REPORT TO COUNCIL
SUBJECT
Title
Resolution Increasing the Transient Occupancy Tax Rate from 9.5% to 11.5% effective January 1, 2022; and Introduction of an Ordinance Amending Section 3.25.030 of the Santa Clara City Code to Reflect the Increase in the Transient Occupancy Tax Rate
Report
COUNCIL PILLAR
Enhance Community Engagement and Transparency
BACKGROUND
The City's current Transient Occupancy Tax (TOT) rate is 9.5%, which is one of the lowest in the County. On November 3, 2020, Santa Clara voters approved the following ballot measure that allows for an increase of up to four percentage points in the City's TOT.
This ballot measure, approved by 73.57% of Santa Clara voters, supports essential City services, paid by guests staying in hotels. With this measure, the TOT can be increased from the current rate of 9.5% to up to 13.5%.
As part of the adoption of the operating budget on June 22, 2021, staff was directed to bring forward a separate resolution to increase the TOT rate by two percentage points (of the maximum of four percentage points) effective January 1, 2022. The FY 2021/22 and FY 2022/23 Adopted Operating Budget assumes this increase.
DISCUSSION
The introduction of a resolution to increase the TOT rate by two percentage points from 9.5% to 11.5% is consistent with the City Council direction provided as part of the adoption of the FY 2021/22 and FY 2022/23 Biennial Operating Budget.
The voter-approved tax increase is designed to generate General Fund revenue that is used to continue to deliver high quality City services, prepare for disasters and emergencies, preserve the quality of life in neighborhoods, ensure the safety of our community, and pay for critical infrastructure needs. While up to a four-percentage point increase was approved by the voters, the recommended action increases the TOT rate by two percentage points effective January 2022. This lower increase and later implementation date take into consideration the impacts to t...
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