HomeMy WebLinkAboutItem 3B - PresentationCity of Palm Springs
ESTABLISHING A CITY COUNCIL POLICY REGARDING THE USE OF A PERCENTAGE OF TRANSIENT OCCUPANCY TAX FOR AFFORDABLE HOUSING
JUNE 29, 2023
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City of Palm Springs
Transient Occupancy Tax for Affordable Housing
•Palm Springs Municipal Code Chapter 3.24 guides the City’s collection of
Transient Occupancy Tax (TOT) within the boundaries of the City.
•The following rates have been in effect since January 1, 2002
•13.5% for Group Meeting Hotels
•11.5% for non-Group Meeting Hotels, Vacation Rental Properties and Agencies
•TOT revenue in total reached a historic high in FY22 at $54.3 million
•TOT revenue is on track to reach the forecasted amount in FY23 of $49.9 million
comprised of the following categories:
•$16.2 million for Vacation Rental property owners and Agencies (11.5% tax
rate)
•$14 million for non-Group Meeting Hotels (11.5% tax rate)
•$20 million for Group Meeting Hotels (13.5% tax rate)
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City of Palm Springs
Transient Occupancy Tax for Affordable Housing
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City of Palm Springs
Transient Occupancy Tax for Affordable Housing
•City Council previously directed staff to bring back for Council consideration a proposed policy that would
provide for the set-aside of a certain amount of the Vacation Rental generated TOT each year for Affordable
Housing programs.
•Vacation Rentals, as noted in slide 2, pay a tax rate of 11.5%. The Palm Springs Municipal Code (PSMC) states
in Section 3.24.030 the TOT is to be split in the following manner:
•7% to the Community Promotions Fund
•4.5% to the General Fund
•The PSMC states in Section 3.24.031 the Community Promotion Fund has specific uses “for advertising,
publicity, promotion, capital projects, debt retirement, and operating expenses normally payable out of the
library fund and parks and recreation fund, of the city.“ Therefore, the 7% cannot be used for Affordable
Housing programs.
•City Staff is recommending 25% of the 4.5% that is received into the General Fund be used for Affordable
Housing programs.
•Based on the estimated $16.2 million in Vacation Rental TOT for FY23, the calculation would be as follows:
•4.5% (General Fund Amount) is 39.1% of the 11.5%
•$16,200,000 * 39.1% = $6,334,200 –this is the General Fund portion of the Vacation Rental TOT
•$6,334,200 * 25% = $1,583,550 –this is the portion that would be set-aside for Affordable Housing
programs.
•City Staff is recommending this Resolution be retroactive to July 1, 2022
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