Del Mar to explore raising transient occupancy tax rate

By Kristina Houck

To generate more revenue for Del Mar, the City Council on Sept. 16 gave staff the go-ahead to explore raising the city’s transient occupancy tax rate.

The city collected more than $1.8 million from the transient occupancy tax, a per-night tax on tourists who stay in hotels for fewer than 30 days, in fiscal year 2012. Staff suggested the council adjust the rate from 11.5 percent to 12, 12.5 or 13 percent to collect even more funds.

An increase to 12 percent would generate about $87,000 in new annual revenues for fiscal year 2014-15 based upon the adopted two-year budget and revenue projection approved by the council on June 3. A 12.5 percent increase would generate $175,000, and a 13 percent increase would generate $261,000.

Currently, neighboring Solana Beach has the highest rate in the region at 13 percent, while Lemon Grove has the lowest rate at 6 percent.

Del Mar resident Jacqueline Winterer spoke in favor of increasing the tax, especially if it could help construct a new city hall.

“You need new funding, new sources of funding, and a transient occupancy tax looks like a good beginning,” Winterer said.

Councilman Al Corti agreed and said he was “glad this is back on the table.”

“I’m in support of raising the TOT,” Corti said. “I think we have other priorities and things that we want to accomplish in the city. To not do that, we’re leaving money on the table. I think it makes us competitive with Solana Beach.”

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

Mayor Terry Sinnott said he appreciated staff exploring revenue-generating ideas, but he was hesitant to raise rates.

“I’m glad we’re looking at this, but I’m a little worried that we raise the rates,” Sinnott said. “I’m looking at not only the TOT, but the TBID at the same time — the total rate. That would put us, I think, not as competitive as we need to be.”

After obtaining feedback from local hotel and motel operators, city staff is expected to return in October with a resolution.