The Del Mar City Council on Monday approved an ordinance that will grant authority for the city to increase the transient occupancy tax (TOT) paid by hotel visitors to an amount up to 13 percent. The measure will now need approval by a majority of Del Mar voters in the Nov. 4 general election.
If the measure were successful and the council eventually raises the tax to its maximum, it would more closely align Del Mar with the Tot rate of its neighboring cities. The city of Solana Beach will have a 13 percent TOT rate commencing in January and the city of San Diego currently has 10.5 percent TOT in conjunction with a TMD or tourism marketing district rate of 2 percent, for a total hotel tax rate of 12.5 percent.
It is still possible that Del Mar will also see a tourism marketing tax on hotel bills.
At an Aug. 4 council meeting, hoteliers had requested the city remove the TOT measure from the ballot and instead implement only the tourism marketing district fee. After a week of discussion with hotel officials, an additional subsection was placed in the TOT ordinance that assures hotels any future special improvement district such as a TMD would be considered for inclusion in the total tax rate paid by guests.
Representatives of the five hotels in the city of Del Mar have agreed in principal to form the tourism marketing district, which would be used to fund efforts to better market Del Mar as a tourism destination and possibly fund future improvements to the city's downtown area. Hoteliers have already deposited $28,000 in an escrow account to fund legal and documentation elements of the plan.
"It would be a marketing strategy for not only hotels, but for the community," said the L'Auberge Del Mar's general manager Mike Slosser. "What the fund would not be used for is to supplement a particular hotel's marketing program."
The proposed marketing district has the support of the San Diego North Convention and Visitor's Bureau.
Transient occupancy tax is considered one of the three main sources of general fund revenue for Del Mar, along with property tax and sales tax. Estimated revenue from the tax for fiscal year 2008/2009 is set at $1.75 million, although city officials say that total may have to be revised due to a decline in hotel occupancy rates this summer. A TOT raise alone to 13 percent from the city's current 10.5 percent, will result in an estimated $417,000 in additional general fund revenue annually.