The Hollister City Council voted last week to put a proposed occupancy tax increase on the ballot for the November 2024 general election. If passed, this would be the first time since 1986 that voters will decide to increase the tax on hotel stays and other short-term lodging in the city.
The transient occupancy tax (TOT) is a source of revenue for California cities that is applied to stays at hotels and other lodgings that are less than 30 days. Generally, the tax is paid by tourists or other people visiting the community and is commonly known as a hotel tax. The tax does not apply for stays longer than 30 days and it is intended to only tax short-term visitors, not city residents or those on extended stays.
In 1986, the Hollister City Council adopted Ordinance No. 672, which created the TOT rate for the city. The current rate is 8% and has not changed since the TOT was created, according to a city staff report.
California state law gives cities and counties the authority to impose TOT’s at their discretion and the cost is typically added to room rates at hotels, motels and other lodgings. Hollister’s current TOT rate is lower than other regional cities. Monterey, San Jose and Salinas all have TOT rates of 10%. San Juan Bautista’s hotel tax is 12%.
In 2014, Measure L was put on the ballot in Hollister to increase the TOT to 12%. It failed to pass. Council member Tim Burns said at the Aug. 21 meeting that he does not want the city to miss out on the potential revenue an increase would bring.
“We’re leaving money on the table every year that we don’t [increase the tax],” Burns said. “The time has come and I couldn’t agree more. Also, […] we need to really find somebody to aggressively and correctly portray what this really is. It’s my understanding that the thoughts the last time it failed was [that] people were concerned that we’re going to tax the homeless, and that couldn’t be further from the truth.”
The word “transient” is often used for people experiencing homelessness and Burns alluded to the confusion Hollister residents might have had if they were not properly informed of what the TOT actually does, which resulted in Measure L’s defeat in 2014.
In order to properly inform the public, the city is planning to team up with Best, Best & Krieger, an election consultancy firm, to work out the language of a ballot measure and to find the best ways to convey the information to voters.
“If we do move forward with this, we really have to think about the campaign behind educating and making sure that we have someone that knows what they’re doing in terms of educating the public. That it’s not really a tax on them and what it really means, so we may need to invest in that as well,” said Vice Mayor Dolores Morales.
Educating the public includes detailing exactly how a tax on hotel stays will financially benefit the city and public services, city officials said.
“I think the public wants to see the value that they’re getting in return […], it feels like we could use the money for pretty much anything we wanted if we received it, but I would argue that we hire another firefighter or we hire another police officer or you pick it so that people can really truly see the value of this,” Burns said.
For every 1% that the city’s TOT is increased, it would generate approximately $75,000 more in annual revenue to the city’s general fund, according to the staff report. The general fund supports the city’s basic public services, including police, fire and emergency medical services, as well as parks and streets.
The city council made the decision by consensus Aug. 21 to put the matter on the Nov. 5, 2024 general election. No measure proposal has been drafted as of yet.