City heightens efforts to tax some rentals

Goal is for June ballot measure

What is a hotel?

That is the roughly $200,000 question Del Mar voters may have to answer come summertime. The city is moving quickly to put a measure on the June ballot that would extend the definition of a hotel to short-term vacation rentals so that it can apply its 11.5 percent transient occupancy tax to this type of lodging.

“The fact that we’re surrounded by communities that already charge TOT means that we’re below the market,” Deputy Mayor Donald Mosier said.

Del Mar currently imposes the tax on hotels and time shares, but San Diego and other coastal cities such as Solana Beach, Encinitas, Carlsbad and Oceanside enforce it on short-term vacation rentals as well.

“I think the fact is that we probably do incur a lot of cost that we’re not getting reimbursed for,” Mosier said.

The TOT produces nearly a fifth of Del Mar’s tax revenues, trailing only property tax income. A recent staff report projects more than $1.3 million gained in TOT this year, but that is still $300,000 less than originally predicted.

In what he called conservative estimates, City Planner Adam Birnbaum said there were 75 short-term vacation rentals in Del Mar at a price of $2,500 per week. That could yield roughly $200,000 in revenue given the amount of weeks in peak season.

“I’d rather estimate low and be happily surprised,” Birnbaum said.

The city increased the TOT from 10.5 to 11.5 percent last July, and is exploring bumping it to 12.5 percent to create a new tourism marketing board for its six area hotels. Solana Beach imposes a 13 percent TOT, while Carlsbad’s is 10 percent.

“This is not a new concept and therefore there are many ordinances available to us to be able to look at and work off of,” said City Manager Karen Brust, adding this tax was one of several projects the city highlighted as a goal for this year. “It’s just a matter of bringing all those pieces together and bringing them back to the City Council.”

Del Mar will also consider imposing a licensing fee to pay for the administrative costs of enforcing the tax. In other parts of San Diego County, these range from as low as $30 to $150. Critics of the measure say it will cost the city more to administer the tax on private homeowners than it will actually produce in revenue.

“This will almost be a wash at the end of the day,” said Brett Combs, president of Pacific Shore Platinum, which manages several short-term rentals in Del Mar.

Any stay of more than 30 days is exempt from a TOT. Del Mar inquired about extending this limit to take advantage of those renting for the entire racing season, but that is prohibited by state law.

Staff will come back to the council with a draft ordinance to be formally presented for approval at the Feb. 8 meeting.

Related posts:

  1. Using a balanced approach to supporting municipal services
  2. City of Del Mar ready to ‘ride out the storm’
  3. City to consider fee increase for permits
  4. City of Del Mar delays creating tourism panel
  5. SB to cut back city services

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Posted by on Jan 28, 2010. Filed under Archives. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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