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Home My WebLink About7/24/2002 - STAFF REPORTS (4) Department of Finance MEMORANDUM DATE: July 24, 2002 MEMO TO: City Attorney via City Manager FROM: Director of Finance &Treasurers RE: -TOT Rate Change Initiative Of the 141 hotels in Palm Springs, 106 have 50 or fewer rooms. Out of the total 6379 rooms in the City, these hotels represent 1585 rooms. Of the $12,800,000 in TOT collections estimated for FY 02-03, these hotels(and the condominium rentals and timeshares)would produce about$2,816,000, or 22% of the total. All except one of these hotels currently collects TOT at 11.5%. If the rate was to drop to 10%, TOT collections would be reduced by about $368,000 per year. There are 5 hotels with 481 rooms that are currently listed as Group Meeting Hotels collecting TOT at 12.5% that fall into the initiative's 51 to 124-room category. Under the initiative, their TOT rate would decline to 11.5%. It is unclear how this would affect the hotels' status as Group Meeting Hotels, since the collection of the higher rate is essentially a voluntary pass through to the Palm Springs Desert Resorts CVA. However, this reduction could cost about another$100,000 per year in reduced TOT collections. There are 5 hotels with 748 rooms that are currently collecting 11.5%. Because each has 125 or more rooms, the initiative would increase their rate to 12.5%. This would increase TOT collections by about $150,000 per year. Passage of the initiative would add administrative complexity to TOT collections and statistical reports. Attached are various historical reports re TOT. tothls collection history 7/24102 CITY OF PALM SPRINGS COMPARISON OF ANNUAL TOT COLLECTIONS Fiscal Year TOT Rate Actual Collections Annual Collections Adj to 10. 5% % Change 1988-89 9. 00% 6, 168, 698 7,196,814 1989-90 9. 00% 6,234,813 7,273 , 949 1. 07% 1990-91 9. 00% 6, 346,224 7,403,928 1.79% 1991-92 10. 00% 7, 133 ,294 7,489, 959 1. 16% 1992-93 -- 10.50% * 6,980,806 6, 980,806 -6.80% 1993-94 10.50% * 7,207, 109 7,207, 109 3 .24% 1994-95 10.50% * 7,647, 158 7, 647, 158 6. 11% 1995-96 10. 60% ** 8,341, 137 8,262 ,447 8. 05% 1996-97 10.50% * 9, 092, 342 9, 092,342 10. 04% 1997-98 10.50% * 9, 675,462 9,675,462 6.41% 1998-99 10.50% * 10, 900,934 10,900,934 12 . 67% 1999-00 10.50% * 11,742,588 11,742,588 7.72% 2000-01 10.50% * 11, 681,444 11, 681,444 -0.52% 2001-02 est 11.40% *** 111800,000 10,868,421 -6.96% 2002-03 12. 05% **** 12,800,000 11, 153,527 2 . 62% * The actual TOT rates are 10.8% for Group Meeting Hotels, and 10% for all others. The 10. 5% shown here is the approximate blended rate. ** The rates were increased by .1% to help pay for the Electrical Municipalization Study. ***The actual TOT rates are 10.8% for Group Meeting Hotels, and 10% for all others thru 12/31/01, and 12 . 5% and 11. 5%, respectively, effective 1/1/02 . The 11.4% shown here is the approximate blended rate. ****The actual TOT rates are 12.5% for Group Meeting Hotels, and 11.5% for all others. The 12 .05% shown here is the approximate blended rate. IdNt Ike Hflay 11I0.01 CITY OF PALM SPRINGS ISTORY OF TRANSIENT OCCUPANCY TAX (TOT) RATES IN PALM SPRINGS Date of Change Rate 4/13/67 4.00% l/l/68 5.00% 10/1/72 6.00% 7/1/78 7.00% 9/l/84 9.00% 8/1/91 10.00% 8/l/92 10.80% 11/1/95 10.90% ** 11/1/96 10.80% 1/l/02 12.50% *** * Group Meeting Hotels only; all others are 10% **Group Meeting Hotels only; all others are 10.1% **Group Meeting Hotels only; all others are 11.5% TOT RATES IN COACHELLA VALLEY Cathedral City 10.00% Coachella N/A Desert Hot Springs 10.00% Indian Wells 9.25% Indio 10.00% La Quinta 11.00% Palm Desert 9.00% Rancho Mirage 10.00% County of Riverside 10.00% TOT RATES IN OTHER CITIES Anaheim 15.00% Las Vegas 9.00% Los Angeles 14.00% Monterey 10.00% Phoenix 12.07% Reno 12.00% Sacramento 12.10% San Diego 10.50% San Francisco 14.00% Santa Barbara 12.00% Santa Cruz 10.00% Santa Monica 12.00% Seattle 15.60% tothls Group Mtg hotels 11/9/01 CITY OF PALM SPRINGS LISTING OF GROUP MEETING HOTELS AS OF DECEMBER 1, 2001 Permit# Name of Hotel No. of Units 250 Hyatt Regency 192 605 Marquis resort 164 610 Epic Resorts 1.01 1135 Hampton Inn 96 1175 Palm Springs Riviera 475 1430 La Mancha Resort 54 1590 Givenchy Spa Resort 98 1710 Palm Mountain Holiday Inn 1.22 1785 Ramada Resort 255 1790 Palm Court Inn 1.10 1810 Caliente Tropics Resort 92 1890 Racquet Club 40 2060 Palm Springs Hilton 260 2105 Marriott Courtyard 161 2120 Spa Hotel 230 2500 Wyndham Hotel 410 Subtotal, Group Mtg. Hotels 2,860 All Other Hotels 3 ,555 Total Units 6,415 MEMORANDUM Date: July 24, 2002 To: Honorable Mayor and Members of the City Council From: David J. Aleshire, City Attorney Subject: November Ballot Measures A. CITIZEN INITIATED BALLOT MEASURES 1. Attached is the City Clerk's memo of July 22, 2002 with the citizen initiative measures which have now been certified for the November ballot. 2. By August 9(your meeting of August 7)we will need to bring resolutions to Council calling the election. 3. The form initiative measures include principally the following points: (a) Eliminates 5% Utility Tax (currently collect$5.6M or 12% of City's General Fund budget) (b) Term Limits: (1) 2 terms or 10 years (2) Council and Commission Offices (3) Retroactive; not limited to consecutive service (c) TOT (1) Changes rate structure by number of rooms rather than category - Current: Group Hotels - 12.5%; Other 11.5%; Proposed: Over 125 Rooms - 12.5%; 50 to124 Rooms - 11.5%; Less than 50 Rooms - 10% See Finance Director memo - $200,000 - $300,000 impact (2) Restricts Expenditures: ♦ Tourism, parking, libraries, parks, seniors, youth, art, and special events ♦ Not public safety (police, fire)which is '/z of budget 4. Parking -Discussed below of PALM a V � k y k k •bfloll cq</FO RN�P FFB. LTERNATIVE MEASURES 1. Council can put alternative measures on the ballot 2. Examples (a) Utility Tax Reduction, 2-3% -(b) Limit Term Limits to Elected Office (c) Allow TOT expenditure on public safety 3. Subcommittee recommends no alternatives (a) Ballot too complicated (b) Should fight measures as a group as fundamentally flawed C. PARKING MEASURE 1. Provisions of measure (a) Prohibits all charges for parking, including metering, in-lieu fees for development, and others (except airport) (b) No reservation of parking spaces (except handicap) (c) No time restriction on parking (except overnight) (d) No taxes for parking 2. Effect (a) Prohibits City from doing projects like downtown parking structure (b) Prohibits time parking restrictions which prevent employees from consuming all parking spaces (c) Numerous other impacts 3. Alternative Measures 4. Legality (a) Initiatives must be legislative in nature, not administrative (b) Arguably dealing with parking restrictions, time limits is administrative (c) Issue whether pre or post election challenge. Generally,courts prefer to test validity after an election OF PALM s Aop, yC U � C'9(/FOP. D. COUNCIL INITIATED MEASURES (Subcommittee Recommendations) 1. 31d Highest vote-getter (a) 3 months before/after election (b) Next highest vote-getter irrespective of number or percentage of votes (e) Only for same office that they ran for(Council office) 2. Process to Appoint to Boards and Commissions (a) Recruitment process by Council resolution (b) At public meeting, any Councilmember may nominate (c) 3 affirmative votes by Council to appoint (d) All Councilmembers and Mayor have equal authority 3. Proclamations City Attorney will outline process for future Study Session to be adopted by resolution OF PALM S N� U � x + 4