Pass: 11,253 / 80.59% Yes votes ...... 2,710 / 19.41% No votes

See Also: Index of all Measures

     NO

This measure would increase the City's Transient Occupancy Tax, commonly known as the "hotel tax", from 10% to 12%. The hotel tax is charged by the City to guests at hotels located in Palo Alto. The tax is computed by multiplying the rent charged by the hotel operator by the tax rate percentage. For example, a guest paying a $100 hotel rate for a one night stay would see their total hotel tax increase from $10 to $12 if this measure is adopted. Guests with occupancies of longer than 30 days are not subject to the tax.

Hotel tax revenue accounts for more than 5 percent of the City's total general fund revenue. The City estimates that the hotel tax revenues from this 2% increment will generate additional hotel tax revenues of approximately $1,200,000, which will be available to the City for any general fund purpose, such as police, fire, public works, capital improvements, parks and recreation, and library.

Hotel tax rates vary from city to city. Across California, tax rates range from a low of 8% to a high of 15%. This tax measure imposes a general tax and will take effect if passed by a simple majority (50% + 1) of voters casting a vote on the measure. If the measure does not pass, the hotel tax would remain at 10%.

PREPARED BY:

/s/ Gary M. Baum
    City Attorney

City of Palo Alto Municipal Code

The League of Women Voters Voters of Palo Alto presents Pros and Cons on Measure M in its Voters Guide

The Midpeninsula Media Center is broadcasting a League presentation of the Pros and Cons of Measure M. Click here for the Media Center schedule of the broadcasts

You may also see the Pros and Cons on line on the Media Center Web site

Palo Alto Daily News

Palo Alto Weekly

Palo Alto needs the revenue that will be generated by a 2% increase in the Transient Occupancy Tax (hotel tax) to maintain the high level of community services that Palo Altans rightfully pride themselves on.

Since 2001, the City has eliminated 80 positions and cut $20 million in expenditures. At the same time, we have committed an additional $3 million dollars per year to maintain and rehabilitate our infrastructure. Recent events in other areas of our country have sadly shown that failure to maintain infrastructure can have tragic results. We have more than $100-¬million in infrastructure needs, not including a new library or public safety building.

Budget cuts, however, can take us only so far. We need additional revenue. The hotel tax is one of the few locally controlled revenue sources from which we receive 100% of the benefit. This pass-through tax has not been increased since 1983 and is paid by travelers, not hotels. Increasing the rate from 10% to 12% will result in a modest $2.75 increase to the cost of the average daily stay and will not diminish the attractiveness of staying in a Palo Alto hotel. East Palo Alto charges 12% and San Francisco 14%.

A "YES" vote will generate additional revenue of $1.2 million. It would take an increase of $120 million in taxable sales or $12.6 billion in increased property valuations to generate the same revenue from the sales or property tax.

The City Council unanimously urges you to vote YES.

/s/ Bern Beecham
    Palo Alto City Council

/s/ Larry Klein
    Palo Alto City Council

/s/ Jack Morton
    Palo Alto City Council

/s/ Dena Mossar
    Palo Alto City Council

ORDINANCE NO. _____

ORDINANCE AMENDING CHAPTER 2.33 OF TITLE 2 OF THE PALO ALTO MUNICIPAL CODE RELATING TO THE TRANSIENT OCCUPANCY TAX

The People of the City of Palo Alto do ordain as follows:

SECTION 1. Chapter 2.33 of the Palo Alto Municipal Code is hereby amended by amending Section 2.33.020 as follows:

2.33.020 Tax imposed

For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of twelve (12%) percent of the rent charged by the operator. Said tax constitutes a debt owed by the transient to the City, which is extinguished only by payment to the operator or to the City. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be made with each installment. Any unpaid tax shall be due upon the transient's ceasing occupancy in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Supervisor of Revenue collections may require that such tax shall be paid directly to the Supervisor of Revenue Collections.

SECTION 2. GENERAL TAX. Proceeds of the tax imposed by this Ordinance shall be deposited in the general fund of the City and shall be available for any legal purpose.

SECTION 3. CONSTITUTIONALITY; SEVERABILITY. If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be invalid, such decision or decisions shall not affect the validity of the remaining portions of this ordinance. The People hereby declare that they would have passed this ordinance, and each section, subsection, sentence, clause and phrase thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses or phrases be declared invalid.

SECTION 4. EFFECTIVE DATE. This ordinance shall be effective immediately upon adoption. However, the increased tax imposed by this ordinance shall be effective only with respect to rent paid to a hotel operator for the portion of an occupancy that occurs on or after January 1, 2008. The tax with respect to any portion of an occupancy occurring before January 1, 2008 shall be levied at the rate in effect before the adoption of this Ordinance.

SECTION 5. EXECUTION. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.

I hereby certify that the foregoing Ordinance was PASSED, APPROVED and ADOPTED by the people of the City of Palo Alto voting on the 6th day of November, 2007.

ATTEST:                       APPROVED:

City Clerk                    Mayor