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Looking to shore up revenue to pay for homeless services and sustainability efforts, the city of Mountain View is considering a ballot measure that would increase taxes on local hotels.
The City Council is expected to approve $120,000 in funding Tuesday to conduct polling and lay the groundwork for the Transient Occupancy Tax to appear on the November 2022 ballot. City officials say Mountain View’s hotel tax rate is among the lowest in the region, and that a voter-approved measure could bring it up to speed and increase annual revenue by $3.5 million.
Hotels have been badly bruised by the COVID-19 pandemic, which led to a sharp increase in vacancy rates as people steered clear of travel and strict public health restrictions were put in place starting in March 2020. Business sank so badly that the city’s existing hotel tax went from generating $7 million a year to just $1.9 million.
Data from the American Hotel & Lodging Association found in June that the San Francisco area was among the hardest hit, with revenue per available room dropping to less than one-third of pre-pandemic levels.
City officials argue that the problem is temporary and that vacancy rates are bound to improve, and that hotel occupancies have rebounded “somewhat” in recent months. U.S. hotel industry data indicates that the path to recovery has been swift this holiday season, with Thanksgiving bringing in more hotel visits than any time since the start of the pandemic.
While proposed ballot language has yet to be drafted, the city is tentatively planning to spend additional hotel tax revenue on a broad range of sustainability efforts totaling more than $7 million over three years. The list includes zero-waste policies, greenhouse gas reduction measures and efforts to expand bicycle use.
The city also lists its safe parking program and other serves to help the homeless and unstably housed as potential uses for the money, as well as “other important community needs.”
As it stands, Mountain View charges a 10% tax on hotel stays, which was put in place three decades ago and hasn’t been increased since. Across all of Santa Clara and San Mateo counties, only one city — Gilroy — has a lower tax rate than the city at 9%. The highest rate across the two counties is next door in Palo Alto, which has a tax rate of 15.5%.
Though the council’s vote this Tuesday is just to explore a ballot measure and test public opinion, city officials say it has a good chance of passing. The measure largely amounts to catching up with other cities, and the tax itself will rarely apply to residents living in Mountain View. What’s more, visitors are unlikely to look at or compare hotel tax rates, according to city staff.
The city has until August 2022 to place the measure on the ballot.
First I am a Mountain View resident and I’m staying in a hotel on my own dime because of damage to my house and bad insurance. So hotel tax would affect me. Second, when I book, even for vacation, I look at total hotel cost, which includes taxes, before I compare hotels. So I don’t agree with the “guess” that taxes aren’t considered. I don’t know who came up with that one but I’m guessing it’s someone in favor of the tax. Anyway, just wanted to say my piece.
Kevin, could you expand this article a bit to let us know if short-term AirB&B and VRBO type rentals would also be subject to the tax increase? And how is MV doing collecting the occupancy tax from those sources, assuming that they are already supposed to remit it?
Pretty shameful that the City would make that decision as a Consent Item. With inflation skyrocketing, you’d think that any potential tax increase would merit a public discussion.
If the financial needs are so pressing -spoiler they’re not-, City should first insure there is 100% compliance with TOT on airbnb and short term corporate rentals.
Reminds me of a incident on a coastal Greek town many years ago. The town wanted to hire more employees and came up on the brilliant idea of taxing the yachts in its harbor. The wealthy owners and their yachts left the town. Knee jerk reactions, i.e. this tax, can have unintended circumstances. Let’s all get through this horrible pandemic and then see if all types of “hotels”(airbnb included) might be taxed.
Despite the current pandemic-related downturn on local lodging, the majority of midpeninsula motels & hotels rake it in when times are good…especially during the midweek when incoming business travelers & conference attendees oftentimes flood the SF Bay Area.
During these peak periods, a basic motel room can easily cost $300.00 or more and then the rates drop dramatically during the weekends unless there is a Stanford football game.
No sympathy here for hotel/motel proprietors as they always overcharge when the opportunity presents itself.
So go ahead and further tax the MV motels and hotels as they are not helping to alleviate the homeless problem in any way whatsoever.