REPORT TO COUNCIL
SUBJECT
Title
Discussion and Direction on the Santa Clara Tourism Improvement District (TID) Assessment Formula and Transient Occupancy Tax [Council Pillar: Promote and Enhance Economic and Housing Development]
Report
BACKGROUND
A base transient occupancy tax (TOT) is charged to hotel guests when they rent accommodations in a lodging business for a period of less than 30 days. Currently, Santa Clara's base TOT rate is set at 9.5% and as a part of the City's future financial planning, it was identified that increasing the City's TOT rate could be one potential revenue enhancement area Council may wish to consider. A separate report on the February 11, 2020 Council agenda discusses the City's overall fiscal outlook and potential revenue areas.
On November 12, 2019, staff presented City Council with the Santa Clara Tourism Improvement District's (TID) request to establish the TID under the Property and Business Improvement District Law of 1994 and proposed to change the district assessment from $1.00 per occupied room night to 2% of gross revenue (RTC 19-920). A policy consideration on the conversion of the TID formula is the overall transient occupancy tax (TOT) being charged. As an increase in the base TOT is being considered, Council approved to move forward with the establishment of the new district under the 1994 Law and requested additional comparative data on cities with similar districts and overall TOT.
This report provides information as requested by Council and other options for the TID assessment.
DISCUSSION
The lodging businesses within the current TID area collect a $1.00 per occupied room night fee from hotel/motel guests. This is the same assessment formula that has been used since the TID was formed in January 2005. The lodging businesses in the TID have proposed a change the district assessment to 2% of gross revenue of short-term rentals. As the 11 TID hotels (AC Hotel Santa Clara, Avatar Hotel, Biltmore Hotel & Suites, ...
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