Tourism tax proposal set for fall ballot

Door left open for tourism marketing district

The Del Mar City Council on Aug. 11 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 was successful and the council eventually raised 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.

Tourism marketing district discussions

It is still possible that Del Mar will eventually 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 districts 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, according to Cammie Matson, the chief executive officer of the bureau.

“It really is a smart way to control your message,” she said of the marketing district, “and create business plans for the future.”

Not all in attendance at the meeting were supportive of the TMD wording in the ordinance, including City Councilman Henry Abarbanel, who was the lone council dissenter for inclusion of the ordinance’s newly added subsection.

“I have real problems with language changes to city code,” he said. “It tries to legislate common sense and you just can’t do that.” He called the subsection “soporific.”

Despite the fact the ballot measure will not specifically mention a tourism marketing district, other community speakers expressed concerns that any future TMD dollars used in conjunction with TOT revenue would take away from much-needed general fund revenues.

“There are a couple of million visitors to our beach that are being funded by a couple of thousand people,” said resident Bud Emerson. “Decisions about how to spend money should only be made by you,” he said to the council.

But some concerns were expressed that Del Mar; Del Mar proper that is, may need a little branding help.

“If all establishments in North County that claim to be in Del Mar were in Del Mar, we’d be one of the largest cities in the county,” said Councilman Carl Hilliard. “They are riding on the cache´ and reputation of Del Mar. By branding Del Mar we distinguish the hotels that are in Del Mar from the faux Del Mar establishments.”

TOT is a “big-three” revenue source

All council members were in agreement though, that a future transient occupancy tax raise was warranted. The tax is considered one of the three major 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, would result in an estimated $417,000 in additional general fund revenue annually. The last time Del Mar’s voters approved a TOT increase was in the November 2002 election when the rate was increased one-half a percentage point.