VOTER’S INFORMATION PAMPHLET
MEASURES, ANALYSES AND ARGUMENTS
(whichever is applicable to your ballot)
Arguments in support of, or in opposition to, the proposed laws are the opinions of the authors.
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INCREASE IN TRANSIENT OCCUPANCY TAX RATE – HOMELESS SHELTER AND SERVICES. Shall the City of Santa Cruz adopt an ordinance amending Section 3.28.030 of the Municipal Code raising the transient occupancy tax rate from 10% to 12% and dedicating the revenues from the two percent differential to provide additional funding to non-profit homeless service providers for the provision of shelter services, including establishing permanent year-round shelter with appropriate facilities for homeless families and children.

IMPARTIAL ANALYSIS BY CITY ATTORNEY
MEASURE U

This ballot measure, if adopted by City voters, would amend the Santa Cruz Municipal Code by raising the transient occupancy tax rate from the current rate of 10 percent to 12 percent. The transient occupancy tax is a tax paid by hotel and motel guests who spend fewer than 30 consecutive days in a hotel or motel in the City. The tax is on the room rent paid. For example, a hotel guest currently pays $10.00 tax per night on a $100.00 hotel room. If the ballot measure is adopted, the hotel guest would pay $12.00 tax per night on a $100.00 hotel room. The ballot measure would further require the City to dedicate the tax revenue received by the City as a result of the tax rate increase to the funding of nonprofit homeless service providers for the provision of shelter services, including the establishment of a permanent year-round shelter with appropriate facilities for homeless families and children. In other words, 2/12 (16.6 percent) of the revenues generated by the transient occupancy tax would be used to underwrite services for homeless persons. 10/12 of the revenue (83.4 percent) would be deposited in the City’s General Fund and General Capital Improvement Fund and used by the City for the provision of municipal services to its residents and for the construction and maintenance of capital improvements. Currently 100 percent of transient occupancy tax revenues, computed at the rate of ten percent, are dedicated to the City’s General Fund and General Capital Improvement Fund. Because the proposed transient occupancy tax rate increase would be imposed for a specific purpose, the underwriting of homeless services, the ballot measure proposes a "special tax" as defined by Article XIIIC of the California Constitution. Accordingly, for the ballot measure to be adopted, it must receive a two-thirds "yes" vote.

s/ John G. Barisone, City Attorney

FISCAL ANALYSIS BY CITY FINANCE DIRECTOR
MEASURE U

The exact fiscal impact of an increase in the Transient Occupancy Tax Rate cannot be estimated accurately because the amount of tax collected annually varies from year to year due to a number of factors. The major variables include the number of establishments offering temporary lodging, the occupancy rate of those establishments, and the rate charged by those establishments.

During Fiscal Year 1999-2000 (July 1, 1999 to June 30, 2000) the City collected $3,534,933 via a tax rate of 10%. During that fiscal year each 1% of the tax rate yielded $353,493 in tax revenue. Therefore, an additional 2% rate would yield $706,986.

The Transient Occupancy Tax cannot necessarily be expected to increase every year, although it has increased in recent years. During the prior 2 fiscal years revenue receipts from this source have been lower. In Fiscal Year 1998-1999 the City collected $3,174,694 and an additional 2% would have yielded $634,938. In Fiscal Year 1997-1998 the City collected $2,716,397 and an additional 2% would have yielded $534,279.

There would be a nominal increase in the costs of administration of the Transient Occupancy Tax. The change in rate would require the expenditure of funds in an amount not more than $500 for printing of forms to include a revised rate and mailing of notices to the establishments collecting the tax on behalf of the City.

s/ David P. Culver

Director of Finance , City of Santa Cruz

ORDINANCE NO. 2000-

AN ORDINANCE OF THE CITY OF SANTA CRUZ AMENDING SECTION 3.28.030 OF THE SANTA CRUZ MUNICIPAL CODE PERTAINING TO THE CITY OF SANTA CRUZ TRANSIENT OCCUPANCY TAX

BE IT ORDAINED By The City Of Santa Cruz As Follows:

Section 1. Section 3.28.030 of the Santa Cruz Municipal Code is hereby amended to read as follows:

"Section 3.28.030 Tax Imposed.

(a) For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in an amount of twelve percent of the rent charged by the operator. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment by the operator to the City. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient’s ceasing to occupy space in the hotel. If for any reason the tax is not paid to the operator of the hotel, the Director of Finance may require that such tax shall be paid directly to the Director of Finance.

16.6% (2/12) of the revenues generated by the transient occupancy tax imposed by this Chapter shall be dedicated to a fund used exclusively by the City to provide and underwrite services for homeless persons in the City. The remaining revenues shall be deposited in the City’s general fund."

Section 2. This ordinance shall take effect and be in full force upon certification of the election by the County Clerk."

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