In the News

City Council Votes for One Percent Transient Occupancy Tax Increase
Santa Cruz City Council members voted 4-1 in favor of an 11 percent Transient Occupancy Tax, rather than the originally proposed 12 percent rate.

By Maria Grusauskas,
Santa Cruz Patch, 7/25/12

At Tuesday afternoon's City Council meeting, the Santa Cruz City Council voted 4-1 to place a one percent tax increase proposal on the November 6 ballot.

The Transient Occupancy Tax (TOT), a tax charged through hotels to tourists, is currently at 10 percent, and the city's original proposal to bring the TOT up to 12 percent, would have brought approximately $880,000 into the city's general fund every year.

The alternative motion for a rate of 11 percent (and an increase of one percent rather than two percent) was presented to the council at the last meeting by the Conference and Visitors Council (CVC). This rate would bring in approximately $440,000. The city's annual obligation is to also provide $330,511 to the CVC.

Hoteliers and representatives of the CVC came out on Tuesday to voice their support of the compromise, saying that a 12 percent rate would harm competitiveness, especially for group rates.

Steve Pleich, who is running for city council, said he was disappointed in the decision to support a one percent increase as opposed to a two percent increase, saying it showed "complete lack of leadership."

"The CVC, they're precluded by an agreement with the city from using any of their funds to take any political action. What they've done today is taken political action, by saying we're not going to support your Transient Occupancy Tax unless you support our compromise. I support the CVC because they do a great job, but this is not where they should be," said Pleich, who feels that a two percent increase in the TOT is needed for economic development.

But Mayor Don Lane addressed the compromise as a healthy partnership rather than lack of leadership.

"I don't want to fight with the tourism industry. The tourism industry is a partner of the city, we're not getting a special deal here. We have partnerships with neighborhoods, we have partnerships with the downtown business community, we try to work with our partners, not say 'we don't care what you think we're just going to do what we feel like doing as a City Council,'" said Mayor Lane. "I think we have a compromise that delivers for the community a similar amount of money to meet our needs as a city," said Mayor Lane.

Council member Ryan Coonerty motioned for an amendment that says if the Board of Supervisors votes for a TOT increase from 10 percent to 12 percent, then the city manager has the power to bring the city's rate to be consistent. The amendment caused council member Lynn Robinson to be the sole dissenter on passing the 11 percent compromise she had originally motioned for.

The council also unanimously passed a decision to accept the city clerk's certification of a petition for the Nov. 6 ballot that requires voter approval of a desalination plant before it can be built.

Mayor Lane commended the 130 people who helped petition for signatures.

"This takes a lot of work and its democracy in progress. I know that people went out and stood on corners, and raised money and all of that and they deserve to be commended for their efforts in doing so," said Mayor Lane.

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