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Measure S would raise tax on Sonoma hotel guests

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Measure S, which would increase a tax paid by Sonoma hotel guests from 10 percent to 12 percent, has support from local hoteliers and appears to have no organized opposition.

If the measure passes, the only people to be taxed would be hotel guests in the city of Sonoma, who would pay 2 percent more on the city’s base Transient Occupancy Tax (TOT) starting Jan. 1, 2019. Also, the measure would allow the council to add another 1 percent any time before Jan. 1, 2024.

One hundred percent of the money generated by the tax would go to the city’s coffers. Some confusion exists because the money from another local hotel assessment goes to the Sonoma Tourism Improvement District (TID), not the city. Measure S involves only the former tax – the TOT.

The transient occupancy tax generates a significant amount of revenue for the city. For example, for the fiscal year 2018-19 budget, city officials estimate that the transient occupancy tax will be 21 percent of the city’s General Fund revenue totaling $3.95 million.

Bumping up the transient occupancy tax to 12 percent – the same base tax amount charged at hotels in jurisdictions including unincorporated areas of Sonoma County and all of Napa County – would raise an estimated $750,000 annually, according to city staff.

It would raise approximately $375,000 more annually if the additional one percent kicked in, city staffers have said.

The TOT is paid by guests in hotels, motels, vacation rentals and bed and breakfast inns – any licensed establishment in the city. The tax is added to the visitor’s lodging bill.

“Generally, local hotels support raising this tax,” said Dan Parks, owner of the Inn at Sonoma and the Sonoma Creek Inn. Residents have also spoken in favor of the proposed tax hike; former mayor Larry Barnett in July urged the City Council to place the measure on the ballot. The council voted unanimously to do so.

“As partners with the community, we (hoteliers) believe the TOT should go up,” Parks said. “About a year and a half ago, local hotel owners wrote a letter to the City Council proposing raising it 2 percent, but for technical reasons it couldn’t go on the ballot.”

Parks was referring to the fact that under election regulations, the proposed hike had to be on the ballot during a council election.

Dan Drummond, executive director of the Sonoma County Taxpayers Association, said his organization has not taken a position on the proposed tax. The group monitors public spending and has been known to oppose tax measures it deems unnecessary or wasteful.

The money generated by the transient occupancy tax, the TOT, goes to the city. However, hotel guests in Sonoma also pay an assessment which goes to the Sonoma Tourism Improvement District (TID).

Founded by the City of Sonoma in 2012, the Tourism Improvement District assesses a 2 percent surcharge on all overnight stays at hotels and other places of lodging within the city limits, with revenues going mostly toward further marketing of Sonoma as an “overnight destination,” according to the website of the Sonoma Valley Visitors Bureau. The bureau administers the TID funds used for the tourism marketing campaigns.

According to the report, one of the TID’s primary goals is “increasing occupancy and room revenues at lodging properties” within the city, with an emphasis on the winter down season from November through April.

Reach Janis Mara at janis.mara@sonomanews.com.