SR 12-13-2022 5P
City Council
Report
City Council Meeting: December 13, 2022
Agenda Item: 5.P
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue
Subject: Adoption of a Resolution Establishing March 1, 2023 as the Implementation
Date of the Transient Occupancy Tax Rates in Measure CS
Recommended Action
Staff recommends that the City Council adopt a resolution setting the implementation
date for Measure CS (increasing the City’s Transient Occupancy Tax rate by 1
percentage point for hotels and by 3 percentage points for home-shares) as March 1,
2023.
Summary
At the November 8, 2022, General Election, a majority of Santa Monica voters approved
Measure CS, which increases the City’s Transient Occupancy Tax (TOT) to 15% for
hotel stays and 17% for home-share stays. The vote was certified by the City Council
on December 6, 2022, and per Elections Code Section 9217, the measure becomes
effective 10 days later (December 16, 2022). However, to allow sufficient time for
hotels, home-share platforms, and home-share properties to update their billing and
reservation systems, marketing materials, and complete any other required
administrative changes, staff recommends an implementation date of March 1, 2023, for
the new rates. This date will coincide with the date set by Measure CS for establishment
of an advisory committee whose role would be to make non-binding recommendations
regarding the expenditure of the incremental funds raised by the measure.
Discussion
At the November 8, 2022, General Election, a majority (over 73%) of Santa Monica
voters approved Measure CS, which amends Santa Monica Municipal Code (Code)
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Chapter 6.68 to set the Tax on Transients for Occupancy (Transient Occupancy Tax or
TOT), paid by persons visiting Santa Monica for 30 days or less as a percentage of
the total amount paid for room rental, at 15% for hotels and at 17% for home-shares.
This is an increase of one percentage point for hotels and three percentage points for
home-shares. In addition, the approved ordinance makes minor adjustments to Chapter
6.68 of the Code to clarify existing language and align outdated sections with existing
practices.
On December 6, 2022, the City Council certified that the voters approved Measure CS.
Per Elections Code Section 9217, the effective date of the amendments to the Code is
10 days after certification (December 16, 2022). However, staff recommends that
collection of the additional tax would begin on March 1, 2023. This will allow time for
the City to provide appropriate outreach to all businesses impacted by the rate increase,
as well as allow the hotels, home-shares, and home-share platforms, such as Airbnb
and Homeaway, sufficient time to make necessary changes to their billing and
reservation systems, marketing materials, and other associated administrative changes.
Measure CS also calls for an advisory committee to provide non-binding
recommendations for use of the additional funds generated by the new tax rates. The
measure requires that the committee be established by resolution of the Council by
February 28, 2023, which coincides with the recommended implementation date.
Environmental Review
This is not a project for the purpose of CEQA.
Financial Impacts & Budget Actions
Staff expects the higher TOT rates will increase General Fund revenues
by approximately $1.4 million in FY 2022-23 reflecting the March 1, 2023
implementation date, and approximately $4.1 million per year in the following years.
There is no anticipated financial impact associated with the other ordinance revisions.
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Prepared By: David Carr, Assistant City Treasurer
Approved
Forwarded to Council
Attachments:
A. Measure CS Resolution
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City Council Meeting: December 13, 2022 Santa Monica, California
RESOLUTION NUMBER _________ (CCS)
(City Council Series)
A RESOLUTION OF THE CITY COUNCIL
OF THE CITY OF SANTA MONICA ESTABLISHING MARCH 1, 2023 AS THE
IMPLEMENTATION DATE OF THE TRANSIENT OCCUPANCY TAX RATES IN
MEASURE CS
WHEREAS, Article XI, section 5, subdivision (a) of the California Constitution gives
charter cities, including the City of Santa Monica, the power to “make and enforce all
ordinances and regulations in respect to municipal affairs, subject only to restrictions and
limitations” contained in their own charters; and
WHEREAS, the constitutional power of charter cities to regulate their own
municipal affairs has been held to include the power to tax local businesses for revenue
purposes; and
WHEREAS, Revenue and Taxation Code sections 7280 et seq. authorizes cities
to impose a transient occupancy tax; and
WHEREAS, Chapter 6.68 of the Santa Monica Municipal Code imposes a 14% tax
on the privilege of occupancy in a hotel within the City, commonly known as the transient
occupancy tax (“TOT”); and
WHEREAS, on or about June 28, 2022, the City Council of the City of Santa
Monica (the “City Council”) voted in favor of placing a measure on the November 8, 2022
ballot which would increase the TOT rate an additional 1% for hotels and an additional
3% for home-shares (“Measure CS”); and
WHEREAS, a majority of voters approved Measure CS at the November 8, 2022
general election; and
5.P.a
Packet Pg. 373 Attachment: Measure CS Resolution (5494 : Resolution Establishing March 1, 2023 as the Implementation Date of the Transient Occupancy Tax
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WHEREAS, under Elections Code section 9217, an ordinance approved by a vote
of the people is deemed adopted on the date the Council certifies the election results
indicating the measure received the required votes; and
WHEREAS, on December 6, 2022, the City Council certified the November 8, 2022
election results, including the passing of Measure CS by a majority of voters; and
WHEREAS, under the Elections Code, Measure CS would be operative on
December 16, 2022; and
WHEREAS, local businesses, home-share operators, and home-sharing platforms
would benefit from additional time to update their billing systems, marketing materials,
and to complete other administrative changes to disclose and collect the increased TOT
rates in Measure CS; and
WHEREAS, City staff would like to conduct additional outreach to local
businesses, home-share operators, and home-sharing platforms to ensure a smooth
transition to the new TOT rates; and
WHEREAS, implementing the TOT rates in Measure CS beginning on March 1,
2023 will provide local businesses with sufficient time to make the necessary changes to
collect the new TOT tax rates and allow City staff to complete the recommended outreach.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA
DOES RESOLVE AS FOLLOWS:
SECTION 1. The City Council declares that the increased TOT rates set forth in
Measure CS will be implemented on March 1, 2023.
SECTION 2. The City Clerk shall certify to the adoption of this Resolution, and
thenceforth and thereafter the same shall be in full force and effect.
5.P.a
Packet Pg. 374 Attachment: Measure CS Resolution (5494 : Resolution Establishing March 1, 2023 as the Implementation Date of the Transient Occupancy Tax
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APPROVED AS TO FORM:
_________________________
Douglas Sloan
City Attorney
5.P.a
Packet Pg. 375 Attachment: Measure CS Resolution (5494 : Resolution Establishing March 1, 2023 as the Implementation Date of the Transient Occupancy Tax