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ROH: 06/07/16 <br />RESOLUTION NO. 2016 -034 <br />A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF <br />SANTA ANA TO ESTABLISH A HOTEL DEVELOPMENT <br />INCENTIVE PROGRAM <br />BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SANTA ANA AS <br />FOLLOWS: <br />Section 1. The City Council of the City of Santa Ana hereby finds, determines <br />and declares as follows: <br />1. Santa Ana's proximity to the Anaheim resort district, the John Wayne <br />Airport, and local amenities such as the Discovery Science Cube and the <br />Bowers Museum makes it a desirable location to attract incoming tourists <br />and visitors to Orange County. According to a study by PKF Hospitality <br />Research consultant, the average occupancy rate for Orange County <br />hotels is 78.3% and is indicative that additional capacity exists for the <br />development of new hotels in this area. <br />2. Santa Ana will need to strategically position itself to accommodate new <br />hotel development. By doing so, Santa Ana will have the potential to <br />create new jobs, spur economic development, and enhance the City's <br />revenue base. Currently, the City of Santa Ana does not have any four - <br />star rated or AAA (American Automobile Association) four Diamond and <br />above hotels. However, nine three -star rated hotels reside within City <br />limits. All other hotels and motels within the City are rated from one to <br />two - stars. A uniform rating system for star quality hotels in the United <br />States does not exist. Several websites and travel guides use the star <br />rating when ranking hotels. AAA has an independent rating system that <br />many hotels have been rated by. The City recommends the use of both <br />star and AAA diamond ratings for this incentive program. <br />3. The City currently imposes an 11 % Hotel Visitors Tax (HVT) on hotel and <br />motel guests. The purpose of this tax is to recover costs of governmental <br />services associated with nonresidents of the City. Since fiscal year 2011- <br />12, the City has experienced a 29 percent increase in HVT revenues and <br />are projected to exceed $9 million by year end 2015 -16. <br />4. To spur the development of high quality hotels (four to five star rated or <br />AAA Four Diamond or above), the City is recommending an economic <br />incentive to close the funding gap in a proposed high quality hotel <br />development. A feasibility analysis would be completed for the project, <br />whereby a projection of operating performance is combined with project <br />development cost in order to determine the funding gap. A financial firm <br />Resolution No. 2016 -034 <br />Page 1 of 9 <br />