TOT worries addressed by council
Community confusion over the relationship between a Del Mar hotel tax ballot measure and a proposed hotel tourism-marketing district has prompted some backtracking on the part of the City Council.
At their Sept. 8 meeting, council members rescinded their initial approval of a transient occupancy tax ordinance considered a companion piece to a November ballot measure. That measure “H,” which will remain on the ballot, allows the council to increase the TOT rate charged by hotels up to 13 percent from its current 10.5 percent rate.
But controversially to several Del Mar residents, including five former mayors and city council members, the accompanying ordinance contained a subsection “D,” whose wording allowed for the council to “consider” a future business improvement district such as a tourism marketing district (TMD) in conjunction with the TOT rate. Although wording of the ballot measure made no mention of any tourism marketing district, the five former councilpersons submitted so-called “arguments against” the measure to be included in the official county election booklet. “Ironically the object of (subsection) D was to head off opposition to the TOT measure,” said Councilman Carl Hilliard who feared opposition could come from hotel operators, who were none too keen on a TOT rate hike to begin with. On Aug. 4 hotel representatives asked that the TOT measure not be put on the ballot.
Speaking on behalf of hoteliers Aug. 4, Thomas Mackey of the Clarion Del Mar Inn, indicated any sizeable increase of TOT tax would interfere with business operations and might dissuade visitors, especially corporate entities, from choosing a Del Mar hotel.
Hilliard and Councilman Richard Earnest spent the following week in discussion with hotel representatives and came back at a specially called Aug. 11 council meeting with a compromise to include tourism marketing district language in subsection D of the ordinance.
Community confusion then followed, according to former Del Mar City Attorney Wayne Dernitiz.
“It created an impression that conditions were being put upon the TOT measure,” he said. “That impression, rather it was correct or not, was prevalent among many members of the community.”
The ballot measure only allows this or future city councils to increase TOT tax at their discretion. Although unlikely, there is no guarantee the tax hike would ever occur at all.
But perhaps not so uncertain is the tourism marketing district. Representatives of the five hotels in Del Mar have already agreed in principal to form the district and have already deposited $28,000 in an escrow account to fund legal and documentation elements of the plan.
“The key here is not rather the TOT is on the ballot or the TMD is formed, said Mike Slosser of the L’Auberge Del Mar hotel, “but that we appropriately market Del Mar as a brand to protect the business community, so this place can be as healthy as possible. That’s the fundamental issue here.”
But the specter of the city losing any general fund money to a privately held hotel marketing fund did not sit well with former Mayor Deborah Groban, one of those who signed the ballot argument against.
“We know (subsection) D is not on the ballot, but it was introduced on the same evening,” she said. “To imply this does not significantly impact the vote is not right. TOT is welcome, but we want the city to have first dibs on that money. Money that otherwise would go into the general fund will go to hotels to form a marketing district. It is not an insignificant amount of money.”
Hilliard and Earnest though, remained supportive of any future marketing district.
“There is no real active marketing of Del Mar,” argued Earnest. “We are the only city in North County that doesn’t direct any money to marketing.”
“Tourism marketing districts are common throughout the state and we’ve (Hilliard and Earnest) studied them thoroughly,” said Hilliard. “We are talking conceptually; there is nothing in front of us. We’ve created opposition for all the wrong reasons.
“We didn’t explain it well and I apologize for that. “The only thing to do is to go back and present this properly. We left the community without an adequate explanation.”
Council members requested further discussion of the ordinance at a future meeting along with the drafting of a substitute ordinance. Because the ordinance was approved on a first reading only last month, it has not yet gone into effect.