Voters will be asked to consider raising the hotel-occupancy tax in Menlo Park from 10 percent to 12 percent after the City Council last night (July 20) decided it was a reasonable way to raise revenue in the face of the city's fast-rising employee costs.
Council members struggled with the question, voicing concerns that the economic climate makes this a risky time to raise costs for business owners. But after citing the city's budget realities, the council voted 4-1 to send the proposed increase to the Nov. 2 ballot. Councilman Andy Cohen opposed the action.
Before the vote, Mike Casey, managing director of the Rosewood Sand Hill Resort, warned the council that boosting the tax, which hotels, motels and inns must charge occupants, would take away the competitive advantage his hotel has over facilities in Palo Alto and San Francisco in attracting non-business customers. That's because Palo Alto and other nearby cities have set their hotel tax at 12 percent, and San Francisco at 15 percent.
"Raising it is a risk," he said, not only to hotels but to other Menlo Park businesses that benefit from the trade the hotels bring to town.
The Rosewood and the Stanford Park hotel contribute about 85 percent of all hotel tax -- or transit-occupancy tax -- revenue, according to a staff report.
Councilman John Boyle expressed misgivings about raising the tax, but said he'd be willing to compromise on an increase to 11 percent. But Councilman Heyward Robinson and others cited the city's need to raise revenue because of growing costs, especially for police compensation.
Mayor Rich Cline spoke forcefully in favor of raising the tax to 12 percent, and moved that the council ask voters to approve the increase, which would be effective January 2012.
Mr. Cohen said he opposed the move because the city needs to do better in reducing costs.