Using a balanced approach to supporting municipal services

By Richard Earnest

Mayor, Del Mar

The City of Del Mar, along with municipalities all over the country, is feeling the painful financial squeeze of the recession.

The current two-year budget, adopted in June of this year, manages to maintain city services by cutting vacant positions, freezing salaries, and limiting maintenance and capital programs to core essential services and to those programs that have other funding sources, such as Streetscape, the North Torrey Pines Bridge and the 21st Street Pump Station.

The other part of the solution is to implement new revenue sources. The city has increased its transient occupancy tax from 10.5 percent to 11.5 percent, has updated its cost allocation plan to better recover its indirect costs in rates and charges, and will shortly increase its planning and development fees for the first time since 2004. Despite these efforts to cut expenditures and increase revenues, city reserves continue to bump along at just above its 10 percent minimum reserve level.

Del Mar continues to struggle with creating revenue sources that appropriately distribute the cost for services that are enjoyed by not just our residents, but by the many visitors that frequent our beautiful beaches. One such idea the city is considering is a revenue source that has been implemented by some of its neighbors — a transient occupancy tax (TOT) on short-term vacation rentals.

While the city applies TOT to lodging structures of greater than three units, it does not collect TOT on short-term vacation rentals, which would allow the city to recoup the costs of providing services to these users of our parks and beaches. Just like our hotels, motels and timeshares, the TOT would be paid by guests, and remitted to the city by the property owner or manager. The coastal cities of Solana Beach, Encinitas, Carlsbad, Oceanside, San Diego and Imperial Beach all regulate and apply a TOT to short-term rentals, with rates in the 10 percent to 13 percent range.

It is estimated that there are at least 75 vacation rentals in Del Mar. Applying the current 11.5 percent TOT rate to vacation rentals may yield as much as $200,000 per year in much needed revenue. On Jan.25, the council will consider this option to continue to ensure financial sustainability with a focus on equitable balance. Your input is welcome on this important issue.

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