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Measure CC, a ballot measure that would increase Menlo Park’s transient occupancy tax, also known as a hotel tax, by 3.5%, is headed for approval.
Final Nov. 5 election night results show Yes on CC is leading with 8,132 votes, or 83.71% of the votes returned so far. No on CC has received 1,583 votes, or 16.29% of the votes returned so far. Election night results include vote-by-mail ballots received in the mail and returned to ballot drop boxes and vote centers by Friday, Nov. 1.
The Measure CC race has not been very contentious. There were no official committees formed to support or oppose the measure, and no money raised in support or opposition of the measure.
Measure CC was placed on the ballot by the Menlo Park City Council in an effort to raise additional local funds to balance the city’s budget, however, local hotel representatives have expressed concern over the proposed tax increase. They say that it will negatively impact their businesses, which are already struggling in a post-pandemic travel landscape.
An impartial analysis of the measure prepared by Menlo Park’s city attorney says that the revenue collected from the transient occupancy tax could be used for “any valid municipal government purpose,” such as maintaining and repairing streets, enhancing emergency preparedness, maintaining parks and open spaces and maintaining city recreation programs, among other things.
The measure would also require that the revenue generated by the measure be audited by an independent auditor annually.
If passed, Measure CC would raise the city’s transient occupancy tax by 3.5%, from the current rate of 12% to 15.5%, over a two-year period. The transient occupancy tax would increase by 2% on Jan. 1, 2025 to 14%, and by another 1.5% to 15.5% on Jan. 1, 2026.
A transient occupancy tax is a type of short-term rental tax that is paid by guests of hotels, Airbnbs and other short-term stays. This tax is not charged to the residents of the city. The proceeds of the transient occupancy tax remain under local control, rather than going to the state.
Proponents of the measure argue that the measure would help Menlo Park maintain its “essential local services and quality of life without taxing residents.” The arguments in favor of the measure were submitted by a group of Menlo Park residents.
A July 9 city staff report about the proposed transient occupancy tax rate increase states that a 15.5% transient occupancy tax would provide an estimated $3.6 million in additional tax revenue for the city.
The city’s 2024-25 budget included a deficit of about $820,000, and forecasts indicate that the city will continue to have budget issues in the future.
According to the arguments in favor, the measure would help Menlo Park retain local control over local dollars. “The state can’t take a penny of Measure CC funds. Yes on CC gives you, the Menlo Park taxpayer, control over local funds to maintain our safety and infrastructure.”
Though there are no committees that were formed in opposition to the measure, several hotel representatives have publicly expressed their opposition to the measure at city council meetings.
During the July 9 City Council meeting, several representatives from local hotels told council members that the tax increase proposed is “extremely high.” They also said it will contribute to furthering low hotel occupancy rates in the city, which have been flagging since the COVID-19 pandemic.
Avi Haksar, managing director at the Stanford Park Hotel, said that his hotel’s room occupancy rate was 76% in 2017, which is a “healthy” level for an upscale hotel, but that in 2023 it was only 65%. Haksar said that business travel, a staple clientele for Menlo Park hotels, has particularly declined since 2020.
Haksar also said in an interview with this news organization that local hotels are worried that raising the transient occupancy tax to be in line with Palo Alto’s — the highest in the region — will ultimately negatively impact the amount of taxes that the city can ultimately collect.
Philip Meyer, the managing director of the Rosewood Hotel on Sand Hill Road echoed Haksar’s concerns, saying that keeping the tax rate lower in Menlo Park gives local hotels a competitive advantage over nearby hotels in Palo Alto, which helps them recover from the pandemic travel slump.
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