What is TBID?

 In 1994, the State of California recognized that certain local areas may face economic disadvantages within their district and sought to provide a remedy whereby a fee could be levied therein to confer special benefits to its constituents, including but not limited to, costs related to business attraction and economic growth, i.e., funding collective advertising and marketing for tourism. Cal. Str. & Hwy § 36600, et seq. 

The solution was creating Tourism Business Improvement Districts ("TBID").  These TBID's were thereafter allowed to assess a fee or tax on restaurants and retailers in their area to benefit the hospitality and tourism businesses at large. Usually, TBID's are used to raise awareness of the destination area, sponsor special events that attract overnight visitors and increase the overall profitability of the area.

The assessment methods vary throughout California's various TBID's, but some common types assess a percentage of restaurants and retailers in the area based on a percentage of their gross revenue.  For example, a TBID may require a restaurant to pay 1.5% of gross revenue to a Chamber of Commerce each quarter (in addition to the restaurant's other obligation to pay its sales tax to the CDTFA).  Some restaurants and retailers have chosen to pass that TBID assessment on to their customers, and in some cases, the restaurant and retailer may have charged sales tax on top of the TBID assessment.