What is a BID? Why is it called BID? Does that stand for something?

A Business Improvement District (BID) is a geographical area or industry that decides to collect an assessment or a fee in order to fund the promotion of that business area or industry. This is what hotels use when they refer to their “TBID” or Tourism Business Improvement District assessment and we picked up the phrase from them.  A BID can include non-contiguous businesses within a large area (such as all wineries within the County).

 

The borders of Santa Barbara County delineate the boundary of the proposed district.

What is the Santa Barbara County Wine Preserve "BID"?

The Santa Barbara County Wine Preserve BID is a kind of business improvement district which is established to invest in individual winery businesses as well as the wider community of Santa Barbara County. The borders of the Santa Barbara County delineate the boundary of the district and wineries within it would raise funds through an assessment on tasting room and winery retail sales. ​

Why do we need it?

The Santa Barbara County wine industry has never been able to engage in the kind of marketing efforts we see in other wine regions. This disadvantage has meant we are often passed over by consumers heading to other wine regions whose advertising has a broader reach, such as Paso Robles, Napa or Sonoma counties.

 

While the Santa Barbara Vintners Association has worked valiantly over the years to promote the area, the organization loses money every year. The budget simply cannot keep up with the ambitions. To succeed as a wine region, it makes sense to establish a Wine BID assessment.

How will this benefit my winery, specifically?

The primary benefit to your winery will be an increase in traffic and sales. With more marketing dollars and events, the Santa Barbara Wine Region will be promoted more extensively than it ever has been before.

 

The Wine Preserve lasts for five years before it is renewed. This will allow the organization sustainable, reliable funding to engage in long-term marketing strategies that will gain momentum and reach every year.

How much is the assessment?

The assessment will be 1% on all winery and tasting room retail sales (Direct to Consumer) that also incur California Sales Tax. Assessed retail sales include; wine, wine club (CA customers only), food, tasting & tour fees, events and merchandise.

I understand it applies to sales in the tasting room, but does it apply to a sale that we are shipping to another location?
The Santa Barbara County Wine Preserve assessment will be applied to all sales that are subject to California sales taxes.
How did you decide on the 1% assessment? How did you decide on CA sales only?

Through meetings, conversations and a dedicated steering committee comprised of vintners, multiple proposed structures were sent to the Santa Barbara wine community to vote on their preferred model. The 1.5% assessment on On-Site Sales was voted most popular by our community by a slim 3% margin over the 1% structure.

 

When this structure was presented to the Santa Barbara County Board of Supervisors, it was strongly recommended that we establish an assessment structure that is 100% auditable. Due to this recommendation, we circled back to our original assessment structure but at 1% for all California DTC sales.

 

1% will bring in approximately $1.2 million. This budget is close to the neighboring wine region of Paso Robles. We have seen what they have been able to accomplish and while our efforts will not be identical, 1% puts us in the ballpark of marketing efforts in successful wine regions.

 

By linking the assessment to all CA retail sales, the Santa Barbara County Wine Preserve assessment can be audited against sales tax payments. We will be able to know when a business is not fully reporting and paying the assessment, which was a concern.

 

We are trying to create as little additional accounting and submission work as possible for the winery; tying the fee to sales tax helps accomplish this.

In other regions that have implemented a BID, have consumers complained about the additional fee?

Believe it or not, while there are sometimes questions, BIDs formed in other industries have reported that people do not complain about the assessment. These industries had similar concerns when they first implemented BIDs in their industries. For example, the SLO tourism district (hotel industry assessment district) shared that in the nine years they have had a BID, they have received NO complaints.

 

While we cannot predict how our consumers will respond, we know that people who travel, stay here, and subsequently join the wine club, are prepared to pay tourism prices and that typically includes assessments.

 

The other major point is that with the revenue, we will engage in more marketing than this area has ever experienced. The benefits of the marketing generated by the Santa Barbara County Wine Preserve will outpace any members who choose to leave the club. This is the most compelling reason to implement the Santa Barbara County Wine Preserve.

 

The cost is nominal for the consumer. We are preserving Santa Barbara County’s wine region for a penny on the dollar.

Will we be the first wine region with a BID?

Yes! Santa Barbara County would become the very first wine region in the world to implement a BID program to fund their wine region promotion. We have been contacted repeatedly by the press, are being considered for a business award for it, and are being carefully followed by other wine regions to see if we can accomplish this. The first Wine Country to achieve this will receive incredible accolades; you can’t buy publicity like that!

 

There are currently three other wine regions in close pursuit of the BID: Sonoma Valley, Dry Creek, and Temecula. Let’s get Santa Barbara County across the finish line first!

Does the BID fund the Santa Barbara Vintners?
The Santa Barbara County Wine Preserve Management District Plan requires us to designate an Owners Association to manage the funds. The Owners Association must be a non-profit organization, governed by those paying the assessment. The Santa Barbara Vintners meets the requirements to serve as the Owners Association, but it will convert to an organization that represents all Santa Barbara County Wine Preserve payors. The Santa Barbara Vintners can retain its name or can change it.  Once the Santa Barbara County Wine Preserve has been approved, all assessment payors will be voting members of the Owners Association, with one vote per winery. (Wineries are only weighted for the initial Santa Barbara County Wine Preserve approval process.)
Will vintners still have to pay membership dues?

No! All vintners in the County who pay into the Santa Barbara County Wine Preserve become de facto voting members of the new Owners Association. Once the Santa Barbara County Wine Preserve is passed, all wineries have equal voting rights, regardless of production size.

 

The organization will still have Associate Members, Vineyard Members, and Business Members, but all assessed wineries are automatically granted membership.

 

If the Santa Barbara County Wine Preserve is passed, we will have to charge dues for 2021 in order to keep operating the association; BUT, we will refund those dues later in the year when the assessment funding starts to be paid out.

What about dues wine? Will we still have to donate that?
Our “dues wine,” also known as “volunteer wine,” is used each year to power our incredible bank of volunteers, who help run our events. We will request a one-case donation from each winery in order to be able to contribute to local silent auctions, thank our volunteers, and give as gifts to VIP visitors. ​
So, this won't hurt sales/visitation in Santa Barbara County?
When other districts have been formed, they have not experienced a decline in visitors or business. 98% of all Business Improvement Districts are renewed. This success rate speaks to the satisfaction with the district and its ability to drive visitation for the member businesses.
Will other wine regions implement a similar district?
We expect this to happen. As mentioned above, BIDs are currently being explored by vintner groups in Dry Creek, Sonoma Valley, and Temecula. Because it is a reliable, sustainable, and significant form of funding for an industry, we expect the wine industry to discover and implement what the hotels have known for a while.
What other places have business improvement districts?
Throughout the state there are currently over 300 BIDs in operation, many are used for tourism promotion and many for business promotion. Other uses for BID’s have been for downtown and main street destinations, neighborhood districts, and for ski destinations. Notable destinations with BIDs focused on tourism and restaurant development include: Sacramento, Carmel, Long Beach, Palm Springs, and San Diego, as well as the Santa Barbara County Tourism Improvement District that supports the Santa Barbara County Visitors Bureau. ​
How will the district be established?
The district will be established under California’s Property and Business Improvement District Law of 1994. This law requires a thorough approval process beginning with the submission of petitions from the businesses that will be assessed in the district. In order to move to the next step in the process, we need to collect signed petitions from businesses that together represent over 50% of the projected assessment budget of the district. ​
Is this definitely happening or is it still up for debate? How will it ultimately be decided?
The passage of the Wine Preserve will ultimately be decided by the majority of the wine industry signed by petitions of owners representing over 50% of the total Wine Preserve budget. The submission of petitions allows the Board of Supervisors to consider Wine District formation. The district formation process is being managed by Civitas, the consulting firm who helps tourism boards and hotel districts implement BIDs.
How are the votes counted? Does each winery get one vote or is it based on sales?

It’s based on sales. Your vote counts as the percentage contribution you make to the whole budget the Santa Barbara County Wine Preserve generates. This is called a “weighted” vote.

 

To meet the petition approval threshold for our District, our petition support will have to reach right around $600,000 worth of owners’ support. The wineries with the greatest tasting room revenues will have a greater weighting because they contribute a larger percentage to the budget.

Do these weightings always stay the same? Are we ever equal?
Once the Santa Barbara County Wine Preserve is implemented, all wineries have the same voting rights under the Santa Barbara Vintners: one vote per winery, regardless of production size. Weightings are only used for the Santa Barbara County Wine Preserve approval process.
Do SBV members get counted automatically on the approving petition or do they have to specifically elect to be on the petition?

No, just because you are a Santa Barbara Vintner member does not mean you are automatically included in the Santa Barbara County Wine Preserve. Every winery in Santa Barbara County is eligible to support the Santa Barbara County Wine Preserve and has to indicate their support.

 

Each winery owner or a winery representative with the power to engage in contracts (General Manger, CFO, etc.) must sign a petition in support of the district to be counted.

 

Petitions will be distributed to SBV member wineries, and all non-member wineries will be contacted.

How do I sign the petition?

The petition is scheduled to be released in October 2020 after the County reviews the Management District Plan. We know this is right in the middle of harvest, which is terrible timing, it’s just the way it worked out.

 

When it’s ready, we will tell you and you will be able to download the petition here.

What happens after the petitions are signed?

Signed petitions are turned into the Santa Barbara County Board of Supervisors, which will initiate the official formation procedures during a public hearing. The Board will then adopt a Resolution expressing its intention to form the district and mail notices to all businesses to be assessed by the district. Those businesses will have at least 45 days to protest to the Board of Supervisors.

 

The Board of Supervisors will hold a public meeting and a public hearing to give businesses the opportunity to express their opinions. The Board can then adopt a resolution forming the district if no dissenting majority exists.

 

During the Public Hearing process, the Board of Supervisors will adopt a Resolution Requesting Consent to all the incorporated jurisdictions in the County to operate the Santa Barbara County Wine Preserve within their City Limits. The City Council from each jurisdiction will be asked to adopt a Resolution Granting Consent to the County to allow the district to operate within their boundaries.

Is the district established permanently?
No. The district will be established for a period of five years. After those five years, the district can be renewed, following the petition and hearing process again, for up to ten years. ​
Is there any way to undo a district?
Once per year, beginning on the anniversary of the Santa Barbara County Wine Preserve formation, there is a thirty (30) day period in which owners paying fifty percent (50%) or more of the assessment may protest and initiate a Board of Supervisors hearing on the Wine Preserve termination.
How will the district be managed?
The Santa Barbara Vintners will serve as the Ownership Association and be responsible for managing the Santa Barbara County Wine Preserve. Representatives of winery and wine tasting facilities, as well as grower and community businesses, will serve on a Santa Barbara County Wine Preserve Advisory Committee that will report to the Santa Barbara Vintners Board. This will ensure that district funds are spent on the most effective programs.
Is there a written document governing the district?

Yes. The district will function in accordance with a Management District Plan. The plan will be prepared by representatives of businesses paying the assessment during the district formation process. During the formation process the Management District Plan (MDP) will be shared with all wineries and will be on file with the County Clerk. The MDP will contain specific information like the assessment rate, collection, budget, and other activities to be funded. The Resolutions adopted by the Board of Supervisors will also contain these provisions.

What kind of oversight is there?
Every year, the SBV will be required to submit an annual report to the Board of Supervisors detailing the district’s budget and activities for the upcoming year. In accordance with the Ralph M. Brown Act, notice of meetings where district business will be discussed must be posted in advance. District records must be maintained in compliance with the California Public Records Act. In addition, the Santa Barbara County Wine Preserve Advisory Committee, which is made up of winery and tasting room representatives, growers, and community representatives will provide additional oversight and report to the businesses within the district.
Can the county keep the assessment money and use it for whatever they want?
No, the Santa Barbara County Wine Preserve is not a tax. The money raised with the assessment must be used in accordance with the provisions of the Management District Plan. The money cannot be diverted to the County’s general fund or spent for any purpose other than those given in the Management District Plan. The County may collect the money on behalf of the district but must pass it on to the SBV. The County may retain a small administrative fee for their collection actions.
How will the collection of assessments be enforced?
Once the district is formed, the assessment will apply to winery and wine tasting facilities, as designated in the Management District Plan. The assessment will be self-reported and collected by the County on behalf of the Wine Industry. Businesses may be audited to ensure compliance. Audit and penalty fees are applied to wineries found to be out of compliance.
How is the district advisory committee chosen?
The Advisory Committee will be chosen by application and vote of the members of the Owners Association.
What will the assessment be?

The assessment will be 1% of retail sales revenue occurring in a winery and tasting room within the boundaries of the district. This includes all retail sales to any customer of wine, tasting fees, touring fees, tasting experiences, food pairings and all merchandise. The assessment is anticipated to generate roughly $1.2 million for the wine industry.

How was the assessment amount determined?
We used competitive research and took into account a reasonable threshold for consumers. We then collected competitive data and gathered input from a range of wineries to generate an annual budget that supports the goals of the wine industry.
Santa Barbara County wines have achieved international recognition and the region is significantly more ambitious than there is funding to achieve.
This sounds like a tax, is it?

No. The assessment, unlike taxes, requires that those who pay the assessment specifically benefit from the assessments paid.  State law explicitly distinguishes taxes from assessments.

 

The district assessment will not go into a government fund. It will be returned to a non-profit corporation that will spend the money for the direct benefit of the assessed businesses.

 

Additionally, an assessment differs from a tax because it is requested and approved by the majority of the businesses that pay the assessment, rather than the general public.

 

Finally, there is 100% transparency on how the money is raised, where it is spent, and what the results are as an outcome of the assessment.

Are there limits on how money raised is spent?
There are very strict limits on how the funds raised can be spent. Funds must be spent on programs and activities that directly benefit the businesses paying the assessment – in our case, the Wine Industry – and are outlined in the Management District Plan. All BIDs in California are required to adhere to the Brown Act and the California Public Records Act for transparency. ​
What are you going to spend the money on?
It is a requirement of the law that all funds raised by the assessment specifically benefit those paying the assessment. The programs that are intended to be provided are sales and marketing programs, special projects (i.e. hospitality & sales training programs, special events, wine education and events programs, etc…), community organization programs (community engagement programs, community development initiatives, etc…), and destination product development initiatives.
What is the process for allocating the budget dollars?
Each year, the Santa Barbara County Wine Preserve Advisory Committee may make a recommendation to the Board of Supervisors through the Annual Report process to change the allocation of the dollars. Once the dollars have been allocated, sub-committees will recommend specific tactics and programs. The Santa Barbara County Wine Preserve Advisory Committee will review the recommendations made by subcommittees on how the dollars will be spent each year. The Owners’ Association’s Board of Directors will approve final budget based on recommendations made by both the Wine Preserve Advisory Committee and Subcommittees. There will be an annual review of expenditures and full financial audit by a third-party firm.
How can I be involved?
There are several ways to be involved. One is to nominate yourself for appointment to the district Santa Barbara County Wine Preserve Advisory Committee. Another is to join one of the sub-committees that will be formed to manage the programs the Santa Barbara County Wine Preserve funds. Your active participation is vital, as our success will depend on broad involvement from Santa Barbara County wineries.
Can the budget dollars be diverted to other uses within the organization?
Santa Barbara County Wine Preserve dollars may only be used for designated district activities and programs. There are very strict guidelines as to how the dollars can be used and they cannot be allocated outside the service plan.
How is effectiveness of the district measured?
The Management District Plan will identify key objectives and metrics for each strategic priority. Accountability reports including an Annual Report, Business Plan, Financial Reports and Marketing/ Economic Impact Reports will be developed and shared with all winery businesses within the district. ​
Will all the tasting rooms be disclosing the assessment, or will some be hiding it?

To keep things fair, all assessed wineries and tasting rooms will disclose to customers in advance that the assessment is levied throughout the boundaries of the Santa Barbara County Wine Preserve.

 

This means that every tasting room has a little sign or plaque that says something like: “1% of the retail sale of wine goes to promote and protect Santa Barbara County’s wine industry.” That way, everyone knows it’s happening and no one has an advantage.

 

You can pay the 1% yourself, incorporate it into the cost of your wine, or pass it on to the customer, but whichever way you choose, they will know it’s happening. (99% of businesses pass the assessment along to the consumer in one way or another.)

 

On some occasions – say, for VIP customers – you may choose to pay the assessment yourself, and that is your choice. But to keep things fair, all customers will know about the assessment.

How will this work with my POS system?

Currently, there are two options for collecting the assessment fees.

 

  • You can add a line to your receipt that says: Santa Barbara County Wine Preserve Assessment 1%, similar to the tax line.

 

For example, Orderport is able to add a line item for the assessment. This can be done by contacting their support team.  Their technical team will add an additional line item for the assessment.  Many other POS systems have similar solutions and Civitas is working on having instructions for all POS systems by the time the Santa Barbara County Wine Preserve is approved.

 

**Please note that any costs associated with adding the Santa Barbara County Wine Preserve to your POS system are reimbursable by assessment dollars.

 

  • The second way to collect the assessment is to incorporate it into the price of your wine. You would do this if you are unable to add the fee to your POS system. You might also prefer to do this for larger sales or for your CA wine club members.

 

Regardless of how you choose to collect the assessment, all tasting rooms will need to disclose that “1% of retail sales are assessed for the protection and promotion of the Santa Barbara County Wine Industry”. This ensures that consumers are not confused by some tasting rooms showing the fee on their receipt, and some incorporating it into the cost.

Can you detail out the annual sales info by splitting apart the DTC from over the counter tasting rooms vs. DTC via wine club shipments?

There is no ability to differentiate between certain types of sales in the available data. All sales revenue subject to sales taxes will be subject to the district assessment.

Will only members of SBV be subject to the Wine Preserve or will anyone selling within the county be subject to it?

Any winery selling in the County would be subject to the Santa Barbara County Wine Preserve. This is why the process is petition based. In order to pass the Santa Barbara County Wine Preserve, we need the approval of winery owners representing more than 50% of the district’s annual assessment to take the issue to the Board of Supervisors. At that point, because it is a county-wide assessment, the Board votes as to whether or not it should be implemented, but the entire wine industry has shown majority support.

Does this mean I am now a member of the Santa Barbara Vintners

Yes! If you pay the assessment, you automatically become a voting member of the Owners Association, currently known as the Santa Barbara Vintners.

What kind of records do I need to keep?
We will work with POS systems to make sure that adequate reporting is included as part of their services offered to the wineries. Record keeping will be very similar to sales tax revenue. ​
Would this only apply to wineries that are members?
No, the Santa Barbara County Wine Preserve is applied to the entire wine industry and, if successfully formed, the Santa Barbara Vintners will become the Owners Association working on behalf of all owners who pay into the assessment.
What is the collection and collection enforcement process?

To remit the Santa Barbara County Wine Preserve assessment, you would submit the assessment in a similar fashion as you would sales tax: you collect the assessments as they come in and then send them along to the appropriate party on a quarterly basis.

 

If the assessment is collected by the County, the County would collect the district’s assessments and forward the funds to the Owners Association.

 

The Owners Association could also use a third party to conduct Santa Barbara County Wine Preserve collections – as the County is currently saturated with numerous additional efforts – but the benefit of using the County to be the collector for our District is that the auditing process is relatively easy.

 

​If during the auditing processes, the County or third party collection agency finds that an assessed business has failed to submit the assessment, the late assessment will result in penalties and interest charged on delinquent amounts.

How can I help?

So glad you asked!! Some of our vintners are confused or worried about the Wine Preserve. Other vintners think it’s a fantastic solution to our long-standing problems. It has been incredibly helpful and reassuring to have people sit down with each other, peer-to-peer and talk it through.

 

If you are supportive of the Santa Barbara County Wine Preserve and think you might be able to help your peers understand the value of it, or even just give them some encouragement and reassurance, we would love your help! Equally, if you have concerns and want to talk to someone, email us and we’ll link you up with someone who can explain it.

 

The vintners association has suffered financial strain for years and never quite been able to keep up with the wine industry’s ambitions. We think this is a fantastic solution that will put us on the map and allow us to achieve.

Will the BID be the only source of funding for the Santa Barbara Vintners (Association)?

There are multiple sources of revenue for an association, the wine BID being only one of them. Others are: non-winery memberships, which might include vineyard, business, or hospitality members, for example; sponsorships, such as we have from Bank of Marin and Visit SB; grants, such as our CDFA grant; and event profits. The funds for the BID will be maintained separately from the other funding, much the same way we have to track the grant funding for a specific use. It is common for nonprofits to have multiple, dedicated funding streams. Funding streams are often used for dedicated purposes, such as marketing, advocacy, or education.

Who will make up the Board of Directors after the Wine Preserve is formed?

One idea for the transition for the Board leadership of this new Organization (which will have majority BID funding, and other funding sources, as well) is to comprise the new Board of 75% of the current Board plus 25% of new Members. In six-month increments, we will keep re-balancing the new organization’s Board to ensure continuity and stability. The current Board holds the vision and strategy for the creation of the BID, holding significant historical knowledge of its formation. It would be foolish to dissolve the current SB Vintners Board entirely. Assessed members will vote in new and future Board members to lead the decision-making process.

The Santa Maria Tourism District, Visit Santa Barbara, and Visit the Santa Ynez Valley have written the Santa Barbara Vintners a letter sharing their experience forming and implementing their BIDs. We are sharing their encouragement with you here!

22 August 2019

 

Allison Laslett, CEO
Santa Barbara County Vintners
597 Avenue of the Flags
Buellton, CA 93427

 

Dear Santa Barbara County Vintners,

 

We are excited to hear about your progress in creating a Wine Business Improvement District (BID).

 

Santa Barbara County is covered by three tourism-focused BIDs – one in Santa Barbara, one in the Santa Maria Valley, and one in the Santa Ynez Valley. These programs are funded by assessments that our hotel and lodging businesses collect for collective marketing of each region. Funds generated by these business-led assessments allow us to promote our communities to potential visitors in ways we would not be able to do otherwise.

 

While each BID employs its own unique strategies, we are all more effective at attracting visitors, placing stories in industry and consumer publications, and attracting influencers to pay attention to our offerings because of the funds provided by the BIDs. Because BIDs have a longer life than traditional annual “membership” models, the predictable nature of the funding allows us to pursue consistent strategies and reap benefits over time.

 

Our lodging owners welcomed the opportunity to expand their marketing voice, and participate actively in the leadership and governance of the BIDs. The BIDs allow our constituents to see the value of a unified effort, and they clearly understand that this allows them to be part of something much greater than anything they can individually achieve. It is important to note that two of the three BIDs have successfully renewed their charters beyond their first five-year authorizations and did so with overwhelming levels of support.

 

Additionally, we are not aware of a single instance in which a hotel has lost a customer due to the assessment.

 

We are excited that you will ‘own’ the enviable position of being the first wine region to successfully pursue a Wine BID. The publicity will be invaluable for all of us. And by taking on this visionary leadership role, SB Vintner’s will not only be an example for wine regions across CA, but across the country.

 

As you know, all three tourism BIDs have embraced our wine industry as a major focus of our tourism marketing. We are proud of the relationships we have built with many of your members and the work we have done together to promote our County and your industry. We are excited about the potential of how much more we can do together once the wine BID is in place and generating dedicated marketing funds.

 

We encourage you to take this step, as the lodging industry has done, and make the decision to create a wine BID – expand your marketing voice and positively impact your business, your industry and our region.

 

Cheers to your success,

STEERING COMMITTEE

 

The steering committee has been part of the Wine Preserve formation process since the beginning and is available to answer any questions you may have. Please feel free to contact them or call the Santa Barbara Vintners office and we will put you in touch with someone: 805-688-0881.

 

Callie Gleason: callie@gleasonfamilyvineyards.com
Stephen Janes: stephen@pencevineyards.com
Katy Rogers: Katy.Rogers@JFWmail.com

 

Alison Laslett, CEO: alison@sbcountywines.com

Letter from the Steering Committee
Media Information