The County of Santa Clara
California

Report
89284

Receive report from the Office of the County Counsel relating to proposed amendments to the County Ordinance Code regarding the Transient Occupancy Tax, and forward to the Board of Supervisors for adoption.

Information

Department:County CounselSponsors:
Category:Report

Body

FISCAL IMPLICATIONS

The recommended action will have no fiscal impact.

REASONS FOR RECOMMENDATION

The purposes of the proposed amendments are to: (1) conform the County’s transient occupancy tax (“TOT”) ordinance with amendments to state law; (2) incorporate language from voter ratification of the TOT in 1988 (Measure A, November 8, 1988) regarding how proceeds of the TOT are to be used; and (3) clarify how the annual adjustment for changes in cost of living and population will be made to the first $500,000 used to promote art and culture in Santa Clara County.      

CHILD IMPACT

The recommended action will have no/neutral impact on children and youth.

SENIOR IMPACT

The recommended action will have no/neutral impact on seniors.

SUSTAINABILITY IMPLICATIONS

The recommended action will have no/neutral sustainability implications.

BACKGROUND

In August 1986, the Board adopted an 8% Transient Occupancy Tax. The TOT was a general tax to be used for all governmental purposes.  In November 1986, California Proposition 62 was approved, which required voter approval of all taxes imposed by local governments, including increases to such taxes.  Proposition 62 also required local agencies to stop collecting any tax imposed between August 1, 1985 and November 4, 1986 unless the tax was ratified by a majority of the voters by November 5, 1988.   Because the County’s TOT was adopted within this timeframe, it was subject to a voter ratification election. The County submitted the TOT to the voters as Measure A on November 8, 1988, and it was approved by 61.6% of the voters.  The ballot measure provided:

Transient Occupancy Tax

Shall the County of Santa Clara, pursuant to the authority of Revenue and Taxation Code sections 7280, et seq., be authorized to continue to levy in the unincorporated areas of the county a tax on the privilege of occupying a room or rooms in a hotel, inn, tourist home or house, motel, or other lodging for which the occupancy is less than 30 days. The proceeds of this tax, to the extent of the first $500,000, to which there shall be added annually an adjustment for changes in the cost of living and population, shall be used to promote art and culture in Santa Clara County. The balance of the proceeds of this tax shall be used for human service needs in Santa Clara County.

Although the County has been complying with the requirement to use the first $500,000 of TOT proceeds to promote art and culture in Santa Clara County, the County’s TOT ordinance has not been amended to include this language, or to specify how the annual adjustment for changes in cost of living and population was to be calculated.  The proposed amendments would expressly include this language in the TOT ordinance.  The annual adjustment to the $500,000 would be calculated in the same manner as the County’s annual Gann Limit adjustment.