section 203 and 505 do not explicity provide zoning regulations for single family domiciles in a R5D residential community seeking a Conditional Use Permit. And so I think you need to go and look at that. Ms. Oliver: Sir, unfortunately that bell was your time up but I do have one question before you leave and I just want to make sure I understood you because you said, a couple of questions I guess, where are you located in proximity to this house? Mr. Kumetz: Right next door. Ms. Oliver: Oh! You are next door, okay, thank you and the other question or, I had is that, I probably misunderstood you, was that you said that she has three bedrooms as if she is going to rent out each individual bedroom versus, Mr. Kumetz: That is what it appears from what I was able to discern. Ms. Oliver: Discern from the application? Mr. Kumetz: Yes, Ms. Oliver: Oh! No, she rents, the application is for renting the house as one unit not as individual bedrooms, not as, Mr. Kumetz: Oh! Okay, Ms. Oliver: And so she would,the application is for her to rent it either on a, well actually because the way the ordinance is now she would rent it once every seven days, if she was able to do that more than once a month or whatever to of a family or one person whoever would want to rent it but she is not renting each individual bedroom out separately. Mr. Kumetz: Well that is okay, alright. Ms. Oliver: I just want to make sure, Mr. Kumetz: That is fine, that is fine but the problem that I have is, okay you are going to have someone, you know, if she is lucky to have, you know someone come in and rent the house for no more than seven days. You know how often are you going to do that, you know we are in a pandemic, you have got to 2 have all sorts of protocols to try to keep ourselves safe from the Covid-19 virus. Ms. Oliver: Right, Mr. Kumetz: Okay and so we are going to have trash that mounts up, I don't know if that is going to get blown all over the place, it has blown on to my property. You know if there is tissues, whatever, it is a problem, Ms. Oliver: I understand, yes sir, I think the Commissioner Weiner has a question for you. Mr. Kumetz: Sure. Mr. Weiner: You are talking about parking, have you had any problems at all with this particular residence for parking situations or any problems at all with this particular residence? Mr. Kumetz: Yes, My property, that is, I can't, yes among the corner of the Glen View and Cabin John so my property is on the other side of that blue box. Okay, you see, you can actually see, right down by the, Mr. Weiner Sir, can you get back to the mic, Mr. Kumetz: Yes, I am sorry, you can actually see right down by the street in front of my house there is a vehicle parked. Okay my property line, as this blue box shows goes right down the side of their drive way to the drive way apron, the pin is there. And so it is always a vehicle parked in front of my property, my house and so it is a major problem. And during the evenings, as you can see there are other vehicles parked on the opposite side of the street on the Cabin John. You can't really park on where the house is located other than in front of my property. Mr. Weiner: Okay sir, appreciate that, that is what I am going to find out, thank you. Mr. Kumetz: Sure, thank you. Mr. Redmond: Can I just Mr. Weiner, I would note, we have got some photographs here with 3 large pick-up trucks in the drive way, I am pretty sure that it meets the parking requirement. Mr. Kumetz: But if I might sir... Ms. Oliver: Sir. Thank you very much. Ms. Sandloop: Our last speaker is Barbara Messner. 3 Ms. Messner: Good evening, Ms. Oliver: Hello, Miss. Messner, Ms. Messner: Thank you, Mr. Tajan and everyone else I tried to have this rescheduled because the elections really aren't over yet and I think it is outrageous to have this at 9.00 AM the day after the elections. It is total lack of due process, one of my objections to this meeting was it was only five days advertisement in the Beacon. Only about 50,000 people get the Beacon that is not how we should be notified, the entire city is being commercialized, I can't believe somebody cares more about, you know, taking care of somebody's dog on vacation. Our entire city is overrun with dogs, our beach is a dog park, you know, I listened to some of the things earlier today, it is just outrageous and, you know, some of the people here who have direct conflicts with the beach, this one isn't the beach district. And people who do abstain occasionally, they don't leave the room like Will Sessoms used to do. The increased traffic, you are also allowing businesses in neighborhoods. Some people can sell guns out of their home, they are opening day care, all type of things. Like I said, somebody said it is close to Mount Trashmore, the closest thing, there are shuttle buses that take people, the city is still planning to use the money for another something in the water and all of these events and shuttle people all over the city. You know they couldn't shuttle people to the polls, you know. As Mrs. Henley has stated even though she, you know, it is just one person voting no, you don't have enforcement, there aren't enough people to enforce. And you are destroying the neighborhood flexibility plus the ability for somebody to rent long term, for somebody to buy the house and to rent long term in the neighborhood is there shouldn't be short term rentals, a week especially during the pandemic, why don't you wait until the pandemic is over before you even consider any of these. What is the bloody rush. So I oppose, thank you. Ms. Oliver: Thank you. Ms. Sandloop: No more speakers. Ms. Oliver: Would the applicant like to come back up, please, Ms. Dio: While I can appreciate the concerns, there are few issues, my rental is not so much for, you know, activities, it is more for medical professionals. You know they come in here, they want to, you know, they need to find a place, they don't want to be by themselves, yes, they want to bring a pet to keep them company. And most of their contracts are for three months so it would 4 not be a weekly rental, they are here, yes, they might want to go to the beach, they are at Virginia Beach but, you know, there are lots of hospitals around, a lot of dialysis clinic and we need nurses, you know, we need essential personnel, you know, we would get more if they can bring, you know, their pets or families you know. And parking on the street is public parking, here as you can see in the pictures there is no issues with parking, I myself have multiple cars and I have never had problems with parking. So you know these are issues that are not valid. As you can see from the parking on the stop sign, there is plenty of parking there, plenty of other parking and the one by his - in front of his house, that is all public parking. That is not in front of his house, it is not my fault his driveway is short. But as you can see I can fit three F-150's in mine so I meet the regulations. Ms. Oliver: Mr. Wiener Mr. Weiner: Mrs. Dio, I know you just said that — are you renting your house up on monthly rentals, you are not going to rent your house on a weekly rental? Ms. Dio: No, I am trying to get, you know, I am trying to help with the medical professionals. Like I said I am a registered nurse and we need help, you know and the people I know, travel nurses, they have, you know, they are single, they have, you know, a small dog or a cat that they want to bring with them, Mr. Weiner: Okay, so you are, it is going to be, it is not going to be a weekly rental. Ms. Dio: No, you know but I want to follow the rules, I got to, Mr. Weiner: One second I have got question for staff, is that considered a Short Term Rental since it is a monthly rental that is less than 29 days, or less than 30 days? Mr. Tajan: The term for Short Term Rental is dependent on the stay length, so it is anything less than 30 days is considered a short term rental. Ms. Dio, if you don't mind, Madam Chair, Mr. Vice Chair. Mr. Weiner: No, go right ahead, Mr. Tajan: Do you plan on renting out for less than 30 days to anybody at any point in time? Ms. Dio: It depends on their situation. Mr. Tajan: Okay so this is more for flexibility for you. 5 Ms. Dio: Yes, Mr. Tajan: Do you plan on being in the home or when they are there or do you plan on renting the house? Ms. Dio: It depends on the situation, I myself would like to become a travelling nurse, Mr. Tajan: Okay, Ms. Dio: Yes, Mr. Tajan: Okay, Ms. Dio: Yes. Mr. Weiner: I have got a question so, sorry, Mr. Weiner: For that question I think we should keep it as we are doing now because it depends on the situation she is doing for, Ms. Dio: Yes I want to follow the rules so, Mr. Weiner: Okay that is fine, I appreciate that, thank you very much. Ms. Dio: Okay. Ms. Oliver: George, Mr. Alcaraz: Are your tenants all travelling nurses? Ms. Dio: I don't, I don't have, I never tried that to, yes, Mr. Alcaraz: You said you are trying to push for the medical field, Ms. Dio: Right, you know, because it is the, if the permit is, is approved that is who I would like to, you know, mark it, I would tell my friends who know travelling nurses, hey, you know, I am available this and not so that is whom I am trying to cater to. Mr. Alcaraz: Thanks. Ms. Oliver: Mr. Wall, Mr. Wall: So you currently live there? Ms. Dio: Yes. Mr. Wall: Okay, that is all. 6 Mr. Dio: Yes. Ms. Oliver: Any other questions for the applicant? Thank you so very much. Ms. Dio: You are welcome. Ms. Oliver: Now we are going to close the commission, close the hearing to the Commission and open it up for discussion and or motion, please, yes. Ms. Klein: I worked in patient at CHKD in the PICU and over at Norfolk General and I met some outstanding travelling nurses. Some of the best nurses I met were from other states and some of the best nurses I knew became travelling nurses. So I think that this is a great opportunity and I thank the applicant for putting it out there. I will be voting for it. Ms. Oliver: Do we have a motion? You want to make a motion? Ms. Klein: Sure, I move that we approve the application. Mr. Weiner: I will second it. Ms. Oliver: With a second by Commissioner Wiener, and call for the vote, Ms. Sandloop: Mr. Alcaraz Mr. Alcaraz: Aye Ms. Sandloop: Mr. Barnes is absent, Mr. Coston, Ms. Coston: Aye. Ms. Sandloop: Mr. Graham is absent, Mr. Horsley is absent, Mr. Inman, Mr. Inman: Aye, Ms. Sandloop: Miss. Klein, Ms. Klein: Aye, Ms. Sandloop: Mr. Redmond Mr. Redmond: Aye, Ms. Sandloop: Mr. Wall. Mr. Wall: Aye, Ms. Sandloop: Vice Chair Weiner. 7 Mr. Weiner: Aye. Ms. Sandloop: Madam Chair Oliver. Ms. Oliver: Aye, Ms. Sandloop: By a vote of eight to zero, agenda item number 13 has been approved. AYE 8 NAY 0 ABS 0 ABSENT 3 Alcaraz AYE Barnes ABSENT Coston AYE Graham ABSENT Horsley ABSENT Inman AYE Klein AYE Oliver AYE Redmond AYE Wall AYE Weiner AYE CONDITIONS 1. The following conditions shall only apply to the dwelling unit addressed as 5528 Cabin John Drive, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times 8 two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4- 1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 9 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 16. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. 10 --J 1 1 - R7.5 . r Conestoga Road Conestoga Road ' 1 ° X \ 'Ls m -1 0 l 1 gir M D H-- << It �. �' . /Ry% 1I 61 L A18 , # o \ R75 � ' _ _ St eet 0 � �. �1 ge �� a :., os ` 0 0 I o 1 \ .:. ti _, O ••�Ar 7-- 93 o bill 'R7.5 D110.41 LI to 0 i • 111 ii 11 iCi.ort , IA . iii N /%4 Site Anita West W-,0hy 1 Property_Polygons 121 South Kellam Road s Zoning Parking Lot Drive Aisle — somm. Feet Building 0 1530 60 90 120 150 180 XU dE.jC �OSq'�` y,7 y 'PC as-, =4t cL . . CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: ANITA WEST [Applicant & Property Owner] Conditional Use Permit (Short Term Rental) for the property located at 121 South Kellam Road (GPIN 1477334326). COUNCIL DISTRICT — BAYSIDE MEETING DATE: December 8, 2020 • Background: The applicant is requesting a Conditional Use Permit for a Short Term Rental on a 8,655 square-foot parcel zoned R-7.5 Residential District. The lot consists of one single-family dwelling containing four bedrooms. The minimum number of parking spaces required for the Short Term Rental use is one per bedroom, or four spaces in this instance. The maximum occupancy for guests on-site after 11:00 p.m. for a four-bedroom Short Term Rental is twelve; however, at the time of this writing, the applicant accepted City Council's recent Short Term Rental condition revisions reducing the number of overnight guests permitted to two per bedroom and limiting the number of bookings in a seven day period from two to one. These changes are reflected in the conditions below. • Considerations: This property is located within the single-family dwelling community of Pocahontas Village; however, an apartment complex exists across the street along S. Kellam Road. The subject property is less than '/% mile from the Town Center. The parking plan designates all four required off-street parking spaces within the driveway, with one of those spaces within an existing carport. This configuration meets the stipulations of Section 241.2(1) the Zoning Ordinance. Furthermore, all other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Additional details pertaining to the application are provided in the attached Staff report. One letter of support was received by Staff, and there were three speakers in opposition at the Planning Commission public hearing. The opposition indicated concerns regarding possible increase in crime and traffic, and overcrowding within the dwelling. In addition, the speakers presented a petition of opposition to the Planning Commission with 38 signatures. • Recommendation: On November 4, 2020, the Planning Commission passed a motion to recommend denial of this request by a vote of 5 to 2. If the City Council chooses to approve the request, Staff recommends the following conditions: Anita West Page 2 of 3 1. The following conditions shall only apply to the dwelling unit addressed as 121 South Kellam Road, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. Anita West Page 3 of 3 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23- 71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31- 28. 10.Accessory structures shall not be used or occupied as Short Term Rentals. 11.No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12.The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13.The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14.There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15.The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 16.To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. • Attachments: Staff Report and Disclosure Statements Location Map STR Vicinity Map Minutes of Planning Commission Hearing Letter of Support (1) Letter of Opposition (1) Petition of Opposition (38 signatures) Recommended Action: Staff recommends Approval. Planning Commission recommends Denial. Submitting Department/Agency: Planning Department City Manager: /� Ii\BApplicant & Property Owner:Anita West Agenda Item PC Public Hearing: November 4, 2020 City Council Election District: Bayside 15 Virginia Beach Request Conditional Use Permit(Short Term Rental) Staff Recommendation L I I mad ! E a Approval H �. [ = e 3 n Virginia Beach Boulevard. 2 Bank Street Z Staff Planner o o Summer Peebles < Cleveland Street < Commerce Woe i Columbus Strew 3 tii Conestoga7.cr°71:1 121 South Kellam Road I1/4 ,.%\�y i 3 004 GPIN A� w„ 1477334326 / Site Size ��`��+ _ �eAvmue �: 8,655 square feet \4,`q,N I.4 1" e raverOno Avenue \• Existing Land Use and Zoning District Single-family dwelling/ R-7.5 Residential Surrounding Land Uses and Zoning Districts North Single-family dwellings/R-7.5 Residential - a t E South , "'.. - _ r, i Single-family dwellings/ R-7.5 Residential e ". East cogesto.a'•'ea. t �t South Kellam Road _ �• t t Apartments/A-18 Apartment I• " f�''` � . • —�r West ��.�°•. .-»o-' �'4. 0 Single-family dwellings/ R-7.5 Residential rK. ^ x ' .. ti, 0 III eM t '1 Aage 5tr �•t F,.3 'f ' 1 ' r ` > a fit' a R f pr �, �, ¢rF,.' �- % 4� V f . .A I`'y7J� Anita West Agenda Item 15 Page 1 Background & Summary of Proposal Site Conditions and History • This 8,854 square foot parcel is zoned R-7.5 Residential District. • City records indicate this single-family dwellng was built in 1962. • Staff inspected the site on September 10, 2020 to observe site conditions and take photographs for this report. • On-street parking is permitted 24-hours per day,therefore any overflow parking beyond the minimum parking spaces required could occur within the public street. • The applicant does agree with City Council's recently imposed conditions reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Short Term Rentals in the Vicinity . I I \ I 1I1—Sank Stieer $ d comm�r scree j r Go um s Street- � I TTHTfMart as - � ■ ■I ASS 1Imo,maim *114 Road g 1111* i m f im O '`STATUS ---_ �. ® Approved CO. \ • Denied Q Under Review i O Registered Summary of Proposal The applicant submitted a Conditional Use Permit request to operate a Short Term Rental on the subject site.The regulations for Short Term Rental use are identified in Section 241.2 of the City Zoning Ordinance. Specific details pertaining to this application are listed below. • Number of bedrooms in the Short Term Rental:4 • Maximum number of guests permitted on the property after 11:00 pm: 8—(As recommended in condition 15) • Number of parking spaces required (1 space per bedroom required):4 Anita West Agenda Item 15 Page 2 • Number of parking spaces provided on-site:4 a [fl • - L Li o ❑a 11 v_L i 1 L._..l [-1 s f [ i , f y ConestogaRoad ,c L__._] i\ (r Zoning History `' 6 ,- # Request rrl P3 a jri. 1 CUP(Residential Kennel)Approved 11/20/2018 "0-1:\-- __-- - ,_,:,64. n Oaf4•iMQ R-t.S L U rt7 i ��_va�1 ,; S \ \-----. le Application Types CUP—Conditional Use Permit MOD—Modification of Conditions or Proffers FVR—Floodplain Variance LUP—Land Use Plan REZ—Rezoning NON—Nonconforming Use ALT—Alternative Compliance STR Short Term Rental CRZ—Conditional Rezoning STC—Street Closure SVR—Subdivision Variance Evaluation & Recommendation This property is located in the Pocohantas Village subdivision which is compromised of single-family dwellings. The four required off-street parking spaces are all accommodated within the driveway in front of the dwelling unit. Parking on the street is allowed in this subdivision,should there be a need for overflow parking. Staff believes that all other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short-Term Rentals can reasonably be met. Staff has received one letter of support. Based on the considerations above, Staff recommends approval of this request with the conditions listed below.The recommended conditions do reflect City Council's Short Term Rental revisions by reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom Recommended Conditions 1. The following conditions shall only apply to the dwelling unit addressed as 121 South Kellam Road, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5)years from the date of approval.The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Anita West Agenda Item 15 Page 3 Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning,fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located.This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person,who may be the owner, operator or an agent of the owner or operator,who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when,the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a'through 'c' below.This information must be submitted to the Planning Department for review and approval. This shall be done within six(6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles,where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site,except one (1),four(4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers")shall be two (2) individuals per bedroom. 16. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and,where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Anita West Agenda Item 15 Page 4 Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED)concepts and strategies as they pertain to this site. Public Outreach Information Planning Commission • The applicant reported that they met with the surrounding property owners, and no objections were raised. One letter of support has been received by Staff, as well as verbal support from the neighbor residing next door at 4801 Conestoga Road. • As required by the Zoning Ordinance,the public notice sign(s) was placed on the property on October 5, 2020. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, October 18, 2020, and October 25, 2020. • As required by City Code,the adjacent property owners were notified regarding the request and the date of the Planning Commission public hearing on October 19, 2020. • This Staff report, as well as all reports for this Planning Commission's meeting, was posted on the Commission's webpage of www.vbgov.com/pc on October 29, 2020. City Council • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, November 22, 2020,and November 29, 2020. • As required by City Code,the adjacent property owners were notified regarding both the request and the date of the City Council's public hearing on November 23, 2020. • The City Clerk's Office posted the materials associated with the application on the City Council website of https://www.vbgov.com/government/departments/city-clerk/city-council/Documents/BookmarkedAgenda.pdf on December 4, 2020. Anita West Agenda Item 15 Page 5 Site Layout & Parking Plan 0 x l d 1�i 72'WPF_ -1 j x 1 x ?'OUT 4�" — — " N f�0°00'00"E]"87.94' _ x 1 r ` CLOTHES LINE } DRAINAGEAND UTILITY EASEMENT POLES 2I Xj 1 (M.B. 48, PG. 7XTTYPICALJ 1-STORY FRAME �' SHED ON SKIDS 1 lsi. I H....1Ci3' I I I --. I I i I I - I fx I I cowl jci i PATIO'4 T 'CLF ,.- ,-x '� I I , es Single-family s' HV° dwelling �P x - s1 .12 X *I f 9<3' L I I y 11 g i-- >sr --- J/ f a# ( i Q 4 f^. i oi ! 1`=- i It 3 f I ! 1 i 0 I L=50.001,0'49 e . 1 ` i d -- 31.81 R=850.00' S 02°10'00"W 95'TO CONESTOGA Rt South Kellam Road Anita West Agenda Item 15 Page 6 Site Photos p .y r. ,t . r r • l yF - • h - €J- Anita West Agenda Item 15 Page 7 Site Photos • . , - • ' *. '` • ..".•••••••-....••••••••••••••• - - - . 41.00. • ••• I•4 ' -• •`'• Op, •it.4 VA.4 - . -• • , = Anita West Agenda Item 15 Page 8 Disclosure Statement - . N ViignimIWNA APPLICANT'S NAME 0.'iw-e,kka\N �,: L _ DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a board, commission, or other body appointed by the City Council. Such applications and matters include, but are not limited to,the following: Acquisition of Property Disposition of City Modification of by City Property Conditions or Proffers Alternative Economic Development Nonconforming Use Compliance,Special Investment Program Changes Exception for (EDIP) Board of Zoning Encroachment Request 1 Rezoning Appeals Certificate of Floodplain Variance Appropriateness -- Street Closure (Historic Review Board) Franchise Agreement Chesapeake Bay — — Preservation Area Lease of City Property Subdivision Variance Board _ Conditional Use Permit i License Agreement I Wetlands Board s • The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of Interest under Virginia law, SECTION 1 / APPLICANT DISCLOSURE — FOR CITY USE ONLY/All disclosures... :I:_ updated I. l) PK>,,wr tk,.u,. Page 1 of 7 Planning Comntissic,n and City Council meeting that penatns to ,,i APPLICANT NOTIFIED OF HEARING r i r Et 11-05-2020 -SP i gj, NO CHANGES AS OF _ DAll ,11-16-2020 LSP 0411. AS PER THE APPLICANT,THERE ARE Date: 11 16 2020-SP NO ANTICIPATED CHANGES BEFORE THE DEC. 8TH CC PUBLIC HEARING Anita West Agenda Item 15 Page 9 Disclosure Statement Check here if the APPLICANT IS NOT a corporation, partstersh10;--frfi, business, or other unincorporated organization. 111 Check here if the APPLICANT IS a corporation, partnership, firm, business, or other unincorporated organization.(iz (A) List the Applicant's name:_F_�Ug S_ S� If an LLC, list all member's names: &Anita West If a CORPORATION, list the the names of all officers, directors, members, trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Applicant: (Attach list if necessary) See next page for information pertaining to footnotesi and 2 4 SECTION 2 / PROPERTY OWNER DISCLOSURE Complete Section 2 only if property ownerjs d4erentkcItttApplicant. ITCheck here if the PROPERTY OWNER ISIIIQT a corporation, partnership,firm, business, or other unincorporated organization. El Check here if the PROPERTY OWNER./5 a corporation, partnership, firm, business,or other unincorporated organization, 4 Np THEN.,complete the following. (A) List the Property Owner's name: If an LLC, list the member's names: Page 2 of 7 Anita West Agenda Item 15 Page 10 Disclosure Statement virgin If a Corporation, list the names ofall officers,directors, members,trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Property Owner. (Attach list if necessary) I "Parent-subsidiary relationship" means `a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,Va. Code§ 2.2-3101. 2 "Affiliated business entity relationship" means "a relationship, other than parent-subsidiary relationship, that exists when (i)one business entity has a controlling ownership Interest in the other business entity, (ii)a controlling owner in one entity is also a controlling owner in the other entity,or (iii) there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets, the business entities share the use of the same offices or employees or otherwise share activities, resources or personnel on a regular basis; or there is otherwise a dose working relationship between the entities." See State and Local Government Conflict of Interests Act, Va.Code§ 2.2-3101. • ♦ SECTION 3. SERVICES DISCLOSURE Are any of the following services being provided in connection with the subject of the application or any business otgeratirn i,.e_gperated on the Property. If the answer to any Item is YES, please identify the firm or individual providing the service: IF THE OWNER AND APPLICANT ARE DIFFERENT, EACH MUST COMPLETE THE SECTION SEPERATELY Page 3 of 7 Anita West Agenda Item 15 Page 11 Disclosure Statement . e= APPLICANT YES NO �— SERVICE _ 1 PROVIDER ++'� N (, Accounting and/or preparer of l,J your tax return 0 a Architect/Landscape Architect/ 1c Land Planner Contract Purchaser(if other than Fr the Applicant)-identify purchaser and purchaser's service providers — Any other pending or proposed — ❑ ® purchaser of the subject property (identify purchaser(s)and purchaser's service providers) LJ tr — Construction Contractors Engineers/Surveyors/Agents Financing(include current ❑ mortgage holders and lenders ��� selected or being considered to provide financing for acquisition or construction of the property) ❑ 1,3 Legal Services — —__..---_----- Real Estate Brokers/ (� Agents/Realtors for current and t_l anticipated future sales of the subject property ♦ • SECTION 4. KNOWN INTEREST BY PUBLIC OFFICIAL OR EMPLOYEE YES NO ; Does an official or employee of the City of Virginia Beach have k I i ® an interest in the subject land or any proposed development ;contingent on the subject public action? If yes,what is the name of the official or employee and what is the nature of the interest? Page 4 of 7 Anita West Agenda Item 15 Page 12 Disclosure Statement __ - CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true, and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing, 1 am responsible for updating the information provided herein two weeks prior to the Planning Commission, Council, VBDA meeting, or meeting of any public body or committee in connection with this Application. —-- V � a I G.Anita West 8/10/20 APPLICANT'S SIGNATURE PRINT NAME . DATE klk Page 5 of 7 Anita West Agenda Item 15 Page 13 Next Steps • Upon receiving a recommendation from Planning Commission,this request will be scheduled for a City Council public hearing. Staff will inform the applicant and/or their representative of the date of the hearing in the upcoming days. • Following City Council's decision,the applicant will receive a decision letter from Staff. • Once the conditions of approval are in place and/or completed,the applicant must contact the Zoning Division of the Planning Department to obtain verification that the conditions have been met. Contact the Zoning Division at 757-385-8074. • If the request requires land disturbance and/or a subdivision of property, please contact the Development Services Center(DSC)to discuss next steps for site plan/plat review. Contact the DSC at 757-385-4621 or the Development Liaison Team at 757-385-8610. • Please note that further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/ Permits and Inspections Division, and the issuance of a Certificate of Occupancy,are required before any approvals allowed by this application are valid. • The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. Anita West Agenda Item 15 Page 14 STR VICI = ITY __:AP ANITA WEST- 121 S. KELLAM ROAD I I I I j ' ' + I -B-an gtr4tt_f__; I 11 - lave _ of it r. _.« Co um s-5t ,-et '_ \-It----ir\ 1 1 \ \ — 11 -t- :r Man -a -oa 'I. L' ` ■■ ■I! ■ I _g_ii 1. *.`. Cone to. . . . . I, 14\ 1, WI INN aiN,L,0 lif. ' .. ' ‘ *1111-4 - --'---Ili' >4. iqlIl ,41%',(t wi .' Road ,---- ANvw4e ,,/,; VIAk,• 0 4,„, 41 , ill i* V''' ' 47, A qr 0\1430 1 ____, STATUS , •, tlieg ,/-* 40 (... .\\7 rvi"' %r 0 4 ✓ Approved . \ •• Denied `�• a'' "Ai� �'� �`Q Under Review 4--- _ f i �\ . QRegistered =�—_ Ii _ Item # 15. Anita West [Applicant & Property Owner] Conditional Use Permit (Short Term Rental) 121 South Kellam Road November 4, 2020 RECOMMENDED FOR DENIAL — HEARD Ms. Sandloop: Our next item of business is agenda item number 15, Madam Chair we do have three speakers on this item. Anita West, an application for a Conditional Use Permit Short Term Rental on property located at 121 South Kellam Road in the Bayside District. Ms. Oliver: Welcome, if you would state your name for the record, please. Ms. West: Good afternoon, my name is Anita West, I am the property owner of 121 South Kellam Road. My Mom purchased this house in 2005, she moved here to be with me and my children. In January of this year she passed away, so we have the home. I have a lot of family members that come in the area and I would like to use this as a Short Term Rental. We have family members that come in the area and thought this would be good home base for them with a lot of memories where they could come and stay without the stress of renting a hotel or trying to find somewhere to stay. Of course, the family members are not going to be here 365 days a year. I have a nephew that lives in Florida who plans to relocate in 2021, next year. This is where he comes to stay when he comes to visit, he stays in that home and between time we want to rent it out like I said as a short term to families. Also as the young lady before me said travelling nurses, my daughter is a therapist, and she has contacts with a lot of people who come in the area who need places to stay. I have a cleaning crew that makes sure that the outside is maintained as well as the inside. We have a huge backyard and plenty of parking space. So we don't have to worry about the overload of parking in the street. We plan to rent to families, like I said and they have to be 30 and older and it is no smoking permitted in the property. Ms. Oliver: Does anybody have any questions for Mrs. West? Thank you, we will come back to you. Ms. Sandloop: Madam Chair there are three speakers, Donald Roberts to be followed by Terry Roberts. 1 Mr. Roberts: Yes, my name is Don Roberts, I live in Pocahontas Village. We just gave a copy that's a petition to the lady there at the desk. We have about 40 people that signed it that live beside, and in front, and in back of Ms. West and so we didn't have much time to get the stuff together because we just got these applications on Friday. But anyway, we got it together and we really do not want Short Term Rental in our neighborhood. We have lived there, most of us have lived there for around 50 or 60 years or more, ever since it was built on what used to be Holland Swamp. And Mr. and Ms. Barco and the gentlemen that built the houses built it for single family residences and that is what they have been all these years and we would like to keep it that way. I know you have heard about all this stuff about short term rentals in the last two or three hours or so. And we don't really want that in our neighborhood. There is already enough problems around here, we have a lot of older people, a lot of handicap people and we don't need more problems. We have a problem right on my road on Kaw Lane right sort of behind this house where that, they turned the camera stuff in the city police department because people were trying to steal the stuff there. And Ms. Hill is right just south of Ms. West and it is scared that something is going to happen to her and her house because they are already getting people at get up trying to break into car and getting in to the mail box and things and the next two ladies pass to us south of her, we are in the same boat and they are old, they are handicapped.And I have got problems, I live right behind Ms. West, we really don't want that kind of carrying on in our neighborhood, we don't need it and I ask you to, please don't let it happen. Ms. Roberts: I will tell them and I have heard that 12 people were going to be able to rent it one time. Ms. Oliver: Let me just stop you one second so we can do one speaker at a time, Ms. Roberts: That is my Dad. Ms. Oliver: I know, I appreciate that but he gets three minutes and then. Ms. Roberts: Sorry, go ahead then. Ms. Oliver: Well his three minutes are up now. Ms. Roberts: Well, Dad it is over now. Mr. Roberts: Okay 2 Ms. Oliver: Respectfully, sir, it is, now you will be introduced and you will state your name and we will wait for the city clerk to do that and then you will get your 3 minutes as well, okay. Mr. Roberts: That is it, Ms. Roerts: We have to wait, Dad, Mr. Roberts: We have to wait. Ms. Roberts: Yes I think so, Ms. Oliver: So if you go ahead and call the next speaker, Ms. Sandloop: Terry Roberts, Ms. Roberts: That is me, Ms. Sandloop: Terry Roberts to be followed by Barbara Mesner. Ms. Roberts: I am here. Ms. Oliver: Okay, Ms. Roberts, if you will state your name for the record and you have three minutes to speak, Ms. Roberts: My name is Teary Roberts and I am a little slow because I just had brain surgery and I can't remember real quick. Ms. Oliver: Well we will give you extra 30 seconds. Ms. Roberts: And also my Dad had told me that they have it where they are going to rent it to 12 people at a time, I am sorry, but, you know what, it is a neighborhood and you don't put 12 people in a home to rent it. The homes don't fit 12 people, to be honest with you, I don't know if hers has three bedrooms or four but even if they have four bedrooms that is three people in a room within a week or 2 weeks at a time. And I don't want it to be where, I hate to say this, but I don't want it to be where all of a sudden this home is going to be either for drugs or prostitutes. We don't need that in this neighborhood and I will be perfectly honest with you, she is on Kellam Road, and the homes here and right across the street are town houses. Well the town houses, the people have to, they have to park on the road because they are town houses and there is no driveways and she is on the corner and she has got the driveway, well, you can't really park cars in front of that because that is Kellam Road, that is very busy. Walmart and Best Buy and all that, that is extremely busy road. You see what I am saying, I will be honest with 3 you it is a nice neighborhood, it is a family neighborhood, they don't need that, really they don't need that, I am sorry, they don't really need that, thank you. Ms. Oliver: Thank you very much Ms. Roberts. Ms. Roberts: You are welcome. Ms. Sandloop: Our final speaker is Barbara Messner. Mr. Roberts: I didn't know Ms. Oliver: You are just doing fine, sir. Ms. Mesmer, welcome. Ms. Messner: Thank you, I am appalled that the, that you put that one through for another elderly gentleman and he said they already have problems. These people who are older and have health issues and who take the time to come out today, they are not considered. You put things through anyway and as far as, this isn't the next one that is coming up but there are shuttle buses that have been shuttling people in residential neighborhoods for like 15 years. But most people don't know what goes on. But like I said you are all liable for, you should all go out there and talk to the neighbors and you should actually check out these things. That is what, you know, you are all supposed to do and most of you have some type of conflict. Like I said there, these people have no recourse. And you deny a few of them but, you know, like I said the only reason I knew you were still going to have this meeting even though there were official objections because of lack of due process and the fact that this room - this room is too small, I watched really these people line up against the wall, you know, before we had ballrooms, I think two and three, this room is not big enough and then there is going to be, you know, joint meetings. This, and half the people here including these tables that take up all this room, it is staff, staff takes up the seating. You are destroying the entire city by having short term rentals, shorter than six months. You know, same is for nurses and doctors, they can, you know, they are even people that are giving them not renting to them but giving them mobile homes and things. We are not responsible for everyone during a pandemic and if there is a pandemic you shouldn't be having people, I listened earlier and there somebody was bragging about people coming from foreign countries and foreign cities, hotspots, no one is checking on this. You know it is a gorgeous day, I don't really want to be here but, you know, I am on the record and you are on the record for your failure to protect the citizens and to put them first over the profit. 4 Ms. Oliver: Thank you, Ms. Messner, I believe your time is up. Ms. Messner: Thank you. Ms. Oliver: Thank you very much. Would the applicant like to come back up? Ms. West: Okay, well, yes, I have heard what everyone said. I am a landlord, I am a property owner of several properties in Virginia Beach. So I am quite aware of some of the activities that they are speaking about. I have long term rentals and I have a rooming home; I have two agencies that have tried to contact me to use this property here as a rooming house. We wouldn't have to come before the Board, I took it into consideration about my neighbors and decided not to use it as a rooming house because that is a different type of environment and I didn't want that in the neighborhood. Like I said for the Short Term Rental we will screen the individuals who will come and stay, we have been trying to keep it as a family rental place. My nephew will have a room there and he will be coming back and forth periodically, so he is going to need his own room. So it is not going to be, I don't, it is not going to be as they said for prostitutes or drugs or anything like that. I have grandchildren, 16, 15, 9 and 6, so I am very conscious of who will be staying in the home, thank you. Ms. Oliver: One question, Ms. West, with Mr. Weiner. Mr. Weiner: This is not your permanent residence, correct? Ms. West: No, it was my Mother's home and it is my home but I don't, now Mr. Weiner: That is okay, thank you. Ms. West: And again I guess I want to rent it on short term so someone will be occupying the house and it is not vacant year round.And I won't have family staying in all the time but I want to have it, you know, available. Ms. Oliver: Ms. West, Mr. Alcaraz has a question. Mr. Alcaraz: I think you just answered that but you said your nephew is going to live there but not full time. Mr. West: Yes, my nephew lives in Florida and he is going to relocate, my Mom raised him, he is going to relocate back in 2021. He comes to visit like he comes for Thanksgiving, this is a place where he will stay. So when he is back and forth he is just living there and I just don't want to keep the house unoccupied the whole year round. 5 Ms. Oliver: Robyn Ms. Klein: Is the house currently occupied? Ms. West: No, we just renovated. Ms. Klein: Okay. So to be clear, she is applying for a Conditional Use Permit before she is renting it out, okay, Ms. West: Yes and I live less than a mile away and my two children, all of us live in three different areas but we live less than, I live less than a mile away, I live in Pembroke. My daughter lives by Mount Trashmore, my son lives less than half a mile from here. So if anybody needed to contact us we are there and my two neighbors on each side, Ms. Edner and my other neighbor, they agreed, they didn't have any objections to me doing this. And I don't live on the corner, I live the second house from the corner, so it is adequate parking space and like I said the driveway is large enough itself. We have four cars, six cars will easily fit in there but I don't plan on having 12 guests in the house at all. Ms. Klein: Thank you. Ms. West: Thank you. Ms. Oliver: Thank you very much, Ms. Roberts, I am sorry it is closed to the speakers right now. Alright we will close this and open it up amongst the Commissioners please. Redmond. Mr. Redmond: First up this is one of things where it is, you know, you would, it is troubling because you would think this is just the kind of situation where someone would want to avail themselves of a Short Term Rental. It is her Mom's house, she doesn't want to lose the house, this is a way to generate revenue from it and the applicant strikes me as being detail oriented. Nevertheless, I was part of one debate already and some of you were as well with City Council. This is not a neighborhood that has a lot of Short Term Rentals. That is not where you would expect to find Short Term Rentals. We had an agenda item in this neighborhood on consent and City Council, I think it is not unfair to say summarily rejected it. I don't believe anything has changed in that regard and particularly because in this case as it was in the prior one, there is opposition and compelling opposition. And specific opposition, not of general issue but I thought of a more specific nature than that. So as much as I am sympathetic to the applicant's desire to do this, I don't think this application is going to work. And I don't know that it should work and as 6 a result I am not going to support it and therefore I move for denial of the application. Ms. Oliver: Mr. Weiner. Mr. Weiner: I am going to second that and the reason I second is because not like this house, the last house, that was her primary residence and she lives there and, yes, she was going to rent it out but that was a residence and she lives there. This isn't a primary residence, this to me is more like a business and it is in a neighborhood looking at the map there is already one denied right down the road. So I will second the motion of denial. Ms. Oliver: Ms. Klein Ms. Klein: I intend to support the application, it sounds like it is only for short term use and until her nephew is able to move up here and while we can't forecast what is going to happen with the ordinances, we are moving in the direction that if it is not an overlay it won't be grandfathered in. So the maximum that she would have this is five years anyway. Ms. Oliver: Yes, Jack,. Mr. Wall: I think that Ms. West is a very considerate of her neighbors. I think, yes. I will repeat just what I said, I think Ms. West is, you know, would be considerate of her neighbors and conscientious of who rents the property but you know Pocahontas Village there has been consistency in not allowing short term rentals. There is also, it does appear to be more opposition not just because we hadn't any one or two speakers but there was a petition against that I believe, am I correct in that?That the gentleman did provide a petition and so I would tend not to support the application. Ms. Oliver: Alright. Anybody else? If not then we have got a motion on the floor to deny by Commissioner Redmond and a second by Commissioner Weiner and so we can call for the vote. Ms. Sandloop: Thank you, Madam Chair, calling for the vote motion for denial, Mr. Alcatraz. Mr. Alcaraz: Aye Ms. Sandloop: Mr. Barnes is absent, Mr. Coston, Mr. Coston: Nay, 7 Ms. Sandloop: Mr. Graham is absent, Mr. Horsley is absent, Mr. Inman, he is out, is absent, okay, Miss. Klein, Klein: Nay, Ms. Sandloop: Mr. Redmond Mr. Redmond: Aye. Ms. Sandloop: Mr. Wall, Mr. Wall: Aye, Ms. Sandloop: Vice Chair Weiner. Mr. Weiner: Aye, Ms. Sandloop: Madam Chair Oliver, Ms. Oliver: Aye. Ms. Sandloop: By a vote of five for and two against, the motion for denial has been approved. AYE 5 NAY 2 ABS 0 ABSENT 3 Alcaraz AYE Barnes ABSENT Coston NAY Graham ABSENT Horsley ABSENT Inman ABSENT Klein NAY Oliver AYE Redmond AYE Wall AYE Weiner AYE 8 CONDITIONS 1. The following conditions shall only apply to the dwelling unit addressed as 121 South Kellam Road, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4- 1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site, except one (1), four(4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 16. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. 10 September 19, 2020 To whom this may concern: My name is Alex and my husband Nick Fockler, and I reside at 4801 Conestoga Rd. Virginia Beach. Virginia 23462. We have been made aware that our neighbor Gwendolyn Anita West who is the property owner at 121 So. Kellam Rd. will be using the property for short term rental. We are not opposed to that and have no objections. 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RT-3 RTr3 A v ' R5S 41t /7 al o Norfolk Avenue Norfolk Avenue -F \la 1 11ililliril \ Al2 N /// Site Arica & Melvin L. Atkins, Ill w 4 ►: Property_Polygons 598 Pinewood Drive, Unit 205 s Zoning Parking Lot Drive Aisle I Feet Building 0 15 30 60 90 120 150 180 t rraC'" "'yi. :e S T, CITY OF VIRGINIA BEACH AGENDA ITEM J ITEM: ARICA & MELVIN L. ATKINS, Ill [Applicants & Property Owners] Conditional Use Permit (Short Term Rental) for the property located at 598 Pinewood Drive, Unit 205 (GPIN 242780434561043). COUNCIL DISTRICT — BEACH MEETING DATE: December 8, 2020 • Background: The applicant is requesting one Conditional Use Permit for a Short Term Rental on a 18,469 square foot parcel that contains 16 multi-family dwelling units and is zoned RT-3 Resort Tourist District. The subject unit contains one bedroom. The minimum number of parking spaces required for the Short Term Rental use is one per bedroom, or one space in this instance. The maximum occupancy for guests on-site after 11:00 p.m. for a one-bedroom Short Term Rental is three; however, at the time of this writing, the applicant accepts City Council's recent Short Term Rental condition revisions reducing the number of overnight guests permitted to two per bedroom and limiting the number of bookings in a seven day period from two to one. These changes are reflected in the conditions below. ■ Considerations: The subject dwelling is located within the Shadowlawn Villas II condominiums, which are situated approximately 0.5 mile from the public beach of the Atlantic Ocean. As the property is zoned RT-3 Resort Tourist District, it is worth mentioning that hotel is a permitted use as a matter of right. The applicant's parking plan depicts the one required off-street parking space within the existing on-site parking lot, thereby meeting the parking requirement. According to the applicant, this off- street parking space is permanently assigned to this specific dwelling unit. As the site is located in the Residential Parking Permit Program (RPPP) area, a condition is recommended that limits the number of RPPP parking passes to two residential passes and further prohibits the issuance of guest permits and temporary permits through the program. Additionally, the remaining requirements of Section 241 .2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Further details pertaining to the application are provided in the attached Staff report. There is no known opposition to this request. Arica & Melvin L. Atkins, Ill Page 2 of 4 ■ Recommendation: On November 4, 2020, the Planning Commission passed a motion to recommend this item on the Consent Agenda, passing a motion by a recorded vote of 8-0, to recommend approval of this request. 1. The following conditions shall only apply to the dwelling unit addressed as 598 Pinewood Drive, Unit 205, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s) through the Residential Parking Permit Program (RPPP) shall be limited to two resident passes only. Guest and temporary passes through the RPPP shall not be permitted. 4. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 5. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 6. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 7. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and Arica & Melvin L. Atkins, Ill Page 3 of 4 b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 8. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 9. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23- 71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 10.A11 refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31- 28. 11 .Accessory structures shall not be used or occupied as Short Term Rentals. 12.No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 13.The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 14.The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 15.There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 16.The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 17.To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. ■ Attachments: Staff Report and Disclosure Statements Location Map STR Vicinity Map Minutes of Planning Commission Hearing Arica & Melvin L. Atkins, Ill Page 4 of 4 Recommended Action: Staff recommends Approval. Planning Commission recommends Approval. Submitting Department/Agency: Planning Department 6 '0 City Manager:fip B Applicants and Property Owners:Arica & Melvin L. Atkins, Ill Agenda Item PC Public Hearing: November 4, 2020 City Council Election District: Beach City of A16 Virginia Beach Request Conditional Use Permit (Short Term Rental) Staff Recommendation '„--... �� Approval .������ Staff Planner ���.•� William Miller �� Location04.-_ a �•� ' 598 Pinewood Drive, Unit 205 =lam GPIN it 242780434561043 A f ,'ai V Site Size 1MOO '"� 18,469 square feet ogi \ I �m� . 11.11 '! Vii10111010 1.6 �* ,► Existing Land Use and Zoning District Multi-family dwelling/ RT-3 Resort Tourist Surrounding Land Uses and Zoning Districts North o ' Pinewood Drive ,p�'... F* _� • Semi detached, duplex dwellings/ R-5D ''Y4� " . r ` - Residential • t M y+3 !!.,‘,1,--- � �' `e''`- , Or South _ 6t. ^ ,. .af. sa. -, '_ * ., , City public parking lot, mixed use path ,,.-..; d _ "'!'' Norfolk Avenue .Q y, East , . . 1 .,.�' f - - 3w -. Single-family dwellings/ R-5S Residential '-4, '^ \ _ `` * .. ,e„ 4�C West -__ .---� t_. 44-L - _'1' at Multi-family dwellings/A-24 Apartment ",. �' ? .3 44 +,,,} . R, 1 ,\*.01, '40"rt-i. ,..,,,. ' ,. r, t, .4 c.„ :,...,. ._.. , _.,... . . .., . „_Jor, , c.,...,, ..i. t., • -. . . ,Wrilk -,-.. , _ , ii, ID:- 1 - �`�` r,1 , }-. \ ; • i s Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 1 Background & Summary of Proposal Site Conditions and History • This property is approximately 18,469 square feet and is located within the RT-3 Resort Tourist District. • The site is developed with one building containing 16 condominium dwelling units. • According to City records, the building was constructed in 1984. • Staff inspected the site on September 15, 2020 to observe site conditions and take photographs for this report. • The property lies within the Residential Parking Permit Program (RPPP) boundary, where parking during the evening and overnight hours is limited. Based on this, a condition is recommended that would prohibit the occupants of the STR from parking in the street during the restricted hours. • No records of zoning violations relating to Short Term Rental use were found associated with the subject address. • On April 18, 1983, City Council granted a Rezoning on part of the subject property from I-1 to B-4 Resort- Commercial, which is now referred to as RT-3.The rezoned portion of the lot was then merged with abutting B-4 Resort-Commercial property to the east. In 1984,the multi-family dwelling structure on the site was built under the City Zoning Ordinance requirements at that time, which permitted multi-family dwellings in the B-4 Resort- Commercial District. • The applicant agrees with City Council's recently imposed conditions reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Short Term Rentals in the Vicinity Air- 0. silo►,�. �►1a :,,-• . weft ii 'OW c wia I .NA ny. v rr t.00 equ°laa .c., • k;% _.u ram • �.� >r • won►ra •ar iss rill N<eta!l misita 'env STATUS Approved r�. VoSII: G.,a .% �tlrr��rr • Denies . O Under Review O C �•� eC+a VAS" Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 2 Summary of Proposal The applicant submitted a Conditional Use Permit request to operate a Short Term Rental on the subject site. The regulations for Short Term Rental use are identified in Section 241.2 of the City Zoning Ordinance. Specific details pertaining to this application are listed below. • Number of bedrooms in the Short Term Rental: 1 • Maximum number of guests permitted on the property after 11:00 pm: 2—(As recommended in condition #16) • Number of parking spaces required (1 space per bedroom required): 1 • Number of parking spaces provided on-site: 1 :j ' _ ii;11•001° , h js �^'f Y"A �G '% : i;.:: 4uv ��— �„�„� Zoning History A rr o 2 �` )4 .,., < c ,/L -, # Request 1 REZ(1-1 to B-4 Resort-Commercial)Approved 04/18/1983 , - 2 CRZ(I-1, R5-D to A-24)Approved 02/12/2002 NorfO Aww• '` 3 REZ(A-12 to RT-3)Approved 01/23/1996 A tar 3 , - ., ice. 00.0.. 0d' 1, , _,.r Application Types CUP—Conditional Use Permit MOD—Modification of Conditions or Proffers FVR—Floodplain Variance LUP—Land Use Plan REZ—Rezoning NON—Nonconforming Use ALT—Alternative Compliance CRZ—Conditional Rezoning STC—Street Closure SVR—Subdivision Variance STR—Short Term Rental Evaluation & Recommendation This request is for a one-bedroom Short Tern Rental unit within the Shadowlawn Villas II Condominiums located along Norfolk Avenue. The surrounding area is a mixture of multi-family dwellings, duplex dwellings, single-family dwellings, and commercial uses. In addition, the property lies approximately 0.50 miles from the public beach of the Atlantic Ocean. As the site is zoned RT-3 Resort Tourist District, it should be noted a hotel use is permitted as a matter of right under the current zoning. The applicant's parking plan depicts one permanently assigned off-street parking space within the existing condominium parking lot,which meets the requirements of Section 241.2(1)the City Zoning Ordinance. Along with the typical Short Term Rental conditions outlined in Section 241.2 of the Ordinance, a condition is recommended that limits the number of RPPP parking passes to two and prohibits the issuance of guest and temporary passes through the program while the Conditional Use Permit is active. Based on the considerations above, Staff recommends approval of this request with the conditions listed below. The recommended conditions reflect City Council's Short Term Rental revisions by reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 3 Recommended Conditions 1. The following conditions shall only apply to the dwelling unit addressed as 598 Pinewood Drive, Unit 205,and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s)through the Residential Parking Permit Program (RPPP)shall be limited to two resident passes only. Guest and temporary passes through the RPPP shall not be permitted. 4. This Conditional Use Permit shall expire five (5)years from the date of approval.The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however,the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints,violations of its conditions or violations of any building, housing, zoning,fire or other similar codes. 5. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two(2))on the property where the Short Term Rental is located.This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 6. The owner or operator must provide the name and telephone number of a responsible person,who may be the owner,operator or an agent of the owner or operator,who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 7. If, or when,the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a'through 'c' below.This information must be submitted to the Planning Department for review and approval.This shall be done within six(6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration;and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 8. To the extent permitted by state law,each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 9. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise),31-26, 31-27 and 31-28 (solid waste collection), 12-5(fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 10. All refuse shall be placed in automated refuse receptacles,where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 11. Accessory structures shall not be used or occupied as Short Term Rentals. 12. No signage shall be on-site,except one (1),four(4)square foot sign, may be posted on the building which identifies the Short Term Rental. Arica and Melvin L.Atkins, Ill Agenda Item 16 Page 4 13. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 14. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 15. There shall be no outdoor amplified sound after 10:00 p.m.or before 10:00 a.m. 16. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers")shall be two(2) individuals per bedroom. 17. To the extent permissible under state law,interconnected smoke detectors(which may be wireless),a fire extinguisher and,where natural gas or propane is present, carbon monoxide detectors,shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design(CPTED)concepts and strategies as they pertain to this site. Public Outreach Information Planning Commission • As required by the Zoning Ordinance,the public notice sign(s)was placed on the property on October 5, 2020. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays,October 18, 2020, and October 25,2020. • As required by City Code,the adjacent property owners were notified regarding the request and the date of the Planning Commission public hearing on October 19,2020. • This Staff report, as well as all reports for this Planning Commission's meeting,was posted on the Commission's webpage of www.vbgov.com/pc on October 29,2020. City Council • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, November 22, 2020,and November 29, 2020. • As required by City Code,the adjacent property owners were notified regarding both the request and the date of the City Council's public hearing on November 23,2020. • The City Clerk's Office posted the materials associated with the application on the City Council website of https://www.vbgov.com/government/departments/city-clerk/city-council/Documents/BookmarkedAgenda.pdf on December 4, 2020. • No letters of opposition/support have been received by Staff related to this request. Arica and Melvin L.Atkins, Ill Agenda Item 16 Page 5 Site Layout & Parking Plan - - , 'IT - k , ,_*2.4 Pine IA/ drive fro i allapil Jiai / •..,dk ..„• ., . - - . , '..(i)c,....r....J.v...c. \, ......\...,:i co • ircs:. , . likewwww. _ ‘ ,-, (1) -1 .-:-----''''' • 121 l'i ' ' \ i / ,. ../ / / ,,I Arica and Melvin L. Atkins, III Agenda Item 16 Page 6 Site Photos 1• Pi". • t • _ 4i 0` • r i - - • • Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 7 Site Photos ' {{l IIIL) 111111iIIIMMI1111111111111Iffili �► i4" � _{li�lii n1l R f ;IF Timm - Parking space for unit 205 ' k • s .� ` i ~ - ^ Ralt►, lii Illi 111 Ill( Arica and Melvin L. Atkins, III Agenda Item 16 Page 8 Disclosure Statement Disclosure Statement 1/3 Mg ofroviso Belch Planning&Community Development f,J=f The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a City board,commission or other body. Applicant Disclosure w' Applicant Name AV I G4 't Fes►vU Does the applicant have a representative? ❑Yes ®NO • If yes,list the name of the representative. Is the applicant a corporation,partnership,firm,business,trust or an unincorporated business? 0 Yes I"No • If yes,list the names of all officers,directors,members,trustees,etc.below. (Attach a list if necessary) • If yes,list the businesses that have a parent-subsidiary'or affiliated business entity'relationship with the applicant. (Attach a list if necessary) '"Parent-subsidiary relationship"means"a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,VA.Code§2.2-3101. "Affiliated business entity relationship"means"a relationship,other than parent-subsidiary relationship,that exists when(i)one business entity has a controlling ownership interest in the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or(iii)there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities,resources or personnel on a regular basis;or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act,Va. Code§2.2-3101. 11 Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 9 Disclosure Statement Disclosure Statement NA3 Ogg sfVovf,:•rack* ..a,.�•.•.a ____, Planning&Community „,,,,.> """ - Development '1441110\ Known Interest by Public Official or Employee Does an official or employee of the City of Virginia Bea ,have an interest in the subject land or any proposed development contingent on the subject public action?0 Yes L—"No • If yes,what is the name of the official or employee and what is the nature of the interest? Applicant Services Disclosure 1. Does the applicant have any existing financing(mortgage,deeds of trust,crosscollateralization,etc)or are they considering anyfinancing in connection with the subject of the application or any business operating or to be operated on the property? Yes ❑ No • If yes,identify the financial institutions. Cam- MOv}- 3(IA.Q, 2. Does the appli5entpl have a real estate broker/agent/realtor for current and antidpated future sales of the subject property? ❑Yes MNo • If yes,identify the real estate broker/realtor. 3. Does the applicant have services for accounting and/or preparation of tax return provided in connection with the subject of the application or any business operating or to be operated on the property?Lh Yes 0 No • If yes,identify the firm or individual providing the service. inA. Mda►nns '15-1 21Sv1L 4. Does the applicant have services from an architect/landscape architect/land planner providsd in connection with the subject of the application or any business operating or to be operated on the property?0 Yes Ef No • If yes,identify the firm or individual providing the service, 5. Is there any other pending or proposed purchaser of the subject property?0 Yes Ltd No • If yes,identify the purchaser and purchaser's service providers. 21 Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 10 Disclosure Statement Disclosure Statement NA3 My uf tlirpinia,ram - - . Planning&Community Development 6. Does the applicant have a construction contractor in connection with the subject of the application or any business operating or to be operated on the property?0 Yes Lfi(NO • If yes,identify the construction contractor. 7. Does the applicant have an engineer/surveyor/ ent in connection with the subject of the application or any business operating or to be operated on the property?engineer/surveyor/rent 0 No • If yes,identify the engineer/surveyor/agent. t./ ../_______DiacIAltirOlgjilLegy_sL 8. Is the applicant receiving legal/services in connection with the subject of the application or any business operating or to be operated on the property?L"J Yes 0 No • If yes,identify the name of the attorney or firm providing legal services. _ dDhn f.t(,I'1ar dstyi -isl Llen 1plp 33 Wolcott/River/Gates Applicant Signature I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing,I am responsible for updating the information provided herein two weeks prior to the meeting of Planning Commission,City Council,VBDA,CBPA,Wetlands Board or any public body or committee in connection with this application. "ter ' ' Applicants tune • PCB 1 ca 1V)S OUJY ti /ri1pp1 i CIR0 k. Print Name and Title Date Is the applicant also the owner of the subject property? 0 Yes 0 No • If yes,you do not need to fill out the owner disclosure statement. FOR CITY USE ONLY/All disclosures must be updated two(2)weeks prior to any Planning Commission and City Council meeting that pertains to the applications ❑ "°changes asof Date 11-17-2020 1 Signature W alia,M,M Lllef- AS PER THE APPLICANT,THERE ARE NO 1 Print"' a William Miller ANTICIPATED CHANGES BEFORE THE DEC.8T"CC PUBLIC HEARING Date:11-17-2020-WM 3l Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 11 Disclosure Statement Disclosure Statement Ogg gi4`cgtti Bede Planning&Community Development Owner Disclosure Owner Name Alfa Runs /Mi,Ivin AI-k lylJ Applicant Name _ Sa Is the Owner a corporation,partnership,firm,business,trust or an unincorporated business? 0 Yes l9 No • If yes,list the names of all officers,directors,members,trustees,etc.below. (Attach a list if necessary) • If yes,list the businesses that have a parent-subsidiary3 or affiliated business entity"relationship with the Owner. (Attach a list if necessary) Known Interest by Public Official or Employee Does an official or employee of the City of Virginia Beach have an interest in the subject land or any proposed development contingent on the subject public action?0 Yes g3rNO • If yes,what is the name of the official or employee and what is the nature of the interest? 3"Parent-subsidiary relationship"means"a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,VA.Code§2.2-3101. "Affiliated business entity relationship"means"a relationship,other than parent-subsidiary relationship,that exists when(i)one business entity has a controlling ownership interest in the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or(iii)there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities,resources or personnel on a regular basis;or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act,Va. Code§2.2-3101. 5I Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 12 Disclosure Statement Disclosure Statement NIB fay a/i'i a loaf Planning&Community Development Owner Services Disclosure 1. Does the Owner have any existing financing(mortgage,deeds of trust,cross-collateralization,etc)or are they considering any fin1ncing in connection with the subject of the application or any business operating or to be operated on the property? Yes ❑No • If yes,identify the financial institutions. -_awl 2. Does the Own have a real estate broker/agent/realtor for current and anticipated future sales of the subject property? ❑Yes rNo • If yes,identify the real estate broker/realtor. 3. Does the Owner have services for accounting and/or preparation of tax retuusns provided in connection with the subject of the application or any business operating or to be operated on the property?NJ Yes ❑No • If yes,identify the firm or individual providing the service. &tnC iNCIC1013 r1S1-21S -t Ity 4. Does the Owner have services from an architect/landscape architect/land planner provide3An connection with the subject of the application or any business operating or to be operated on the property?0 Yes g No • If yes,identify the firm or individual providing the service. S. Is there any other pending or proposed purchaser of the subject property?❑Yes 0 No • If yes,identify the purchaser and purchaser's service providers. 6. Does the Owner have a construction contractor in connection with the subject of the application or any business operating or to be operated on the property?❑Yes fNo • If yes,identify the construction contractor. 7. Does the Owner have an engineer/sur(yeyor/agent in connection with the subject of the application or any business operating or to be operated on the property?0 Yes ❑No • If yes,identify the engineer/surveyor/agent. ►kAL-ham [khstkliiv11 thg+► 3(s 6l Arica and Melvin L. Atkins, Ill Agenda (tern 16 Page 13 Disclosure Statement Disclosure Statement NIB trey c/wvi*Bad _� Planning&Community Development 8. Is the Owner receiving legal ices in connection with the subject of the application or any business operating or to be operated on the property?Eli Yes ❑No • If yes,identify the name of the attorney or firm providing legal services. _ John p�-1Gln0lr4SUln 1cj1" L}q1" tog,33 Wolcott/River/Gates Owner Signature I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate, I understand that, upon receipt of notification that the application has been scheduled for public hearing,I am responsible for updating the information provided herein two weeks prior to the meeting of Planning Commission,City Council,VBDA,CBPA,Wetlands Board or any public body or committee in connection with this application. Q4o Owner Sign rc Mil l Li kliMkr Print Name and Title Date 1A,S i ' j L/�i(lQ D 7I Arica and Melvin L. Atkins, Ill Agenda Item 16 Page 14 Next Steps • Upon receiving a recommendation from Planning Commission,this request will be scheduled for a City Council public hearing. Staff will inform the applicant and/or their representative of the date of the hearing in the upcoming days. • Following City Council's decision,the applicant will receive a decision letter from Staff. • Once the conditions of approval are in place and/or completed,the applicant must contact the Zoning Division of the Planning Department to obtain verification that the conditions have been met. Contact the Zoning Division at 757-385-8074. • If the request requires land disturbance and/or a subdivision of property, please contact the Development Services Center(DSC)to discuss next steps for site plan/plat review. Contact the DSC at 757-385-4621 or the Development Liaison Team at 757-385-8610. • Please note that further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/ Permits and Inspections Division,and the issuance of a Certificate of Occupancy,are required before any approvals allowed by this application are valid. • The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. Arica and Melvin L.Atkins, Ill Agenda Item 16 Page 15 Ln ' ue--- ---- i 1-- - \_\s,465-AL ',- =0 ./4 * 10 ....„ '7 , . 0 lit s,wi... w V• . , s' ' & I.gs.A'' . > 4,4 ' :k ito - iivizi 't) va O 17( l41%it I s W.1 '`00r 0 wig its Ito' 0' swjts ram z iisz ____i_---- if* _ti _ ...ri woo >- 00 * 11 opi orb-is ill 0 _2 . . L..... :2 0 .01 _ I \_lop si ,gto al fb) Iola - 'c U = pm _ -.Lel arlos:Lip, 101, • 00 - • Will Vora MI > ;1�1,,.,13G10. �, \ 111 '- - - 1 }- -- - Oli ale,OA le'*0,",---zilliP ---.k 10\Silleilli \ oliti....., -. likit- 4 - \ 1 "Ili-..■ Ole 111111et _\ Z %VA '---.4°3 .i!1 > tAIPPS\711110 'VW.'4S1-1.1 1011111 w : %hi0r 114 IS \ i% , - '17- ---, _P •41` 101 OtiollierrAlqi 1 t, (t T Z t t UE<. \I\ ' _O t, i n _ t Dc \-11' :1. 00211 Q agW ilasi o • o 0 co ec Item # 16. Arica & Melvin L. Atkins III [Applicants & Property Owners] Conditional Use Permit (Short Term Rental) 598 Pinewood Drive, Unit 205 November 4, 2020 RECOMMENDED FOR APPROVAL - CONSENT Mr. Weiner: Thank you. The next items, item 16 which is short term rental the Planning Commission places the following application for Conditional Use Permit for Short Term Rental at 598 Pinewood Drive, Unit 205 on the consent agenda as this application meets the applicable requirements of Section 241.2 of the zoning ordinance, staff support the application and there is no known opposition for this request for item number 16. So in saying that I move for approval on the consent agenda item 1,2,3,4, 5, 7, 8, 11 and 16. Ms. Klein: I'll second Ms. Oliver: We have a second by Commissioner Klein. Mr. Weiner: Madam Chair, for the record, item number four which is CSA Virginia Beach, I need to abstain from, the applicant is my client. Ms. Oliver: Okay. We're ready for the vote. Mr. Alcaraz: I got it. I just need to disclose something. Sorry about that. Ms. Oliver: No, it's okay. Mr. Alcaraz: That I am the adjacent property owner to item number 16 and I will be voting on impartial but I will be voting for it. Thank you. Ms. Oliver: Are there anymore? All right. Ms. Sandloop: Calling for the vote. Mr. Alcaraz Mr. Alcaraz: Aye. Ms. Sandloop: Mr. Barnes is absent, Mr. Coston Mr. Coston: Aye. Ms. Sandloop: Mr. Graham is absent. Mr. Horsley is absent, Mr. Inman Mr. Inman: Aye. 1 Ms. Sandloop: Ms. Klein Ms. Klein: Aye. Ms. Sandloop: Mr. Redmond. Mr. Redmond: Aye. Ms. Sandloop: Mr. Wall. Mr. Wall: Aye. Ms. Sandloop: Vice Chairman Weiner Mr. Weiner: Aye Ms. Sandloop: Madam Chair Oliver Ms. Oliver: Aye. Ms. Sandloop: By recorded vote of eight to zero, agenda items number one, number two with conditions as amended, number three, number four with Commissioner Wiener abstaining. Number five with conditions as corrected, number seven, number eight, number 11 and 16 have been approved by consent. AYE 8 NAY 0 ABS 0 ABSENT 3 Alcaraz AYE Barnes ABSENT Coston AYE Graham ABSENT Horsley ABSENT Inman AYE Klein AYE Oliver AYE Redmond AYE Wall AYE Weiner AYE 2 CONDITIONS 1. The following conditions shall only apply to the dwelling unit addressed as 598 Pinewood Drive, Unit 205, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241 .2 of the City Zoning Ordinance or as approved by City Council. 3. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s) through the Residential Parking Permit Program (RPPP) shall be limited to two resident passes only. Guest and temporary passes through the RPPP shall not be permitted. 4. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 5. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4- 1 (8a). 6. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 7. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 8. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 3 9. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 10. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 11. Accessory structures shall not be used or occupied as Short Term Rentals. 12. No signage shall be on-site, except one (1), four(4) square foot sign, may be posted on the building which identifies the Short Term Rental. 13. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 14. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 15. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 16. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 17. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. 4 111 I - V-Will1 , 5 We& go 1\_ ---- 1113- 0 R10 0 - ri. 001 rdik 1 4ii III � 1111 R10TillisCii go Oil4� f R-10 R�1,0 plow' h1 ...it wit t`- ra1. ,. iimlitri- _ ___ \ =� ILA , t . ?AMP -01V \ .MO r . " 1-010 , OR i R10 R10 _ �t \ \ R1=0 . � . up.o...wit,i , A- .��11 1a 1111116/1 Lira 1.,L, 1 via WA' Site HDS Properties, LLC w-All Property_Polygons 600 S. Atlantic Avenue _� s Zoning Parking Lot Drive Aisle - i • Feet Building 0 2040 80 120 160 200 240 U 11 io�l~~S y ,,,„ << si t ,J. 4t CITY OF VIRGINIA BEACH AGENDA ITEM j ITEM: HDS PROPERTIES, LLC [Applicant] RUTH VOGEL [Property Owner] Conditional Use Permit (Short Term Rental) for the property located at 600 S. Atlantic Avenue (GPIN 24263968960000). COUNCIL DISTRICT — BEACH MEETING DATE: December 8, 2020 • Background: The applicant is requesting a Conditional Use Permit for a Short Term Rental on the 15,050 square-foot parcel zoned R-10 Residential District. The oceanfront lot consists of one single-family dwelling containing six bedrooms. The minimum number of parking spaces required for the Short Term Rental use is one per bedroom, or six spaces in this instance. The maximum occupancy for guests on- site after 11:00 p.m. for a six-bedroom Short Term Rental is 18; however, at the time of this writing, the applicant agrees with City Council's recent Short Term Rental condition revisions reducing the number of overnight guests permitted to two per bedroom and limiting the number of bookings in a seven day period from two to one. These changes are reflected in the conditions below. • Considerations: This site is located within the Croatan subdivision, which primarily consists of single-family dwellings. The subject property abuts the public beach of the Atlantic Ocean and is within a short drive to the resort area, the Virginia Aquarium, and other resort-oriented attractions. The applicant's parking plan depicts the six required off-street parking spaces, all on-site within the existing driveway. All the other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Additional details pertaining to the application are provided in the attached Staff report. Three letters of opposition were received by Staff and there were five speakers in opposition at the Planning Commission public hearing. The opposition noted concerns related to the transient nature of the occupants of Short Term Rentals, beach erosion due to increased use, dangers of additional traffic in the neighborhood, additional noise, and the lack of parking. • Recommendation: On November 4, 2020, the Planning Commission passed a motion to recommend denial of this request by a recorded vote of 8 to 0. If City Council chooses to approve the request, Staff recommends the following conditions: HDS Properties, LLC Page 2 of 3 1 . The following conditions shall only apply to the dwelling unit addressed as 600 S. Atlantic Avenue and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two [2]) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23- HDS Properties, LLC Page 3 of 3 71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31- 28. 10.Accessory structures shall not be used or occupied as Short Term Rentals. 11.No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12.The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13.The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1 ,000,000) underwritten by insurers acceptable to the City. 14.There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15.The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 16.To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. • Attachments: Staff Report and Disclosure Statements Location Map STR Vicinity Map Minutes of Planning Commission Hearing Letters of Opposition (3) Recommended Action: Staff recommends Approval. Planning Commission recommends Denial. Submitting Department/Agency: Planning Department �0 City Manager: (ii2 Applicant: HDS Properties, LLCli Agenda Item Property Owner: Ruth Vogel PC Public Hearing: November 4, 2020 B City Council Election District: Beach 17 Virginia Beach Request Conditional Use Permit (Short Term Rental) Staff Recommendation I' —�' ten'" Ue y,,nsw" sa Approval Staff Planner -- William Miller y ( ,t I o 43 Location // 600 S. Atlantic Avenue y,' GPIN c`O°,;,a,,, 1 2426396896 \ �I e Site Size ,##°1 �,,•\` 15,050 square feet to t s 0 of Existing Land Use and Zoning District t Single-family dwelling/ R-10 Residential Surrounding Land Uses and Zoning Districts North '# , ", :'. .P - Single-family dwellings/ R-10 Residential '"` r% ,t.e. Ate: South 1 " Single-family dwellings/ R-10 Residential i 'aw ' �r'�'' East , `,,1 Public beach,Atlantic Ocean / R-10 Residential 1. , West h , S. Atlantic Avenue ., , 4 - .-v - -A. - , ,: .;.,-.- .- . , Single-family dwellings/ R-10 Residential c ks t. ,..„, c :_mid...,„,,,.. AE : . . , _ HDS Properties, LLC Agenda Item 17 Page 1 Background & Summary of Proposal Site Conditions and History • This 15,050 square foot lot is located within the R-10 Residential District and contains one single-family dwelling. • According to City records,this six-bedroom home was constructed in 2006. • Staff inspected the site on September 15, 2020 to observe site conditions and take photographs for this report. • On-street parking is not permitted on this portion of S.Atlantic Avenue. • No records of zoning violations relating to Short Term Rental use were found associated with the subject address. • The applicant agrees with City Council's recommended conditions reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Short Term Rentals in the Vicinity Or/ At 1'tors _ 11111. rill91016— Wrakw4 Alla7w•'r ''— dill"air %z. foot "we ;covia-vst STATUS _. fir► �/ Approvetl . =� Denied .%.'r,� �- . O Under Rewew r 0011.11 O Registered rl ~' Summary of Proposal The applicant submitted a Conditional Use Permit request to operate a Short Term Rental on the subject site.The regulations for Short Term Rental use are identified in Section 241.2 of the City Zoning Ordinance. Specific details pertaining to this application are listed below. • Number of bedrooms in the Short Term Rental: 6 • Maximum number of guests permitted on the property after 11:00 pm: 14—(As recommended in condition#15) HDS Properties, LLC Agenda Item 17 Page 2 • Number of parking spaces required (1 space per bedroom required): 6 • Number of parking spaces provided on-site: 6 IIII t � ,e6e 0i Zoning History -.3 _ _.,//j/ # Request ©3 ,,, 1 CUP(STR)Considered on this agenda Ini1 i , 4. iiirc) - _ , „,„ vs, I,_:_ .., Application Types CUP—Conditional Use Permit MOD—Modification of Conditions or Proffers FVR—Floodplain Variance REZ—Rezoning NON—Nonconforming Use ALT—Alternative Compliance LUP—Land Use Plan CRZ—Conditional Rezoning STC—Street Closure SVR—Subdivision Variance STR—Short Term Rental Evaluation & Recommendation This site is located within the Croatan subdivision,which primarily consists of single-family dwellings. In fact,the neighborhood contains only three known lots with dwelling types other than single-family.The subject property abuts the public beach of the Atlantic Ocean and is within a short drive to the resort area of the oceanfront and the Virginia Aquarium.The applicant's parking plan depicts six required off-street parking spaces;all within the existing driveway, which meet the stipulations of Section 241.2(1)the City Zoning Ordinance. Furthermore,Staff believes that all the other requirements of Section 241.2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Based on the considerations above,Staff recommends approval of this request with the conditions listed below.These recommended conditions do reflect the recent City Council's Short Term Rental revisions by reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Recommended Conditions 1. The following conditions shall only apply to the dwelling unit addressed as 600 S.Atlantic Avenue and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. HDS Properties, LLC Agenda Item 17 Page 3 3. This Conditional Use Permit shall expire five (5)years from the date of approval.The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however,the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints,violations of its conditions or violations of any building, housing,zoning,fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two [2])on the property where the Short Term Rental is located.This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 5. The owner or operator must provide the name and telephone number of a responsible person,who may be the owner,operator or an agent of the owner or operator,who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when,the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a'through 'c' below.This information must be submitted to the Planning Department for review and approval.This shall be done within six(6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration;and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law,each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise),31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2(fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles,where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site,except one(1),four(4)square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7)day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m.or before 10:00 a.m. 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers")shall be two(2) individuals per bedroom. 16. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and,where natural gas or propane is present, carbon monoxide detectors,shall be installed in each Short Term Rental. HDS Properties, LLC Agenda Item 17 Page 4 Further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design(CPTED)concepts and strategies as they pertain to this site. Public Outreach Information Planning Commission • One letter of opposition was received by Staff relating to this request. • As required by the Zoning Ordinance,the public notice sign(s)was placed on the property on October 5, 2020. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays,October 18, 2020, and October 25, 2020. • As required by City Code,the adjacent property owners were notified regarding the request and the date of the Planning Commission public hearing on October 19, 2020. • This Staff report, as well as all reports for this Planning Commission's meeting,was posted on the Commission's webpage of www.vbgov.com/pc on October 29,2020. City Council • A letter of opposition was provided to Staff by the civic league. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, November 22, 2020,and November 29, 2020. • As required by City Code,the adjacent property owners were notified regarding both the request and the date of the City Council's public hearing on November 23, 2020. • The City Clerk's Office posted the materials associated with the application on the City Council website of https://www.vbgov.com/government/departments/city-clerk/city-council/Documents/BookmarkedAgenda.pdf on December 4, 2020. • 3 letters of opposition have been received by Staff noting concerns related to this request(this includes a letter from the civic league). HDS Properties, LLC Agenda Item 17 Page 5 Site Layout & Parking Plan ATLANTIC OCEAN 70.00' 9' x 18' parking space ///////i Paver driveway .4 o p O q ttj Yj GAR ,t q i -7 i 56' 1 2 5 3 6 4 I 70.00' SOUTH ATLANTIC AVE. ' 50' R/W. HDS Properties, LLC Agenda Item 17 Page 6 Site Photos --...„, . ........_ ' . . alihi . " 't't" • _, _ L -- ',, 1 -"47.14 1 ' 1 - • , •• 4 Of -- .. • .. . : A - •-• — 600 S Atiantic Avenue : , , Google Street View N.' -,, - i I , . .... -",.... '• to,---- — -, , . , . ' . . ' 5 r" 4.44, ---- '' s •Ii&_ .441M. 441111111b•• ' -- i••--- , 4 0 ' " --4" o•••,, '.1 „....„,,,,per - 44:-.44.4-______L_:• '4&:..-_:_.- 'it, • - . ‘,..„......"----44.__ ' •,. ' ,,'" -‘-'S \-. -4.•'-i • 44_ , • _ --- -, _ -, - . ' .. ,, • ,, - ,-, • -.4 ,, . HDS Properties, LLC Agenda Item 17 Page 7 Site Photos W - 110 a • - • - v R ji ,r i ` , : r• ,:Ivil s \ Z ,fit f • 4' .'lam .� I., 1, i tt ,.y -T.`" ./' � \T 1. � � l 3�i -1 ....ft,d),,,,, ---‘ :- HDS Properties, LLC Agenda Item 17 Page 8 Disclosure Statement Virginia Beach APPLICANT'S NAME 4.1,1-1- va&t. /N-vi Lies s #fbs DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a board, commission, or other body appointed by the City Council. Such applications and matters include, but are not limited to, the following: Acquisition of Property Disposition of City Modification of by City Property Conditions or Proffers Alternative Economic Development Nonconforming Use Compliance,Special Investment Program Changes Exception for (EDIP) Board of Zoning Encroachment Request Rezoning A•peals Certificate of Floodplain Variance Appropriateness Street Closure (Historic Review Board) Franchise Agreement Chesapeake Bay Preservation Area Lease of City Property Subdivision Variance Board Conditional Use Permit License Agreement Wetlands Board L The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. SECTION 1 / APPLICANT DISCLOSURE F'OK:=i1Y USE ONLY;All disclosures must ce updated two t[I week=prior to an. Page 1 of 7 Ptann:nc Commission and Cii.Courtin meerina that pertains to the apt licatlor./sJ APPLICANT NOTIFIED Of HEARING DATE: [ 11-06-202O-WM 0 NO CHANGES AS OF DATE: REVISIONS SUBMITTED DATE: 11-06-20201-WM AS PER THE APPLICANT,THERE ARE NO OTHER ANTICIPATED CHANGES BEFORE THE DEC.8T"CC PUBLIC HEARING Date: 11-06-2020-WM William Miller—November 16, 2020— 'ViUt 1il'4illex HDS Properties, LLC Agenda Item 17 Page 9 Disclosure Statement VB \1rg nia Beach ❑ Check here if the APPLICANT IS NOT a corporation, partnership, firm, business,or other unincorporated organization. Check here if the APPLICANT IS a corporation, partnership, firm, business, or other unincorporated organization. (A) List the Applicant's name: If an LLC, list all member's names: F1 VOi If a CORPORATION, list the the names of all officers, directors, members, trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary I or affiliated business entity 2 relationship with the Applicant: (Attach list if necessary) See next page for information pertaining to footnotes' and 2 SECTION 2 / PROPERTY OWNER DISCLOSURE Complete Section 2 onlyjfproperty owner is different from Applicant. Check here if the PROPERTY OWNER IS NOT a corporation, partnership,firm, business, or other unincorporated organization. 11 Check here if the PROPERTY OWNER IS a corporation, partnership, firm, business, or other unincorporated organization, AND THEN, complete the following. (A) List the Property Owner's name:_ 5 eN-0 1_�___ �t If an LLC, list the member's • p L. \tp names: Page 2 of 7 HDS Properties, LLC Agenda Item 17 Page 10 Disclosure Statement .N)B Virginia Beach If a Corporation, list the names ofall officers, directors, members,trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Property Owner: (Attach list if necessary) `Parent-subsidiary relationship" means "a relationship that exists when one corporation directly or indirectly owns shares possessing more than 50 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,Va. Code§2.2-3101. 2 "Affiliated business entityrelationship" means "a relationship, other than p, parent subsidiary relationship,that exists when(i)one business entity has a controlling ownership interest in the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or (iii) there is shared management or control between the business entities- Factors that should be considered in determining the existence of art affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities, resources or personnel on a regular basis; or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act, Va.Code§ 2.2-3101. SECTION 3. SERVICES DISCLOSURE Are any of the following services being provided in connection with the subject of the application or any business operating or to be operated on the Property. If the answer to any item is YES, please identify the firm or individual providing the service: IF THE OWNER AND APPLICANT ARE DIFFERENT, EACH MUST COMPLETE THE SECTION SEPERATELY Page 3 of 7 HDS Properties, LLC Agenda Item 17 Page 11 Disclosure Statement APPLICANT Virginia Beach YES NO SERVICE l PROVIDER(use adrItional sheets If needed) ® ❑ Accounting and/or preparer of At'- Rtel..°A. �{�uatiFZ your tax return G•P L1 ❑ Architect/Landscape Architect/ Land Planner ❑ Contract Purchaser(if other than the Applicant)-identify purchaser and purchaser's service providers Any other pending or proposed ❑ ® purchaser of the subject property (identify purchaser(s)and purchaser's service providers) ▪ 11 Construction Contractors ▪ © Engineers/Surveyors/Agents Financing(include current W 4.as f'a1 O mortgage holders and lenders selected or being considered to provide financing for acquisition or construction of the property) ❑ © Legal Services Real Estate Brokers/ -sos PG\( * E ❑ Agents/Realtors for current and s L j a anticipated future sales of the subject property -To w • SECTION 4. KNOWN INTEREST BY PUBLIC OFFICIAL OR EMPLOYEE YES NO Does an official or employee of the City of Virginia Beach have ❑ an interest in the subject land or any proposed development contingent on the subject public action? If yes,what is the name of the official or employee and what is the nature of the interest? * On 11.16.2020,the applicant advised City Staff that the home is being removed from the real estate market. Therefore,Josh Parker of Berkshire Hathaway Towne Realty, is no longer associated with the sale of the property. Page 4 of 7 HDS Properties, LLC Agenda Item 17 Page 12 Disclosure Statement Virginia Beach CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true, and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing, I am responsible for updating the information provided herein two weeks prior to the Planning Commission, Council, VBDA meeting, or meeting of any public body or committee in connection with this Application. f vO I AvI Lt# (1S APPUCAN 5 SIGNAT I PRINT NAME DATE Page 5 of 7 HDS Properties, LLC Agenda Item 17 Page 13 Next Steps • Upon receiving a recommendation from Planning Commission,this request will be scheduled for a City Council public hearing. Staff will inform the applicant and/or their representative of the date of the hearing in the upcoming days. • Following City Council's decision,the applicant will receive a decision letter from Staff. • Once the conditions of approval are in place and/or completed,the applicant must contact the Zoning Division of the Planning Department to obtain verification that the conditions have been met. Contact the Zoning Division at 757-385-8074. • If the request requires land disturbance and/or a subdivision of property, please contact the Development Services Center(DSC)to discuss next steps for site plan/plat review. Contact the DSC at 757-385-4621 or the Development Liaison Team at 757-385-8610. • Please note that further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/ Permits and Inspections Division,and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. • The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED)concepts and strategies as they pertain to this site. HDS Properties,LLC Agenda Item 17 Page 14 STR VICI 7 ITY _.-AP HDS PROPERTIES, LLC - 600 S. ATLANTIC AVENUE iiii i A iiii 4 t J IAbs o `y 5 t0r ' ' 1 ,, ris\Iwo ` 'Mi ,.� 0 ft ill .az 1, -. E0 Lr . ;� Zvi s�o r ,, ; Cr a.ta n R_4 ',��r t.rr' `�ir'tii' .11111 STATUS --__-_co 15 +0 �,010 qv Approved \ —1==� — ' 1*O.4 \,\t � 1 Denied 1 � A Q Under Review ` y' '100 }Re istered , Item # 17. HDS Properties, LLC [Applicant] Ruth Vogel [Property Owner] Conditional Use Permit (Short Term Rental) 600 South Atlantic Avenue November 4, 2020 RECOMMENDED FOR DENIAL — HEARD Ms. Sandloop: Madam Chair, our last item agenda is number 17 and we have four speakers on this item. It is HDS properties LLC an application for a Conditional Use Permit Short Term Rental on property located at 600 South Atlantic Avenue in the Beach District. Will the applicant or the applicant's representative please step to the podium. Ms. Chapman: Good afternoon. My name is Margie Chapman, I am the property manager for HDS properties LLC Incorporated and I am here to speak on their behalf. They have applied with all of your conditions and they will agree to all of your conditions as well. Ms. Oliver: Thank you. Do we have any questions for Mrs. Chapman? Thank you. Ms. Sandloop: Madam Chair,we have four speakers,first one is Ron Swan, to be followed by Barbara Messner. Ms. Oliver: Welcome Mr. Swan, if you will state your name for the record please. Mr. Swan: Thank you, Madam Chair, my name is Rob Swan, vice chairman, commissioners. I live in 825 South Atlantic Avenue. I am here representing the Croatan Civic League on the committee for short term rentals. I have lived in Croatan for 36 years and I will be briefer than what I thought I was going to be. We, only in the last couple of years have realized how many short term rentals we think we have. We are a diverse community, we often disagree with ourselves but we ran a survey on Next Door and 85% of the respondents were opposed to short term residents. We estimate there is approximately 60 short term residents and AirBnBs, apparently as best as we can tell the city record shows two. Last month at the October 20th city council meeting we were gratified to see a 10 to nothing disapproval with one council member, this was 809 Vanderbilt Avenue, sorry, it was one council member Guy Tower stating enough is enough and we feel the same way. Just as an aside, I have two friends and you probably know them, Alan Pyle and Tom Joint Jr, they were both long term residents of Croatan and when short term rentals became adjacent to their property they both moved 1 out of Croatan, they felt it wasn't safe. It's heart breaking for me that they had to do that. We have corporations buying short term rental homes in Croatan. They can't mitigate behavior no matter how hard they try. I have one across the street from me. On this particular one, 600 South Atlantic, on November 3rd. I think you have probably got a plethora of information on this one. I am sorry, but you received a letter from our President of the Civic League and in that letter he referenced everything I referenced but just did a better job at it, but he included a picture. And this is the backside of 600 South Atlantic Avenue. It's adjacent to a deeded ingress egress, private one for public use, but you can see it's caved in on the side. The property was concrete, fence around the swimming pool has caved in. We have erosion. That part of Croatan Beach is the narrowest part of Croatan Beach; it's a real problem. At high tide it's 20 feet. This house is a large house, it's a big house, we have —we didn't know that we were becoming a mini Sandbridge we had no idea until it got out of control. So we as a community, as a majority of the community in the civic league have taken a position that we are opposed to short term rentals in our neighborhood for all the reasons you hear all the time up here. And lastly, thank you for being here today after the elections and doing the city's business. Ms. Oliver: Do we have any questions for Mr. Swan? Thank you. Ms. Sandloop: Barbara Messner to be followed by Jan Periello. Ms. Oliver: Welcome Mrs. Messner Ms. Mesmer: Good evening. You know as I said earlier, I have — you all are aware you had a huge meeting on short term rentals and you were given a lot of input, people opposed it. But you haven't taken any of that to heart. As far as Croatan, you know I appreciate the fact that they are finally waking up and the number of homes over there for sale is unbelievable and part of the reason they are selling is because they don't really have a beach. The beach hasn't been replenished and it gets, you know dredged back for Rudee Inlet. Like I said, you have seen the signs, some of them are hidden and the one for 600 was, it wasn't really noticeable unless you stopped your car and got out to take a picture. So, you know everyone doesn't drive by and looking, everyone doesn't read the agendas. Like I said I see shuttle buses shuttling people back and forth and you know what the elderly couple said there is a lot of things that go on in this city that no one has any idea. And when you see the hotel strip there is plenty of police down there to protect the hotel industry but there aren't plenty of police. If there were plenty of police we wouldn't have all the violence in our neighborhoods and 2 long waits. I mean even if you call 311, sometimes there is a six minute wait. So I think because there are, you know, Croatan is organized and they have a little bit more clout that hopefully you will deny this one but the short term rentals and the fact that there is no requirements that where the people can come from, from out of the State, I guess you can rent the Cuomos, you know from New York. Like I say I don't appreciate being here and I don't appreciate the way my city is run and Mr. Tajan, I don't appreciate the fact that you do not ... Ms. Oliver; Mrs. Messner, I am going to interrupt you right now, we are not going to do that to Mr. Tajan, you need to stay right to the short term rental. Thank you. Ms. Messner: Okay. Ms. Sandloop: Jan Periello followed by Cynthia Rickman. Ms. Periello: Good afternoon. I am Jan Periello, my husband and I live on South Atlantic Avenue in Croatan. My letter of October 8th to Mr. Alcaraz stated the negatives and hazards of granting a CUP to now just 600 South Atlantic. So I am going to spare you and not go into those issues. I am sure you read the letter. Over the years I have watched my community change with a number of STRs overtaking us, legal and illegal. We all dread the summer months and watching our quiet community turn into chaos with the influx of renters bringing traffic and disruption. Without providing any spot checks or enforcement of the regulations while continually granting STRs the City has left us helpless to control the partying and event houses. The burden of trying to protect our right to the quiet enjoyment of our homes should not be our burden. These are our homes in a neighborhood where our children deserve to be safe while playing, bike riding, skateboarding, they should be able to sleep without being subjected to inebriated strangers roaming through their yard, loud noise and filthy language way into the night. I ask you to deny this particular application now and I am going to, like Mr. Swan quote our Beach District Councilman "enough is enough". Thank you. Ms. Oliver: Thank you. Ms. Sandloop: Cynthia Rickman followed by Amanda Robinson. Ms. Oliver: Welcome, if you will state your name for the record please. Ms. Rickman: Yes, I am Cynthia Rickman and I live at 512 South Atlantic. I am also neighbors with Jan. The problem we are having in Croatan is from my account there are about 30 of them. I am working with — to try to get 3 information on whether any of these are actually licensed to be doing this and I believe I am having a meeting after this to discuss it because I do not think that you should be approving things that you cannot police and when I ask how many are in Croatan there should be an answer just like that. I don't know if I have also mentioned, this house that would like to be a short term rental is on the market to be sold. So, who is going to be overseeing this if you were to say yes. Are they a rental or are they for sale? They can't be both. And Croatan right now where I live there are within eight houses of me, going in a two block radius, six short term rentals. I do not believe any of them are licensed. Some of them were grandfathered but I don't think they bothered to go ahead and get the license at that point. I would like to sit in my backyard and not listen to Marco Polo at 1 `o clock in the morning from the rental two doors down. And that's pretty much it. Ms. Oliver: Do we have any questions? Mr. Weiner: I have one. Mr. Tajan, does the CUP go with the property or the owner if its approved? Mr. Tajan: It runs with the land. Mr. Weiner: Okay, thank you, I just wanted to know. Thank you. Ms. Oliver: Thank you very much. Ms. Rickman: Thank you. Ms. Sandloop: Madam Chair, our final speaker is Amanda Robinson Ms. Oliver: Welcome. If you will state your name for the record please. Ms. Robinson: Amanda Robinson, I live at 504 South Atlantic Avenue, I live next to a rental property which is at the beginning of the block and I have lived there for 9 almost 10 years and I feel I know all the difficulties that go along with living right next to rental property. I am opposed to the 600 South Atlantic house applying the CUP for an STR. I wrote a letter to Mr. Alcaraz last month and I will echo those sentiments I relayed to him. I am opposed for three reasons. First I value the community Croatan offers. I love knowing my neighbors and I am a Board Member of the Civil League and I am the Secretary and I also am in charge of the social activity. So I really do my best to foster friendship and camaraderie between my neighbors. I am also currently the President of the Women's Club. I don't want to see our neighborhood have any more STRs. I have two small children and we walk to the bus stop, they go to different schools, one will go to ODS and the 4 other (inaudible) and so the two bus stops are south of Vanderbilt and Twilight and the other one is Virginia Dare and Twilight and so that 600 house would have a big impact if all of the cars are allowed to park in that, what is that for six bedrooms they are allowed to have eight cars, is that right? Male Spkr: Six cars. Ms. Robinson: Yeah, so that would be a great increase of traffic and Twilight would bear the blunt of it and we are at the bus stops there are no sidewalks. I just want to make sure that it's safe for our kids to walk around. When you are on vacation you are not necessarily thinking about kids going to school and you are not necessarily paying attention. Additionally, as Rob Swan mentioned, the Moffet and Nickel Study about our beach shows that Twilight is at a critical point for beach erosion and having somebody that's not really interested in the health of our beach or the longevity of it just doesn't make sense to me. I feel like that is a poor decision for the entire community. And that's all I have, thank you very much for listening to my comments. Ms. Oliver: Thank you very much. Any more speakers? Ms. Sandloop: No, ma'am no more speakers. Ms. Oliver: Would the applicant like to come back up please. Ms. Chapman: Yes, I would just like to add that I have been doing short term rentals for 22 years now and Croatan has always been in our inventory I mean, Croatan is like part of our resort area. And then each just — it goes from Croatan all the way to you know to north end to the bay. So you know I don't think it is unusual to ask for a conditional use permit for this property being like Croatan has always been, like it's just considered part of our resort area and part of our vacation area where people want to come in and enjoy the beach and enjoy our city. Ms. Oliver: Do you have any questions for Mrs. Chapman? Mr. Weiner? Mr. Weiner; Are you already using this as a short term rental? Ms. Chapman: No sir, Mr. Weiner; Okay. How often does the owner come in? Ms. Chapman: Currently it is rented right now, it's currently rented on a one year lease right now. 5 Mr. Weiner; And can you explain about it being getting ready to be sold? Ms. Chapman: It was a situation where the owner is still trying to sell the property but if not, once this lease expires they may want to convert to vacation and short term rentals. Mr. Weiner: What, I am sorry could you say that one more time, I didn't comprehend that? Ms. Chapman: So, right now we have a yearly tenant in there. It's still for sale, if they are not successful with selling it, then probably the next term around they want to be able to rent it as a vacation rental. Mr. Weiner: So he goes to sell it and that short term rental is going to go with the property and that person, we don't know who that person is going to be. You see where I am going with that. Ms. Chapman: I see where you are going, yes. Mr. Weiner: Okay, that's all I got, thank you. Ms. Oliver: Mr. Wall? No, okay. So we have no more speakers I am going to close this to the public and open it up to the commission or to a motion please. Mr. Inman. Mr. Inman: I have a question, I am just going to leave it on I am sorry I have got a question about the map that's in our material which shows a whole bunch of dots that are grey which says that they are registered and what does that mean? They were like grandfathered? Mr. Tajan: No, registered means that they are paying their taxes. We have not yet had a chance to go through all of the applications whether or not they meet all the requirements of 241.2. So if you are paying your taxes and registered with the commissioner of revenue it shows up on the list that we utilized to mark on this on the staff report. Ms. Oliver: So if they are, I want to piggyback on that, so if they are registered and paying their taxes then I would assume that they are renting, they are all operating as short term rental? Mr. Tajan: I should say that they are registered, and whether they are paying their taxes or not it's just — I have submitted the paper work I will have to clarify that. Ms. Oliver: Okay. 6 Mr. Inman: Yeah, well, that's kind of where I was going. I mean they are registered but they don't have conditional use permits yet but that ... Mr. Tajan: They may or may not need one, so again we have — as the commission is fully aware we have been inundated with the conditional use permits. We have this next step as we transition with additional staff to dive into all these dots, but to all these applications are the ones that we have submitted. Currently right now we have 255 actual applications out of a number of these registered dots. So we don't even have all those yet. So we have been sending mail and reminding them to come see us. So we need to go through all those. Mr. Inman: Because some of these grey dot properties have applications in that are being processed? Mr. Tajan: Some of them could have a zoning permit application so that we can review to make sure they meet the parking and meet everything else and if they were registered and paying taxes prior to July 2018 they will be considered grandfathered. So there is still a zoning permit process or the conditional use permit process. Mr. Inman: Yeah, I have a lot of concerns about this neighborhood. I mean the representation just made that Croatan has always been considered part of the resort area. I have been here 47 years, I have never considered Croatan part of the resort area and nor should it be treated as part of the resort area. And I have a major concern, I do understand and I believe that the representatives of the neighborhood, the residents who have come and the civic league members that there are short term rentals going on that maybe are not authorized yet. And I have concern with this especially this particular - size of this particular property and what it portends is for a lot of congestion related to it because of the size and the number of visitors that would be generated for that property. So I am opposed to this application. Ms. Oliver: I have to go on with Mike, I am not going to admit to be here longer than Mike, as it will just start showing my age but — I can agree with him that Croatan has never been, as far as I know considered part of the resort strip. It's more of a cul-de-sac neighborhood if anything. And the fact that this house is for sale concerns me and that this conditional use permit would go along with the land, I am just not real comfortable with this at all and so I would not support this application. Mr. Redmond. Mr. Redmond: I am completely untroubled by the fact people want to sell houses all the time and that's not typically inconsistent with people who also might want to 7 rent it, whichever one works. However I completely agree with both of you when I look at this, I say isn't that what Sandbridge is for. There are a lot of big houses in Sandbridge that are far more protected under Virginia law than anything else that we have done. I agree I find this an inappropriate application and with that I would move for denial of the application. Thank you. Mr. Inman: Second. Mr. Redmond: And what are you about 34, I am calling you 34? Ms. Oliver: I am about 35 now. Mr. Inman: I will second that. Ms. Oliver: Great, thank you, did you get that. Okay. Perfect. Call for the vote then when you are ready. Ms. Sandloop: Okay. We have a motion for denial. Mr. Alcaraz. Mr. Alcaraz: Aye Ms. Sandloop: Mr. Barnes is absent, Mr. Coston. Mr. Coston: Aye Ms. Sandloop: Mr. Graham is absent, Mr. Horsley is absent. Mr. Inman Mr. Inman: Aye Ms. Sandloop: Ms. Klein Ms. Klein: Aye Ms. Sandloop: Mr. Redmond; Mr. Redmond: Aye Ms. Sandloop: Mr. Wall. Mr. Wall: Aye Ms. Sandloop: Vice Chair Weiner Mr. Weiner: Aye Ms. Sandloop: Madam Chair Oliver 8 Ms. Oliver: Aye Ms. Sandloop: By vote of eight to zero, agenda item number 17 has been denied. AYE 8 NAY 0 ABS 0 ABSENT 3 Alcaraz AYE Barnes ABSENT Coston AYE Graham ABSENT Horsley ABSENT Inman AYE Klein AYE Oliver AYE Redmond AYE Wall AYE Weiner AYE CONDITIONS 1. The following conditions shall only apply to the dwelling unit addressed as 600 S. Atlantic Avenue and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 4. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two [2]) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4- 1 (8a). 9 5. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 6. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 7. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 8. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 9. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 10. Accessory structures shall not be used or occupied as Short Term Rentals. 11. No signage shall be on-site, except one (1), four(4) square foot sign, may be posted on the building which identifies the Short Term Rental. 12. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 13. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 14. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 15. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 10 16. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. 11 From: William R.Landfair To: William N.Miller;Summer J.Peebles Subject: FIN:STRs 557 and 600 South Atlantic Date: Monday,November 2,2020 12:39:55 PM Attachments: IMG 20201030 0002.odf IMG 20201030 0001.ndf IMG 20201030 0003.odf Will and Summer, See email from concerned citizen regarding proposed STRs at 557 and 600 South Atlantic Avenue. Thanks, Bill William R. Landfair,AICP Planning Evaluation Coordinator I Planning&Community Development I Planning Administration 2875 Sabre Street,Suite 500 I Virginia Beach VA 23452 (757)385-8745 From: Ron Swan <ron@adschem.com> Sent: Friday,October 30, 2020 12:52 PM To:William R. Landfair<WLandfair@vbgov.com> Subject:STRs CAUTION:This email originated from outside of the City of Virginia Beach. Do not click links or open attachments unless you recognize the sender and know the content is safe. I am speaking in opposition to 557 & 600 South Atlantic Avenue, both of which are presently STRs. Madam Commissioner and Commissioners: My name is Ron Swan. I reside at 825 South Atlantic Avenue. I am here representing the CCL. I caught my first wave in Croatan 53 years ago. I became a resident 36 years ago. I've watched this small 3/4 mile x 3/4 mile spit of sand change from a dozen beach box houses to a 500 home community. I've watched it all unfold. Croatan is a diverse community that has often disagreed with itself. But by an overwhelming majority we all agree that STRs are destroying the very essence of what our community is. I have friends on both sides of this issue. To be sure, it's all about the money, and the slogan of STR owners is more beds more money, thus the conversion of garages to bedrooms and lawn parking to accommodate vehicles. We estimate there are 60 STR and Air B&B in Croatan. Apparently the City records show 2. Last month at the October 20th City Council meeting there was a vote on 809 Vanderbilt Avenue for an STR, we were gratified to see a 10 — 0 disapproval, with one Council Member, Guy Tower stating, "enough is enough". We feel the same way. In fact the CCL conducted a survey on NextDoor. 85% of residents were not in favor of STR. Coincidently, this almost lines up with the ratio of STR owners in Croatan vs residents. Just as an aside, I have two friends; you may know them, Allen Pyle and Tom Joint, Jr. who sadly moved from Croatan because their homes were next door to STR. They felt their children were not safe. That's heartbreaking to me. We have corporations buying houses for STR income. Behavior can't be mitigated as renters arrive at 1:30am and leave at 4:00am. I watched a Planning Commission meeting on Facebook. I learned two things. First, you all have a great deal of patience and fortitude. Second, I learned there is nothing I can tell you about STR, that you don't already know. In short, our community does not want any more STRs for all the reasons you've heard countless times. 557 S. Atlantic Ave— adjacent residents are opposed. 600 S. Atlantic Ave— located at intersection, narrowest part of the beach. Adjacent to deeded path to beach. This commission is our primary line of defense. You are the arbiters who decide. I simply ask that you take into account the will of our community and disapprove any more STR in Croatan, and thank you very much for your time and consideration. Best Regards, Ron Swan Advanced Dealer Services 1724 Virginia Beach Blvd.,Suite 101 Virginia Beach,VA 23454 tuoa•uaayaspeguoa 80LL-0517-LSL :I1a0 V[I9-9117-LSL :@DIJIO From: William R.Landfair To: William N.Miller;Summer J.Peebles Subject: FW:Short Term Rentals in Croatan Date: Thursday,October 22,2020 11:09:59 AM Will and Summer, See letter of opposition below for STR applications at 600 and 557 South Atlantic Avenue. Bill William R. Landfair,AICP Planning Evaluation Coordinator I Planning&Community Development I Planning Administration 2875 Sabre Street,Suite 500 I Virginia Beach VA 23452 (757)385-8745 From:John Mannarino<manoreno1955@gmail.com> Sent:Thursday, October 22, 2020 9:17 AM To:William R. Landfair<WLandfair@vbgov.com>; galcarazvbpc@icloud.com Cc: Michael J Kelly<mkellyav8@aol.com> Subject:Short Term Rentals in Croatan CAUTION:This email originated from outside of the City of Virginia Beach. Do not click links or open attachments unless you recognize the sender and know the content is safe. I am opposed to the approval of two properties, 600 and 557 South Atlantic that have applied for CUPs for the following reasons: 1. 5. Atlantic already has a number of rental properties in close proximity to these sites - some of which can accommodate a large number of guests and vehicles. 2. 5 Atlantic is a narrow road- barely accommodating two way vehicular traffic. One of the properties is at the intersection of Twilight and 5. Atlantic 3. 5. Atlantic is the gateway to the beach and pedestrians use it to access the beachfront. One of the properties lies adjacent to the Twilight access. 4. Croatan Beach can not accomodate large gatherings as it has experienced sufficient erosion to make it unusable at high tide with little berm left for beachgoers and these properties will add to the stress until the city completes the restoration of both the dunes and the berm. That action is tentatively scheduled for summer 2021. 5. Croatan is not an overlay district and must not become one by default. What is occurring seems to indicate mission creep as more properties apply for CUPs to enhance their appeal to potential buyers/investors, especially for the current listings. 6. We must remain a residential neighborhood and the size of at least one of the properties is large enough to be considered an inn - ergo a commercial interest. I live next to several rental properties and do not welcome the uncertainty and anxiety that comes each time these properties are rented. Although one assumes the owners will rent responsibly and screen their guests, that is no guarantee of a good outcome. I do not believe it is my responsibility to provide overwatch if guests behave badly nor is it my desire. Given the cities inadequate resources for inspection and enforcement, any expansion of STl2s in croatan is ill advised. Respectfully John Mannarino 525 Vanderbilt Ave Stay Thirsty My Friends! C .® .1 AI EAe r, • September 14, 2020 The Virginia Beach Mayor and City Council 2401 Courthouse Drive City Hall, Building#1, Room 281 Municipal Center Virginia Beach,VA 23456 Subject: The Croatan Civic League Position on Short Term Rentals Dear Mr. Mayor and Members of the City Council: I am writing to you today to express the position of the Croatan Civic League (CCL) to various Short-Term Rental (STR) proposals being discussed at Council and in the Planning Commission. Croatan is a residential community located between Rudee Inlet and Camp Pendleton. Save for a handful of lots zoned R-15,Croatan is zoned R-10 throughout. We have a single means of access (Croatan Road), narrow streets - many without sidewalks, and no commercial venues. It is in the true sense of the word, a neighborhood. Where some may consider STRs as a boon,many Croatan residents see them as a bane. Increased trash, illegally parked vehicles (some blocking streets, driveways, and mailbox access), and a revolving door of tenants detracts from the neighborhood ambiance that our residents —your citizens—seek to enjoy. Almost two years ago, our letter dated December 14, 2018 stated the following: We do not see any need to grandfather nor support it as existing rentals must comply with new CUP. Possibly the fee/hearing for existing Short-Term Rentals can be waived, but the application and permit must be on file to enforce and renew every two years as properties often change hands. This is a fairness, economic, and safety issue. While still preferring no grandfather clause, the CCL supports passage of proposed change to the grandfather clause of Virginia Beach Zoning Regulations§241.2. The revised language is prudent; especially for STRs that have operated for many years in violation of zoning regulations. On July 12, 2020, a Planning Commission presentation included a bullet on slide 13, referencing a potential STR Overlay for "Portions of Croatan" (Attachment 1.) At the September 9, 2020 combined Planning Commission/City Council meeting the City Attorney stated that an overlay district could be created by the City Council without consultation or vote by the affected district. We conducted an informal survey on this issue via Nextdoor from September 11-13, 2020. 148 property owners voted, and some provided comments. The vote was overwhelming against a Croatan STR Overlay with 85% against, 10% for, and 5% undecided. Attachment 2 is a copy of the comments with the names removed. Perhaps we are overreacting, but given the July 12t' presentation, coupled with the City Attorney's spoken comments,the Croatan Civic League Board of Directors is compelled to inform the leadership of Virginia Beach the we are strongly opposed to any move by the Planning Commission or City Council to create a Croatan STR Overlay District. The CCL point of contact for STRs is our Vice-President, M. Conrad "Connie" Agresti, 757-425- 2068, mcaiii@aol.com. Sincerely, Michael Kelly, President, Croatan Civic League 604 Fort Raleigh Drive Virginia Beach, Virginia 23451 (M) 703.439.9153 mkellyav8@aol.com TO. VIRGINIA BEACH FLANNING COMMISSION FR: CRD.ATAN CIVIC LEAGUE RE. CROATAN CIVIC LEAGUE POSITION ON SIP. CT' i18i 15 Summary tt is the position of the Croatan Civic League that Short Term Rentals be reasonably restricted in residential zones.Such rentals to be defined as less than 30 days and to be restricted to no more than twelwjl4CerltrLets per year.The MI supports other restrictions Including banning event home rentals. _.ear Plaort nc C—nrrrssior The Crcetan Civic League respectfully urges you tc ooes.dor Ism t:ng die number of times a parson can rent oil Biro noise r7 a residential a ua !:a less Ulan 30 days. Two rentals per week the curren:proposition, clearly disregards the will of every resident who aces not rent our their horror.which 3 the rnaiori!y of people in rrtis city It All encourage corporate nrryn:ns of teats*hones The charautee of the ittskisitital zorta will be erased for most oceanfront neightcrhoc_s The wirst p-nbiems occur when 'j turnovers fia~u.4re, 1-3 Jays 2) ri0 limit en ter ants leads to excess no se trash and parkin 3)The ma)onty of houses turn onto rentals due to the rnrrwrie poten;IEl Trc nncx residential p'csa itirts tc fad liko incid I hotel Iorne in i ummer acid a ghost town in wirier.Full time ressden:s want a^.ontmuntty, rota revotvenc door of 57ergers, and the•, wit tease Inevitably, upkeep Sta-tt tb decclinr. on :he closes as they rue just none'}• pus to owners I;is not far-fetched'n imagine Creator w lh TSa% :unto homes in a few ye3rs as investors drive up purchase pmces a-d maxir,i a snort term rentals and events to rrake profits,urless the rents options ate reasonably curried Virg n fearh i within a 1ay's drag for titer thirds of the US popu,i1uom wnicr rb good for hotels but no:for homeowners who do net want to live in the middle of a low-cost mote;district. Restrictions are necessary to malhmin the Cut oe of the znring r.rhicrr F The Croata,..CCU suppc-ts the toloanng: 1; L'u:a house re ttal to 12 STR oorracts annually. this it l reduce very short term-wee.-end anti rich!!y -enta s- while tit owing weekly c r longe! rerrats every weiNr of the summer 2; Def ne short term'e.ab a resxtentiai rental cortex 30 days The curren:9C days S t R transient tax owed unta'rly burdens peep e w no rent for rnost o-me warner or`ail. 3; Frohitrt 'event' or "galheing' houses. This is where the Ordnance should be cleer. 'Ever:`houses shp;l^ riot tt permitted in any resrre!'nnttal Areas The ever ho.>_5e s to nutrignt venue. not a t;:s::Jertct: with nu`band fide' residents li:rig there .; InipCsae Fees or managemertl'eattcrs Ion dotal-3ms as well as•ovviers because tie realtor mast keep recc^ds for :p-;t5 anc must a ides by the limits ref the Orriramce in ronductinc business con their Outwit yl Ester:Ash a registry annual registration for quartette TOT proof of insurance. Mr: Ccde enforcement;hailed 9rat Ferric pen of the 70T to supourt axed Code Irilettartrent espeC.a'ry in s-.mmer,for these areas payeng tte TOT 5;At rentals shi:_IJ rr'a-item proof of insurance.fre exllnsJ:irlers.smoke a arms and recta.property lability insurance-- rerure teat a chec4.1-s1 of these items is accepted sird Eigatrod to each your when 'eq for rig The rumber of pew in A recta ;mould he limited tr.a ree;nnatte number,may mutt 3 per bedroom Tnank you for the erne and attention'tc'J helve devoted to this important issue The future of Cowl:ran-r n:t other rer_i dens it comriueities is rn your hands. Siroterety Capev r Prpidprtt.(.CI Crooton Civic League,517 Croaton Rd Virginia Beach VA Emoit:cddx@dooi.com ,Ili ilk i MELne V `L i �, olm. / 4 �'Ci rilit'-. :-• -=- ''el* 4\\• / eNell 'ii t VA ' _, - --\ \\ -1' I 0-11 RIP wit \ ' - - Air V 440 _ c), OR cl\ \❑ I " .. % t %,. ke� .�, cv\ , rA o Ox AI�,I:e.. -�� -_..- , DRSS, `'4 1 �, " r. / `.,,,." R5,S ! �� I [11 Li is ui =ii.!_lt ,... --"'/-s 1i y� go _P_�i newoo-d-D rive .�..0�� 7,,,,,. '�I RSSI �� / ° 11110:: NE 1 , i Ali . - P11\ INC . ir,r, . _;;.,-- - - .Norfolk AvenueANNS Mil N°r�O�kA en _ RT3 a raw pn, �V '9 � Al2 � - � RT3 � -- ,�. 1P\° 10 t---et J� k-,—,Al2 \ 15S ow! gtb- — I �\� p �il 1 1\ 101 RS.S tu f t\II \ or*H R5S v IS i, -.% , ,, ilO'kk c A 1A m `` a VI /// Site Rickert Family Living Trust w 4) Property_Polygons 349 Norfolk Avenue h' Zoning P Parking Lot Drive Aisle I i Feet Building 0 30 60 120 180 240 300 360 �y. si CITY OF VIRGINIA BEACH AGENDA ITEM ITEM: RICKERT FAMILY LIVING TRUST [Applicant& Property Owner] Conditional Use Permit (Short Term Rental) for the property located at 349 Norfolk Avenue (GPIN 24271464730042). COUNCIL DISTRICT — BEACH MEETING DATE: December 8, 2020 • Background: The applicant is requesting a Conditional Use Permit for a Short Term Rental for a two-bedroom unit within the 32 condominium unit development on this 1.70-acre parcel at the oceanfront. The property is zoned A-18 Apartment District. The minimum number of parking spaces required for the Short Term Rental use is one per bedroom, or two spaces in this instance. The maximum occupancy for guests on-site after 11:00 p.m. for a two-bedroom Short Term Rental is six; however, at the time of this writing, the applicant accepts City Council's recent Short Term Rental condition revisions reducing the number of overnight guests permitted to two per bedroom and limiting the number of bookings in a seven day period from two to one. These changes are reflected in the conditions below. • Considerations: The subject dwelling is located within the Lake Station condominiums, which are situated approximately 1,000 feet from the public beach of the Atlantic Ocean. The applicant's parking plan depicts one of the two required off-street parking spaces within the existing on-site parking lot. According to the applicant, this off-street parking space is permanently assigned to the subject unit. To accommodate the second required parking space, the applicant has submitted a letter of intent to lease a parking space within the 9th Street Parking Garage, which is approximately two blocks east of the site. The Zoning Administrator reviewed this alternative parking plan and deemed it acceptable. As the subject property is in the Resort Parking Permit Program (RPPP) area, a condition is recommended that limits the number of RPPP parking passes to two residential passes and further prohibits the issuance of guest permits and temporary permits through the program. The remaining requirements of Section 241.2 of the Zoning Ordinance pertaining to Short Term Rentals can be reasonably met by the applicant. Further details pertaining to the application are provided in the attached Staff report. Twelve letters of opposition and two letters of support were received by Staff and there were four speakers in opposition at the Planning Commission public hearing. The opposition noted concerns related to parking, security, privacy, and the transient nature of occupants of a Short Term Rental. Rickert Family Living Trust Page 2 of 4 • Recommendation: On November 4, 2020, the Planning Commission passed a motion to recommend approval of this request by a vote of 6 to 1, with 1 abstention. 1. The following conditions shall only apply to the dwelling unit addressed as 349 Norfolk Avenue, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. A second (2nd) parking space, at a location subject to approval by the Zoning Administrator, shall be available for use by the Short Term Rental occupants at all times. 4. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s) through the Residential Parking Permit Program (RPPP) shall be limited to two resident passes only. Guest and temporary passes through the RPPP shall not be permitted. 5. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 6. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1 (8a). 7. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 8. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through `c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. Rickert Family Living Trust Page 3 of 4 a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 9. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 10.There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23- 71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 11.All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31- 28. 12.Accessory structures shall not be used or occupied as Short Term Rentals. 13.No signage shall be on-site, except one (1), four (4) square foot sign, may be posted on the building which identifies the Short Term Rental. 14.The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 15.The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1 ,000,000) underwritten by insurers acceptable to the City. 16.There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 17.The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 18.To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. • Attachments: Staff Report and Disclosure Statements Location Map STR Vicinity Map Minutes of Planning Commission Hearing Rickert Family Living Trust Page 4 of 4 Letters of Opposition (12) Letters of Support (2) Recommended Action: Staff recommends Approval. Planning Commission recommends Approval. Submitting Department/Agency: Planning Department 7 City Manager:fh.0 Applicant& Property Owner: Rickert Family Living Trust Agenda Item PC Public Hearing: November 4, 2020 City Council Election District: Beach 12 G1ty of Virginia Beach Request Conditional Use Permit (Short Term Rental) Staff Recommendation ms"�"` 4 � t Approval t9 16th sue`� � Y"9'^`3 Bead`8�,�6 ti Staff Planner 1 \---?j"" .74 i ' Summer Peebles t5i^strt t , 4 e tart,sue strut i Location s R S 349 Norfolk Avenue tzttas 'ci. o \.---\ GPIN `l 24271464730042 �)i 9M„y th tP- s•_ Ate J"-- at p 6 Site Size �„� �,� ,,� e^ 1 Approximately 1.70 acres 1p boo po,„,pve^ a >th,�... • o Wto^saw pyeNe 43ds�t i To I Existing Land Use and Zoning District Multi-family dwellings/A-18 Apartment Surrounding Land Uses and Zoning Districts North t Single-family dwellings/R-5S Residential " !' ' South . Norfolk Avenue Duplex dwellings, hotel/R-10 Residential, A-12 , .,.... a 40 Apartment . East —4-t -, - Open space, parking lot/OR Oceanfront Resort 114 3, West r" • yI. ,. , Single-family dwellings/ R-55 Residential •`. L '+� r 01 ^. '� is t _ ., r .-) r 3• Rickert Family Living Trust Agenda Item 12 Page 1 Background & Summary of Proposal Site Conditions and History • This 1.70-acre parcel is zoned OR Oceanfront Resort Form-Based Code District. • City records indicate the site is developed with a condominium building built in 1985. • Staff inspected the site on September 10, 2020 to observe site conditions and take photographs for this report. • The property lies within the boundary of the Residential Parking Permit Program (RPPP),where parking during the evening and overnight hours is limited. Based on this,a condition is recommended that would prohibit the occupants of the STR from parking in the street during the restricted hours. • Staff received a complaint on June 30, 2020 that a Short Term Rental was operating at this address without the proper approvals.A Notice of Violation was issued to the property owner.The property subsequently submitted the Conditional Use Permit application to rectify this oversight. • Staff received a complaint on October 29th, 2020 about an incident that occurred August 27th, 2020 regarding noise levels of Short Term Rental tenants.The complainant notified the property owner,who subsequently resolved the issue with his tenants. • The applicant agrees with City Council's recently imposed conditions reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Short Term Rentals in the Vicinity A-141170-.,1•14\ ill?Ift, 5_\ ' ct -*--:1A.:., i•§ga %sli 's ...‘ L _ %Woo --- too . � e WO •. k _ t 11 1!STATUS N�OS O� S wig 't et i • Denied i r'17 '',„e gear ,)1cAy' \ 1 Q Under Review.*r t i� CI Iii {1 1 /5 R�- 6 .**-,red 1111 -1\ C�1n . r, y! l\ Rickert Family Living Trust Agenda Item 12 Page 2 Summary of Proposal The applicant submitted a Conditional Use Permit request to operate a Short Term Rental on the subject site. The regulations for Short Term Rental use are identified in Section 241.2 of the City Zoning Ordinance. Specific details pertaining to this application are listed below. • Number of bedrooms in the Short Term Rental: 2 • Maximum number of guests permitted on the property after 11:00 pm: 4—(As recommended in condition 17) • Number of parking spaces required (1 space per bedroom required): 2 • Number of parking spaces provided on-site: 1* *1 proposed parking space to be leased off-site at the 9th Street Parking Garage OR - /4? 1101T "tir 441kilacili Zoning History 1 DR # Request CC�,• • 1 SVR(Create 2 lots)Approved 08/09/1994 R-6S /� 2 CUP(Commercial Parking Lot) Denied 04/26/2011 t � , 3 SVR(Create 3 lots)Approved 01/17/2017 O I= f77 ./j! 4 CUP(Short Term Rental) Pending Planning Commission n«1akAv.eu. Recommendation and City Council Decision (Wait till 10/20) it Application Types CUP—Conditional Use Permit MOD—Modification of Conditions or Proffers FVR—Floodplain Variance LUP—Land Use Plan REZ—Rezoning NON—Nonconforming Use ALT—Alternative Compliance STR—Short Term Rental CRZ—Conditional Rezoning STC—Street Closure SVR—Subdivision Variance Evaluation & Recommendation This dwelling is part of the Lake Station Condominium complex, located less than a mile from the public beaches of the Atlantic Ocean and the resort area.The Lake Station Condominium complex is composed of 32 condominium units. This two-bedroom Short Term Rental unit requires two parking spaces. Each unit has one assigned parking space on-site. To accommodate the second required parking space,the applicant has submitted a letter of intent to lease a parking space within the 9th Street Parking Garage, which is approximately 0.15 miles east of the site. Since the property is within the boundary of the Residential Parking Permit Program (RPPP), parking passes issued for the subject dwelling unit will be limited to two resident passes;guest and temporary passes will not be permitted while the Conditional Use Permit is active. The Zoning Administrator has reviewed this alternative parking plan and deemed it acceptable. 12 letters of opposition have been received about this requesting, noting concerns over parking, security, noise and the overall nature of Short Term Rentals. Rickert Family Living Trust Agenda Item 12 Page 3 Based on these considerations,Staff recommends approval of this request with the conditions listed below.The recommended conditions do reflect City Council's Short Term Rental revisions by reducing the number of bookings in a seven day period to one and limiting the overnight guest calculation to two per bedroom. Recommended Conditions 1. The following conditions shall only apply to the dwelling unit addressed as 349 Norfolk Avenue,and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. A second (2nd) parking space,at a location subject to approval by the Zoning Administrator,shall be available for use by the Short Term Rental occupants at all times. 4. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s)through the Residential Parking Permit Program (RPPP)shall be limited to two resident passes only.Guest and temporary passes through the RPPP shall not be permitted. 5. This Conditional Use Permit shall expire five(5)years from the date of approval.The renewal process of this Conditional Use Permit may be administrative and performed by the Planning Department; however,the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints,violations of its conditions or violations of any building, housing,zoning,fire or other similar codes. 6. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight (number of bedrooms times two(2)) on the property where the Short Term Rental is located.This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4-1(8a). 7. The owner or operator must provide the name and telephone number of a responsible person,who may be the owner,operator or an agent of the owner or operator,who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty(30) minutes. Physical response to the site of the Short Term Rental is not required. 8. If,or when,the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements'a'through 'c' below.This information must be submitted to the Planning Department for review and approval.This shall be done within six(6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration;and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 9. To the extent permitted by state law,each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 10. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71(noise), 31-26,31-27 and 31-28(solid waste collection), 12-5(fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. Rickert Family Living Trust Agenda Item 12 Page 4 11. All refuse shall be placed in automated refuse receptacles,where provided, and comply with the requirements of City Code sections 31-26,31-27 and 31-28. 12. Accessory structures shall not be used or occupied as Short Term Rentals. 13. No signage shall be on-site,except one(1),four(4)square foot sign, may be posted on the building which identifies the Short Term Rental. 14. The Short Term Rental shall have no more than one(1) rental contract during any consecutive seven (7)day period. 15. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 16. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 17. The maximum number of persons on the property after 11:00 p.m.and before 7:00 a.m. ("Overnight Lodgers")shall be two(2) individuals per bedroom. 18. To the extent permissible under state law, interconnected smoke detectors (which may be wireless),a fire extinguisher and,where natural gas or propane is present, carbon monoxide detectors,shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design(CPTED)concepts and strategies as they pertain to this site. Public Outreach Information Planning Commission • Staff has received 1 letter of support and 12 letters of opposition to this request, noting concerns about parking, noise,security,and the overall nature of Short Term Rentals. • As required by the Zoning Ordinance,the public notice sign(s)was placed on the property on October 5, 2020. • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, October 18, 2020, and October 25,2020. • As required by City Code,the adjacent property owners were notified regarding the request and the date of the Planning Commission public hearing on October 19, 2020. • This Staff report,as well as all reports for this Planning Commission's meeting,was posted on the Commission's webpage of www.vbgov.com/pc on October 29, 2020. Rickert Family Living Trust Agenda Item 12 Page 5 City Council • As required by State Code,this item was advertised in the Virginian-Pilot Beacon on Sundays, November 22, 2020,and November 29, 2020. • As required by City Code,the adjacent property owners were notified regarding both the request and the date of the City Council's public hearing on November 23, 2020. • The City Clerk's Office posted the materials associated with the application on the City Council website of https://www.vbgov.com/government/departments/city-clerk/city-council/Documents/BookmarkedAgenda.pdf on December 4, 2020. • Staff has received 2 letters of support and 12 letters of support for this request. Rickert Family Living Trust Agenda Item 12 Page 6 Site Layout & Parking Plan . Y.I II 1i 15 pru »,.lag tm --t -z ; l ti .0 . l �, j - - .`s a • .- ,�. `; 1� ,j u . -.k ---...�o:, I .a 7 ,f to�i' a I is al ,: ' Ic aI %) + r V 1j\r*1 ztb • • . ,,,4 b- I:, M - Z MI 41) co ml- i ( '• a) Zia ►,- �` a LII Q. a4'i E !1 II,' a tot to no N .-f t -�air; c C rzr, O - �•1 h0 i of fa E -� f6f"f � • �_.._. . G •fM Rickert Family Living Trust Agenda Item 12 Page 7 Site Photos i -� r ;. 111 I 171 1.1..:::::-;i,,,,, II* -', '. 4 �" 1 _ 417 0�m F7. L IF - _ • Rickert Family Living Trust Agenda Item 12 Page 8 Site Photos t _----_T1 ---,- ----a -..-.__._,. — - _ ____._ _ , .______ , t— �1111c 3yq 35 t a _ 6 3. ar 6.3 ....- 1. te r~ F. VOCK / rilr- i 1N15 TO:L �" '\ y 6tiPi Pl1 t 0 ,ry,er`r. ........ . -..` 1111. A ril 1 Gill \1,- , .-i, , ,,, • . 'i1Njlli11 Rickert Family Living Trust Agenda Item 12 Page 9 Disclosure Statement 7Z fj¢I'/- 349 Nox'l=atK '"" IttiB CA µ -Cr A) APPLICANT'S NAME RoC36i2i K_ I c i . DISCLOSURE STATEMENT FORM The completion and submission of this form is required for all applications that pertain to City real estate matters or to the development and/or use of property in the City of Virginia Beach requiring action by the City Council or a board, commission, or other body appointed by the City Council. Such applications and matters include,but are not limited to,the following: Acquisition of Property Disposition of City Modification of by City Property Conditions or Proffers Alternative Economic Development Nonconforming Use Compliance,Special Investment Program Exception for (EDIP) Changes Board of Zoning Encroachment Request ' Rezoning Appeals _ Certificate of Floodplain Variance Appropriateness --- Street Closure (Historic Review Board) Franchise Agreement Chesapeake Bay Preservation Area Lease of City Property Subdivision Variance Board _ Conditional Use Permit License Agreement Wetlands Board • The disclosures contained in this form are necessary to inform public officials who may vote on the application as to whether they have a conflict of interest under Virginia law. SECTION 1 / APPLICANT DISCLOSURE FOR CITY USE ONLY/AU disclosures must be updated two(2)weeks prior to any Page 1 of 7 Planning Commission and Cit Council meeting that pertains to the a; lication(s). i] APPLICANT NOTIFIED OF HEARING DATE: 11-05-2020 -SP ▪ NO CHANGES AS OF DATE 11-16-2020 -SP • REVISIONS SUBM(T r r DATE AS PER THE APPLICANT,THERE ARE NO ANTICIPATED CHANGES Date: 11-16-2020 SP BEFORE THE DEC. 8"CC PUBLIC HEARING Rickert Family Living Trust Agenda Item 12 Page 10 Disclosure Statement Virginia Beach EiCheck here if the APPLICANT IS NOT a corporation, partnership, firm, business,or other unincorporated organization. Check here if the APPLICANT IS a corporation, partnership, firm, business, or other unincorporated organization. (A) List the Applicant's name:_ ist all member's names: Z/M'A v?DaGe>c.S— /clCdz-r , f CMe 7 r ML/ %ru�.f'T If a CORPORATION,list the the names of all officers,directors,members, trustees, etc.below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary or affiliated business entity 2 relationship with the Applicant: (Attach list if necessary) See next page for information pertaining to footnotesi and z SECTION 2 / PROPERTY OWNER DISCLOSURE Complete Section 2 only if Property owner is different from Applicant. [Zi Check here if the PROPERTY OWNER IS NOT a corporation, partnership,firm, business,or other unincorporated organization. Check here if the PROPERTY OWNER IS a corporation,partnership,firm, business,or other unincorporated organization,AND_THEN,complete the following. (A) List the Property Owner's name: RiricorL Fiat,Ly T/Lye If an LLC,list the member's names: ,1Of e Page 2 of 7 Rickert Family Living Trust Agenda Item 12 Page 11 Disclosure Statement 11Ifc,J Virginia Beath If a Corporation, list the names ofall officers,directors, members,trustees, etc. below: (Attach list if necessary) (B) List the businesses that have a parent-subsidiary 1 or affiliated business entity 2 relationship with the Property Owner: (Attach list if necessary) 1 "Parent-subsidiary relationship- means "a relationship that exists when one corporation directly or indirectly owns shares possessing more than S0 percent of the voting power of another corporation." See State and Local Government Conflict of Interests Act,Va. Code§2.2.3101. 2 `Affiliated business entity relationship" means `a relationship, other than parent-subsidiary relationship,that exists when(i)one business entity has a controlling ownership interest in the other business entity,(ii)a controlling owner in one entity is also a controlling owner in the other entity,or (iii) there is shared management or control between the business entities. Factors that should be considered in determining the existence of an affiliated business entity relationship include that the same person or substantially the same person own or manage the two entities;there are common or commingled funds or assets;the business entities share the use of the same offices or employees or otherwise share activities, resources or personnel on a regular basis; or there is otherwise a close working relationship between the entities." See State and Local Government Conflict of Interests Act, Va.Code§ 2.2-3101. SECTION 3. SERVICES DISCLOSURE Are any of the following services being provided in connection with the subject of the application or any business ooeratina or to be operated on the Property. If the answer to any item is YES, please identify the firm or individual providing the service: IF THE OWNER AND APPLICANT ARE DIFFERENT, EACH MUST COMPLETE THE SECTION SEPERATELY Page 3 of 7 Rickert Family Living Trust Agenda Item 12 Page 12 Disclosure Statement Wt. APPLICANT Virginia Beach YES NO) f SERVICE PROVIDER(dseaddntonal sheets if l needed El R Accounting and/or preparer of your tax return �d ® Architect/Landscape Architect/ Land Planner __ , Contract Purchaser(if other than r N the Applicant)-identify purchaser and purchaser's service providers Any other pending or proposed Gl El purchaser of the subject property �] H (Identify purchaser(s)and purchaser's service providers) 1 1 _ ___ Construction Contractors Engineers/Surveyors/Agents Financing(include current m mortgage holders and lenders t7Ll selected or being considered to provide financing for acquisition or construction of the property) — n ® Legal Services Real Estate Brokers/ Z4vrm deveGd '-2/cam—rig m I 1 Agents/Realtors for current and ee r R,e,,a,ii?i r—,ec�crvri- '�JI anticipated future sales of the subject ro ___ "Re�,w 6r PTE /" SECTION 4. KNOWN INTEREST BY PUBLIC OFFICIAL OR EMPLOYEE YES NO Does an official or employee of the City of Virginia Beach have �f an interest in the subject land or any proposed development l contingent on the subject public action? If yes,what is the name of the official or employee and what is the nature of the interest? Page 4 of 7 Rickert Family Living Trust Agenda Item 12 Page 13 Disclosure Statement Virginia Beach CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate. I understand that, upon receipt of notification that the application has been scheduled for public hearing, I am responsible for updating the information provided herein two weeks prior to the Planning Commission, Council, VBDA meeting, or meeting of any public body or committee in connection with this Application.lV24 �, (� �J /'•e- 41"^ I� o b /C t L keg r 7/10/Z� ar APPLIUNT'S SIGNATURE PRINT NAME DATE Page 5 of 7 Rickert Family Living Trust Agenda Item 12 Page 14 Disclosure Statement OWNER Virginia Beach YES I NO I SERVICE I PROVIDER(use additional sheets if l needed) n ® Accounting and/or preparer of your tax return ® Architect/Landscape Architect/ Land Planner Contract Purchaser(if other than n ® the Applicant)-identify purchaser and purchaser's service providers Any other pending or proposed I I purchaser of the subject property X 1 (identify purchaser(s)and purchaser's service providers) nConstruction Contractors l Engineers/Surveyors/Agents L El Financing(include current I ® mortgage holders and lenders selected or being considered to provide financing for acquisition or construction of the property) II © Legal Services Real Estate Brokers/ '7w7A / 'ODQ f=g/ evr 1R20 ecgE Agents/Realtors for current and j Jree-d"ecera—£ it tTO ' U�1 anticipated future sales of the "2.&/ itv G,tTimi subject property a'1 t' SECTION 4. KNOWN INTEREST BY PUBLIC OFFICIAL OR EMPLOYEE YES NO i Does an official or employee of the City of Virginia Beach have an interest in the subject land or any proposed development ncontingent on the subject public action? If yes,what is the name of the official or employee and what is the nature of the interest? Page 6 of 7 Rickert Family Living Trust Agenda Item 12 Page 15 Disclosure Statement .1kB Virginia Beach CERTIFICATION: I certify that all of the information contained in this Disclosure Statement Form is complete,true,and accurate. i I understand that, upon receipt of notification that the application has been scheduled for public hearing, I am responsible for updating the information provided herein two weeks prior to the Planning Commission, Council, VBDA meeting, or meeting of any public body or committee in connection with this Application. [:4 ../ 7W�f,-, ki. /w V-00 a/ I A:,.A.Y`141, 7/7-1//4 2c- PROPERTY OWNER'S SIGNATURE �PRINT NAME -- ` DATE - — Page 7 of 7 Rickert Family Living Trust Agenda Item 12 Page 16 Next Steps • Upon receiving a recommendation from Planning Commission,this request will be scheduled for a City Council public hearing. Staff will inform the applicant and/or their representative of the date of the hearing in the upcoming days. • Following City Council's decision,the applicant will receive a decision letter from Staff. • Once the conditions of approval are in place and/or completed,the applicant must contact the Zoning Division of the Planning Department to obtain verification that the conditions have been met. Contact the Zoning Division at 757-385-8074. • If the request requires land disturbance and/or a subdivision of property, please contact the Development Services Center(DSC)to discuss next steps for site plan/plat review. Contact the DSC at 757-385-4621 or the Development Liaison Team at 757-385-8610. • Please note that further conditions may be required during the administration of applicable City Ordinances and Standards.Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards.All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/ Permits and Inspections Division,and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. • The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED)concepts and strategies as they pertain to this site. Rickert Family Living Trust Agenda Item 12 Page 17 STR VICI 2 ITY MAP RICKERT FAMILY LIVING TRUST- 349 NORFOLK AVENUE --;---,\_____\ k Sit go� . -- � � '� 'y .r ti *� - 1101 '-w-js . 't lit Witoe-44/ g---01 ' 1.0.0 -.cr.-ow* _,_t,._,,,,,, . , ,.."A , 1- - ------ _W_AA 0 0tt . 1 \_-. Er1* �►*l��v# J11 ,a r6°iii,i_;4M 4. r - , ‘i, • lco 1 ,111.•iii:k\-:\t a=,i..'t-_i__-_l--.rk,\oA tlfp 3y\ ®, .wc•. \ . 1 ,13 " ' , \ • 1 lt 1, \ -r 11 111111� ,. � •ttt �� �. , low. A • ',,,\ 1,, .tic -A,ligilkil,illei IN" n a' 1 ieli \ 1 1 ti \ alt STATUS : i 111111 L ` ili\1111116---MIAP `t ` 1 0 Approved - 6 1�111 10 _ -" I, .t • Denied ` - 1 ; • .e 1,-.0611°- e7 l ‘4\ ( 0 UnderReviRegistered %;!! .. ' • ti�° r ,. �// l Item # 12. Rickert Family Living Trust [Applicant & Property Owner] Conditional Use Permit (Short Term Rental) 349 Norfolk Avenue November 4, 2020 RECOMMENDED FOR APPROVAL — HEARD Ms. Sandloop: Our next item of business is agenda item number 12 and Madam Chair we do have four speakers for this one. Agenda item number 12, Rickert Family Living Trust, an application for a Conditional Use Permit Short Term Rental on property located at 349 Norfolk Avenue in the Beach District. Could the applicant or the representative approach the podium and state your name for the record. Ms. Oliver: Hi welcome. Ms. Rickert: Good afternoon and thank you for having Rob and I here. My name is Zinta Rogers Rickert and Rob Rickert. We would like to share with you our experience as long time second home resident owners and only a temporary short term renters for necessity rather than profitability. When we purchased the property in 2005 it was bought as a primary residence, Rob lived here in Virginia Beach, I live up in Fairfax City and for seven years it was the primary residence and only for the last eight years have we rented for approximately 12 weeks, no more than 15 in the course of 52 weeks. We are down here every single month, we have a 94-year-old mother and family in this area and it is our second home. Our tax person doesn't appreciate really the fact that we use it so much, it causes tax issues and all of that but at the time when he decided to move up to Fairfax because I had a long established clientele with my business we had four girls to go through college and five potential weddings for our girls to plan. So in order to keep the place we were one of the first in our community Lake Station to look into short term rentals because they are not in any way restricted in our condominium documents. So for eight years we have managed the second home and occasionally rented to non-family, non-smoking, no pets and generally one car and no more than four people to a unit. To give you some idea of who the people are that use these short term rentals, we have had people as far away from England and Australia. Recently someone came from Arizona for a wedding and more local to the area you have lots of people that come to rent to participate in the local cheer events, fishing and softball competitions.And our favorite families are those that come to spend 1 more time with their son or daughter before they see them off to serve in the military. Only once and I stress only once in eight years has a neighbor ever brought it to our attention that a renter was noisy and we immediately remedied the problem. Rob and I are at the condo once a month anywhere from three to seven days every month. As you can see I have my ECSC shirt on and we, actually I have Neptune on, we like to participate in a lot of the weekly events and we are a big promoters of the Virginia Beach over Ocean City type events to all of our friends and family and those that we advertise to in the Fairfax area. I think it's important that this board understand our Lake Station community. There are a total of 32 units divided into three independent sections. The far west section has two town home style units both rented yearly and the same owner owns both and is responsible for all of its maintenance. The far east cluster of buildings has the total of 18 units with three separate entrances and they are responsible for all of their own maintenance. One family owns three of those units. The breakout of the section of three buildings has six units that are second homes, six are either full time rentals or short term rentals and six are full time owner residents. Recently one of those owners who wanted to change from a short term rental to a yearly rental had to within the first 30 days offer 3000 dollars to the tenants she had rented to, it was a father and son scenario, to get them to give up keys because there were so many complaints and violence and drug use by those tenants that she was trying to go to a yearly basis. Currently another unit may have, it's rumored that there may be a drug dealer in that section of buildings and neighbors are walking on eggshells there. On a yearly lease the rent is only about$1500 a month whereas on a weekly rate you can rent it for $1300 to $1500 a week. So it's safe to assume that it's a much more affluent temporary renter even when there are problems that occur which again we have only had one in eight years. Our two building clusters has a total of 12 units. Three and half of them are full time resident owners, three full time rentals and five and half are second home owners of those 12. I have referenced it in that fashion because there is currently one owner that is between a full time resident and going to have to rent because he is in the military and may be transferred. This means half of our neighbors aren't even there most of the time summertime or otherwise. On a couple of occasions our second home neighbors from Pennsylvania have actually rented our unit too when more family was coming. What further makes our unit location within the community unique is we are in the Crux of a building. There is no access, nobody really sees our place, it's very private and great. It's a first floor unit as well, so nobody is walking behind us. We have no 2 way of accessing or exiting the community from the back of our place unless we go just around the building in our one neighbor's deck. As for any Shadowlawn neighbors we have one neighbor across the pond that can see our condo. Our community as a whole is an island in and of itself with an abundance of parking. There are 48 spaces for the 32 units. We sit and are located on a busy street Norfolk Avenue, it is well-traveled at all hours of the day and we are directly across the street from a seedy hotel called the Marlin. Except for roughly 90 days of the year Lake Station is a mini ghost town and many of us love it. With work, events, activities, restaurants and more it is rare that we run into any of our neighbors during any of those times except for an occasional trip to the dumpster. The 12 to 15 weeks a year that I referenced that might be rented out on a short-term basis is rarely in a row. It is not just during the summer months, this could be over the course of a whole year. We have had the same local manager and cleaning lady for those eight years. She lives approximately one mile from the condo. We have a lease, we require a cash deposit and all renters are 25 years or older with four adult maximum. We are very active in our community whether it's clean ups, organized clean ups for the pond and Rob has served on the Board for 10 years as the community president and has once again been elected to the Board. The community has no rules against short term rentals and we have self-managed with great care our second home. We want to keep the place and only by allowing for a few weekly rentals is that going to be possible for us. Our hope is that our kids and grandkids will continue to love their visits to Virginia Beach as we have and this allows us to be regularly here with family and Rob's 94-year-old mother who is in a memory care place. So with that I am here to answer any questions you might have. Ms. Oliver: Does anybody have any questions for this applicant? Yes, Mr. Weiner. Mr. Weiner: Did I hear you correctly you have been renting for eight years? Mr. Rickert: Yeah. Mr. Weiner: How long have you been registered with the city and paying taxes? Mr. Rickert: When they sent me a notice back in, I want to say February of 2018, they send me a notice to go down to the city council. I mean I have always paid taxes through our accountant for rental income. They sent me a notice in February 2018 saying that you needed to come down here and register which I did. 3 Mr. Weiner: Okay, hold on a second. Question for staff, what is the date of the fathering / grandfathering? Isn't it July of 2018? Mr. Tajan: That is correct, it is July 2018. Mr. Weiner: So if he has been paying taxes, why isn't this grandfathered? Mr. Tajan: That is a very good question, Mr. Weiner. When they said that I have been trying to search that as well at the moment. So, if you would like to keep going with the questioning I will see if I can find it. Mr. Weiner: That's really it. No, we are just — we are going to check some things out, that's all I have right this second. Ms. Oliver: Anybody else? Okay, thank you. I think we have a couple of speakers and so we will come back to you. Ms. Rickert: Thank you. Ms. Sandloop: Yes, ma'am, we have four speakers and before I call them I just want to remind everybody that speakers have three minutes each. First speaker is Benham Malcolm to be followed by Thomas Belvin. Ms. Oliver: Welcome, and if you will state your name for the record please. Mr. Malcolm: Good afternoon. My name is Benham Malcolm and my family has lived at 319 Norfolk Avenue - I owned 319 Norfolk Avenue since 1998. My family and I have been heavily impacted by short term rentals for the last two and half years that have occurred within our community. This is a precedent setting application within Lake Station community of 30 2-bedroom units. If approved there will likely be five more applications, five within the next 60 to 90 days by other neighbors that are currently doing unregistered rentals. This is the start of a motel within our community that is zoned as a apartment 18. Everything about our building construction or parking, or the way it's structured, management company, contract, utilities, security, maintenance it's all designed for single family long term occupancy kind of residence. Our community has spoken before on opposition to short term rentals. On July 8th this Planning Commission voted seven to two to deny the application for 323 Norfolk Avenue. For unit 323 the email opposition that was represented 47% of our community, for today 38% of our community has written opposition emails. During the Commission review of July 8th for the 323, Mr. Horsley said, "I think this is one incident where short term rental condition use permit has come to life that's made these problems evident 4 because the neighbors have the right to come and voice their opinion." So I think this ordinance is really working here. So I want to support the motion for denial Mr. Alcaraz has made. Mr. Horsley is correct. The CUP process is working and our neighbors are opposed to approval of the application for 349 Norfolk Avenue. The overall message from our community is clear, we want to be a residents community, not a motel, please honor our desires. In terms of violations on June 29th the applicant was notified by enforcement by zoning authorities you need to register short term rental. From then through last weekend, 349 continued short term rentals. The applicant communicated that he has been paying his taxes for his grandfather short term rentals.We all believe them. So as a result we didn't bother to complain or file for issues with the city during the course of 2020. Renting before approval same issue was discussed during the applicant interview for 323 when Ms. Oliver and Mr. Graham had the discussion and I quote, "In the application they did not follow the rules, so by passing something in this way we are almost rewarding bad behavior. Approval of this application for 349 would be deemed rewarding bad behavior." A former long term member of the planning commission said that the developer has an obligation to minimize the impact to surrounding neighbors. In this case you are the developers of neighborhood impacting unregulated motel one room at a time with individual owners for every room. Please let's put heads and hotel beds that are nearby, not in Lake Station condominium beds, please minimize the impact to our community by denying the CUP application for 349. Thank you for your time and what questions do you have. Ms. Oliver: Does anybody have any questions for the speaker? Yes. Mr. Redmond. Mr. Redmond: Can you speak to this unit in particular, I mean you said you have been impacted by short term rentals. Are you talking about what they own? Mr. Malcolm: I am talking not about their community in general, it's been impacted significantly by short term rentals. Mr. Redmond: So you are not talking about this application? Mr. Malcolm: This particular unit is not what I am referring to specifically but the application does include violations that were doing short term rentals on a weekly or less than weekly basis during the course of 2020 and as the applicants already indicated they are doing it for a long time. 5 Mr. Redmond: I appreciate it, you answered my question, I will say I entirely disagree. I think the Conditional Use Permit process in this has been a disaster. I think it's ripe for abuse, its altogether too objective. I think the course that we are on which I may not support in the end to make the law much more objective and much more certain about what does and doesn't qualify will make more sense than what we have been doing but thank you for your time Mr. Malcolm: Thank you. Ms. Oliver: Sir, I just want to clarify one sentence that you had, did you say you spoke to the applicant about his short term rental directly? Have you had a conversation with this applicant? Mr. Malcolm: I have not had a conversation, I have had a conversation about short term rentals in our community associated with the last one with Rob, I did not have a conversation directly on 349. I did not know about it until the board showed up out on the street. Ms. Oliver: Okay, thank you. I thought — wasn't sure if I had misunderstood because you said something about him being grandfathered that he had said he was grandfathered. Mr. Malcolm: The word within the community was that Rob, we knew he was doing some rentals but we thought he was qualified and we had heard that he was paying his taxes, he told me that himself. And so that's why we didn't bother — we all thought he was grandfathered, when I contracted Summer about the application I asked why wasn't he grandfathered and she said well, "He wasn't paying his taxes." Ms. Oliver: Okay, thank you, I appreciate it. Mr. Malcolm: Good question. Ms. Oliver: Alright, thank you very much. Oh, I am sorry, Mr. Inman. Mr. Inman: Could you please tell us again your address and where you are relative to the applicant's property? Mr. Malcolm: Yes, my address is 319 Norfolk Avenue, as was pointed out previously the community consists of a building of 18 units and a building of 12, I am in the building 18 units, I am up against Lake Holly Ms. Oliver: Thank you very much. Mr. Malcolm: Thank you. 6 Ms. Sandloop: Our next speaker is Thomas Belvin to be followed by Lee Jones Hubert. Mr. Belvin: Hello. I am Thomas Belvin of 313 Norfolk Avenue, part of Lake Station condominiums. I am here to speak in opposition to the proposed CUP for 349. And here are some points that support my opposition. In our by-laws and rules for the condominium association the use of each unit is expressly restricted to single family use occupancy only. Two, while the mitigation of a rented parking space in the nearby parking garage maybe adequate solution for a short term rental using single family detached home, in this case a shared parking / guest parking does not work. There is no way to hold a short term renter accountable for not using the guest spaces thus impacting all other owners. Three, all owners personally share an inside stairwell, foyer, external keyed security door with each building section of six units. Management of the security door key and the constantly changing short term rentals will greatly increase risk to all residents. This is particularly troubling during a pandemic. Our community is not a hotel and it's not designed or constructed as one. Who do I or my family turn to night or day for noise, confrontation or security issues, call 911? The burden is on me and my family to confront, investigate and initiate enforcement. Number four, this application has not been reviewed or discussed or voted on by Lake Station HOA board or unit owners and it hasn't been signed by - the application itself hasn't been signed by the Board as per process. So final few thoughts. The current Short Term Rental ordinance rules and regulations are really designed for single family detached homes. Condominiums with shared living spaces like security doors, internal stairwells, rear decks are shared, stair access and shared parking really do not apply. Two, there is no clear enforcement process for Short Term Rentals and condominiums. It's all on me, my family, my neighbors to regulate. Now if a renter misbehaves then the owner can just keep the security deposit, the city may fine the owner but there is really no accountability for following the rules especially in real time. I anticipate calls to 911 . Also once approved the Short Term Rental owner has five years and an automatic renewal for the CUP. The requirements for the CUP keep changing it appears because they keep getting negotiated between the city and the applicants which is really strange to me. So given that the Short Term Rental ordinance is planning to be changed in January wouldn't it make sense... Ms. Oliver: Thank you very much, Mr. Belvin. Mr. Belvin: Okay. 7 Ms. Sandloop: Our next speaker is Lee Jones Hubert to be followed by Virginia Portalatin Mr. Hubert: Good afternoon. In November 2013.... Ms. Oliver: Sir, before you get started, I just would like to ask you if you would state your name for the record. Mr. Hubert: Oh, I am sorry. Lee Jones Hubert. Alright. In November of 2013 my wife and I purchased property at 325 Norfolk Avenue, Virginia Beach, Virginia 23451, Lake Station condominiums. This is our second home a place where we would come to relax and enjoy the new community as well as the beach. There have been many times that we have talked about even making this our primary home. We are aware that the investor in 349 has applied for CUP making Short Term Rentals legal in our community. We oppose this for the following reasons. Privacy. Privacy is a main concern of ours and we know many of the residents in our community and feel that if short term rentals become legal our privacy would be compromised. Short term renters come and they go and there is no way telling who is supposed to be on the premises and who is not at Lake Station. The community is not a hotel or a motel you know where you have like a desk clerk or a security guard or some means of social control there. There is no one to keep the peace except for the investor who lives 200 miles away. And the bottom line is then calling 911 . And then there is lesser things we wouldn't call 911 like spillage of trash and things like this. So we want to be able to keep the peace in our community and notice the noise and safety, even though you might have four to six occupants in one unit as in the past, short term renters often have friends in nearby hotels and motels and they come over and join the party as well because there is a larger premises there. At times we have seen a dozen people on one of the decks that's made for about four people. Large amounts of trash collect in the parking lot large and in a lot of the common areas as well. As you have heard from the others you know we do have a corridor that you must go through before you get to your unit. Lake Station is being updated with, we are getting new doors and we are getting a coded keypad but in short the term rentals — if the Short Term Rentals become legal we would feel very unsafe knowing the code is out there and we would be given out to short term renters. So pets are allowed at Lake Station, however there is a leash law and lot of times short term renters aren't aware of this. And we have had some issues with that. Parking is another issue at Lake Station. Each condo is assigned a number of space and two guest passes and unnumbered space... Ms. Oliver: Mr. Hubert, thank you very much. Time is up. 8 Mr. Hubert: Thank you. Ms. Oliver: Oh hold on one second, Mr. Weiner has question for you. Mr. Weiner; I am sorry, where is your condo compared to the Rickert's? Mr. Hubert: It's in the building that's caddy cornered towards the building that he is in, on the same floor but it's in the other building caddy cornered to his maybe — to 850 feet part. Mr. Weiner; How long have you been in yours? Mr. Hubert: Seven years. Mr. Weiner: Have you had any complaints at all against the renters in his condo? Mr. Hubert: Well, we don't know where they are going when they go through the front door, whether they are going to his or somebody else's, we never kept track of it. We did have some issues with the parking where people coming and parking in the fire lane and leaving their vehicle there for a long time where they unloaded and then we pulled up like our spaces right next to the parking lot lane and they got very belligerent where there is like can't you park somewhere else. And they are not really understanding the concept that people live here, they think that we are just another short term renter like them. So there has been that and I don't know specifically that they were staying at that place and I don't know specifically that the trash they pick up out of the parking lot the day after somebody has been there is coming from that specific place. My main concern is we don't want to start a precedent here. Mr. Weiner: How many units in your condo do you know, I don't know you may not know, how many units in your condo are short term rentals? I am just curious if you know because obviously we have received a letter from Thomas Ellis stating that since this is the first unit to officially be going in front of Planning the other units have withdrawn. I feel like speaking out. So I am just curious because he is saying in his email that there are no other units. I am just asking. Mr. Hubert: Well, I am finding that out now but at the time that I am being confronted by this short term renter, I didn't know. Mr. Weiner: I am just asking a question. Mr. Hubert: Yeah, I didn't know at the time but I am learning that now. 9 Mr. Weiner: We will have to ask that question. Okay, appreciate that, thank you. Ms. Oliver: Do we, Mr. Tajan, no I am just going to ask this while we are waiting. Do we know how many registered Short Term Rentals are in this building? Mr. Tajan: According to the information we get from the Commissioner of Revenue, again these haven't been checked to see if there are —this just means they are registered and paying taxes, whether they did it before July 2018 or not has not been checked for these. There are four, two in the one building, where 349 is located and two in the adjacent building. Ms. Oliver: And these are four rentals who presented in front of us? Mr. Tajan: No, I believe that there was only—there was one in front of us, Summer, do you want to come up? Ms. Peebles: So there has been one, that's been withdrawn, that went through the Conditional Use Permit process. There are four according to the Commissioner of Revenue's Office which are registered. Zoning office has received two Short Term Rental Registrations of those and received three letters because issues of notices of violations were sent to them that they were operating, they needed to come in conformance with the proper paperwork. We have received three letters that they have either stopped operating at these addresses —they have either stopped operating or doing long term home, share, they are not operating Short Term Rentals. And there is one in which there is a violation in process. Ms. Oliver: Okay, great. So as of right now this is the only one that we have seen all the way through the process. Ms. Summer:Yeah, the other one was withdrawn before city council. Ms. Oliver: Okay, great, thank you. Mr. Tajan: So, just to clarify, Madam Chair, it was heard that the commission recommended denial for that one application and the applicant withdrew it before it went to the city council, okay. Ms. Oliver: Yeah, Mr. Weiner and then Mr. Redmond. Mr. Weiner: I remember that, in that particular one we denied they went forward and they pulled it out but they were not paying — they were not grandfathered. I remember that complete list but they weren't grandfathered so that's why we denied it also, and a couple of other things too. There is a lot of things too but we denied that, I remember doing that, okay. 10 M. Tajan: If I may also, I apologize, the question that you asked earlier Mr. Weiner, we did contact the Commissioner of Revenue, according to the records they were registered as of February 2019 so they are not grandfathered. Ms. Oliver: Mr. Redmond. Mr. Redmond: Well, I was just going to ask where we are with regard to the question about the grandfathering thing, that was the one thing but I did want to add to that in case you didn't notice, we just asked some questions and Summer just ripped off a whole bunch of stats, that I thought was mighty impressive. So thank you for having all that information at your fingertips. She is obviously prepared. Ms. Oliver: Okay, I am sorry for the interruption. So I believe we have one more speaker, is that correct? Ms. Sandloop: Yes, ma'am, our last speaker is Virginia Portalatin Ms. Oliver: Welcome and if you will state your name, please. Ms. Portalatin: Good afternoon everyone. My name is Virginia Portalatin. I am an owner and resident located at 307 Norfolk Avenue at Lake Station. I have lived there for close to a year and a half. During this time I have experienced the full impact and implications that Short Term Rentals bring to our community. When I moved in 50% of the building was operating an AirBnB business. One of the units despite having received the letter last July continues to operate in my building. Among all the issues with short term rental guests which includes indiscriminately parking in any spot inclusive of mine, excessive noise when entering and exiting our shared hallway and deck staircases. My most serious concern revolves around the violation of privacy and safety. My most recent disturbing incident occurred late last August, a group of men staying in the unit upstairs continuously used the deck steps to sit, smoke and make phone calls. At one point while sitting in my living room I heard a voice in very close proximity, I looked out to see one of the men sitting on the steps leading down just a few feet from my deck entrance close enough that I looked him in the eyes. He could clearly look into my unit from where he opted to sit. Allow me to include the same group used the charcoal grill at the bottom of the steps a few feet from the desk staircase and close by to the first floor unit. After they left I found that they had dumped the charcoal on the grass. I share and use the steps with my next door neighbors who are long-term renters. We use the deck steps regularly. This 11 young couple as well as their visiting friends have never made me feel that my safety or privacy is violated in any way. My personal perception is that short term renters come in with a hotel / motel mentality. There is an overall disregard with parking, noise and respecting privacy. It translates into a major safety issue for our community. I stand here before you pleading for your help to preserve the Lake Station community. Please do not approve the Conditional Use Permit for 349 Norfolk Avenue, please help us keep Lake Station a sanctuary for those of us who simply want to preserve our privacy, our sense of peace and our safety. Thank you so very much for your time and your consideration. Ms. Oliver: Thank you very much. Do we have any questions? Yes, Mr. Alcaraz. Mr. George: One question, I just want to get some clarification. You had said 50% of the building, is that your building that you live. Ms. Portalatin: Yes, where I reside, when I moved in. Mr. George: I mean just there is three buildings there, I was asking your building was 50% AirBnB. Ms. Portalatin: Yes, if I could clarify there is three entrances, yes, in the same building that Benham Malcolm lives in facing Holly Lake. So there are six units and when I moved in 50% of the building, three units were running AirBnB, one continues as we sit here and speak. Mr. George: Thank you. Ms. Oliver: Do you have any other questions? Thank you very much. Ms. Portalatin: Thank you. Ms. Sandloop: No more speakers, Madam Chair. Ms. Oliver: Thank you very much. Would the applicant like to come back up? Ms. Rickert: Thank you. Though there are certainly items that both of us would like to respectfully disagree with, I have to say that I probably agree as a second home owner with everything that has been thus far said by those that live, every one of those four comments were made by those that live in the larger building and there has been some excessive issues in the past. When we speak with a potential renter, they are non-smokers, we don't allow pets, they are 25 years or older. We explain he has set a routine that he explains this is a residential community, we explain which parking space they have use of, we explain that there is something about the street parking which 12 we have additional passes for and the parking garage et cetera. Everything all of the concerns that they have raised whether it is noise, whether it is privacy, whether it is trash and boy have we picked up our fair share on our dog walks as well none of it necessarily is the short term renter. A short term renter comes there with a goal, they spend all day at various activities, they might be a participant of a particular event, they are there more so than even the local residents to spend time at the beach, check out the aquarium and all of those places. You could run into any of these noise, privacy et cetera, type issues with long-term renters and / or residents. We have had and heard because of his years on the board of long term owner residents harassing a number of second home owners, tenants et cetera. So all that they describe and are concerned about happens in just about every community. None of what they described has ever been raised with us and our 12 units between the two doors. When we bought the place there are six units, two are second homes, two are full-time rentals and two are what I had said earlier, in our particular building we have got three and half time residents and three full time renters/ short term and then five of our units in our 12 section building are second homes. So people are coming and going whether it's family, friends or a Short Term Rental specifically. You had a couple of comments. Mr. Rickert: Just a couple of things, I did have approval because at the time I first saw the application, Summer can back me up on this, I was previously on the Board, She checked with the City Attorney, he told me to re-sign it, that I was on the Board now so my application was within the system. So Summer can back me up on that with the City Attorney so that I could sign as a board member for the application. Less than 5% of my rentals have ever required a second parking, but that's just not been a problem with us because we have 16 extra spots on top the reserve. Less than 5% of the time has anybody ever needed a second car spot. The people that spoke to you earlier, one of them actually tried to actually buy a second unit that they were going to do a Short Term Rental they were unsuccessful in purchasing that unit. So now they are not worried about doing the short term rental. That's wonderful but they would have done it, had they. The other thing is these are the same folks that have talked to me in the past, you asked them have they talked to me, yes they talked to me and when I asked them earlier this year when a couple of the other people applied, "Well we have no problem with your unit, we have a problem with the ones who live in our building where they are not managed". I have been in management for 40 years that's why I manage mine so selectively on the people that I actually let come use my place. 13 Ms. Rickert: And I just want to remind everyone, this isn't your typical - we didn't buy this to make it a Short Term Rental investment property. We are here on a monthly basis with family, with activities, this is our second home and so it's important to us that it be maintained. We take great care in considering who is coming into the unit. Because we have that private entrance in the Crux of the building there, we have now put there a keyed lock for if there is an additional concern among our six in our building that they don't want them coming down the hallway, they don't have to come down the hallway. We are the ground floor unit. We as owners don't even run into half of the people that live there. At least two of the people here today I have never met in the 15 years that we have owned the place. So we are very isolated when it comes to our particular location and the care that we take with our rentals. Mr. Rickert: And in terms of the security I mean I was on the construction for the last four years to get our building through - be on the board, we had the same key for 35 years that fit the doors. Just now we finally are changing out the doors and the key so that's never been - there was never an issue before with the keys, we are having the same key for 35 years. Ms. Rickert; And we hope to retire here, so you know. Mr. Rickert: I mean like I say they - I understand people have problems and there is no doubt about it, it's all about the way you manage something and I think that we managed it properly, we are just looking to continue to do that if it's okay with this committee here. That's all we are asking. Ms. Rickert: Thank you. Ms. Oliver: Commissioner Klein has a question. Ms. Klein: I believe you said earlier that you have a local property manager for when you guys are in Northern Virginia. Mr. Rickert; Like the lady lives up the street in Sawgrass who has cleaned for me for the last five to six years, she actually manages the entire place. She comes by and takes care of it and then she is the first on one the scene as soon as somebody leaves letting me know everything is fine before I refund the deposit. So she is my eyes and ears on the ground and she is also, she has done such good jobs, she used to clean all of our buildings for a while and she is also cleaning for some of the other people in the complex. Ms. Klein: Is her information either available to or provided to your direct neighbors? 14 Ms. Rickert: Whether her information is provided to our neighbors. We are so readily available by our two cell numbers but they know that we have someone who if we can't physically be here within a short period of time but she is available to us. Because Rob grew up in this area, we have got over 40 volleyball friends that we could call on any one of them to replace a chain on the bike. We provide bikes, we provide all chairs. All of that is there because it's there for our use as well. So we regularly manage the place and are here to address any kind of issues. Ms. Klein: I think one of the ordinances that either just passed or is under discussion is having somebody local and you said that you are readily available by cell phone. So do your neighbors have your contact information in your building? Ms. Rickert: Yes. Mr. Rickert: I mean even the people that stayed with us, they have my phone number, they have my email directly. I mean it's just — if you go read any of my reviews I have got 4.7 out of 5 star reviews for all my reviews which is probably close to 100. Communication with us is what they rave about they like about staying with us. Ms. Rickert: And only one person that tried to smoke in our unit did we have to retain their $300 cash deposit that they have to give us. Mr. Rickert: One time. Ms. Rickert: One time. And we don't rent during some of the events that the city chooses to hold in this area because we are looking to have conscientious renters. Ms. Oliver: Mr. Redmond. Mr. Redmond: Real quick, can you hit me with those dates again, you bought the unit when? Mr. Rickert: I bought it 2005. Mr. Redmond: 2005, and you started renting it when? Ms. Rickert: Seven years later, we had a long distance relationship for seven years. Mr. Rickert: My sister who lives in Sandbridge has a rental property and she was the one who suggested it to me at the time. She said you ought to be trying to bring income in while you are not living there, if you want to try and keep it. And I had watched several people in our community lose their property. But 15 they lose the property because like us they pay — we pay 275 for unit, the units went down to a value of $200,000. So we were under water most of the time that we lived there, we just finally come back out of that but we just paid $28,000 assessment to redo our property there. Mr. Redmond: There are a lot of people who brought property in 2005 suffered the same. Ms. Rickert: And everybody signs a lease, we have a lease. Mr. Rickert: Yeah, my sister had a rental agreement... Ms. Rickert: We have copy of their driver's licenses. Mr. Rickert: My sister had a rental property in Sandbridge, she had a rental agreement so she gave me the rental agreement, that's what everybody signs off and initials for us. And like I say, again some of the folks I have talked to today, they talked to me about it before. In fact they just talked to me about it earlier this year, well, we don't have a problem with yours, it's the people in our building and they were correct — well, the people in the other building had management companies that completely mismanaged it and it was just a complete fiasco in the other building. I won't dispute that, that was it and think that's why most of them gave up because of the fact being they couldn't manage it properly. Mr. Redmond: Okay, thank you. Ms. Oliver: Mr. Weiner. Mr. Weiner: Okay. I got to go back to these dates real quick also. So you have been renting for last eight years. Mr. Rickert; Right. Mr. Weiner: So now or after you were talking about staff, you started paying taxes January of 2019. Mr. Rickert; Yeah, she just corrected me, it was 2019. I got a notice in the mail and we went down to the court house Mr. Weiner: I mean with everything going on in the world today, short term rentals in Virginia Beach, you didn't realize that you needed to start paying taxes before then Conditional Use Permits. Mr. Rickert; Well, like I said, I mean I claimed the rental income on my taxes. 16 Mr. Weiner: Hold on, I'm just talking about the City, us in the City, you realize you are listening to the news and Short Term Rentals going on like ... Mr. Rickert; Right exactly. Mr. Weiner: And you didn't know that what needed to be done. Mr. Rickert; I did not know anything else until I got the letter. I got the letter, we went down to the ... Mr. Weiner: How did you get the letter, did the Commissioner of Revenue's office just send you a letter one day in the mail that somebody complained about you renting? Mr. Rickert; I don't know how-when I got that I don't know how they got my name except now all of a sudden it said you need to come down here to the court house, register to start paying $2 night and 8% of any revenues on my rentals which I have done since — and my apologies, it wasn't 2018, it was 2019. Mr. Weiner: Okay. Mr. Rickert; So, I mean last thing I will probably say is I understand you all have to make a decision but with our community, if they want to change things then it can change it with the by-laws. If the city okays it and says it's allowed that's what we are trying to do. Mr. Weiner: They city can't do anything with the by-laws, by-laws is what you are and they aren't what we do. Mr. Rickert; And I agree, that's why the board is okay with our rentals, Short Term Rentals. Ms. Oliver: Okay, yes George. Mr. Alcaraz: In the staff write up I just want to look into this with the complaint on June 30th you were cited for notice of violation for not applying for Conditional Use Permit. After you have been told to or asked to apply with the commissioner revenues office. So this is June 30th and you still hadn't after applying for the — whatever application you need for the Commissioner of Revenue on June 30th you were given a notice of violation for not properly submitting the Conditional Use Permit, still that was. Mr. Rickert; I can't tell you the exact dates, I don't have ... Mr. Alcaraz: I have it, it's in your report. 17 Mr. Rickert; Okay, that's fine. So I will just say it to you, Summer contacted me, I started working with her and then at some point whenever I will meet, our original thing was meeting like this and this was going to come up, we asked for a continuance at that time and this was the date that we have gotten. Ms. Rickert: I think what you are referring to is back in 2019 when we went to the city we paid, we signed up, we get their letters on a weekly basis, we know what we had to do there. We stood there and asked them do we need to do anything more because all of that was just kind of getting started and the person that we stood there and spoke with said, there was nothing else we had to do because we would have gone and knocked that out at that particular time. Because of the issues that were going on in the other building and more attention was being paid as to the fact that they were now, we were the one and only Short Term Rental in anyway trying to maintain our place so that we would have it for our retirement all of those early years and as other people started seeing where that could be of benefit or profitability et cetera, because there were some issues in the other building someone brought ours to the attention. I mean there is some animosity between you know as there often is in the condominiums and as soon as we knew that we had to do kind of like the softball thing, didn't know until we got that notice that we had to somehow do it, we even believed for a period of time because we have been doing it so long that we were grandfathered in. So we apologize for any miscommunication there Mr. Rickert; When they referred early to a building that they said was like 50% Short Term Rentals, there is a building that has 18 units. Each unit has got 6 units, that unit that has six units possibly half of those could have been short term rentals. It wasn't the whole building of 18, it was probably that building that had six units that had three Short Term Rentals. Mr. Alcaraz: Okay, I am not finished, sorry. Back to your local manager, so she is your cleaning person. Mr. Rickert; She is my cleaning person, she is my manager, I am just saying Mr. Alcaraz: So she is professional manager for the property? Mr. Rickert: Somebody has an issue has a problem she comes down there to correct it whatever it might be so that somebody is not going to be upset when ... Mr. Alcaraz: She addresses it at all hours.. 18 Mr. Rickert: All hours anytime, her phone number is right in there when you come inside my unit and I say her uncle and my father worked together for Sears for 30 years. Like I said I have known her for seven — eight years, she is a very hard working conscientious lady. She doesn't take anything and she is over there immediately. Ms. Rickert: She is even monitoring some of the building stuff that's going on and bringing it to our attention and pointing it out. She is about 52-54 years old, she also cleaned for Lake Station common ground area and knew what was going on better than anybody else in that community. Ms. Oliver: I got a question — I am just trying to get the date straight again because you have said a couple of things and I just want to make sure that— and maybe I am going to need Summer because Summer's name keeps getting tossed up. But, you mentioned that you thought you were grandfathered but previously you said you didn't know anything about the short term rentals. So, let me just kind of finish. You bought it in 2005, you started renting it in 2012, January 19th of 2020 you got a letter from the commissioner revenue, is that correct? Ms. Rickert: I am sorry, what date did you just say, January? Ms. Oliver: January 19th 2020? Oh I am sorry 2019, January 2019, sorry, I got too many 20s in here. Mr. Rickert: And I don't know part of the confusion with the — our unit used to be in our name — we switched over to a Ms. Oliver: So you —January 2019 you got a letter from the commissioner revenue out of the blue asking you about your Short Term Rentals. Ms. Rickert: Actually I think it just said that now if we are running a Short Term Rental that we have to be paying taxes. Ms. Oliver: So somebody has obviously brought your name up because I don't think Mr. Kellam can just pull that rabbit out of the hat. Mr. Rickert: I mean you mean that somebody in our community just ... Ms. Oliver: No, I am just saying I don't know that they do that and maybe they do and Summer can probably clarify that and then you didn't register or you got a complaint. I am sorry you got a complaint on June 30th 2020 that you were still operating without a CUP, without filing the paperwork or just operating illegally. 19 Ms. Rickert: We thought we had done what we were supposed to do in early 2019. So when the complaint came and we had to look into it and we thought at that point we thought okay .. Ms. Oliver: But then you thought you were grandfathered. Ms. Rickert: We thought we had done what we were supposed to do. We didn't know that there was a second step to this. Ms. Oliver: Okay. I am just double checking. Okay, great. Thank you. Mr. Weiner, are we all done? Okay, thank you very much. Ms. Rickert: Thank you. Mr. Rickert; Thank you. Ms. Oliver: So Summer, do you mind popping up here real quick. Ms. Peebles: Yes. Ms. Oliver: I was just curious as far as what conversation you had with them as .. Ms. Peebles: Yes. So according to the Commissioner of the Revenue's Office they did receive notice in January of 2019 that they wear operating Short Term Rental. From what I have heard there is a software that the Commissioner of Revenue may use in which they were notified of this and that they weren't registered, so I am sure that's why they reached out to them. And so in February is when they obtained their business license from the Commissioner of Revenue's Office. So as a result they do not meet that grandfathering requirement of July 1, 2018 for paying taxes. So then we had that year and those couple of months between November 1 2019 when the ordinance became adopted. And so June 29th of this year 2020 is when Kevin Hershberger received a complaint that they were operating without a Conditional Use Permit, he sent out the notice. About 30 days later is when I received the Conditional Use Permit application from Mr. Rickert, and so this is the process as it goes thus far. Ms. Oliver: Okay, great, thank you. Alright, so we will close this — oh sure, go ahead. I am going to close it to the public and then go ahead and ask your question. Ms. Klein: Granted this is a completely different department, do we know if it's in their workflow to advise registrants that there may be permits or other things aside from the registration that they need to do? 20 Mr. Tajan: I don't— I am unsure, I think it depends on which avenue you take whether you come in person or do it online. I will say that I believe during the process when I wasn't here for as far as the initial Short Term Rental process with the city that, it's my understanding that we sent out letters to folks that may have been operating. So those that were on the registered list potentially stating that they have to apply for Conditional Use Permit for the people that we had information on that they were operating. So that was part of our proactive outreach at the time based on the information at least that I am aware but we did send letters to folks to remind them they need to come in. Now, as you know we get them trickling in, saying they don't know. So I will take that for it's worth. Mr. George: It would be real helpful to us if we knew the protocol that was used at the Commissioner of Revenue's Office and whether they have a script that they ae supposed to follow in telling applicants so that — because we have had this, it comes up all the time. All the time, I didn't know, no one told us. Mr. Tajan: Right. I believe the timeline that this happened when they went there we have gotten a better rapport with the Commissioner of Revenue, we are reviewing all the business licenses also as well and so we have a better rapport in providing information when there are issues and details that come up at that time. We do understand we have gone through some other applications. There was a gap where the city did not have any regulations in place, the Commissioner of Revenue was just collecting the taxes. So that gave this false sense of someone did enough to get in the door. I think it was a matter of the timing but yes, it is in the timeline. To this point we have updated our processes to make sure that we are from — moving forward since that issue came up providing better information to applicants. Ms. Oliver: Yes. Mr. Redmond. Mr. Redmond: I just — I mean to what you say, I mean we are so close to this we think everybody is supposed to know all this stuff. And we got a batting cage earlier in somebody's back yard, they didn't know they needed a Conditional Use Permit for it. And the assumption that everybody necessarily knows when things change and they have got to do this and they have got to do that, I think that's asking a lot sometimes of people. There are people who just operate without the legal right to do so, know full well they are operating without the legal right to do so and we know that that occurs. I think we assume too much if we assume that people necessarily know all these timelines and deadlines and once you filed with this thing, then you don't, then you have got to — I mean they don't always know all this stuff. I mean 21 that's one thing I figured out in this process is it is messy. Like you allude to, it's just a messy process and it's hard sometimes to sort it out. Ms. Oliver: George. Mr. Alcaraz: I know, I mean they meet the regulations at 241.2, and put a lot of weight on that but then I also put a weight on the neighbors, I put a weight on the parking, I put a weight on the management, I don't like the parking. I know staffs worked to get the parking but when there is one parking per unit, and they need to — or are they going to take someone else's parking, who monitors that, you know. I am not sure who or what happens when that happens but I can see that there is a controversy on the parking lot when that does come. And because of that and the opposition is here today, unless anyone else wants to say anything I am going to make a motion. Ms. Klein: I also agree that the opposition can weigh heavily in these, community members feel very strongly. I think my focus is on the fact that the opposition was not towards their building and that no one here had a problem with their particular Short Term Rental which is in a different building. It sounds like the building that they are in which is all the same one is not a good place for additional Short Term Rentals but I didn't hear anything about their unit specifically which is in a separate location. Ms. Oliver: David. Mr. Weiner: Isn't this building the same as the other building as in shared access, shared balconies as the other building if I am not mistaken, Summer? Is that correct? I am sorry to get you keep walking back and forth. Isn't this building the same as the other one with the shared balconies, the shared access to the buildings? Ms. Peebles;Yes, I believe this one is on the first floor from what the applicant said, it's just in a different condominium building I think. I believe Terry Champion was located where those three are connected and this one is located at the front too. Mr. Weiner: But all units go through only the two doors. Ms. Peebles:Yeah, there is the shared access ways, it's only for the ones within that building so perhaps six units sharing one common access way, yes. Mr. Weiner: Sure, okay, thank you. That was one of the main reasons we denied the last one in this location, because of the close access and the shared balconies. That's.... 22 Mr. Alcaraz: With Ms. Klein's comments, I mean, I agree, I just — it's also due diligence for the owner to manage it and I think there is some oversight that they — I don't know if it was intentional but it happened and I am weighing into that and I think Mr. Redmond has his hand up. Ms. Oliver: Dave. Mr. Redmond; Thank you, George. No, I agree with Robyn, I mean I agree with what these folks said too and you know it's—you're exactly right, the structure of these building is such that it would cause one concern but the objections I have heard general objections, they don't apply to this particular unit. And, I mean —that's why we are looking at each one individually and these folks strike me as fairly conscientious property managers. They seem to be screening people very closely. They seem to be particularly concerned about how they manage this. I will also say, I am inclined to support the application and for the reason said Robyn just stated. But I will also say in a situation where you have trash in the parking lot, parking in eastern end of Norfolk Avenue, you know the ocean front, there are going to be people parking there because they want to go to the beach, right, and they have nothing to do with the condominiums.There will always be parking problems at this property and there is always going to be trash in a multiunit environment like that and you don't know where it's coming from, it could be windblown for all we know. But in any event, you know in an environment like this where you do have a lot of second homes people live in one place, they have got a condo at the beach, they are routinely turning them over to friends and family, let your neighbor go down to your place at the beach, your nephew and his girlfriend go down for a long weekend.There is coming and going all the time, the idea that this is all restricted to Short Term Rentals coming and going and all that, I just don't believe that. I mean I think a lot of that has to do with people who own units, it's just with the nature of those kinds of properties. In any event I mean I don't like the opposition, what I mean by that is I am concerned by opposition, I am concerned by the nature of the buildings themselves but it seems to me if you look at these as individual cases, this seems to be one that is particularly well managed and I have seen places managed by professional property management companies, the names of which we all know who do terrible jobs doing it. Don't know the light is out, don't know what's in the place, don't know what the hours are, don't know when the cleaning people come and so that's not a panacea either but it does—it seems to me that gentleman said something very telling to me and that is communication is the key. And I think that's dead right. You know if you are talking to people and you are on top of it, 23 then these things run a lot better. So I am inclined to support it for those reasons. Thanks. Ms. Oliver: Jack, hold on. Mr. Wall; You know the last application we had was in the Lake Station condominium complex was very specific. The things there were very specific, you know faults with that application and it wasn't necessarily the shared balcony and you know things that very much stood out with that application that you know brought our attention that there were problems going on with that unit. With this one it seems like it's been operating fairly well and that its been operating within the requirements of units or type of residence that you would expect. You know I feel for the residents that don't feel that Short Term Rentals allow them to experience the sanctuary of home that they should have but in this case it just seems like this application and the people that are applying for are somewhat managing it fairly well. So I am going to support it. Ms. Oliver: George? John. Mr. Coston: I just joined this commission in February I believe and had it not been for my position I would have known nothing about requirements for Short Term Rentals. I missed on air rights on a piece of property I owned because I didn't know what was going on. So I understand sometimes when you are in business, there is something you might need to know that you don't know, I understand that and I think they have the ability to prove that they have been renting for eight years and just missed out on grandfathering only because I didn't know I needed to do something to protect my right to grandfathering. So, I am inclined to support this as well. Ms. Oliver: George, back in your court. You were making a motion. Mr. Alcaraz: I was and I still will so I make a motion that we deny it. Ms. Oliver: Alright, I need a second please. I need a different— I need an ...what? Ms. Klein; I will make a subsequent motion. Ms. Oliver: Thank you. Ms. Klein; That we approve the application. Ms. Oliver: I need a second on the subsequent motion. Mr. Weiner: I will second. 24 Ms. Eisenberg; Just to clarify it's not a subsequent motion or substitute motion because the first motion died since there wasn't a second so. Ms. Oliver: Thank you, we don't typically have this. Council has this more often than us. Ms. Sandloop: Calling for the vote, Mr. Inman: Madam Chair. Ms. Oliver: Yes Mr. Inman: I have to abstain from vote on this, I my firm represents Lake Station condominium, I don't, I am a representative here don't know anything about, what, may be thinking about it but I don't, out of an abundance of caution am not going to vote, I am abstaining. Mr. George: And I am sorry your mic was not on but what are we doing here, Ms. Oliver: We are voting to approve. Mr. Alcarz: Okay, thank you. Ms. Sandloop: Calling for vote on the motion to approve the agenda item number 12, Mr. Alcaraz, Alcaraz: Nay. Ms. Sandloop: Mr. Barnes is absent, Mr. Coston Ms. Coston: Aye. Ms. Sandloop: Mr. Graham is absent, Mr. Horsley is absent, Mr. Inman is abstaining, Ms. Klein, Ms. Klein: Aye, Ms. Sandloop: Mr. Redman, Mr. Redman: Aye, Ms. Sandloop: Mr. Wall, Mr. Wall: Aye, Ms. Sandloop: Vice Chair Weiner Mr. Weiner: Aye, 25 Ms. Sandloop: Madam Chair Oliver Ms. Oliver: Aye, Ms. Sandloop: By a vote of six to one, six for, one against with one abstention, agenda item number 12 has been approved. AYE 6 NAY 1 ABS 1 ABSENT 3 Alcaraz NAY Barnes ABSENT Coston AYE Graham ABSENT Horsley ABSENT Inman ABS Klein AYE Oliver AYE Redmond AYE Wall AYE Weiner AYE CONDITIONS 1. The following conditions shall only apply to the dwelling unit addressed as 349 Norfolk Avenue, and the Short Term Rental use shall only occur in the principal structure. 2. Off-street parking shall be provided as required by Section 241.2 of the City Zoning Ordinance or as approved by City Council. 3. A second (2nd) parking space, at a location subject to approval by the Zoning Administrator, shall be available for use by the Short Term Rental occupants at all times. 4. While this Conditional Use Permit is active, parking passes issued for the subject dwelling unit(s) through the Residential Parking Permit Program (RPPP) shall be limited to two resident passes only. Guest and temporary passes through the RPPP shall not be permitted. 5. This Conditional Use Permit shall expire five (5) years from the date of approval. The renewal process of this Conditional Use Permit may be administrative and 26 performed by the Planning Department; however, the Planning Department shall notify the City Council in writing prior to the renewal of any Conditional Use Permit for a Short Term Rental where the Short Term Rental has been the subject of neighborhood complaints, violations of its conditions or violations of any building, housing, zoning, fire or other similar codes. 6. No events associated with the Short Term Rental shall be permitted with more than the allowed number of people who may stay overnight(number of bedrooms times two (2)) on the property where the Short Term Rental is located. This Short Term Rental may not request or obtain a Special Event Permit under City Code Section 4- 1 (8a). 7. The owner or operator must provide the name and telephone number of a responsible person, who may be the owner, operator or an agent of the owner or operator, who is available to be contacted and to address conditions occurring at the Short Term Rental within thirty (30) minutes. Physical response to the site of the Short Term Rental is not required. 8. If, or when, the ownership of the property changes, it is the seller's responsibility to notify the new property owner of requirements 'a' through 'c' below. This information must be submitted to the Planning Department for review and approval. This shall be done within six (6) months of the property real estate transaction closing date. a) A completed Department of Planning and Community Development Short Term Rental Zoning registration form; and b) Copies of the Commissioner of Revenue's Office receipt of registration; and c) Proof of liability insurance applicable to the rental activity of at least one million dollars. 9. To the extent permitted by state law, each Short Term Rental must maintain registration with the Commissioner of Revenue's Office and pay all applicable taxes. 10. There shall be posted in a conspicuous place within the dwelling a summary provided by the Zoning Administrator of City Code Sections 23-69 through 23-71 (noise), 31-26, 31-27 and 31-28 (solid waste collection), 12-5 (fires on the beach), 12-43.2 (fireworks), and a copy of any approved parking plan. 11. All refuse shall be placed in automated refuse receptacles, where provided, and comply with the requirements of City Code sections 31-26, 31-27 and 31-28. 12. Accessory structures shall not be used or occupied as Short Term Rentals. 13. No signage shall be on-site, except one (1), four(4) square foot sign, may be posted on the building which identifies the Short Term Rental. 14. The Short Term Rental shall have no more than one (1) rental contract during any consecutive seven (7) day period. 27 15. The owner or operator shall provide proof of liability insurance applicable to the rental activity at registration and renewal of at least one million dollars ($1,000,000) underwritten by insurers acceptable to the City. 16. There shall be no outdoor amplified sound after 10:00 p.m. or before 10:00 a.m. 17. The maximum number of persons on the property after 11:00 p.m. and before 7:00 a.m. ("Overnight Lodgers") shall be two (2) individuals per bedroom. 18. To the extent permissible under state law, interconnected smoke detectors (which may be wireless), a fire extinguisher and, where natural gas or propane is present, carbon monoxide detectors, shall be installed in each Short Term Rental. Further conditions may be required during the administration of applicable City Ordinances and Standards. Any site plan submitted with this application may require revision during detailed site plan review to meet all applicable City Codes and Standards. All applicable permits required by the City Code, including those administered by the Department of Planning/Development Services Center and Department of Planning/Permits and Inspections Division, and the issuance of a Certificate of Occupancy, are required before any approvals allowed by this application are valid. The applicant is encouraged to contact and work with the Crime Prevention Office within the Police Department for crime prevention techniques and Crime Prevention Through Environmental Design (CPTED) concepts and strategies as they pertain to this site. 28 October 25, 2020 To Whom it May Concern, I, Michelle Walters, have been a unit owner at Lake Station Condominiums for 25 years. I am writing you to request you to deny the request made for a short term rental Conditional Use Permit(CUP), by Rob Rickert,for unit 349 in Lake Station Condominiums, located on Norfolk Avenue,Virginia Beach,VA 23451. I oppose this request for the following reasons: 1. Parking-All units in Lake Station, including unit 349, have two bedrooms and one assigned parking spot per unit.There is not enough available parking for as per the zoning ordinance section 241.2(1) 2. Previous short-term rentals in Unit 349: a) Has been rented on less than a weekly basis. Rentals of 1-3 days were common. It frequently has been operated as a hotel suite/room. On a regular basis,there would be 3 different renters per week(in violation of the city ordinance stating a maximum of 2 different rentals per week)during spring and summer months. b)Was not in compliance with HOA/Condominium Association rules which requires notification to our management company of tenants occupying the unit. Since our community was intended for residents only,our management company is not equipped to track constant check-ins and check-outs by short- term renters.Any owner that has had short-term rental,to my knowledge, has not complied with this requirement thus far. 3. Security: a)We have a keyed common area door for 6 units per building.This door is our front door to our building.There is no control over who gets the key(s)and when the key is returned. ***Our building has been undergoing construction for the past year. I feel that is an inappropriate time to have short-term rentals. Currently we have a new door(opens into the common area of the 6 units)on our building that is not working correctly(you have to make sure it's shut properly). It's been in place for 2 weeks. Short-term rental has been there for half the week. A majority of the mornings I have left for work at 6:15 am,the door would swing wide open due to not being shut correctly. Also,several times when I arrived home after work,it was open. The 3 of us who live there shut it properly. Therefore,the short-term renter is at fault and this negatively impacts my safety. b)With short term rentals,the residents never have an opportunity to know who is really in the unit,to build a relationship and to prevent random theft of items left on the decks. I oppose any and all CUP requests in our community for all above reasons in addition to reasons below: 1. Noise: People rent the unit are on vacation to in lots of fun. Residents have endured family gathering parties, bachelorette parties,and people staggering back from the Oceanfront area late at night. Renters celebrating and/or returning late at night from the bars regularly makes sleeping impossible. Unlike those on vacation,the residents must get up early and work in the morning. Residents pay taxes all year round. 2. Utilities increase: Lake Station has a common water supply lines for all units and water bills are divided equally between all units.Short term rentals have increased the water bill of the community. Investors with high occupancy(number of people) unfairly benefit financially while financially burdening the residents,who essentially are supporting their short-term rentals. 3.This has been my home for 25 years. In dealing with the different issues with each individual new STR renter(parking issues, noise, renters not obeying any rules and regulations) is very time consuming (sometimes consuming 1-3 hours of my time in a single day or night)until the issue is resolved.Again, it negatively impacts my quality of life. 4.We,at Lake Station Condominiums,care about our home and our buildings. Short term renters do not care and abuse the community. 5.Short-term rentals negatively impacts the character of our community. Short term rentals in my community significantly adversely affects the use and enjoyment of my home. I urge you to not recommend approval for this request for a conditional use permit for short term rental. Thank you so much for your attention to this matter, Michelle Walters 359 Norfolk Avenue Virginia Beach,VA 23451 757-403-0455 shellectric359@gmail.com Homeowner for 25 years at Lake Station Condominiums From: Thomas Ellis To: Summer J.Peebles Subject: 349 Norfolk Ave.Short Term Rental Conditional Use Permit Date: Wednesday,October 28,2020 1:29:51 PM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. Ms. Peebles, I'm Thomas Ellis, owner and resident at 337 Norfolk Ave. I wrote a note to you back in June opposing the C.U.P. that one of my neighbors was applying for and it appears I need to do so again for another unit in the association, in this case 349 Norfolk Ave. Rob Rickert (The owner of 349 Norfolk Ave.) is a friend and to date there hasn't been any issue with how he's handled his property from a damage or noise complaint angle, but I'm afraid that if his C.U.P. is granted it will open up the property to owners that are less careful about who they allow to rent. Since this is the first unit to officially go before Planning since the other unit's owner withdrew I felt I had to speak out. The same items I listed in June still apply now: Our community is a quiet, place to live with owners that know each other, and opening up the community to short term rentals gives me pause that we will lose what we've grown to appreciate here. There's a level of trust with the people living here, that I feel we will lose if the property begins to operate as a hotel. Our buildings are set up with a main security door into the six units of each stack, so security is also a concern for me. Currently our community only has one assigned parking spot for each unit and we do not have the capacity to monitor the lot aside from owner self-policing. Our water is also on a communal meter, so if short term rentals are allowed, we would be subsidizing the short-term renter's consumption because of frequency of use and volume of water consumed. The management company the association uses is not set up to manage the constant check in and check out of short-term rentals on behalf of the owner looking to rent out their unit on a short-term basis. While I want everyone in the community to have a good time, it's been shown that weekend vacationers are not as polite about noise while in the units. There have also been instances of litter after a weekend of partying in the past. The long and short of it is that our community just wasn't designed for short term rentals. Security and respect for the property are just not a priority for folks coming in for the weekend like those of us that this is our home. Thank you for reading and if you need/want additional feedback, please reply to this note, Thomas Ellis PS: I request that you keep this correspondence confidential and use it only for internal From: ANITA HYINK To: Summer J.Peebles Cc: aalcarazvboc(o icloud.com Subject: Conditional Use Permit-Oppose Date: Sunday,October 25,2020 2:48:59 PM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. Dear Ms. Peebles, I am writing to oppose the short term rental Conditional Use Permit application from the owner of Unit 349 in Lake Station Condominiums for the reasons cited below. 1. Parking-All units in Lake Station, including unit 349, have two bedrooms and one assigned parking spot. There is not enough available parking as per the zoning ordinance section 241.2(1). It should be no surprise to anyone that parking in condominium parking lots is always at a premium. 2. Short term rentals change the character of our neighborhood—We are a residential community. Not a motel. Short term rentals will change what makes our community a community of long standing owners/residents. 3. The proposed leasing of space in the city parking garage by the investor in unit 349 circumvents the short term rental ordinance section 241.2(1), does not address the parking situation introduced by short term rentals within our community, and requires implementation of active parking management by the residents. Although the investor may have space in the public 9th street garage,there is nothing to prevent the short-term renters from not parking in the garage and consuming the limited guest parking spaces within our community. It is much easier and closer to park in the condominium parking lot then make the five minute walk from the garage. Prevention of this would require an active parking management system to manage and enforce who can park where and when. Our community does not have the personnel or the financial resources to support active management of our parking spaces. Approval by the city of the parking exemption burdens the residents with financially supporting the investor's short-term rental business. 4. Previous short-term rentals in Unit 349 1. Were rented on less than a weekly basis. Rentals of 1-3 days were common. It was operated as a hotel suite/room. 2. Were rented to groups of greater than 6 people. 3. Was not in compliance with HOA rules which requires notification to our management company of tenants occupying the unit. Since our community was intended for residents, our management company is not equipped to track constant check-ins and check-outs by short-term renters. 4. Security— a. We have a keyed common area door for 6 units per building. This door is our front door to our building. There is no control over who gets the key(s) and when the key is returned.There is nothing to prevent short term renters from making copies of the keys for later use.There is no way to keep track who has a key and who does not. b. With short term rentals,the residents never have an opportunity know who's really in the unit,to build a relationship and to prevent random theft of items left on the decks, which has occurred in the past. 5. Privacy- a. Strangers gathering behind the building on the deck with clear visibility into adjacent units. This could become a security concern. b. Strangers in the common area. 6. Noise - a. People rent the unit to be on vacation and have lots of fun. We've endured family gathering parties, bachelorette parties, and people staggering back from the Oceanfront area late at night. Renters celebrating and/or returning late at night from the bars regularly makes sleeping impossible. Unlike those on vacation, many residents have to get up and work in the morning. We pay taxes year round.They're on vacation. 8. Utilities subsidy - Lake Station has a common water supply lines for all units and water bills are divided equally between all units. Investors with high occupancy(number of people) unfairly financially benefit from residents effectively subsidizing their short-term rentals. 9. I have been an owner of Lake Station Condominiums since 2007 and the main reason I purchased my unit was due to the sense of community, everyone knew everyone else and we felt safe. I want my home back. I want my community back. 10. We care about our home and our buildings. Hotel guests don't. 11. Short term rentals in my community fundamentally impacts the use and enjoyment of my home. Lake Station Condominiums is a community of 32 garden style condominiums. Short term rentals in condominiums carry a host of issues different from those of a single family home: safety, security, noise, parking and privacy. My unit 305 is on the 2nd floor and the unit below and above are short term rentals (non-permitted), and we hear constant noise, renters who ring our doorbell because they forgot their key, we don't even know if they are renters as claimed, dumped charcoal from grills,trash, cigarette butts. Residents care about their community, many renters do not. Please consider denying the short term rental permit for Unit 349 in Lake Station Condominiums. There is no place in condominiums for short term rentals. Anita Hyink Unit 305 Lake Station Condominiums 305 Norfolk Avenue From: DNB To: Summer].Peebles Cc: William R.Landfair;aalcarazvboc(a)icloud.com;Colleen F Belvin(colleen.f.belvin(Tdominionenerov.com) Subject: Conditional Use Permit(Short-Term Rental)349 Norfolk Avenue-11/4/2020 Meeting-Item#12 Date: Wednesday,October 28,2020 12:31:35 PM Importance: High CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. To: Summer Pebbles (sjpeeblePvbgov.corrt) [757-385-5088] CC: Bill Landfair (wlandfairPvbgov.corri) [2875 Sabre Street,Suite 500,Virginia Beach,VA 23452] CC: George Alcaraz (galcarazvbpcPicloud.com) [757-620-8040] Ms. Pebbles; I am contacting you to express my opposition to the current request by the owner/investor of 349 Norfolk Avenue;Virginia Beach,VA 23451 for approval of a conditional use permit for short term rental. This property is in the Lake Station Condominium complex. I am a neighbor and owner of 313 Norfolk Avenue which is adjacent to Unit 349. Parking: All of the Condominiums in Lake Station, including unit 349, have two bedrooms and one assigned parking spot. There is not enough available parking for a short-term rental as per the zoning ordinance section 241.2(1). The proposed leasing of space in the city parking garage by the investor of Unit 349 circumvents the short term rental ordinance section 241.2(1), does not address the parking situation introduced by short term rentals within our community, and requires implementation of active parking management by the residents. Although the investor may have a space in the public 9th street garage,there is nothing to prevent the short-term renters from not parking in the garage and consuming the limited guest parking spaces within our community. Prevention of this would require an active parking management system to manage and enforce who can park where and when. Our community does not have the personnel or the financial resources to support active management of our parking spaces. Approval by the city of the parking exemption burdens the residents with financially supporting the investor's short-term rental business. Community: The approval of a conditional use permit for short term rental would significantly change the environment of our community from an owner/long term rental residential environment to that more like a hotel. Also, HOA rules requires notification to our management company of tenants occupying the unit. Since our community was intended for residents, our management company is not equipped to track constant check-ins and check-outs by short-term renters. There is also no incentive for the short-term renters to be considerate of others regarding noise and trash. Security: We have a keyed common area security door for the six units per building. This door is our front door to our building. The owners'control who gets the key(s) and when the key is returned. With short term rentals,the residents never have an opportunity to know who is really in the unit,to build a relationship and to prevent random theft of items left in common areas. Subsidization: Lake Station has a common water supply for all units and water bills are divided equally between all units. They are not individually metered. Investors with high occupancy (number of people) unfairly financially benefit from residents effectively subsidizing their short-term rentals. This would also be true with increased upkeep costs related to the common areas. Notice/Application: The owner/investor of 349 Norfolk Avenue has not reached out to communicate to me or any other owner that I am aware of, related to this request. Likewise,the Board of the Lake Station Condominium Association [HOA], has not voted on this change to the use of our properties nor have they communicated to the owners anything related to this request. The investor's application includes a signature line indicating approval of someone associated with the HOA. Our HOA executive board did not meet,there was no community meeting and there was no community endorsement at any level of the CUP application. Mr. Rickert signed his own application as a Board Member,while not a HOA Board member. He became a Board member after the CUP application was submitted. The City attorney's office has be engaged. Noise; Customers rent the unit to be on vacation and have fun. I have seen family gathering parties, bachelorette parties, and people staggering back from the Oceanfront area late at night. Renters celebrating and/or returning late at night from the bars regularly makes sleeping impossible. Unlike those on vacation, I have to get up and go to work. I pay taxes year round.They're on vacation. This is not a Hotel. Regulation: Our community is not a hotel and is not designed or constructed as one. Who do I or my family turn to during the day or night for noise,trash, confrontation,or security issues? Do I call 911?The burden will be on me and my family to confront, investigate and initiate enforcement. Under the current rules and regulations, enforcement is not addressed by the City. There is no clear enforcement process for short term rentals, it is all on the neighbors to regulate. Once approved the Short-Term Rental owner has 5 years and an automatic renewal for the CUP. If a renter misbehaves then the owner can just keep the security deposit and the City may fine the owner but there is no real accountability for following the rules. I anticipate a lot of calls to 911. I have owned 313 Norfolk Avenue since 2012 and want to maintain the community that has existed since I joined the community. Short term rentals in my community will fundamentally impact the use and enjoyment of my Condominium. I urge you to potxecomnr end for approval this request for a conditional use permit for short term rental. Thank you for your time and consideration. Thomas W. Belvin 313 Norfolk Avenue Virginia Beach,VA 23451 804-921-5949 twbelvin Pverizon.net From: Patsy Jones-Hubert To: Summer J.Peebles Subject: CUP Application 349 Norfolk Ave. Date: Wednesday,October 28,2020 7:01:52 PM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. j Please forward this email to each Board Member. Thank you. In Nov., 2013, we purchased the property at 325 Norfolk Ave., Virginia Beach, VA 23451, Lake Station Condominiums. This is our second home, a place where we would come to relax, enjoy our new community, as well as the beach. There have been many times that we talked about making Lake Station our primary home. We are aware that the Investor of Unit 349 has applied for a CUP, making short term rentals legal in our community. We oppose this for the following reasons: Privacy —Privacy is a main concern of ours. We know many of the residents in our community and feel that if short term rentals become legal, our privacy would be compromised. Short term renters come and go and there's no way of telling who should or should not be at Lake Station. Since our community is not a motel/hotel where there is a desk clerk or security officer, there is no one to keep the peace and to see what's going on in our community. Noise & Safety — Even though there might be 4-6 occupants in one unit, as in the past, short term renters often have friends in nearby hotels who join them for a party. At times we have seen a dozen people on one deck that's made for no more than four. Large amounts of trash collect on the parking lot and the common areas. Lake Station is being updated and with that we are getting new doors and a coded key pad. If short term rentals become legal, we would feel very unsafe knowing that the code would be given out to short term renters. Pets are allowed at Lake Station. However, there is a leash law. Short term renters often are not aware of this. Water & Sewage — Our HOA fee covers water and sewage which is nice, except when there are a number of individuals and their visitors in one unit using these utilities. That's one of the reasons our HOA fee will go up. It's not fair for those who are keeping within the number living in one unit to pay for the additional use of water and sewage. Parking —At Lake Station, each condo is assigned a numbered space and two guest passes for unnumbered spaces, which are very limited. We had an incident where someone parked in the fire lane next to our assigned space where we had just pulled up. She was quite upset with us because she couldn't easily unload her luggage. We did not know her and she assumed that we, too, were short term renters. We have also have had cars from out-of-state parking in our spot These issues are dear to us. We purchased our condo with the idea that we would be in a residential community. Thank you for your time and consideration. Lee and Patsy Jones-Hubert (804) 285-1718 From: Cathryn Evanek To: Summer J.Peebles Subject: CUP for 349 Lake Station Date: Tuesday,October 27,2020 7:42:58 PM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. Ms.Peeble, We are contacting you to voice our opposition to the CUP for short term rental of unit 349 Lake Station due to issues of parking(which do not meet current city regulations),adverse effects on the quality of life of permanent residents and the limitations of our community in terms of insuring security and enforcing city occupancy and rental frequency regulations. Cathryn and Michael Evanek 351 Lake Station Virginia Beach 23451 Sent from my iPad Benham Malcom 319 Norfolk Ave Benham8@comcast.net 301-922-8383 George Alcaraz, Planning Commission Beach District 757-620-8040 galcarazvbpc@icloud.com Summer Pebbles, Zoning Inspector I 757-385-5088 sipeeble@vbgov.com RE: Conditional Use Permit Application for 349 Norfolk Ave Summer and George, My name is Benham Malcom. My family has owned 319 Norfolk Ave. for 22 years. SUMMARY 349 Norfolk Ave, Short-term Rental CUP Application • Precedent setting 1st CUP application in Lake Station Community • 2 BR; 1 parking spot. No parking mitigation proposed • Investor cannot control STR renter overcrowding, noise, & behaviors. Residents always impacted to monitor, report, and cleanup. • CUP Application NOT acknowledged by the HOA. Applicant signed own application when NOT a member of the board • Rentals continued after zoning enforcement notification w/o CUP approval. • 47-55% of community requesting denial of CUP application • STRs change the residential character of our community • Many rentals violate HOA occupancy and tenant registration rules • Security — Shared front doors & back decks; limited key control; • Privacy — No idea who's next door, on the deck or in common area • Shared Utilities — Residents pay for overconsumption by short-term rentals • Community is outside proposed STR CUP overlay Community is not /does not want to be a Motel ! VOTE TO DENY 349 Norfolk Ave CUP Application! SUMMARY The Lake Station community is a garden apartment style 30 unit condominium which is broken up into five sections each consisting of six units with a shared entrance/common area.All units have the same general layout with two bedrooms and two baths. Most residential units are occupied by one person or used as second homes.The physical design of our buildings, our parking lot,our home owner association rules/procedures,our shared water utilities and our contract with our management company are all designed for a residential environment.We do not have a front desk, parking lot attendant,security guard,and maintenance team to address the needs of a short-term environment.We're not a hotel and we don't want to be a hotel. The formal registration of 349 Norfolk Ave with submission of a CUP application is a precedent-setting zoning exception for our Lake Station community. In addition to unit 349 there are currently 5-7 more units within our community that are doing unapproved, illegal short-term rentals. Unit 349 has been doing short-term rentals for about 4 years and has been actively renting after notification by zoning enforcement and prior to city approval, during 2020. Thus, our Lake Station community already has experience with short-term renters and the impacts to our community. 4' p 111. 1 II i A -1'dill I I I. I i;,,?!.• k i 1� At- 1 I Figure 1—Three Short-Term Rental boxes on lake Station Fence(6/22/2020) Unit 349 Norfolk Ave is owned by Rob Rickert of Fairfax. He has indicated he and his wife are real estate agents, have extensive real estate knowledge and are very familiar with Virginia Beach. He should be clearly aware of short-term rental ordinance for Virginia Beach. The rules established by the investor and by the conditional use permit govern much of the behaviors that the renters SHOULD follow. However,the reality is there is no control over the behavior of short- term renters until after they have committed a violation. My neighbors and I are directly impacted by each violation.We are the monitors and the reporters and we have to act to remedy the active situation. My past experiences have typically taken 1-2 hours to get resolved. The investor can apologize profusely for their renter's behavior but that does nothing to prevent the situation from occurring again and again with future renters. 45-55% of the Lake Station community doesn't want short-term rentals in our community. As the number of short-term rentals has increased, our sense of community and "home" has decreased. Our lives are interrupted by issues generated by investors who are profiting at the expense of our right to peaceful, quiet, enjoyment of our residences. It IS changing the character of our community. Lake Station fully supports the City's goal to put "heads in beds"to fill hotel rooms along the Oceanfront. Please help us direct more heads to HOTEL beds. We are asking the Planning staff, Planning Commission and City Council to support our community request to deny the CUP application for 349 Norfolk Avenue and to deny future short-term rentals within the Lake Station community. Details The community and I are asking for denial of the STR CUP application based on the following: Parking From the STR CUP Application - "Parking Requirement(1 space per bedroom).#number of spaces provide: 2 Plan required—No". All units in Lake Station, including unit 349, have two bedrooms, one assigned parking space, and shared guest parking which is available on a first-come basis. There are not two parking spaces available for short-term renters as per the zoning ordinance section 241.2(1) The CUP application does not include a parking mitigation plan. A parking mitigation plan should be required. An exemption on short-term rental ordinance section 241.2(1) may propose a mitigation of leasing of space in the city parking garage by the investor. The mitigation would appear to address the parking requirement of the ordinance. Unfortunately, it does not address the parking situation introduced by short-term rentals within our community. Although the investor may have space in the public 9th Street garage,there is nothing to prevent the short-term renters from bypassing the garage parking and consuming the limited guest parking spaces within our community. Prevention of this would require an active parking management system (who's parking where,when, how long, when to tow...)to manage and enforce who can park where and when in the presently unmonitored guest parking. Our community does not have the personnel or the financial resources to support active management of our parking spaces. Approval of the 9th Street garage parking also guarantees the investor that their short-term renters will readily have access to Oceanfront parking in the 9th Street garage,the unit reserved spot in Lake Station and access to the guest parking spots within Lake Station. More available parking increases the likelihood of overcrowding within the rental unit and benefits the investor who then would have 2 guaranteed Oceanfront parking spots (1 reserved in Lake Station, one reserved in the city garage, and an opportunity for community shared guest spots). This is more parking than is available to the full-time residents of Lake Station. Lake Station Community Support& Misrepresentation in CUP Application The investor's application includes a signature line indicating approval of someone associated with the Lake Station HOA. The Lakes Station HOA executive board did not meet,there was no community meeting, and there was NO COMMUNITY ENDORSEMENT or acknowledgement at any level of the CUP application. The signature was that of the applicants when he was NOT a member of the HOA board. As of October 28th,45-55%of the residents in Lake Station have expressed their opposition to approval of the CUP for 349 Norfolk Ave and at least 12-15 are expected to provide written CUP opposition emails to the Planning Commission. This is similar to the opposition expressed during the review of the STR CUP for 323 Norfolk Ave. For 323 Norfolk Ave., 15 of the 30(47%)condo units within the Lake Station community wrote letters of opposition to the approval of STR CUP for 323 Norfolk Ave. 55%verbally indicated opposition. Six of the ten that wrote letters of support for the Unit 323 STR CUP were doing unregistered short term rentals. During the Planning Commission review of July 8;2020 for 323 Norfolk Ave., Mr. Horsley said: "....we ended up putting the Conditional Use Permit process into this,so that we could find if there were problems and not just doing it by right. So, I think that this is one incident where the Short-Term Rental has the Conditional Use Permit process for the Short-Term Rental has come to life and has made these problems evident, because the neighbors have the right to come and voice their opinion where before about right we would not have had that opportunity.So, I think the ordinance here is really working.So, I am going to support the motion (for denial) Mr.Alcaraz made" Mr. Horsley is correct. The CUP process is working and the neighbors are opposed to approval of the CUP for 349 Norfolk Ave. Doing rentals before STR CUP approval The applicant has indicted he has been doing short-term rentals for period of time. He has also indicated he and his wife are real estate agents, have extensive real estate knowledge and are very familiar with Virginia Beach. On June 29th,the applicant was notified by the zoning enforcement"that your home maybe operating as a Short Term Rental.All properties being used as a Short Term Rental must comply with the requirements of Section 241.2 of the City Zoning Ordinance". From the time of the initial notification on June 29 through this summer and fall, unit 349 continued to do short-term rentals. Renting before approval is the same issue as discussed in the Planning Commission review of the STR CUP application for 323 Norfolk Ave when Ms.Oliver and Mr. Graham had the following dialog: Ms. Oliver: I have an issue with people Short-Term Renting before they are supposed to Short-Term Rent. I mean,you are conducting business, prior to having. Mr. Graham: Do they have permission once they make application. Ms. Oliver: No. Mr. Graham: Basically,the applicant,they did not follow the rules. Ms. Oliver: Right. Mr. Graham:Okay. Ms. Oliver: So,they are conducting business. Mr. Graham:So, by passing something in a way,we are almost rewarding bad behavior. Ms. Oliver:Yes,sir. Approval of the STR CUP for 349 Norfolk Ave would be "rewarding bad behavior". Community impacting rentals Typically my neighbors and I have always attempted to work with the renters to resolve the situations. That's what neighbors do. In retrospect,our mistake as residents was failing to grasp that we're not dealing with our neighbors but rather with investors whose primary motivation is to make money. Several of these situations have turned tense and confrontational with the renters subsequently becoming more difficult and belligerent because their party was interrupted. Unfortunately, it's not just an issue with amplified music for which the police can be called. Pounding footsteps, pets and children running, loud talking and laughing are audible due to the all wood construction of Lake Station. All I really want is peace and quiet so I can go back to bed and sleep. Unlike the short-term renters, I have a job to get up for in the morning. Sadly,the process starts over with every new rental made by the investor. Compliance with HOA Rules Many short term rentals do not comply with occupancy rules established within the community which reads—"Units may be occupied only by a single family....or a group of not more than four persons not related....". Unit 349 also is not in compliance with Lake Station HOA rule which requires notification to our management company of tenants occupying the unit. This requirement has not been met by the investor.Since our community was intended for longer term residents our management company is not equipped to track constant check-ins and check-outs by short-term renters. Unfortunately,the HOA has limited ability to enforce the rules without filing civil lawsuits. Security and Privacy We have a single keyed common area door for 6 units per building. This door is our main entrance to the building. There is no control over who gets the physical key(s)and when the key is returned. Our buildings do not have wiring for electronic access controls and we don't have funding for security systems to manage access permissions. The back of the buildings have shared stairs and decks for ingress and egress. Anyone going up or down the stairs has clear visibility into the living space though the 9"glass panels. With short-term rentals, the residents never have an opportunity to know who's really in the unit,to build a relationship, prevent random theft by of items left on the decks and to feel comfortable with who is just our side our glass doors. ! , i 1 ,IT i e .,. /OP , _ — 4 tE` :fir I ' l , . .- ,..,__ . ; . i ' r 3ii: � if, ? 1 r i? s f 11 . 11 • v Rwr1 . I•. Ilk, : ,_#, �`• _ ...- , -..- . ._..,._•_•, ' . . • , _ , i „ 444- .. • d 1 :;11 : 1 [ ... . ' .Is 1 t • \Illir , .• , - _ , •,- , ,-_,---,--,- ' f Figure 2-Shard Decks/Stairs Backside of Lake Station ft ►,• , Z i, }t y.7 d r ' Nt,. :' ' *it-. 1, ° 84tti 1 ti ' ,lx:;;-_ . 1 s { t • a P tt .:„ . 1 40 IN , i I k •.4 ;44 Iti I, / pi i . , . _- ,„,,„ , , _ i . , :,,,. j i Litter Beer cans and litter on the grounds, usually near short-term rental units,occurs on a regular basis. The litter usually sits there until cleaned up by a resident or by our somewhat weekly lawn contractor. Lake Station is not staffed or funded to perform daily cleanups. Utilities subsidy Lake Station has a common water supply line for all units and water bills are divided equally between all units. There is typically one Lake Station resident per unit. Investors with high occupancy(number of people)taking two showers per day unfairly financially benefit from residents effectively subsidizing their short-term rentals. Again, please DENY the CUP application for 349 Norfolk Avenue Regards, Benham Malcom 319 Norfolk Ave 301-922-8383 From: Eileen Daniels To: Summer J.Peebles Subject: Norfolk Avenue Date: Wednesday,October 28,2020 4:24:18 PM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. I am opposed to the short term rental conditional use permit on 349 Norfolk ave,owner Robert Rickert. I have been awoken in the middle of the night with yelling and screaming from the renters and my parking spot has been taken on several occasions leaving myself and my family with no where to park, Thank you Eileen Daniels 333 Norfolk ave VB,VA 23451 757-639-3837 Sent from AOL Mobile Mail Get the new AOL app.;nail.mobile.aol.com From: Viroinia Portalatirl To: Summer J.Peebles;aalcarazvboc(aicloud.com Subject: Oppose Conditional Use Permit(CUP)for 349 Norfolk Ave Date: Monday,October 26,2020 12:12:13 AM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. Good morning, My name is Virginia Portalatin, owner and resident at Lake Station 307 Norfolk Ave Virginia Beach,VA 23451. I am respectfully requesting support for denial of the Conditional Use Permit (CUP) for 349 Norfolk Ave Virginia Beach,VA 23451 scheduled November 4th 2020 During the course of the last year and a half I have had numerous issues with noise and parking with short term Air BnB visitors, I have come home on several occasions to find my clearly numbered parking spot occupied by short term renter. On one particular occasion I encountered someone in my parking spot,asked the person standing by the car to kindly move car, short term renter responded she was unloading her car, didn't move until she finished. On another occasion I walked up to a group of three in my parking spot, explained they were at risk of being towed,one of the group members repeatedly interrupted me by asking if the parking spot was mine, I responded it was and that when I returned from my errand I expected to find my spot empty or I would be forced to have him towed. I have repeatedly found it necessary to explain to short term renters they cannot arbitrarily park in spots clearly numbered as they will be towed,fact they choose to ignore despite signage at the entrance of parking lot. Short term renters also choose to ignore privacy protocol, I experienced a short term renter last August sitting on the deck steps smoking and talking on his cell phone just a few feet from the entrance to my unit which has an open view to my living and dinning area. I felt my safety violated, something that had not occurred despite having next door neighbors( long term renters) who use the deck steps regularly as do I, we use them to enter and exit our units,we are mindful and respectful of each others space and privacy. Please consider my request to deny CUP for 349 Norfolk Ave, as I have serious concerns for the overall safety and wellbeing of all who reside at Lake Station,this is our home, our sanctuary. I am truly concerned Lake Station community will take on a Motel atmosphere,certainly was not what I had in mind when I purchased April 2019, my hope is to spend time here with my three beautiful little granddaughters in a safe environment. Respectfully, Virginia Portalatin Lake Station Condominium 307 Norfolk Ave Virginia Beach,VA 23451 From: Chuck Hoffman To: Summer J.Peebles;aalcarazvbocCa�icloud.com;Michelle Walters Subject: opposed to CUP for 349 norfolk ave Date: Wednesday,October 28,2020 8:14:54 AM CAUTION:This email originated from outside of the City of Virginia Beach.Do not click links or open attachments unless you recognize the sender and know the content is safe. This is to confirm my opposal to CUP for 349 Norfolk Ave. i have owned since 1997 ,traffic and this use is not beneficial to this community .There are 5 buildings with 6 units each,with each building having 3 units one on top of the other on each side of a stairway.Thank you.Charles Hoffman 335 Norfolk Ave Va Beach Va 23451 757-286-3978 From: John Krafinski To: Summer 3.Peebles Cc: oalcarazvboc(a icloud.com Subject: Opposition to 349 Norfolk Ave CUP Date: Wednesday,October 28,2020 8:55:56 PM CAUTION:This email originated from outside of the City of Virginia Beach. Do not click links or open attachments unless you recognize the sender and know the content is safe. Summer, I'm writing this email to express my opposition the CUP for 349 Norfolk Ave. Short term rentals, mainly run illegally to this point, are taking a serious toll on Lake Station. Most of the owners here either live here full time or have their unit as a vacation home. The owner of 349 has been using his unit as a short term rental and his own vacation home since at least 2016 when I moved into the community. This is of specific concern to me as our units share a common wall, my sining room/kitchen window looks out onto his back deck, and the man even went as far to build himself a patio directly outside my dining room window. Needless to say his guests in his short term rental are a constant niussance to me. I have addressed many concerns with the owner directly, and he mostly just ignores me. I used to keep my two, large dining room windows open but I really can't due to noise, partying, cigarette smoke, and the occasional aroma of Marijuana eminating from his back deck. I have complained to him many times and his answer is that I should keep my windows and blinds closed. I initially bought this property because of the beautiful view over the pond and now I can't even enjoy it. These things are a non issue to Rob because he makes a lot of money off of the short term rental and of course he's not here to deal with the noise and disturbance his guests create. They often have parties and his one method of deterring his guests from creating issues is to just pocket their security deposit, which is also beneficial to him. Rob is a liar and a bad neighbor. My fiance and I are in the Armed Forces and have positions involving National Security. We work long hours rather frequently and we expect the place to be quiet past 10 PM, as outlined in our HOA bylaws. This is not always the case as we live next to people throwing constant parties, who don't care if they're causing a disturbance. Rob is a long serving board member and he intentionally does not enforce the rules here, even in his own unit, due to his ongoing conflict of interest and how much he has to gain financially through his illegal short term rental. He is damaging our community and he is well aware of this. I'm tired of living next to a massive problem in our community and I pray the city does something about it by denying his CUP. All the owner is doing is padding his wallet at the cost of peace and quiet in our community. All we want is to do is live in a safe and quiet community which isn't being run as a hotel. Thank you for your time. John Krafinski 339 Norfolk Ave From: renee ambito cury To: Summer J.Peebles Cc: aalcarazvbpcllicloud.com Subject: Opposition to Lake Station Unit 349 Conditional Use Permit Date: Thursday,October 29,2020 2:52:55 AM Attachments: Unit 349 November Rental Calendar.onq Unit 349 Auaust and September Reviews.pnq Unit 349 VRBO June and July 2020 Reyiews.onq Unit 349 VRBO July 2020 Reviews.onq Plannina Commission Short Term Rentals Directive.pnq CAUTION:This email originated from outside of the City of Virginia Beach. Do not click links or open attachments unless you recognize the sender and know the content is safe. October 28,2020 Hello Ms.Peebles, I am a unit owner at Lake Station Condominiums on Norfolk Avenue which is located at the oceanfront. I have owned my unit for 22 years and it is my second residence. I am writing to voice my opposition for the conditional use permit that has been applied for by the owner of Unit 349. I believe short term rentals are a detriment to our condominium community. Short term renters do not benefit the Lake Station community as a whole. The revolving door of short term renters creates safety concerns and has a negative impact on the maintenance of our buildings. Simply put,short term renters do not feel the same responsibility to take care of the property and follow condominium association rules like actual unit owners. From my understanding,the owner of Unit 349 has proposed renting his second parking space from the 9th Street parking garage. This is an unrealistic and unacceptable solution because the owner and the condo association are unable to enforce whether or not the renters are actually parking in the garage. In the summer,parking is a huge issue in our lot because of the proximity to the beach. Another issue with our parking lot is short term rental guests parking in other owners'designated spots with complete disregard to the unit owner's instructions to only park in the unit's designated spot. The owner of Unit 349 lives in Northern Virginia and is unable to monitor whether or not his renters are actually using the 9th Street Parking Garage. Additionally in his VRBO listing,there is no mention of the 9th Street parking garage expectations. Safety and security is another reason I am concerned about short term rentals. When I bought my unit 22 years ago, a major selling point was that the building had an added layer of security in that you need a key to enter the main door of the building before you can get to your unit. With short term renters,we have no guarantee that they are not going to make a copy of the key for the main entrance or return the key to the owner. Under today's current state, COVID-19 is a major concern with short term rentals..I live above Unit 349 and I know that the unit is rented out for 2 or 3 day blocks throughout the month which means there is a constant flow of renters entering our building. It is alarming to think about these countless strangers staying in our community. These renters are traveling from within Virginia and out-of-state possibly infecting those of us who live here year round I would like to add that the owner of Unit 349 has been renting out his unit as a short term rental this year without proper authorization from the planning commission. He has also been in violation of HOA regulations which state that the management company must be provided renter information. Lastly,in his application for the conditional use permit,the unit owner signed his own application instead of having an HOA board member sign it. I have attached screen shots of the Planning Commissions directive from the Planning Commission web site that states individuals must wait to operate a short term rental until they have talked to the planning commission. I have also attached screenshots of the November VRBO rental calendar for Unit 349 which shows that the unit is being advertised without Planning Commission approval and bookings have been made for the unit. Additionally,there are screen shots of VRBO reviews from June—September 2020 which verify unauthorized short term rentals from this summer. As a long time Lake Station owner,I would like for our community to remain a safe and well-maintained haven for those of us who live here and pay taxes to the city year round. I do not support short term rentals at Lake Stations because they take away from the quality of life that our community has enjoyed until these short term rentals started infiltrating Lake Station by turning these units into hotel rooms. The oceanfront has hundreds of hotel rooms from 1st to 41st street where these short term renters can spend their money at and support the Virginia Beach economy in that manner. Please consider denying the conditional use permit for Unit 349 in order to preserve the quality of life at Lake Station Condominiums. Please feel free to contact me at 757-574-7125 or at wahoowa91@,..yahoo.com if you have questions. Thank you in advance for your consideration. Renee Cury Lake Station Condominiums 353 Norfolk Avenue Virginia Beach,VA 23451 November 21, 2020 My name is Patricia Grossi and I live in the 3-building section of Lake Station. I own another unit and have properly managed both long and short-term rentals and have regularly compared practices and notes with Rob about the rentals. I had planned to attend the Dec. 8 meeting but recently tripped on construction debris hit my head and broke my elbow. In my professional life I have sold, managed timeshares, and have been an owner at Lake Station for over 23 years. I served with Rob Rickert on Lake Station's board of directors for 10 years. Rob is very dedicated to this community. He's regularly here, frequently helps neighbors and our management company. He coordinates efforts for dryer vent cleaning, access for HVAC inspections and care of their small pond area behind his unit. This community has some challenges, but short-term-rentals really isn't one of them. Some folks really should be in single family homes. I support Rob and Zinta and would encourage you to grant them the conditional use permit. Respectfully, 1,1 Patricia Grossi abed November 20, 2020 My name is Lisa Lorraine Grossi and I own a rental at Lake Station Condominiums, unit number 331 for 23 years. I've known Rob Rickert and his wife for years. He lived here full time for many years and now the home serves as their 2nd home temporarily; we see them frequently. I support allowing them to continue renting their 2rd home a few weeks a year to offset their expenses so they may keep their property and soon be our full-time neighbors again. Since much of the Oceanfront development and improvements are primarily happening in and around 25-35 streets it's hard for some of the local establishments near our end of the beach. Rob and Zinta share info about local establishments, restaurant, activities, etc. They allow renters to use their bikes to explore the area too. This is not an investment property this is their home and thus they take time to screen those they intend to share their place with. Someone paying $1500+for a week is someone likely to take care of the place and respect the neighbors. These places only sleep four people. These are parents coming to see their kids off to service or a mom&daughter attending a cheer or volleyball event. Rob lived there for 7 years, he's already been renting it for 8 years with no issues—give him another 5 years and hopefully by then he and his wife;will formally retire here. • Res tfully, Lisa Lorrain rossi 1526 Chela Ave. Norfolk,VA 23503 757.328.2574 7 abed �o M. APPOINTMENTS 2040 VISION TO ACTION COMMUNITY COALITION ARTS AND HUMANITIES COMMISSION CLEAN COMMUNITY COMMISSION COMMUNITY SERVICES BOARD GREEN RIBBON COMMITTEE HISTORIC PRESERVATION COMMISSION HOUSING ADVISORY BOARD INVESTIGATIVE REVIEW PANEL OLD BEACH DESIGN REVIEW COMMITTEE OPEN SPACE ADVISORY COMMITTEE RESORT ADVISORY COMMISSION SOUTHEASTERN PUBLIC SERVICE AUTHORITY TRANSITION AREA/INTERFACILITY TRAFFIC AREA CITIZENS ADVISORY COMMITTEE TRANSPORTATION DISTRICT OF HAMPTON ROADS VIRGINIA BEACH COMMUNITY DEVELOPMENT CORPORATION N. UNFINISHED BUSINESS O. NEW BUSINESS P. ADJOURNMENT If you are physically disabled or visually impaired and need assistance at this meeting, please call the CITY CLERK'S OFFICE at 385-4303 ############################# The Agenda(including all backup documents) is available at https://www.vbgov.com/government/departments/city-clerk/city-council under the eDocs Document Archive. If you would like to receive by email a list of the agenda items for each Council meeting,please submit your request to pmcgraw@vbgov.com or call 385-4303. CITY OF VIRGINIA BEACH SUMMARY OF COUNCIL ACTIONS DATE:12/01/2020 PAGE: 1 B AGENDA E ITEM# SUBJECT MOTION VOTE A L H W W B U E J R T I 0 B C D N OM 00 L W 0 O C Y L NOUWS 0 T THEE E S S E O O E T I , R Y S S ERNDN CITY COUNCIL'S BRIEFING A. HRT MICROTRANSIT William E.Harrell, DEMONSTRATION PROJECT President and Chief Executive Officer— Hampton Roads Transit Ray Amoruso,Chief Planning and Development Officer— Hampton Roads Transit II. CITY MANAGER'S BRIEFINGS A. CONVENTION AND VISITORS Ronald H.Williams,Jr. BUREAU COMMUNITY TASK —Deputy City Manager FORCE RECOMMENDATIONS B. LOCAL COVID-19 RELIEF FOR RESCHEDULED VIRGINIA AQUARIUM&MARINE SCIENCE CENTER III/IV/ CERTIFICATION OF CLOSED CERTIFIED 10-0 Y Y Y Y Y Y A Y Y Y Y VIIVII SESSION A-E _ F. MINUTES 1. INFORMAL/FORMAL SESSION APPROVED 10-0 Y Y Y Y Y Y A Y Y Y Y November 10,2020 2. INFORMAL/FORMAL SESSION APPROVED 10-0 Y Y Y Y Y Y A Y Y Y Y November 17,2020 G. PUBLIC HEARINGS 1. DECLARATION AND SALE OF 1 SPEAKER EXCESS CITY PROPERTY Approximately 2.812 acres at the intersection of Princess Anne and South Witchduck Road(formerly Kempsville Road) 2. PROPOSED PROPERTY TAX 1 SPEAKER EXEMPTIONS a. East Coast Volleyball Club b. Hospice and Palliative Care of Tidewater c. Luv All Warriors,Inc. • d. One Step Ministries e. The Pink Ride,Inc. f. Trails of Purpose I.1. Ordinance to AMEND Section 2-109 City DEFERRED TO 10-0 Y Y Y Y Y Y A Y Y Y Y Code re temporary pay adjustments DECEMBER 8,2020, BY CONSENT I.2. Ordinance to GRANT a Non-Exclusive ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y Franchise Agreement to SimIS Holdings, CONSENT LLC re install,operate,and maintain network facilities for telecommunication services in the public streets and rights- of-way CITY OF VIRGINIA BEACH SUMMARY OF COUNCIL ACTIONS DATE:12/01/2020 PAGE: 2 B E AGENDA R ITEM# SUBJECT MOTION VOTE A L H W W B U E J R T I 0 BC D N O M O O L W 0 O C Y L NOUWS 0 T THEE E S S E O O E T I R Y S S ERNDN 1.3. Ordinance to AUTHORIZE the City DEFERRED 10-0 Y Y Y Y Y Y A Y Y Y Y Manager to EXECUTE a Ground Lease INDEFINITELY,BY for approximately 420 square feet right-of- CONSENT way known as Atlantic Avenue re placement of the Oceanside Marriott Hotel Monument Sign 1.4. Ordinance to AUTHORIZE temporary ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y encroachments into a portion of City CONSENT right-of-way known as Southern Boulevard,the adiacent City property formerly known as the Norfolk Southern Rail Line,and a 30-foot City utility easement,at 4920 Southern Boulevard re maintain existing 72-inch chain- link fence,chain-link gates,concrete barriers,a gravel area,and two(2) metal tanks I.5. Resolution to ESTABLISH a May 31' ADOPTED 10-0 Y Y Y Y Y Y A Y Y Y Y Memorial Committee,AUTHORIZE the City Manager to solicit proposals for two(2)third-party consultants,and TRANSFER$115,000 from the General Fund Reserve for Contingencies to FY2020-21 Cultural Affairs Operating Budget re establish and dedicate a permanent memorial I.6. Ordinance to ESTABLISH the Resort ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y Management Office,APPROPRIATE CONSENT $1,176,505 of Tourism Investment Program(TIP)Fund Balance, TRANSFER$361,287 and nine(9) FTEs within FY2020-21 Department Operating Budgets,and AUTHORIZE six(6)FTEs re facilitate initiatives at the Resort Area and coordinate City Code enforcement 1.7. Ordinance to TRANSFER$200,000 ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y from the General Fund Reserve for CONSENT Contingencies to FY2020-21 Human Resources Operating Budget re hire a consultant to conduct a market salary survey 1.8. Resolution to REPLACE the 2006 ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y Resolution re market salary survey CONSENT guidance 1.9. Ordinance to ESTABLISH CIP ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y #100557,"Flood Mitigation Assistance CONSENT Grant Program IV",and ACCEPT and APPROPRIATE$803,061 from Virginia Department of Emergency Management to CIP#100557 re flood mitigation measures at qualifying residential properties CITY OF VIRGINIA BEACH SUMMARY OF COUNCIL ACTIONS DATE:12/01/2020 PAGE: 3 B E AGENDA R ITEM# SUBJECT MOTION VOTE A L H W W B U E J R T I 0 BC D N O M O O L W O O C Y L NOUW S 0 T THEE E S S E O O E T I R Y S S ERNDN I.10. Ordinance to APPROPRIATE ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y $300,000 from the Fund Balance of the CONSENT General Fund re provide special event fee offsets during pandemic public health measures I.11. Resolution to AUTHORIZE the City ADOPTED,BY 10-0 Y Y Y Y Y Y A Y Y Y Y Manager to EXECUTE a Mutual Aid CONSENT Agreement for Emergency Fire and Emergency Medical Services with Currituck County,North Carolina J.1. RITA M.WHALEN&MICHAEL J. APPROVED/ 9-1 Y Y Y YYN A Y Y Y Y WHALEN/RITA M.WHALEN CONDITIONED,BY REVOCABLE TRUST for a Variance CONSENT to Section 4.4(b)of the Subdivision Regulations re recordation of a Subdivision Plat to construct a single- family dwelling at an adjacent parcel North of 3652 North Landing Road DISTRICT 7—PRINCESS ANNE J.2. ATLANTIC PARK INC.&THE APPROVED/ 9-0 Y Y Y Y Y A A YYYY CITY OF VIRGINIA BEACH CONDITIONED,BY DEVELOPMENT AUTHORITY CONSENT B (VBDA)for Street Closures re various rights-of-way for assemblage of Dome S Site property at: T a. Portion of South Side of 20'h Street between Pacific and Arctic Avenues A b. Portion of South Side of 20th Street between Pacific and Baltic Avenues N c. Portion of West Side of Artic Avenue between 19th&20th Streets E d. 19`h Street between Pacific and Artic D Avenue e. All alleys within the block surrounded by Arctic&Baltic Avenues and 19t°& 20th Streets DISTRICT 6—BEACH J.3. CSA VIRGINIA BEACH,LLC/ APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y FREEDOM LAND LINVESTMENT, CONDITIONED,BY LLC for a Modification of Conditions CONSENT re indoor recreation facility at 5070 Virginia Beach Boulevard DISTRICT 4—BAYSIDE (Approved September 6,2017) J.4. BURGER BUSTERS,INC./ APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y BALBOA,LLC for a Modification of CONDITIONED,BY Conditions re Special Exception for CONSENT Alternative Compliance to add decorative feature on building façade and extend drive-through hours at 2902 Pacific Avenue DISTRICT 6— BEACH(Approved May 1,2018) CITY OF VIRGINIA BEACH SUMMARY OF COUNCIL ACTIONS DATE:12/01/2020 PAGE: 4 B E AGENDA R ITEM# SUBJECT MOTION VOTE A L H W W B U E J R T I 0 B C D N O M O O L W 0 O C Y L NOUWS 0 T T HE E E S S E O O E T I R Y S S ERNDN J.5. LIFE IN HIS WORD CHRISTIAN APPROVED/ 9-0 Y Y Y Y A Y A Y Y Y Y MINISTRIES/JR MOULTON CONDITIONED,BY B FAMILY,LLC for a Conditional Use CONSENT S Permit re religious use at Indian River T Road,between 6620&6608 Indian A River Road,509 feet East of Sandra I Lane DISTRICT 2—KEMPSVILLE N E D J.6. BRANDON&SAMANTHA APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y HATHAWAY/BRANDON CONDITIONED,BY HATHAWAY&ET AL for a CONSENT Conditional Use Permit re outdoor recreation facility at 5025 Cullen Road DISTRICT 4—BAYSIDE J.7. ROSETTA DENISE CICONTA& APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y KYRUS-PERROS,LLC for a CONDITIONED,BY Conditional Use Permit re assembly use CONSENT at 2014 Atlantic Avenue DISTRICT 6—BEACH J.8. KENDYL TEAGUE/STEWART APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y INVESTMENTS,LLC for a CONDITIONED,BY Conditional Use Permit re beauty salon CONSENT 613 North Lynnhaven Road DISTRICT 5—LYNNHAVEN J.9. GREG S.HORVATH/GREG S.& APPROVED/ 10-0 Y Y Y Y Y Y A Y Y Y Y CAROLYN M.HORVATH for a CONDITIONED,BY Conditional Use Permit re home CONSENT occupation at 2321 Vaughan Road DISTRICT 7—PRINCESS ANNE K. APPOINTMENTS RESCHEDULED 10-0 BY C ON S E N S US 2040 VISION TO ACTION COMMUNITY COALITION CLEAN COMMUNITY COMMISSION COMMUNITY SERVICES BOARD GREEN RIBBON COMMITTEE HISTORIC PRESERVATION COMMISSION HOUSING ADVISORY BOARD INVESTIGATIVE REVIEW PANEL OLD BEACH DESIGN REVIEW COMMITTEE OPEN SPACE ADVISORY COMMITTEE RESORT ADVISORY COMMISSION SOUTHEASTERN PUBLIC SERVICE AUTHORITY TRANSITION AREA/INTERFACILITY TRAFFIC AREA CITIZENS ADVISORY COMMITTEE VIRGINIA BEACH COMMUNITY DEVELOPMENT CORPORATION CITY OF VIRGINIA BEACH SUMMARY OF COUNCIL ACTIONS DATE:12/01/2020 PAGE: 5 B E AGENDA R ITEM# SUBJECT MOTION VOTE A L B U E J R T I O BC D N OMOOL W O O C Y L NOUWS O T T HE E E S S E O O E T I R Y S S ERNDN CHESAPEAKE BAY PRESERVATION Reappointed: 10-0 Y Y Y Y Y Y A Y Y Y Y AREA BOARD Norbert Dreps David France Casey Jones June Barrett- McDaniels Michael Steier 3 Year Term 1/1/2021-12/31/2023 Appointed: Janie Young 3 Year Term 1/1/2021-12/31/2023 COMMUNITY SERVICES BOARD Reappointed: 10-0 Y Y Y Y Y V A Y Y Y Y Lori Bridges Joyce Harvey Carla Hesseltine Molly Trask Susannah Uroskie 3 Year Term 1/1/2021-12/31/2023 GREEN RIBBON COMMITTEE Appointed: 10-0 Y Y Y Y Y Y A Y Y 1 Y Brian Large 1 Year Term 12/1/2020—12/31/2021 HEALTH SERVICES ADVISORY Appointed: 10-0 Y Y Y Y Y Y A Y Y Y Y BOARD Jacqueline Cotton (Represents Health Care Provider) Unexpired Term Thru 3/31/2023 HISTORIC PRESERVATION Reappointed: 10-0 Y Y Y Y Y Y A Y Y Y Y COMMISSION Jennifer Brown Estes Sharon Felton Mac Rawls 3 Year Term 1/1/2021-12/31/2023 OPEN SPACE ADVISORY Appointed: 10-0 Y Y Y Y Y Y A Y Y Y 1 COMMITTEE Laurence Horvath 3Year Term 12/1/2021—12/31/2023 PUBLIC LIBRARY BOARD Appointed: 10-0 Y Y Y Y Y y A Y Y Y Y Kaitlin Burket Unexpired Term Thru 8/31/2024 RESORT ADVISORY COMMISSION Reappointed: 9-1 Y V V V V N A V V V V Keith Ireland 3 Year Term 1/1/2021—12/31/2023 I./M/N ADJOURNMENT 7:04 p.m. OPEN DIALOGUE 3 SPEAKERS 7:15 p.m.