Del Mar hikes transient occupancy tax

Del Mar’s Tourism Business Improvement District may be dissolved, but marketing efforts for the city’s hotels will continue through a bump in transient occupancy tax.

With Councilman Terry Sinnott absent, the City Council voted 4-0 at the Oct. 5 meeting to increase the tax from 11.5 to 12.5 percent. Paid by hotel visitors, the new tax rate is effective Oct. 6.

The 1 percent increase will replace the funding formerly provided by the Tourism Business Improvement District.

In November 2008, Del Mar voters approved an increase in the transient occupancy tax rate from 10.5 percent to 13 percent. Rather than collect the full increase, however, the council allowed hotels in the city to create the district, which imposed a 1 percent room rate fee on guests to promote Del Mar, resulting in a 12.5 percent assessment on hotel bills.

Formed in 2010, the district was authorized for five years and automatically expired at the end of September.

The council on Sept. 21 decided to discontinue the district and instead fund marketing efforts through an increase in the tax, which will be administered by the Del Mar Village Association.

With the vote, the council on Oct. 5 authorized City Manager Scott Huth to negotiate and execute an agreement with the Del Mar Village Association, contingent upon approval from the council liaisons.

The Del Mar Village Association will continue the marketing efforts established by the district, which include maintenance of the Dream Del Mar website, as well as advertising campaigns, social media, special events, and public and media relations. The association will be required to produce performance metric reports.

“The TBID is just finally getting up and running, in terms of its marketing activities, so this would build on that momentum and keep it going forward,” said Assistant City Manager Mark Delin.

Transient Occupancy Tax revenues are anticipated to increase $205,000 on an annual basis, or $153,750 for the nine months of the fiscal year that the tax increase will be in effect. With the vote, the council appropriated $180,000 for marketing efforts, in the event that revenues from the 1 percent increase exceed projections.

Future funding will be based on projected transient occupancy tax rate revenue. The agreement will be subject to annual renewal during the budget process.

The city will send out letters announcing the increased tax on Oct. 6. And because a public hearing regarding the continuation of the district had already been scheduled, it is still slated for Oct. 19.