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Home My WebLink About2019/08/21 - Agenda Packet - SpecialAUGUST 21, 2019 - 3:30 PM SPECIAL MEETING WORKSHOP CITY COUNCIL/FIRE PROTECTION DISTRICT AGENDA Tri -Communities Conference Room, City Hall, 10500 Civic Center Drive, Rancho Cucamonga, CA 91730 A CALL TO ORDER Pledge of Allegiance Roll Call: Mayor Michael Mayor Pro Tem Kennedy Council Members Hutchison, Scott, Spagnolo IJ -.]A _�_iC�1►�� This is the time and place for the general public to address the Fire Protection District and City Council on any item listed on the agenda. State law prohibits the Fire Protection District and City Council from addressing any issue not previously included on the Agenda. The Fire Protection District and City Council may receive testimony and set the matter for a subsequent meeting. Comments are to be limited to five minutes per individual or less, as deemed necessary by the Mayor, depending upon the number of individuals desiring to speak. All communications are to be addressed directly to the Fire Board, or City Council not to the members of the audience. This is a professional business meeting and courtesy and decorum are expected. Please refrain from any debate between audience and speaker, making loud noises, or engaging in any activity which might be disruptive to the decorum of the meeting. C ITEMS FOR DISCUSSION C1. Discussion of Transient Occupancy Tax (TOT) Issues and Rates, and Options for Considering Adjustment of the Rate. D ADJOURNMENT CERTIFICATION I, Linda A. Troyan, MMC, City Clerk Services Director of the City of Rancho Cucamonga, or my designee, hereby certify under penalty of perjury that a true, accurate copy of the foregoing agenda was posted on at least twenty-four (24) hours prior to the meeting per Government Code 54954.2 at 10500 Civic Center Drive, Rancho Cucamonga, California and on the City's website. Page 1 DATE: TO: FROM: INITIATED BY: SUBJECT August 21, 2019 Mayor and Members of the City Council John R. Gillison, City Manager Lori Sassoon, Deputy City Manager/Administrative Services DISCUSSION OF TRANSIENT OCCUPANCY TAX (TOT) ISSUES AND RATES, AND OPTIONS FOR CONSIDERING ADJUSTMENT OF THE RATE. RECOMMENDATION: It is recommended that the City Council discuss the current TOT ordinance and rate, and provide direction to staff concerning potential future adjustments to the rate by the voters. BACKGROUND: The City has had a Transient Occupancy Tax (TOT) in place at the rate of 10% since the early 1980's. The TOT, commonly known as hotel tax or bed tax, is paid by visitors to Ranch Cucamonga who stay in one of the City's hotels. Revenues generated by the TOT are deposited to the City's General Fund. ANALYSIS: At the workshop, staff will present an overview of TOT information and options to adjust the rate, which would require voter approval. FISCAL IMPACT: None by this action. TOT currently generates more than $4 million annually to the City's General Fund. COUNCIL GOAL(S) ADDRESSED: This discussion is in keeping with the Council's goal to use mid and long-range planning to implement the City's vision. Page 2 1 Transient Occupancy Tax (TOT): Issues and Options City Council Workshop August 21, 2019 Overview • TOT History a n d Definitions • TOT Landscape —Rates in Our Region • TOT Elections —Process and History • Options for Consideration "1" 11 1 . 1 9 i j ilI I II ,f �11444,11ITi ■# -- Aloft Best Western Plus Heritage Inn Courtyard by Marriott Fairfield Inn & Suites by Marriott Four Points by Sheraton Hilton Garden Inn Holiday Inn Express & Suites Homewood Suites by Hilton New Kansan Motel Residence Inn by Marriott TownPlace Suites by Marriott TOTAL 10480 Fourth Street Business/Leisure 8179 Spruce Ave. Business/Leisure 11525 Mission Vista Drive Business/Leisure 9550 Pittsburgh Ave. Business/Leisure 11960 E. Foothill Blvd. Business/Leisure 11481 Mission Vista Drive Business/Leisure 9589 Milliken Ave. Business/Leisure 11433 Mission Vista Drive Extended Stay 9300 E. Foothill Blvd. Budget 9299 Haven Ave. Extended Stay 9625 Milliken Ave. Extended Stay 1 116 108 118 122 93 103 12 126 112 1,163 Under development -Hampton Inn by Hilton (108 rooms); Tapestry by Hilton (71 rooms) What is Transient Occupancy Tax? • Tax paid by visitors to RC hotels, not typically RC residents • Imposed on stays of 30 days or fewer, per state law • Rate of 10% imposed in Rancho Cucamonga since 1983 • City had about 66% fewer hotel rooms at that time • Makes up about 5.2% of the City's General Fund revenues — an estimated $4.6 million in FY 2019/20 The RC and Ontario hotels of 50 rooms or more also collect an additional 3% assessment to fund the Greater Ontario Tourism Marketing District (60TMD), a Benefit Assessment District (BAD). GOTMD promotes tourism and visits to the region, increasing room nights and revenue to the hotels $ 5, DDS,, 000 $4,500,000 4, 000, DOD S3,500,000 3F OD0r 900 52,500,000 $2,000,000 1, 5001 OOD $1,000,000 Transient Occupancy Takes zz� -N, N, C3N csN zow N , J � k k qkT � FY 2DO7/08 FY 2008/09 FY 29/ 10 FY 201D/11 FY 2011112 FY 2012/13 FY 2013/14 FY 2014115 FY 2015/16 FY 2016/17 FY 2017/13 FY 2018/19 FY 2019/20 1r 667370 2r 9r07O 1r 971r760 1r 651 r 9 10 1, 750r7 90 1e 243r1 2r 124r 7 00 2r 579 r 1 70 2r 9r-350 3rr11O 3r 737 r 4 50 4r 505r800 4r 6 13 r 41O Ulm A N 12 10 10 0 146 r, 14 +• ifi-�r;.•.J r= Yucca Valley 10 12 10 10 10 14 ,; 9 P _.i• t `,'.,, 14 $ .,. 14 14 10,1,+., des 10 10 POP 1 : - 10 $ 12 _ -.- . t, Dna 10 10 M. 14 10 Rivers}6e 10 ` ti ' Deu rt Hot f' f � enc+ �l � 0 � ;�_... 12 � 10 r�ur The i,,,un,pnt 12 r3ailri� � i :�,,, a 10 rC��;,.., . — 11 13 f�ed�ar:Gs - nq p8ss 10 Sky Valley 1a, 10 10 # 12 - { 10 8 12 15 T ' `� �, � •; �,' } Jnr r � Lakeview Santa Ana Y -F Moun�arn5 Ni. a +1 j ' { Palm Desert 56 9W, suncity Huntington Irvine 4 fr BeachQ 'f f }' Lake Elsinaee o is about the median L'' Rancho Santa f41' � y�Ilk • Ma aria sapri3 Arra.. Rates are higher in cities with more hotels, more New rt Beach travel/tourism focus • Rates are lower in cities with relatively fewer hotels TOT is defined in y the City's Municipal Code • Under state law, any rate adjustment would require voter approval • Each additional 1% TOT would generate annual revenue of approximately $460,000, based on current hotel activity, and up to $560,000 considering future hotel developments Recent TOT Election Results in California • Election options • General tax =simple majority approval • Special tax = 2/3 approval • 118 TOT general tax elections since 2010 • 84 have passed (71%) • 34 have failed (29%) • 15 TOT special tax elections • 8 have passed (53%) • 7 have failed (47 %) 2018 Election Results November 2018 TOT Measures Pass/Fail Rate (General Tax) 3 Measures 28 Measure Pass (90.32%) — Fail (9.68%) November 2015 TOT Measures Pass/Fail Rate (SPECIAL Use) 2 Measures I s7 Measures Pass (77.78%) Fail (22.22%) 2016 Election Results November 2016 TOT Measures Pass/Fail Rate (General Use) 5 Measures Pass (68.25%) 11 Measures -F 0 Fail (31.25%) November 2016 TOT Measures Pass/Fail Rate (SPECIAL USE) 4 Measures . Pass {20%} P Fail {801Y.} *-F-- 1 Measure How is a general tax placed on the ballot? During a regular Council election cycle • 2/3 vote of the Council to place on the ballot • Simple majority voter approval During an off -cycle election • Unanimous vote of the Council to declare a fiscal emergency • Simple majority voter approval If there is interest....a path forward to the future: • Community education and feedback • Hotel stakeholders • Business community • Residents • Draft potential ballot question(s) based on community feedback • Voter polling (cost of $25,000 - $35,000) on the questions • Go/no go decision timeframe — Spring of election year • Ballot measures due in August of election year Options, if the community seems supportive... 1. Election to set a new capon TOT. Voters give Council the authority to adjust rates up to the new cap. 2. Add an advisory measure (non-binding) to determine voters' wishes for how funds might be spent, if the companion measure is approved. 3. Have two measures, one a special tax with a 2/3 vote requirement and one a general tax with a simple majority requirement; the higher vote -getting measure is approved/implemented. il 4