Voters to Decide on Hotel Tax Hike

The City Council decided 4-1 Tuesday to consider asking voters in November to raise the 10 percent hotel bed tax paid by guests. The increase would supplement city services burdened by a visitor count topping 6 million a year, a city report stated.

A recent voter survey asked about the importance of using funds from hypothetical tax measures to move utility wiring underground and remove poles, a project estimated at $180 million over 10 years.

Some residents raised questions about how the survey was framed, which they contend led respondents to certain predetermined answers regarding raising sales and bed taxes, using public safety as persuasion.

“We’re talking about providing things to the community like safer utilities…that’s our job up here,” said council member Rob Zur Schmiede. “If somebody disagrees with us, well, go knock yourselves out.”

After talking to hotel owners and managers to decide about raising the transient occupancy tax (TOT), a subcommittee of council members Kelly Boyd and Bob Whalen will help draft the ballot measure. The measure will be presented to the council for final approval at its July 26 meeting.

“Obviously, I’m totally opposed to that. I think we pay an exorbitant amount of money right now,” said Georgia Andersen, owner of Hotel Laguna, 425 S. Coast Highway. Bed tax was supposed to be a minimal amount to promote business in Laguna Beach, she said.

“We pay over $200,000 a year in bed tax to the city and I’ll be darn if I can figure out what we get for it,” she said. An additional two percent on top of the current 10 percent is voluntarily paid by the hotels for business improvement assessments. Andersen said she’s not seeing any benefits from that either.

Mayor Pro Tem Toni Iseman said the survey results, which covered myriad issues, do not determine where the city will ultimately place its focus. “I really believe we need to have additional money,” she said.

Mayor Steve Dicterow voted against the proposed ballot measure. “I think we should live within our means when we’re running surpluses,” he said. “I don’t see a way that you’re going to be able to earmark where the money is going.” The city now has a 20 percent general fund reserve of $11 million, said Gavin Curran, the city’s financial director.

Among survey respondents 61 percent favored increasing hotel bed taxes, according to a report on the results presented by John Fairbank from Fairbank, Maslin, Maullin, Metz and Associates, a public opinion research firm in Los Angeles.

“The TOT tax, which is derived from visitors who create a lot of the demand for services that we need to provide, puts the payment obligation on the right group of people,” said Whalen. “Let Laguna vote on this one.” Visit Laguna Beach, the city’s promotions organization, leaned toward one to two percent, he said, which would bring the total hotel bed tax to 13 or 14 percent.

“Increasing the occupancy tax beyond the recommended level would potentially have a negative impact on occupancy rates,” Visit Laguna Beach president Ashley Johnson said following the meeting. The money also needs to be earmarked for specific projects affecting tourism and not for general city improvement projects, she said.

Each one percent would generate $1 million, says the survey report. The increased revenue would pay for public safety, street and sidewalk improvements and removing utility poles and undergrounding wires, the report stated. The increase would stay until voters rescind it.

A similar majority of the survey respondents, 59 percent, also expressed support for a one-cent sales tax increase while 62 percent favored a half-cent increase. Even so, voters will not be asked to raise sales taxes.

The Laguna Beach Chamber of Commerce adamantly opposed raising the sales tax, along with several local merchants. Survey-takers did not understand that retail store operators do not want a sales tax increase, said Larry Nokes, the chamber’s president. Sales are suffering, he said, due to online shopping.

Using local money to protect the ocean was the survey’s big winner at 84 percent support; fire protection ran a close second. A citywide ban on smoking in public places also received strong support at 75 percent. Making Forest Avenue a pedestrian promenade and allowing marijuana dispensaries in town received split votes, with 49 percent of the respondents supporting both.

Senior assisted living, a parking structure near downtown, affordable housing, an arts and events center and permanent housing for the homeless rated below the 25 percentile mark. Replacing the south Laguna fire station came in last. Traffic congestion and homeless people were rated the town’s biggest problems.

With 543 responses, the survey was sent to 6,000 local voters via emails and also conducted over the phone to balance responses with the city’s demographics, according to the firm’s report. Only 400 results were necessary as an accurate opinion sampling for the city, according to assistant City Manager Christa Johnson.