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V. BUDGL I AND SERVICES A. Annual Service Plan Assessment funds will be spent to provide specific benefits conferred, or privileges granted directly to, the payors that are not provided to those not charged, and which do not exceed the reasonable cost to the City of conferring the benefits or granting the privileges. The privileges and services provided with the TVTMD funds are sales, marketing, advertising, and promotional programs available only to assessed businesses. Administration costs that support the provision of the services are also allowed. A service plan budget has been developed to deliver services that benefit businesses throughout the District. A detailed annual budget will be developed and approved by the Owners' Association. The table below illustrates the initial annual budget allocations. Category Percent of Budget Dollar Amount Marketing 50% $911,000 Sales 95"4, S455,500 Administration 18% $327,960 City Collection Costs 2 536,440 Contingency/Renewal 5% $91,100 Total Annual Budget 100% $1,822,000 Although actual revenues will fluctuate due to market conditions, the proportional allocations of the budget shall remain the same. However, the VTV board shall have the authority to adjust budget allocations between the categories by no more than fifteen percent (15%) of the total budget per year. For instance, the sales item could be reduced by 15% of the total budget (from a 25% allocation to a 10%allocation) and the marketing item could be increased by 15% of the total budget (from a 50% allocation to a 65% allocation); no other changes could be made because this is a 15% adjustment. A description of the proposed improvements and activities for the initial year of operation is below. The same activities are proposed for subsequent years. In the event of a legal challenge against the TVTMD, any and all assessment funds may be used for the costs of defending the TVTMD. Marketing The marketing program will be designed to raise awareness of assessed lodging businesses as overnight venues,using both digital and traditional channels. Marketing programs may include: • Generating media coverage for assessed businesses by hosting journalists, pitching media stories, and writing press releases • Partnerships with national and international travel organizations to benefit assessed businesses • Participating in press trips with partners,including Visit California and SF Travel, to increase coverage of assessed businesses as overnight venues • Developing and expanding social media promotions for assessed businesses, including Facebook,Twitter, Instagram,and Pinterest • Creating cooperative marketing opportunities for assessed lodging businesses . Management District Plan 8 April 21, 2015