PACIFIC GROVE — Measure U on the November ballot in Pacific Grove, would raise the city’s transient occupancy tax by 2 percent, providing badly needed revenue for the city.
Voting in favor of the measure gives the city the go-ahead to increase the local hotel tax from 10 to 12 percent, an increase that would be applied to the cost of short-term rentals and hotels, inns and bed-and-breakfasts. According to the city, it is expected to raise the revenue annually by $1.13 million.
Despite the opposition from the city’s innkeepers and the Pacific Grove Chamber of Commerce, it has been the most endorsable measure by Pacific Grove candidates, especially in light of the possibility of Measure M passing. That initiative would limit short-term vacation rentals in the city’s residential zone. If passed, it also means an estimated loss of upwards of $2 million in revenue to the city.
All three of Pacific Grove’s mayoral candidates support Measure U.
Councilman Bill Peake said he would agree to increasing the hotel tax, especially if the city loses revenue from limiting short-term rentals in the future.
“It will add important revenues to the city and offset any shortfall from the passage of Measure M,” said Peake. Councilman Rudy Fischer echoed that view.
“Looking at the financial needs going forward, we need more revenue, not less,” said Fischer.
Dionne Ybarra, who is also running for mayor, is also in support and said it will make Pacific Grove comparable to other coastal locations.
“In others, raising it hasn’t hurt their tourism economy,” said Ybarra.
Six out of the seven city council candidates are also in support of the measure. Even former councilman Dan Miller who used to be against it has changed his tune.
“… I think the city needs to live within its means but I’ve evolved to being for it because it negates any loss that’s possible from Measure M,” said Miller.
Candidate Jenny McAdams, the one council candidate against raising the transient occupancy tax, said it’s not that she doesn’t want the revenue for the city but that she would have preferred to see the council make other cuts. Other candidates cited badly needed funds for infrastructure improvements and mounting CalPERS costs as the reasoning behind their support.
Still Pacific Grove Chamber of Commerce President Moe Ammar said the city’s lodging establishments already pay more than their fair share.
“Two percent increase represents an increase in 20 percent in taxes on tourists,” said Ammar. “How much more taxes do you expect your visitors to pay?”
Most importantly, Ammar said that raising the hotel tax will make Pacific Grove’s Asilomar Hotel & Conference Grounds and its other hotels that compete to hold conferences on the Peninsula less competitive than neighboring accommodations.
Monterey has a 10 percent transient occupancy tax although there’s been talk of raising it. Both Carmel and Salinas have a 10 percent hotel tax while Seaside stands at 12 percent. Monterey County’s is at 10.5 percent.
Marina has proposed raising its hotel tax from 12 to 14 percent under Measure P that is on the November ballot. Major backers of the measure include Mayor Bruce Delgado, District 4 Supervisor Jane Parker and Marina Planning Commission member Adam Urrutia.
State-wide, raising the transient occupancy tax seems to have become a silver bullet for many California cities.
Nearbye Watsonville is proposing raising it from 11 to 12 percent. The city of Scotts Valley is sending a hotel tax increase from 10 to 11 percent to voters while similar proposals are being explored in Capitola and Santa Cruz. If passed, Palo Alto’s increase in TOT would be to 15.5 percent.
In the case of Pacific Grove, the hotel tax was last raised in 1987. If Measure U passes on Nov. 6, the new 12 percent transient occupancy tax would take effect July 1, 2019.
Ammar noted that when the city’s transient occupancy tax was set previously, it raised about $1 million for the city while today considering the rise in room rates and other costs it raises $3.6 million annually.
“So the tax revenue increases with time as businesses increase their room rates etc.,” said Ammar. “Also, people need to realize that when you charge people more hotel room taxes, they’ll spend less money on shopping and dining.”
