Sonoma City Council to discuss hotel tax as revenue for housing trust fund

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The Sonoma City Council on Monday laid out a list of priorities for the council to consider over the next three months – including such topics as cannabis dispensaries, development code updates, housing and an additional increase in hotel taxes.

Measure S, a 2-percent increase to the citywide hotel tax – or, Transient Occupancy Tax – was approved by voters in November and took effect Jan. 1. Included in Measure S is an option for the council to increase the TOT an additional 1 percent within the next five years.

Revenue from the Transient Occupancy Tax goes to the city’s General Fund, which then funds myriad services such as safety, parks and recreation, streets, and affordable or workforce housing.

Members of the council at its Feb. 4 meeting expressed interest in earmarking revenue from an additional 1 percent TOT increase for a housing trust fund – a fund the city could create to help subsidize affordable housing projects.

“The 1 percent is a potential revenue source for the housing trust fund,” agreed Sonoma City Manager Cathy Capriola.

Mayor Amy Harrington, who has been an advocate for creating such a housing fund, said at the meeting that if the council does decide to take advantage of that extra 1 percent she doesn’t want to see it go into the General Fund, she would like it allocated toward housing.

Capriola said the city’s staff has conducted preliminary research on a housing trust fund, adding that it “would make sense to have a conversation” with the Tourism Improvement District – whose board is composed of local hoteliers and receives 2 percent of the TOT – before making any decisions.

Any upcoming discussion should be “fairly general,” advised Capriola, so that the council doesn’t lock itself into too many details just yet.

Councilmember Rachel Hundley suggested having the city’s ad hoc housing subcommittee, which is composed of herself and Councilmember Logan Harvey, take on the hotel tax and housing trust fund topics and work together with city staff before the topic comes back to the council.

Harvey said he liked the idea of getting the extra 1 percent in place as a “pot” of money to be set aside to help with the city’s housing needs.

Capriola said the housing subcommittee could potentially prepare an interim report to bring back the council at its Feb. 20 meeting.

The council is eying March 18 as a possible date to initiate discussion on raising the TOT an additional 1 percent.

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