A group of Hermosa Beach residents is gathering signatures to place an increase of the city’s hotel bed tax before voters in November. The petition comes after the city council recently could not agree to bring the issue to voters.
The residents, led by Marie Rice, are proposing a two-percent increase in the hotel bed tax, or transient occupancy tax (TOT), which would be tacked onto hotel, motel and short-term rental bills and paid by visitors. The city currently levies a 10 percent tax on hotel stays. The measure would raise that to 12 percent.
The idea is to raise revenue to improve streets, sidewalks, sewers, public buildings, fire and police departments, the library, and parks. The city currently generates about $2.2 million a year from the hotel bed tax, and could generate an additional $440,000 a year if the tax were raised 2 percent, said city finance director Viki Copeland.
With three new high-end hotels expected to be built in the coming years — Clash, Strand + Pier and another project planned for the south side of the pier on 11th Street — residents believe the timing is right to raise the tax. The tax would also be a way to fill city coffers following the defeat of oil drilling proposal Measure O in March, proponents said.
“We are a tourist town,” local resident Dency Nelson, who supports the tax increase, recently told the city council as it considered putting a measure before voters. “This is a way to compensate the city for what it provides the hotel owner … It’s a way to focus on creating the quality tourist town we want.”
Hermosa’s hotel bed tax is low compared with other prime tourist destinations in Los Angeles County, including Santa Monica, which levies a 14 percent tax; Redondo Beach, which has a 12 percent tax; and Beverly Hills, which charges 14 percent. (Manhattan Beach charges 10 percent).
At its April 28 meeting, the council considered a motion from Councilman Hany Fangary to put a tax increase measure before voters in November. The motion needed 4-1 approval from the council, but failed after Councilwoman Carolyn Petty and Councilman Michael DiVirgilio voted against it.
Petty said not enough research was done to merit putting the issue before voters.
“There was no outreach to existing hotels,” she said. “I had a discussion with the Beach House, and they said people negotiate down to the bottom level and that this would hurt them … Who increases capacity and taxes at the same time?”
Proponents of raising the tax have argued it would have effectively no impact on whether visitors choose to stay in local hotels. The tax increase would add $5 to a $250 hotel room bill.
“I have never made a vacation decision based on the transient occupancy tax,” local resident Lauren Pizer Mains told the council. “ (And) I don’t know anyone else who has made a decision based on that.”
DiVirgilio said he was worried that short-term rentals, such as those listed on AirBnB, would be exempt from the tax increase, since they are not currently covered in the municipal code.
“I’m not interested in increasing the burden on folks who are following the rules while we are not on the people who are not following the rules,” he said.
To address those concerns, the petition stipulates the 12 percent tax would apply to short-term rentals of less than 30 days.
Councilwoman Nanette Barragan was incredulous that the city is proposing a $92 sewer fee on every house or condo owner, but that it could not agree to allow voters to decide to raise a smaller tax from visitors.
“Voting for any other fee shows ‘I’m more willing to tax you as a resident than I am a visitor,’” she said.
Fangary was equally dismayed the council could not agree to put the issue before voters.
“I thought this was the simplest item on our agenda,” Fangary said. “It’s the voters’ decision. They’ve showed us they can show up – it’s up to them to make the decision.”
The day after the council meeting, Mayor Peter Tucker met with concerned residents and began planning the petition.
“I said to myself, ‘Why don’t we do it the old fashion way?’” Tucker said. “The next day we got started on it … The city needs to move forward and get this up to 12 percent.”
Rice began circulating the petition this week. She will need a relatively small number of signatures — 322 — in order to put the issue before voters. (As a tax increase, the petition only needs to gather support from the equivalent of 5 percent of voters that turned out in the last gubernatorial election. Only 6,435 Hermosa voters turned out in November).
City Clerk Elaine Doerfling said signatures will need to be gathered and filed with the city in about a month to meet the county’s August 7 deadline for all materials to be submitted.
