AgdaPkt 2003-07-21 - Laserfiche WebLink

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A, I REPORT To the Honorable Mayor and City Council From the City Manager July 21, 2003 Subject Submission of Proposed Increase in Transient Occupancy Tax at the General Municipal Election of November 4, 2003 Recommendation Adopt a resolution placing a measure on the November 4, 2003 ballot calling for increasing the City's transient occupancy tax rate from 8% to 10 %; directing the City Attorney to prepare an impartial analysis with respect to the proposed measure; and authorizing the Mayor and Vice Mayor to sign the ballot arguments in favor of the measure. Background The transient occupancy tax (TOT), or hotel tax, was implemented in June 1978. Revenue generated by this tax has ranged from a high of $2.6 million in FY2000 /01 to $1.4 million in FY 2002/03 and is used to support general fund operations such as the Police Department, Fire Department, Parks, and Libraries. The current tax rate of 8% is charged to those occupying rooms for 30 consecutive calendar days or less and based upon the rent charged by the hotel or motel operators. If approved by the voters, this increase will bring the City of Redwood City inline with the TOT rates that are currently being charged by other cities in the bay area and provide a much - needed increase in revenues to the City's general fund. Of 19 cities recently surveyed, only five cities had TOT rates below 10 %. There are currently 18 hotels and motels operating in Redwood City generating TOT revenues for the city. The results of a survey taken in May 2003 can be viewed in attachment A. This matter was discussed and informally approved during the August 2002 Council budget study session. The funds generated by the TOT rate increase will be used to support the general governmental operations of the city. As such, the State Constitution requires approval by a majority of the voters at a regular election. The next regular election will be on November4, 2003. Alternative Should the Council elect not to place this measure on the ballot, TOT revenue on FY03 /04, will be $175,000 less than currently budgeted and future years revenues will be about $350,000 less per year than is projected in the City's five year financial projection. Fiscal Impact Without this revenue in FY 03/04 we will see an additional $175,000 deficit and $350,000 deficit in FY 04/05. We will be forced to either increase expenditure reduction or reduce the reserves by these amounts.