HomeMy WebLinkAboutAgenda Bill 4E 06/21/2010 l
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DATE: June 21, 2010
TO: Honorable Mayor and Members of the City Council
FROM: John C. Brown, City Manager
SUBJECT: Discussion. and Possible Direction to Prepare for Submission to the Voters of a
Ballot Measure Relating to an Updated City's Transient Occupancy Tax.
RE C ®1VIIVIENDA'I'ION
It is recommended that the City Council discuss and provide staff with appropriate direction
regarding preparation for submission to the voters of a ballot measure relating to updating the
City's Transient Occupancy Tax.
BACI£GROUND
Background and discussion regarding this subject were provided in the staff report included in
the agenda package for the Council's May 17, 2010 meeting (Attachment 1). The agenda item
was not considered at that meeting but was moved instead to the June 7, and subsequently to the
- June 21, 2010 meeting, to allow for additional staff work prior to Council consideration. In the
brief discussion that accompanied delaying consideration of the item on May 17`h, staff was
requested to address in subsequent agenda material: Constitutional and statutory requirements
regarding the placement on the ballot of special and general purpose taxes by local governing
bodies; and how Municipal Code Section 4.24.200 regarding the uses of the proceeds of the
existing Transient Occupancy Tax' (TOT) affects whether an increase is treated as a general or
special purpose tax.
DISCUSSION
At its June 7, 201.0 meeting, the Council authorized me to execute an agreement with the
Petaluma Downtown Association (PDA) to provide Visitor Center services and to operate the
Visitors Program. That .agreement will provide a minimum level of funding of $140,000 per
year to the PDA for the contract period, based on current TOT estimates, with provision to
increase funding to $169;000 if revenues from this source improve. As indicated in the May 17,
2010 staff report, increasing the TOT could help to provide additional financial support for the
Petaluma Visitor's Program, and to offset the City's costs to support events that promote
Petaluma. Staff met with the PDA Board in late May, to discuss the proposal to increase the
TOT and to answer questions. After considering that information; and meeting with
representatives of the lodging industry, the PDA Board has decided that it does not support
Agenda Review:
Dept. Director/ _ City Attorney Finance Director_i~ City Manag
increasing the TOT rate. The PDA's position is consistent with that of the local lodging
industry, and the Board of Directors of the Chamber of Commerce. Supporting correspondence
is provided as an attachment to this report.
Regarding the questions posed at the Council's May 17, 2010 meeting:
State Constitutional and statutory requirements related to tax measures and pertinent to this
discussion are found in Article XIIIC, Sections 2 (b) and (d) of the State Constitution, and in
California Government Code Sections 53724 (a) and (b). Government Code section 53724(b)
provides that prior to placing a measure on the ballot to impose or increase a general tax, the
ordinance or resolution proposing the tax must be approved by atwo-thirds vote of all of the
members of the legislative body. A two thirds vote of the Council is comprised of five
members. To then become effective, the proposed general tax must then be approved by a
.simple majority of the electorate. (Cal. Const., Art. XIIIC, Section 2(b).)
Government Code Section §53724 imposes no special voting requirement on adoption of
resolutions and ordinances for presenting special taxes to the voters. Therefore, the City Charter
rules for approval of resolutions and ordinances apply to City Council resolutions or ordinances
for presenting a special tax to the voters. Article VII, section 42 of the City Charter requires a
simple majority of the Council members present to approve ordinances and resolutions. -This
would require the vote of four members if six or all seven are present, and three members if four
or five members are present. To then become effective, the proposed special tax must then be
approved by atwo-thirds vote of the electorate (Cal. Const., Art. XIIIC, Section 2(d).
Based on the forgoing, a simple majority vote of the Council members present, (as long as a
quorum of at least 4 are present) is sufficient to place a special tax on the ballot; atwo-thirds
vote of the entire Council membership is necessary to place a general tax on the ballot.
The TOT is provided for in Municipal Code Chapter 4.24. Section 4.24.220 addresses
disposition of revenues and provides:
"All fees and revenues collected pursuant to the authority of this article shall be used for
such promotional purposes as the council shall find will contribute to the growth,
enlargement and prosperity of the city and will forward, encourage, advance, help, aid
and assist in the growth, enlargement and prosperity of the city. The moneys collected
hereunder by the city shall be used only for the purposes as set forth in this section, and
the city may place the moneys collected in a separate fund earmarked only for the
purposes as set forth in this section. (Ord. 787 NCS §2: prior code §23.27.)"
It appears that the TOT has been historically treated as a general tax, although section 4.24.220 is
not completely clear regarding certain aspects of the tax that could affect its status as a general or
special tax. Section 4.24.220 clearly permits a broad range of uses that will contribute to the
City's prosperity. As well, it has been the City's past practice to use a portion of the tax proceeds
to fund general activities that support City prosperity, and to allocate tax proceeds to diverse
non-profit entities in the City for various purposes that benefit the City. This appears to be
consistent~with the TOT being a general tax. At the same time, the language of section 4.24.220
indicates that the TOT proceeds may only be used as prescribed in the section, notwithstanding
the broad latitude the section appears to afford the Council in allocating the tax proceeds. The
main legal considerations for determining whether a tax is a general or special tax focus on
whether-the tax proceeds are placed in the general fund, and. whether the proceeds are legally
earmarked for a specific purpose. Petaluma TOT Proceeds have been deposited in a special
revenue fund, and either disbursed directly from the special fund, or transferred to the General
fund. The City Attorney's office has suggested that if a measure is to be submitted to the voters
to provide for an increased tax, the language governing disposition of proceeds should be clear
so that the intended status of the tax under existing law is unambiguous.
Staff is available prior to, or during your June 21, 2010 meeting to answer any further questions
the Council may have.
FINANCIAL IIVIPAC'I'S
Based on current collections, each percent increase in TOT could be expected to generate
approximately $110,000 in new revenue, or approximately 220,000 if the TOT were increased by
two (2%) percent. Placing this matter on the ballot will generate elections costs ranging from
approximately $8,000 to $15,000. City and legal staff costs are not expected to exceed $7,000.
None of these funds are currently budgeted.
AT'TACIIIVIENTS
1. May 17, 2010 staff report
2. Correspondence -
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DATE: May 17, 2010
TO: 'Honorable Mayor and Members of the-.City Council
FROM: John C. Brown, City Manager
SUBJECT° "Discussion aril Possible~Drection to Prepare for"Submission to the Voters of a
:Ballot Measure Relating to an Increase in the City's Transient Occupancy Tax
(TOT).
RECOMMENDA'I'lON
. It is recommended that the City Council discuss and provide staff appropriate direction regarding
preparation for submission to the voters of a ballot measure relating to amending the City's
Transient Occupancy Tax (TOT) to increase the tax.
BACKGROUND
' The City assesses a Transient Occupancy Tax .(TOT) on persons lodging for periods of thirty
consecutive calendar days or less in hotels, motels,. and campgrounds. The tax is assessed to the
paying. guest, and is collected by the lodging operator. The current rate is 10 percent of the rent
charged by the operator. The Council .has broad latitude concerning allocation of the tax
proceeds,. and may use revenues from this source for.such,promotional.pvrposes as it finds will
contribute to, forward, encourage, advance, help; aid and assist in the growth, enlargement and
prosperity of the City. City Councils, have supported these purposes by allocating TOT proceeds
to the Petaluma Visitors Program. and,to other non-profit organizations whose activities promote
and: encourage tourism. Councils. have also supported these. purposes by allocating TOT to City
departments, whose services directly or indirectly support tourism and promotion and aid and
assist in the :growth, enlargement and prosperity of'the City.
An:assessment of two (2) percent of the. rent charged' by fhe lodging operator is also collected,
and conveyed to the City. This assessment is charged pursuant to a Tourism Business
Improvement Area formed by the County of Sonoma in 2004, participation within which was
approved by the majority of cities in the. county, including Petaluma.. These monies are
forwarded. to the ,county,. and are used to .fund activities of the Sonoma County Tourism Bureau.
In Petaluma, these two charges total twelve (12) percent on the rent charged by the lodging
operator. In past years, the City has generated as much. as $1.48 million on the 10 percent it
charges and retains, from the seven lodging establishments located in the City. Current TOT
estimates are approximately $1.1 million for FY 2009-10, and FY 2010-11. At this.level of
Agenda Review:
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Dept. Direct `~~City Attorney, Finance Director % 1L,~ City Manages-
collections, each ,percent of TOT levied .generates approximately $110';000. Attachment ]
provides a summary of'Petaluma's TOT collections for FY's;2000-01 through 2009-I0.
Attachment 2 ~provi'des a summary of the TOT rates charged'. by California cities as of August,
2009'.
Earlier this year the Council discussed options for`inereasngrevenues as an alternative to
.decreasing expenditures.. With respect to creating new revenue options; the most focus was
placed on increasing the TOT, due to: recent decreases in the proceeds :from .that revenue source
and its corresponding effect on funding for the .Petaluma Visitors Program,. and City support for
• parades and, special events. that similarly promote tourism in the City and the City generally. The
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Council .made. no~~decision in Ghat-regard, but asked rather-that: the matter be brought back for
further consideration within a timeframe that would facilitate: placement of a measure on the
November 2010 ballot.•
DISC>[:TSS°ION:
This item;is .placed. on the agenda to provide for further consideration of amending the City's
TOT ordinance to increase the -tax.
Although the Council did not: define a specific percentage, a: conceptual, increase of two percent
on the existing rate -was briefly :discussed. Staff was requested to .identify the amounts that could
be obtained from. various percentage increases. Amounts to be generated would be based on
fractions or multiples ofthe $.11,O,Q0,0 per-percent amount. discussed in the Background section
(i.e.: ''/z percent. increase equals $55.;000, one percent equals $ l 1~Q,000; two percent equals ~
$220,000., etc:).
Based on current estimates, a two percent; increase would. generate: approximately $220,000 :per
year.. 'With the addition of at least one new'hotel, and economic recovery, it is reasonable to
expect'in the short term that fwa percent could generate. approximately $300000 per year.
TOT collections have decreased in the economic downturn, o that the City is collecting
. approximately $370,000 ess than n,2007-08. Because of that reduction, funding.for- a variety of
not-for-profit ;activities, such as Butter and Egg Days and the Veteran's Day parade was
temporari?ly eliminated. The .only entity currently receiving TOT funds, besides .the G.ty, is the
Petaluma Visitor's Program. In th'e past,-this program received=as much as $3.72,,000..:. In 2007-
08 it received $290,000. It is expected to spend, approximately $100,000 in FY 2:009-10.
As indicated, the TOT ordinance provides the Council broad .discretion to use proceeds for such
purposes as ~it find's. will contribute to the growth, enlargement. and prosper-ity of t_he City, If a
TOT increase were approved, the resulting :revenue could. be used to support the City's costs
associated with Butter and_Egg. Days and the Veteran's Day parade, and to fund the activities of
the Visitor's. Program.. The two events and the Program bring in thousands of visitors and
potential lodgers to town: Assuming proceeds of approximately $220,000, estimated. support
costs for Butter and'Egg 'Days of approximately $26,000 and estimated support costs of
approximately $ 1,500 for the Veteran's Day parade, support for the. Visitor's program could be
'Information compiled by CaliforniaCityFinance.com fiom State Controller,'s data.
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nearly: doubled from the existing, level. It would also free up apprgximately $1°.20;000
programmed in 2010-11 for the Visitors Center to 'other uses. While funding these activities is
desirable;. formally d'e'dicating an 'increase to only these uses. by .ordinance is not recommended.
The Council may at. sorne'pomt'want to ::fund other similar activities that could also increase
vi'sts to and stays in.Petaluma.or otherwise contribute to the City's-prosperity. Also;
. legislatively restricting TOT proceeds to such specified uses would most likely at least. partly
transform the TOT into a special tax subject to '66-2/3%, voter apprb~al requirement, 'which :may
be difficultto obtain.
I have, in the past, and'recently,, discussed a potential TOT increase with .representatives of our
' lodgin"g",operators, tthe Chamber- of Commerce and-the Petaluma-Downtown-Assocation,-for the
purpose of understanding how an. increase might be structured..I have not found support for
increasng the TOT; as it is viewed as defracting from~Business~' ability to attract visitors.
Hoteliers,. in particular, indicated that. increasing the TOT requires'they must either increase their
rates accordingly, reducing. their competitiveness with operators in other communities who either
collect a']ower TOT or who have recently' cut, rates, or they will need to absorb increases at a
time when they are cutting back on expenses. Repr_.esentatiwes of these groups have suggested
that City investment in the Visitors program is: snore desirable .than increasing. the TOT.
However, i:rnvestment beyond the amount. noted'. earlier in this report is not possible; without
further reduction of the City's budget and to City services.
Staff checked .the rates advertised.. on the websites of each of our lodging operators for weekdays
and weekend days, and found "rates ranging' from $39.50 to $319 per night: That review was by
no means exhaustive. It did not examine seasgnal fluctuations; special promotions,, or rates
available through otherinternet booking sites. Staff s review~shou_ld, however;~sufficently
identify the potential. impact :of a 2 ;percent 'increase in the TOT. It would;: based on the forgoing,
result in increases ranging from 7.9.' cents. to $6_.3 8 per night. On apes-percent basis., each percent
would raise ratesfrom 40 cents to $3.19 per night; assuming -the operator chose, to pass the.
increases on to the customer:
While'tliey did not support increasng,the TOT, discussionswthlodging operators .did identify
options. associated with an increase that would be viewed as Tess undesirable. These are:
dedicating the proceeds to-tourism., or the Visitors Center; and settng.a sunset for the increased
amount.: As previously indicated; 1'egislafiuely dedicating these funds to specific purposes is not
' recommend'ed'. Establishing ~asunset date; such-as a sunset date tied to term of the Visitor's
`Center agr,;.eement, or aaunset tied'to a revenue generation target, are options the Council should
consider., In~particular;, the option of setting the onset in relationship to a revenue targetmay be
appropriate if this increase is viewed as a means of supplementing existing revenue shortfalls
until such. time,as the economy improves and TOT revenues recover to previous collection
bevels. A target,'of at least $'1 ,5`' million a year'is suggested if the Council supports this option.
Direction is sought for: the present time as to whether the Council will direct staff to prepare a
measure:relatirg to increasing, the TOT for submission to-the, voters, and if so, at what:rate of
increase, and with what associated provisons:'The Council. should consider an increase of at
least.two (2) percent; to generate. revenues sufficient to increase local promotion activities.
• If Council directs staff to proceed'; the intention would. be to return "at the 'Council's Tune 7, 201•:0
meeting'with a resolution ordering -for submission to the voters a measure amending the City's
transient occupancy tax ordinance and increasing the Transient Occupancy Tax .and. providing for
submission oflallot argument and rebuttals, '.for the Council's further consideration.
FINANCIAL IMPACTS':
As indicated, each:percentincrease:in tlae TOT,is estimated to.generate, based on current:
collections, approximately $;l 10.,000. Election. costs associated wi"th the increase, based' .on City
Clerk esfrnates~ range from. approximately '$$;0;00-$ l:S;,000' for placing this matter on the'. .
Novemberballot,.:based on.the;amount.,ofspaee_fhe Cty'.s..:i'tems take up,.on-the,sample-ballot.
These costs are not currently'incl'ude`d in the proposed,budgefi for 2:0:10=11, and: would be
provided by shifting funds from other accounts. Staffing and'legal costs are not expecfed to .
exceed $7,00,0.
ATT.ACII'M~E'NTS
1, TOT Revenue by -Year
2. TOT Rates for CaTforra Cities
i
'TOT REVENUE BY YEAR'
2008-2009
2009-2010
CITY OF PETALUMA
ATTACHMENT 1
6/3D/2009 $ 336,119 $ 1,305,969
9/30/2OD9 $ 403,133
12/31;/2009 $ 237,.5.66
3/31/2010 $ 185,020
6/30/201..0 $ - $ 825,,719 (75% Reported)
MAY 13, 2010
r_ 'Transoent ®cc~pancy Tax Rates - Cal~~ Citoes
' Source: Computations by GaliforriiaCityFinance.com from State Controller data.
Rev
Aug 15, 2009
Count 427
Mean 9.5%
Stahdard Deviation 1.7%
Median 10.0%
Miriimum 3.5%
Maximum 15:0%
,!
53 cities with no TOT
Clty COUllty Rev
Aug Y5, 2009
Anaheim Orange 15.0%
Beverly Hills Los Angeles 14.0%
Inglewood Los Angeles 14.0%
Los Angeles Los Angeles 14.0%
San Francisco San Francisco 14.0%
Santa Monica Los Angeles 14.0%
Palm Springs Riverside 13.5%
Del:Mar San Diego 13.0%°
Garden Grove Orange 13.0%
Mammoth Lakes Mono 13.0%
Barstow San Bernardino 12.5%
Pasadena Los P,ngeles 12.1 %
goura Hills Los Angeles 12.0%
Alhambra Los Angeles 12:0%
Avaidn Los Angeies 4.2.0°/a .
Bakersfield Kern 12.0%
Bedieley Alameda 12.0%
Buena Park Orange 42'.0°/d
Calabasas Los Angeles 12.0%
Calistoga Napa 12:0%
Citrus Heights Sacramento 12.0%
Commerce Los Angeles 12.0%
Culver City Los Angeles 12.0%
Desert Hot Springs Riverside 12,0%
East Palo:Alto Sam Mateo 12.0%
Elk Grove Sacramento 12.0%
'Emeryville Alameda 12.0%
Fresno Fresno 12.0%
Half Moon Bay San Mateo 12.0%
Hawthorne Los Angeles 12.0%
Healdsburg Sonoma 12.0%
Kirigsburg Fresno 12:0%
Long Beach Los Angeles 12':0%
Malibu Los Angeles 12.0%
Monterey Park Los Angeles 12.0%
Napa Napa 12.0%
°ato Alto Santa Clara 12.0%
,rancho Cordova Sacramento 12.0%
Rotinert Park Sonoma 12.0%
Sacramento Sacramento 12.0%.
SOURCE: Coleman Advisory Services
compuations using State Controller reports
CalifocniaCityFinance.com .
ATTACHMENT
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" Saint Helena Napa ~ 12.0%
San Juan''Bautista Sah.Benito 12.0%
San Pablo Contra `Costa 12.0%
Sahta Baebara Santa Barbara 12<.0%
Sausalito Marin ~ 12.0%
Seaside Monterey 12.0%
Solana Beach San!Diego 12.0%
West Sacramento Yolo 12.0%
Windsor Sonoma 12.0%
Yountyille Napa 12.0%
Ontario San Bernardino 1.1:8%
West Hollywood Los Ahgeles 11.5%
Cathedral City Riverside 1'1.0%
Gardena Los Angeles 11:0%
La Quinta Riverside 11.0%
Oaktahd Alameda 11'.0%
Riverside Riverside 11.0%
Sahta ,4na Orahge 11.0%
Torrance Los Angeles 11.0%
Vallejo Solanb 11.0%
San Diego San Diego 10.5%
Adelanto San Bernardino 10.0%
Alameda Alameda 10:0%
Albany Alameda 10.0%
Alturas Modoc 1A.0%
American,Canyon Napa 10.0%d
Anderson Shasta 10,0°/d
Angels Calaveras 10,0%
Antioch Contra Costa 10.0%
Arcadia Los Angeles. 10.D%
Arcata Humboldt 10'.0%
Arroyo*Grande Obispo 10'.t)%d
Arvih Kern TO`.0%
,4tascadero Obispo 10:0%
Baldwin Park Los Angeles 10,0%
Beaumont Riverside T0.0%
Belmont Sah Mateo 10.0%
Blythe Riverside 10.0%
Brea Orange 10.17%
Brentwood Contra Costa 10.0%
Brisbane' San.Mateo 10.0%
Buellton Santa Barbara 10.0%
Burbank Los Ahgeles 10.0%
Bu~lingame San Mateo 10.0%
Calexico )mperal 10.0%
Calimesa Riverside 10:0%
Campbell Santa ,Clara 10.0%°
Canydh Lake, Riverside 10:0%
Cap"itola - Santa Cruz tOSO%
Carlsbad San Diego 10'.0%
Carmel Monterey 10.0%
Garpiriferia Santa Barbara 1't):b%
Chico Butte 1.0:0%
Chino Flills San Bernardino 10:0%
t
SOURCE: Coleman Advisory Services
cdmpiiatiohs using State Controller reports CaliforniaCityFinance.com
r
r
,.
Chowchilla Madera ~ ] Oa)%
Chula Vista San Diegd 10.0%
~la~emdnt Los Angeles; 1.0.0%
Cloverdale Sonoma: 10,0%
Clovis Fresnd 10v0%
.Colton San Bernardino 10.0%
Concord Contra,Cosfa 10.0%.
Corning Teliama 10.0%
Corona., ,Riverside 10':0%;
Corte Madera Morin 10.0%
Cotati Sonoma 10.0%
Covina Los Angeles 10,0°10
CrescenYCty Rel tJorte 10.0°/d
Cupedino _ Santa Clara 10:0%
Cypress Orange 1,0:0%
Daly'City ~ San Mateo .10.0%
.Dana Point '
~ Orange 10.0%
DaJis Yolo 10.0%
Del"Rey~Oaks ~M'onte~ey 10.0%
_
Deland . _._--
Kern
10.0%
Diamond ,Bar LosiAngeles 10.0%
binu~ba Tulare 10.0%
Duarte Los Angeles 10.0%
Ddnsmuir SiSkiyoQ 10.0%
EI Cajon San Diego 10.0°1°
Eh Centro .Imperial 10.b%
FI Cerrito . Contra Costa 10:0%
cl Monte Lds Angeles '10.0%
EI Paso De Robles ' Obispo; 10.0%
Encinitas San Diego- 10.0%
Escalon San Joaquin 10.0%
Escondido San,Diego 10:0%
Eureka , Humboldt T0.0%.
Fairfax M1ilarin 10.0%
Fairfield Solano 10.0%
Fillmore .Ventura 1D:0%
Fort Bragg Menddcind 1,0.0%
Fortuna Humboldt 10.0°/a
Fremont. Alameda 10.0% '
Fullerton Orange 10.0%
Galt Sacramento 10.0%
Glendale LosAngeles 10.0%
Goleta `Santa Ba~6ara, 10.0%
Grass Valley "Nevada 1 O.l)%
GFover City Obispo 10.0°l0
Hemet Riverside; 10:0%
Hercules 'Contra Costa T00%
Hermosa Beach Los Angeles- 10a)%
Hesperia. San.Bernardno 10,0%
Huntingtdn Beach Orange 10.0%
Imperial Beach 'San Diego 10.0%
ndio Riverside 10.0%
Isletdn: Sacramento 10.0%
Jackson Amador 10:0%
SOURCE: Coleman Advisory Services
cdmpuations using State Controller reports GallfornlaCltyFlnanCe.aom
~~
King^Cty Mohtereyy 1O,1)%
La _N1esa San Diego 10.0%°
La Puehte Los Angeles 10.0%
La Verne Los Angeles 10:0%
_Laguna Beach Orange. '10.0%-
Laguna Hills Orange: 1'030%
Laguna Woods Orange 10.0%~
Lake Elsinore Riverside: 10':0%
• Lake;Forest Orange 10.0%
Lakeport. Lake 10:1]%
Larkspur Matih 1'0:0%
Lincoln Placer 10:0%
Loma'Linda Sari Bemardiho 70'0%
Lomita Los Angeles,,. ,, „ ' 70:0%, ,
Compdc Santa, Barbara ' 1 q.t)%
Los Altos Santa Clara 10.0%
.Los Banos ~ Merced' 10.0% ,
Los Gatos Santa Clara '10:0%
Manhattan Beach Los Angeles 10.0%;
Nlaricopa Kerh 10.0%
Marina Monterey 10.0%
Martinez Contra Costa 10:0%.
Marysville Yuba• 1A:0%
Menifee Riverside. 10:-0%
Menlo Park San Mateo 10:0%
Merced ~ Merced• 1'0:0%
Milf Valley Mariti 10:0%
Millbrae ' San Mateo 10.'0%
Milpitas -' Sahta Clara 10:0%
Mohtovia Los Angeles 10.1)%
Mon4clait San Betnardino 70:0%
Montebello 'Los Angeles 1'0.0%°
Monterey Monterey 10:0%.
Moorpark Veritura 10.0%
Morgan Hill Santa Clara 1.0.0%
Morro Bay Obispo 10.0%
MounY'Shasta Siskiyou 10;q%
MoUhtairrView Santa Glara 10.0%d
Murrieta Riverside: 10.0%
Natiohal City San l7iego. 1D.0%
Needles San Berhardiho 10.0%
Nevada. City fVe4ada: 10 ;0%
Newark Alameda 10.0%a
Newport Beach Orange 10.0%
Norwalk Los Angeles ,1.0.0%
Novato Marini` 70.0%
Oakley Contra Costa 10.0%
.Oceanside Sari Diego 10,0%
.Ojai Ventura 10.0%
Qrange O~ahge 10.0%
Orinda Coht~a Costa 10.0%
Orland Glenn 10.0% •
Oxnard Ventura 1-0.0%
Pacific Grove Monterey 10.0%
,~
SOURCE: Coleman Advisory. Services
compuations using State Cohtrolle~ ieports CalifocniaCityFinance,com,,
- ~3
Pacifica San Mateo 10:0%
Palmdale LosAhgeles '10.0%
''Paradise Butte 10.0%
Paramdunt Los Angeles 10 0%
Perris Riverside 10.0%
Petaluma Sonoma 10.0%
Pico Rivera Los Angeles 10.0%
Pinole Contra Costa T0.0%
Pismo Beach Obispo 10.0%
Placentia Orange 1:0.0%
Placerville EI Dorado 10:0%
Pleasant Hill Contra Costa 10:0%
Fbiht Arena Mendocino 10.0%
Pomona ~ Cds Angeles 10.-0%
Port Hueneme Ventura 10.0%
Poway San Diego 10.0%
Rancho Cucamonga San Bernardino •=10:0%
Rancho Mirage Riverside 10.0%
Rancho Palos Verdes Los Angeles 10.0%
Red Bluff Tehama 10.0%
Redding Shasta 10.0%
Redlands San Bemardino 10.0%
Redondo Beach Los Angeles 10.0%
12edwood City San Mateo 10.0%
Richmond Contra Costa 10.0%
Ridgecrest Kern 10.0%
Rio Vista Solaho 10.0%
,2ipon San Joaquin 10.t)%
Rolling Hills Estates Los Angeles 10.0%
Rosemead Los Angeles 10'.0%
Salinas. Monterey 10.0°/v
San Bernardino San Bernardino 10:0%,
San Bruno San Mateo 10.0%
San Buenaventura Ventura 10.0%
San Carlos San Mateo 10.0%
San Clemente Orange 10.0%
San Gabriel Los Angeles .10.0%
San Jose ~ Santa Clara 10.0%
San Juan Capistrano. Orange 10'.0%
San Leandro Alameda 10:0%
San Luis Obispo Obispo 10:0%
San Marcos San Diego 10.0%
San Mateo San''Mateo 10,0%
Sari Rafael Marin 10.0%
Santa Clarita Los Angeles 10.0%
Santa Cruz Santa Cruz 10.0%
Santa Fe Springs Los Angeles 10.0%
Santa Maria Santa Barbara 10.0%
Sahta Paula Ventura 10.0%
Saratoga Santa Clara 10.0%
Scotts Valley Santa-Cruz 10.0%
Sebastopol Sonoma 10.0%
Shasta Lake Shasta 10.0%
Simi Valley Ventura 10.0%
SOURCE: Coleman Advisory Services
compuations using State Controller.reports CaliforniaCityFinance.com
l
Solvarig
Santa Barbara ...
10:0%
Sonoma. Sdnoma ~ T0,0%
South-Lake Tahoe EI Dorado 10':0%
SusanJille Lassen 1'0:0%
Taft Kern 1'0.0°/d
Temple City Los Angeles 10.0%
Thousand Oaks Ventuta 1'0.0%
Tiburon Marin 7,0.0%
Tracy San Joaquin 10.0%
Truckee Nevada "10:0°/d
Tulare Tulare 10:0%
Ukiah Mendocino 10:0%
Union City Alameda 10.0%
Upiand San Bernardino„ 10;0%
Visalia Tulare 10:0%
;Vista Sah Diego 1`0:0%
Watsonville Santa Cruz 10.0%
Weeii Siskiyou 10.0%°
West Covina Los Angeles 1'0.0%
Westlake Village Los Angeles 10.0%
Westmorland Imperial 10,0%
Wheatland Yuba 10.0%,
Whittier l_osAngeles 10:0%
Wildomar Riverside 10'.0%'
Williams Colusa 10:0%
Willows Glenn 1,0.0%
Winters Yolo 10:0%
Woodland Yolo T0.0%
Yorba Lihda Orange 1i):0%
Yreka Siskiyou 10:0%
Yuba City . Sutter 1'0:0%
Lafayette Contra,,Costa. 9.5%
Santa Clara Santa Clara 9:5%
Sunnyvale Santa Clara 9.5%
Indian Wells Riverside 9.3%°
Bellflower Los.Angeles 9.0%
Beriicia Solano 9.0%
Bishop lnyo 9.0%
Camarillo Veritura 9.0%.
Carson Los Angeles; 9^-0%
Clearlake ~.
Lake ~
9:0°/d.
~
Coachella Riverside _
9:0%
Dixon Solano 9:0%
Downey Los Arigeles 9:0%
Fountain Valley Orange 9:0%
Giltoy Santa Clara 9,:q%p
Hawaiian Gardens Los Angeles 9:0%
La Mirada Los Angeles 9:0%
Lathrop San.Joaquiri 9.0%°
Lawhdale L•os Angeles 9.0%
Livingsfon Merced. 9.0%
Madera Madera. '9.0%.
Manfeca San Jdaquiri 9:0%
Modesto $tanislaus '9.0%
I
SOURCE: Coleman Advisory Services /
cdmpuations using State Controller reports. CaIIfOFf118CItyF111a11C@.COfTI i
{~
.._
t
t
~.
Oroville Butte 9'0%
Palm Desert. Riverside 9.0%
'.Portola Plumas g;0%
' Rialto SanBernardihii 9;0%
Santa'Rosa Sonoma 9.0%
S@al Beach Orange 9.0%
Signal Hill __
Los Angeles
9.0%
South San Francisco San:Mateo 9.0%
Turlock Stanislaus. 9.0%
T.v/entynine Palms San Berriardino 9.0%
Willits Mendocino 9.0%
~H~ayward. Atameda~ 8.5%
Walnut Los Angeles 8.5%
Walnut Creek- Eohtra-Costa - 8:5°/d,
Atwater Merced 8:0%
Auburn Placer 8:0%
Bell Gardens Los;Angeles: 8.0%v '
Big Bear Lake San Bernartliho 8.0%
Brawley ' Imperial 8.0%
California City Kem 8.0%
Calipatria Imperial 8.0%
Chino. San Bernardino 8S0%
Colfax Placer 8:0%
Colusa Colusa 8:b%
Corcoran Kings 8.0%
.Coronado San Diego 8':0%
Cudahy Los Angeles 8.0%
)ublin , Alameda 8:0%
EI Segundo Los Ahgeles 8:0%
Ferndale Humboldt 8il)%
Folsom Sacranierito 8.0%
Fontana San.Bernardino 8.0%
FosterCity San Mateo 8.0%
Gonzales Monterey 8.0%
Gdeehfield Monterey 8~0%
Hanford Kings 8.0%
Hollister San Beriifo 8:0%
Imperial Imperial` 8:0%
Industry Los Angeles 8:0%
Irvine Orange. 8.0%
La'Falma Orange. 8.0%
Laguna Niguel .Orange 8.0%
Lakewood . Lbs,Angeles 8.0%
Lemoore Kings. 8,,0%
Lindsay Tulare 8.0%
Livermore Alameda 8.0%
Loomis .Placer 8.0%
Los Alamitos .Orange S.t)%
Mission Viejo Orahge 8,0%
Moreno Valley Riverside 8.0%.
Norco Riverside. ' 8:0%
°atterson Stanislaus. 8.0%
/ittsfurg Contra Costa 8:0%,
Fleasantdn Alametla. 8.0%
SOURCE: Coleman Advisory Services
compuatjons using State Controller reports C811fOff118CItyF1178nCe.Cg117 ~ _,
i
F'orterville Tulare 8':0%
Reedley Fresno 8;0°/'
Rio: Dell Humboldt 8'.0%
Rocklin .Placer 80%
San Dimas Los Ahgeles 8.0%
San'Jacinto Riverside 8.0%
Sonora Tuolumne 8.0%
South EI Monte L`os Angeles 8:0%
South Gate Los Angeles. 8:0%
Stanton Orange 8.0%
Stockton San Joaquin 8.0%
Tehachapi Kern 8.0%
Temecula Riverside 8.0%
Trinidad- - Humboldt 8:0%
Vacaville Solano 8.0%
Waterford Stanistaus 8.0%
Westminster Orange 8.0°I°
Azusa Los Angeles 7.5%
Compton Los Angeles 7.5%
San Ramon Contra Costa 7.3%
Sutter Creek Amador 7.3%
Amador Amador 7.0%
Gustine Merced 7.0%
Highland San Bernardino 7.0%
Huron Fresno 7,0%
Lancaster Los Angeles 7.0%
Oakdale Stahislaus 7.0%
Victorville San Bernardino 7.0%
Yucaipa San Bernardino 7.0%
Yucca Valley San Bernardino. 7.0%
Danville Contra Costa 6.5°!0
Apple Valley San Bernardino. 6.0%
Artesia Los Angeles 6.0%
Avenal Kings 6.0%
Banning Riverside 6.0%
Cerritos Los Angeles 6.0%
Coalinga Fresnp 6.0%
Costa Mesa Orange 6.0%
Etna Siskiyou 6;0°/
Glendora Los.Angeles 6.0%
GFidley ~ Butte 6.0%.
lone Amador' 6,0%.
Lemon Grove San Diego 6.0%
Lodi San Joaquin 6,0%
Mcfarland Kern 6.0%
Plymouth Amador 6.0%
Roseville Placer 6.0%
Santee San Diego 6.0%
Selma Fresno 6.0%
Soledad Monterey 6.0%
Tustin. Orange 6.0%
.Masco Kern 6.0%
Ceres Stanistaus 5.0%
Dorris Siskiyou 5.0%
1
``
SOURCE: Coleman Advisory Services
compuations using State Controller reports CalifornlaCltyF7nance.COm
l`
.r ..
Huhtington Park Los Angeles: 5.l)%
Maywood. Los ,Angeles 5.0%
`.Clayton Contra Gosta 4A%
YExeter Tulate 4,0%
Firebaugh Fresno 4.0%
Holtville Imperial 4.0%
Riverbank Stanislaus 4.0°/a
Sanger Fresno 4.0%
Bell Los Angeles 3;5%
Atherton San Mateo none
Belvedere Marin none
Biggs Butte Hobe
Bradbury Los Angeles none.
_ Grahd.Terrace San.Bemardino.: hone
Hidden Hills Los Angeles none.
Flillsborough San Mateo none
Hughson Stanislaus none
Ihvihdale t:os Angeles ,none
.Kerman Fresno horie
La Canada flint~idge Los Angeles none
La Habra Orange Hobe'
La Habra Heights Los Angeles none
Live Oak Sutter none
Los Altos Hills Sahta Clara ~ none
Lynwood Los Ahgeles norie
Monte Sereno Santa Clara none
Moraga Contra Costa none
`Jewman Stanislaus none
Palos Verdes Estates Los Angeles none
Piedmont Alameda hone
anc o an a
Margarita
Orange
none
Rolling. Hills Los Angeles none
Ross .Marin none
San Anselmo .Marin none
San Fernando Los Angeles none
San Marino Los-Angeles none
Shaffer . Kern none
Sierra Madre tos;Ahgeles none
South Pasadena Los•Ange,les none.
Suisun City ¢olano none
Villa Pack ~ Orahge none
Woodside San Mateo none
Aliso Viejo Orang"e none
Blue'Lake HumbolcJt none
Colma Sari Mateo none
Dos'Palos .Merced none
Farmersville Tulare none
Fort Jones Siskiyou ~ none
Fowler Fresno none
Guadalupe Santa Barbara .none
Lbyalton Sierra none
'1endofa Fresno none
~vldntague Siskiyou hohe
Orange Cove Fresno none
SOURCE: Coleman 'A'dvisory Services
compuations using. State Controller reports CafIfOF1118CItyF111811CC.COIII (~
6
Parlier Fresno none
Portola Valley San Mateo none
San Joaquin Fresno none
Sand.City Monterey none
Tehama Tehama none
Tulelake Siskiyou none
Vernon Los An9eles none
Woodlake Tulare none
r~:
i
r'
SOURCE: Coleman Advisory Services
compuations using State Controller reports CaliforniaCityFinance.com
~`~
.
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vv~~~I ,,~v~~~1
0
SheraA,t®
RECEIVED
MAY 272010
CITY MANAGER
May 27, 2010
City of Petaluma
11 English Street
Petaluma, CA 94952
Re: Potential Ballot Measure to Increase TOT Rate to Equal Beverly Hills' 14% Rate
Dear Mayor and City Council Members:
I am one of the owners of the Sheraton hotel in Petaluma, and oversee its day-to-day
operations. My fellow owners are local,. Sonoma County residents, and we operate the
. hotel under'a franchise agreement with Sheraton. I am also. a founding member of the
Petaluma. Lodging Coalition, a coalition of hotels, motels and campgrounds in Petaluma.
We strongly advise the City Council to not move forward with putting on the ballot a
measure to increase the Transient Occupancy Tax (TOT) rate in Petaluma. Raising the
TOT rate may seem like an easy way to raise additional. funds for the City without harm
to local residents and businesses, but this is simply not true. Instead, .raising the TOT rate
would (1) be paid for in large part by local businesses. and, residents, (2) decrease the
number of overnight business and leisure. visitors to Petaluma by making us less able to
compete with neighboring cities, and (3) .harm local businesses that benefit from
spending by overnight: visitors.
In addition,. proceeding with a ballot measure raises significant legal issues that would
require .the. City to spend even more money on legal fees, aril could present obstacles to
passing 'any such measure.l
~ One such issue is that the TOT tax may be a special tax under.Proposition 62 subject to
approval by voters at the super majority level. of 66-2/3% rather than the simple 50% level. The
Municipal Code of the City requires that the TOT revenues 6e used solely for "promotional
purposes." A second .issue is the likelihood that Propgsitign 62 requires a 2/3 majority vote by
the City Council to even puta TOT rate increase on the ballot in the first ,place. This would
require approval by five,of the seven members ofthe. City Council, not the normal majority of
four members.
SHERATON SONOMA COUNTY - PEfALUMA
745 Baywood Drive
Petaluma, CA 94954
t .- 707 283 2888
f - 707 283 2828
s h e rato n: c o m/p eta I u m a
May 27, 201.0
Page 2
Z. LOCALS WILL BEAR 1VIUCH OF TFYE BURDEN OF )(31GHER TAXES
The first -reason we oppose an increase in the TOT rate is because local businesses and
residents will bear much of the burden ofhigher taxes.
The: myth tells. us that only "outsiders'' will bear the burden of higher TOT rates. And the
Staff Report-issued 1VIay 13, 2010 on the poteritial.TOT increase did not even mention the
important issue of who pays TOT taxes and therefore who will bear the burden. of higher
TOT taxes. The truth, however, is that local. businesses. in Petaluma will suffer much of
the proposed. increase in the TOT rate.
® Many of our best.accounts at-the Sheraton are'local businesses who are also
significant employers iri Petaluma.z
These local businesses -span. many industries, including agriculture,. food
processing,, food products; manufacturing, telecominuriications and "green"
technology fields. And' they .range from long: established companies like Mrs
Grossman's tb~new and fast growing companies like Enphase Energy. If the
TO.T rate is increased all of these businesses will. suffer increased costs to
operate in .Petaluma during one of the most difficult economic times in
decades.
.Local' businesses often have people stay at our hotel every week. Since the
eompany'pays for their travel, the company bears the burden of the TOT
taxes. Those guests. include:
- Employees who are visiting the Home- office in Petaluma.
- Employees. who are attending meetings such as sales training sessions
or planning meetings in Petaluma.
- Customers of the company.
- Consultants who: are doing projects,for the local company; and whose
travel>costs - including'TOT -are paid for"by the local company.
® As one ocal bnsiiaess and. Sheraton client. eva-ote. to us recently: "We have
br~siness travelers -both .employees- and guests -almost every week of the
year. This additional az would have a negative impact on .our business
[due to thej higher costs."
2 The Sheraton is the largest hotel in Petaluma and the largest generator of TOT revenues to the
Clty.
~~
May 27, 2010
Page 3
® Local businesses account. fora significant portion of our total business. For
five nights of-the week=Sunday through Thursday-we are primarily a
business .hotel. During the winter season, most of our guests are traveling .for
business purposes.
Ln addition to local businesses; we also. host many -friends and' family of Petaluma
residents.. Tlu is a steady part of our business. When relatives come to town, whether it
be parents; grandparents, children or grandchildren, they often stay with us. And the
same is true for frends..All of these guests pay TOT.
So, if you decide to move-;forward with a ballot. proposal, voters .need to know that a
significant°portion of°the higher tax burden will:be borne by local businesses, and by the
relatives;. friends and visitors of local residents. We at the Sheraton, and at the Lodging
Coalition, do riot support increasing taxes on local business, and the relatives, friends and
visitors of local residents.
2. RAISING ~TAXE5 WILL RESULT IN JF+`EWER VISITORS TO PETALUMA
The second reason we do not- support an increase in the' TOT rate is that a higher rate will
result in fewer business travelers, groups .and visitors to town. The staff report for this
item assumes that increasing the total TOT rate.:from 12% to 14% will have zero :impact
on demand for-staying overnight in Petaluma. VJe respectfully disagree with this.
assumption. To raise taxes and not assume any d'eerease in demand is unsupported by
economic theory acid by ,our long experience in he 'hotel ind'ustry_ Unlike property taxes
where people cannot: move their house from Petaluma to Marin, people can easily stay in
hotels in Mann or Sonoma or elsewhere: in response to..higlier taxes. in Petaluma.
So where does. Petaluta stand in comparison to our competitors? Currently our total
rate, including he County-wide BIA assessment of 2%; is 1"2%. This already puts us at a
disadvantage eompared,to the City of Sonoma grid virtually all of Marin, which .are at
10%. Going to 14%~will`put us 4% above them.
Attached. as .Exhibit 1is a chart which shows the -total TOT rates for all cities
in Sonoma; lYlarm and Napa Counties.
® Highlighted in red font are those cities which are the principal competitive
cities for our lodging properties in Petaluma.
- At present, the only competitive city at 14% is Rohnert Park. Having
them 2% above us helps us today in competing with them.
d~~
May 27, 2010
Page 4
- ,Santa Rosa is currently at 11% or 1% below us, which helps them. If
they go to 14%, that will help us attract business away from them,
particularly the large group business that is very sensitive to total
costs.
- Given the location of Petaluma and,parfcularly the. Sheraton hotel,
two very important competitive areas ,for us are the City of Sonoma
and all of the cities .in northern Merin, which are at 10%. Since we are
at 1~2%-now; we are already 2% higher. At l4% we would be 4%
higher„ and this is a substantial "difference; particularly for the high
volume accounts. .
- Since Petaluma borders Maria and:is relatively close to the City of
Sonoma, creating a larger difference in TOT rates will result-in our
losing ,lodging business to those locations.
While this difference of 4% may appear "small" to those+ who are not. in the hotel or
lodging .business, it is actually a huge difference when we'go after high volume business
accounts, and large groups -these accounts can. each produce anywhere from 300 room
nights to more than 3,000 room nights.a,.year:
These large accounts~are a:major,part~of our`business, and absolutely critical to
generating high TO')r' revenues to the City. For these large accounts, having a TOT
rate'thatdvas.40% higher=than the,rates iII 1Vl<arin and' Sonoffia would a~aount to
thoexsands of dollars per yedr, .:axed we would 1®se business to those locations. This
wo>afld result in lower TO.T :revenues to Petaluxna,and fewer visitors.
Having a total TOT rate of 14% would make us one of tlie, cities with the highest TOT
rates in California -tied with Beverly Hills -and that wih not.help us attract visitors. 3
3 We are ranked. as the ~`h' best Sheraton hotel in North America for guest satisfaction, and last .
year our sales team :was selected as one of the top' 3' sales teams in all of North America `for
Sheraton hotels: Our team of five full-time sales people knows. how to sell hotel rooms and they
are working •very hard to br-ing as :many people as. possible to town and thereby increase the
number of people visiting our stores and eating.in our restaurants,; and atthe,same-time
maximizing;the TOT revenues to the City. The last thing;we need right now is another
obstacle'to bringiing,more,people to Petaluma, and that is ezactlywhat raising. the TOT rate
from 12°l to 14% would do: '1?lease don't inake the job of our sales team even harder..
~~
May 27, 2010
Page 5
i'; ..
3. H1~GREASING THE TOT RATE WILL REDUCE SPENDING AT LOCAL )BUSINESSES
The third~reason we do not support increasing the TOT~rate is the.hidden cost to small
businesses that berief t from spending by overnight visitors to Petaluma.
A study commissioned by the. Sonoma 'County Tourism Bureau. showed that; on average,
overnight visitors. in .Sonoma County spend ;approximately $292 per day: A portion of
that, is spent on lodging, but a large portion is spent at restaurants and other local
businesses.. 'Therefore,. every overnight visitor lost as a result of higher taxes hurts the
beneficiary of-such spending=local businesses. Clearly, our goal as a community should
be to increase TOT revenues `by increasing the number of overnight visitors to Petaluma,
not.by raising taxes and causing potential visitors to take their business and.spending to
other cities.
That is why we have been working with John Brown. and the Petaluma Downtown
Association (PDA) to bolster the "marketing of Petaluma by having the PDA run and
operate the Visitors Program. The Lodging Coalition. members. are ready and eager to
work with the PDA and everyone else in town to bring morepeople to Petaluma, which is
the quickest and surest way to increase tax ..revenues to the City while at the same time
helping local businesses.
For the reasons noted., above, we, together with the Petaluma Downtown Association and
the Petaluma Lodging Coalition, recognize that::°raisng the TOT rate is a bad idea at the
worst possible time. VJe will vigorously oppose any increase in Petaluma's TOT rate:
Sincerely,
~~~
Thomas H. Birdsall
Co-Owner
Sheraton Sonoma County-Petaluma
Attachment
cc: Mr. John frown
Petaluma. Lodging Coalition
Petaluma Downtown Association
d~
Exhbat 1
Transient Occupancy Tax Rates
and T®tal Tax Rates by 'City: 20®9
Principal Competitive Cities with Petaluma are highlighted in red
"~'" SONOM6A COUNTY
~: ,
'C TOT Rate (%)• BIA Rate (%)* Total .Rate {%)"
Rohnert'Park 1:2 2 - 14
Windsor 1'2 2 14
Cloverdale 10 2 12
Healdsbur 1:2 -- 12
.Petaluma ~ 10. 2 12
Sebasto of 10 2 12
Santa.. Rosa 9 2 11
Unincor orated 9 2 11
Sonoma 1D -- 10
f~,4RIfoI C®UN-fY
Ci TOT'Rate: (%) BIA Rate(%) Total Rate (%)
_. .
Sausalito 12 -- 1.2.
Corte :Madera 1'0 -- 10'
Fairfax 10 -- 10
Larks ur 10 -- 10
Mill Valle 10 -- 10
Novato 10 10
San Rafael 10 10
NAF',~ COUPd~fY
Ci ~ TOT Rate (°~) BIA Rate {%) ~ Total Rate (°~)
Calisto a 1'2 -- 12
Na a T2 -- 12
St. Helena 12 -- 12
Yountville 12 -- 12
American Can. on 10 -- 10
*Sonoma County Tourism Business Improvement Area (BIA) was established in
November 2004 by the Sonoma Courity Board of Supervisors. Funds from tlie.Iodging
facilities in the member cities and unincorporated areas pay forthe Sonoma County
Tourism Bureau to market overnight stays in the BIA.
n,~
QUALITY INN
June 1, 2010
City of Petaluma
11 English Street
Petaluma, CA 94952
Re: Proposed Ballot Measure to increase TOT Tax 20%
Dear Madame Mayor and Members of`the Petaluma City Council:
~ ~ 0~~
u
ukFF)'J ~
-;~_- ,
BY CHOICE HOTELS
My family and I have been involved in Petaluma lodging community since. 1985. In
those 25 years; we have enjoyed providing our share of hotel accommodations for the
overnightguests of our Petaluma residents, fellow business.community, and our share of
the Wine Country traveler. This.also~means that we.have ridden through at least three
economic down cycles, with this .current down cycle being the most severe.
We -urge that you rescind Staff s recommendation to place on the ballot a proposal to
increase TOT by 20%.
The most devastating part of the current recession is the loss: of jobs and the empty office
parks that surround us and appear throughout Petaluma. 'The; empty spaces mean. fewer
jobs for Petalumans, who correspondingly have fewer resources to spend with our local
retailers and'service providers. Our hotel occupancy plummeted with the emptying of
the surrounding. off ce parks.. ~I would attribute most of our lost business in the current
recession to the Goss of local jobs and local businesses. A 20.% increase in TOT taxes will
negatively impact a business community trying'to recover.
Until we see those office parks:fih up with-new businesses who hire more local residents,
you should not expect to see a recovery of TOT revenue that matched the revenue flows
prior to 2008. Correspondingly; since local residents alsq make up a large portion of the
employers°in Petaluma, restraint in travel budgets will continue to keep occupancy and
hotel rates down for the foreseeable future. Any additional tax, including TOT, will
make surviving-this recession even more difficult for the local community.
Because over 50% of our hotel occupancy mix comes from business travelers, travelers
doing business with local businesses, family visiting our local residents, your proposed
20% increase in TOT will most. adversely impact local businesses and local residents. If
there -are less business and. family travelers, then there will correspondingly mean fewer
visitors to our local restaurants and retailers. The negative trickle down effect of less
overnight visitors is compelling. Just.read Ben Stone'sreports on visitor impacts in
Petaluma. and .Sonoma 'County° when you have less overnight visitors in a community.
S1OO MONTERO WAY
PETAI:UMA, CALIFORNIA 94954.
PHONE 707.664.1155 FAx 707.664.8566
www.vdinecountrygi:com ~,^
For reservations worldwide:'800.4CHOICE choicehotels.com KJ
QUALITY I N N
B Y CHOICE HOTEL S
4n the ourism side of our business, Petaluma continues to.capture .its. share of transient
leisure travel, which fortunately is the only bright spot in an otherwise miserable
economy. It remains~a lesser .portion of the Petaluma occupancy mix, accounting for
maybe 40% of our annual business. Most of these travelers arrive on weekends and
during the summer:., 'They make up only a- .mall fraction of the occupancy Sunday
through Thursday:. Most of that. weekday occupancy demand;needs to come. from local
business, and business travel. associated with local businesses.
The Internet hasmade.:shopping for hotel .rooms very transparent: The hotel rates in
Petaluma sit side by side. with those 'of our cgmpettors in surrounding communities. If
rate is an important consideration,particularly forthe price, conscious .consumer of today,
they will. likely go where they will get the most' value for their dollar. Most Internet sites
showtotal cost including room,rate, taxes~andseryice fees combined. Your proposed
20% increase in TOT will adversely `affect the ability of Petaluma lodging facilities to
compete with our neighboring communities. We see and hear from those shoppers daily.
This is a highly competitive, market; and people who stay:in'hotels have plenty of choices
and options. Those options do not confine their choices to any one community. You and
the community of Petaluma will benefit more if Petaluma.left: its•cuxrent TOT rate
unclaanged..As recovery begins, and business travel retains; 'TOT funds will
correspondingly improve; so Iong as the traveling publc;feels they are getting value for
their dollar in a-competitive market. I have always felt that Rohnert.Park's higher TOT
tax was a constant impediment to their historic inability to capture their fair share. Please
do not add Petaluma into the mix ofuncompetitive communities for overnight lodging.
Thank you for.your consideration,
Kirkman.. ok,,CHA
Ivlanaging;Partner
Qualty~Inn -Petaluma
S1OO MONTERO WAY
PETALUMA, CALIFORNIA 94954
PHONE 707.664.1,;155 FAx 707.664.8566
www.winecountrygi.com
For reservations worldwide[ 800.4CHOICE choicehotelsscom
~:~ih~E~~F, ~~~ C~~1~~1F~CE
7une~4, 2010
Mayor and City Council.
City of Petaluma
11 English Street
Petalurria, CA 94952
Dear Mayor Torliatt and.. City Council Members:
ECEI
JUN U72010
OiTY MANAGER
This is to notify you that the Petaluma Area Chamber of Commerce Board has
voted and voted; unanimously to oppose, at this time, any ballot measure
designed to increase the Transient Occupancy Tax °rate on overnight visitors to
Petaluma lgdgng businesses. The Board's vote _fol ows the recommendation
of the Chamber's Government Affairs/Economic Deyelopment.Commttee,
which. also opposed. this tax increase by a unanimous. vote.
The.Board believes that this is the absolute-worst tme.to increase costs to
local businesses: and' visitors to our community, and to,institute a tax increase
which carves every possibility of doing harm to our local businesses, residents
and lodging instituti'oris.
The original intent of the TOT' legislation was to allow. communities° to raise
funds in order to market those same communities to the growing tourism
market. The,Board feels that the City's decision last year to slash funds for
tourism marketpg is :at least partly responsible'for the substantial decline in
TOT revenues to the City.
It has been dramatically demonstrated to us that the current drop-off in -room
rentals"has ad'versel'y affected many of our other local businesses that provide
badly needed jobs and sales tax revenues. To force higher room, rates via this
tax increase would only tend to perpetuate this decline when we should be
seeking ways to turn it :around.
The Ghamb:er supports the Petaluma Downtown Association as well as the
hotels„ motels,. and campgrounds in this City in urging the Council to seek
other remedies to resolve their budgeting. dilemmas instead of pushing for 'a
tax -increase. that would have no guarantee of providing, the funding the City
weeks .and will certainly do harm to local businesses and residents.
Sincerely;
Qnita~Pellegrini, CEO
Petaluma Area Chamber of Conmerce
~-D
Cdr
~~
I ll~
PETALL'MA '
DOWNTU'.~.'~' -
\~SOCIACIUN
June 10, 2010
City of Petaluma
11 English Street
Petaluma, Ca 94952 .
Attn: John Brown, City Manager '
Dear Mr. Brown,
Thank you for your offer to more formally state the position of~the Petaluma Downtown
Association regarding the interest ofthe City in raising the Transient Occupancy Tax (TOT).
On May 11, 201p the PDA responded to your requestthat I get a sense of the potential support
of our board for such a taz increase.. As a resu_It, an email solicitation;ofsll board members was
performed and the consensus by unanimous`vote was that the contemplated tax increase was
not a good idea at this time for a: variety of reasons.
Additionally, and again after agreement by our~completl= board, a meeting took place where our
members heardlthe comments of yourself and briefly, those of ourMayor, Pam Torliatt.
Subsequent discussions were had and this led to an invitation by the board .to hear a
presentation by the Lodging Coalition in the same manner at the next scheduled board meeting.
After hearing,,the concerns of the Lodging Coalition, our.board entered info further.discussions
and. has come away with the convictionthat our position is uncha"nged for ail the reasons
previously stated.
To,summarize, our concerns with an increase in the tax stems from a) the need to ensure that
our local. hotels remain price competitive an'd b) a lackof confidence',that fhe increase in
taxation .would be added to the :existing TOT funds earmaeked for the PVP. We wou d like you to
know~that,o.ur"feel"ing about the tax increase is borne from the same concerns as the overall
economy: With an established economic recovery, we would of course Consider an increase in
the TOTtax for°the.purposes;of ~reating.additional ~furiding'fohfhe marketing of Petaluma as a
destination location by fhe variety'of organizations equipped to do so.
Sincerely,
Marie McCuslcer
a~