Measure K would raise the hotel tax to 12 percent (from the current 10 percent) effective Jan. 1 if approved by a simple majority of voters. Otherwise known as the transient occupancy tax (TOT), the new rate would match that of neighbors Redwood City, East Palo Alto and Palo Alto and generate approximately $600,000 in revenue for Menlo Park annually. That would help make up for at least some of the $1.2 million annual loss triggered by the state dissolving the city's redevelopment agency (RDA).
And according to the candidates running for Menlo Park City Council — local hotel owners are now OK with that, despite the defeat of a similar measure in June brought by the county. The current council unanimously voted to place the proposed increase on the ballot.
"This past year has been a difficult one for Menlo Park. Although the city has worked hard to reduce expenditure budgets and revenues are showing signs of recovery, the dissolution of the RDA ... is a severe blow to the city's efforts towards a sustainable budget for the long-term," Mayor Kirsten Keith said, presenting the argument for Measure K in a video produced by the Mid-Peninsula Community Media Center. The revenue will help maintain city services such as police services and infrastructure maintenance, she argued, describing the measure as a "market adjustment" to bring Menlo Park in line with other Peninsula cities.
The rebuttal argument was authored not by a coalition of hotel owners, but by the Silicon Valley Taxpayers Association. The rebuttal questions whether the money would actually go to services.
"The thinking of the average politician goes like this: I want to spend someone else's money for this or that. Whom can I get it from?" asked Executive Director Elizabeth Brierly, in a video produced the Mid-Peninsula Community Media Center. "Well, it's not fair to target one type of service — hotels." She outlined potential consequences that include reduced business at local establishments; loss of a competitive edge in a tough economy; and a trickle-down effect. "Your favorite takeout may count on business from these convention visitors. Your hairdresser's husband may be a desk clerk. Real people, really impacted," Ms. Brierly said.
The city disputes that in its rebuttal. "Occupancy rates are close to 80 percent for Menlo Park and Palo Alto. Palo Alto already charges a 12 percent hotel tax," it noted. According to the city, the competitive edge lies in the quality of services rather than a tax that visitors don't pay attention to when choosing hotels.