COMMUNICATION FROM THE CITY ATTORNEY, ORDINANCE FIRST CONSIDERATION, and BALLOT RESOLUTION relative to a ballot measure regarding the City's transient occupancy tax (TOT) and applying the TOT to online travel companies.

Summary

This item proposes placing a ballot measure before voters on June 2, 2026, to apply the City's Transient Occupancy Tax (TOT) to online travel companies and platforms. The measure aims to close a tax collection gap that arises when these companies negotiate discounted hotel rates but charge customers higher prices. If approved, it would require online travel agencies to collect and remit the TOT on all charges and fees for hotel occupancy. The City Administrative Officer estimates this measure will generate approximately $5 million per fiscal year for the general fund. The proposed ordinance also clarifies definitions within the Municipal Code related to 'Rent,' 'Operator,' and introduces terms like 'Facilitation Fee,' 'Intermediary,' and 'Discount Room Charge' to address the nuances of online bookings. This measure is designed to be complementary to another TOT measure potentially on the same ballot that increases the tax rate.

Citizen Impact

If approved by voters, this measure will ensure that the Transient Occupancy Tax is collected on all hotel bookings made through online travel companies, potentially leading to slightly higher costs for hotel stays booked via these platforms. The revenue generated will support general City services.

Confidence

high