Item No. 24.
TO:HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:OFFICE OF THE CITY MANAGER
BY:VANIAH DE ROJAS, ASSISTANT CITY MANAGER
DATE:JUNE 23, 2026
SUBJECT:DISCUSSION REGARDING AMENDING THE CITY'S HOTEL USERS' TAX (TRANSIENT
OCCUPANCY TAX )
EXECUTIVE SUMMARY
The City Council will discuss amending the City's Hotel Users' Tax (Hotel Tax) also know as Transient Occupancy Tax and provide staff direction.
RECOMMENDATION
That the City Council:
Discuss amending the City's Hotel Users' Tax and provide staff with direction.
BACKGROUND
Revenue and Taxation Code Section 7280 allows government agencies to assess a Hotel Tax, also known as a hotel bed or room tax. A Hotel Tax assessment is charged to travelers when they rent accommodations (i.e., a room, rooms, entire home, or other living space) in a hotel, inn, motel, or other lodging for less than 90 days. A Hotel Tax is calculated as a percentage of the rent for the occupancy of a structure or any portion of a structure.
The law requires that operators collect the tax from Hotel Users and remit them to the local jurisdiction. The City of Downey assessed a Hotel Tax in 1965 through Ordinance No. 255 and last amended its Hotel Tax in October 1998 through Ordinance No. 1057. Ordinance No. 1057 increased the City’s Hotel Tax rate to 9 percent after voter approval. The City’s Hotel Tax is levied on Hotel visitors, and not levied on residents or businesses. In July 2022, the City Council passed Resolution No. 22-8091, which placed of a general tax measure (Measure D) on the November 8, 2022 general municipal election ballot for a proposed ordinance amending the City’s Hotel Tax code by increasing the maximum rate from 9% to 13%, addressing online travel company and other third party bookings, and making other conforming changes; requesting the County of Los Angeles to consolidate said election with the statewide general election of even date; and setting rules and deadlines for arguments and rebuttals for and against the measures. The measure did not pass, as 64% of Downey voters opposed. Feedback from the community regarding the measure was that it's purpose was not clear as many believed it was a transient or homeless tax measure, rather than a Hotel Tax on visitors to Downey. If the measure were to have passed, it was estimated to generate approximately $950,000 a year at the time.
ANALYSIS
City TOT Rate Notes
Bellflower 9%
Buena Park 14%12% + 2% Tourism
assessment
Cerritos 12%
Commerce 12%
Glendale 12%
La Mirada 10%
Lakewood 8%
Norwalk 10%
Pico Rivera 10%
Santa Fe Springs 10%
Whittier 10%
Unincorporated LA County 12%
Average 11%
Downey 9%
At the January 27, 2026 meeting, Council member Trujillo asked that the City Council discuss placing an adjustment of the City's Hotel Tax rate on the November election at an upcoming City Council meeting.
City staff surveyed neighboring cities and cities with a similar tourism draw regarding their current Hotel Tax Rate.
Below are the findings:
If the City were to increase its Hotel Tax rate from 9% to 13% it is expected to generate an additional $1,066,700 to the City.
While not a Hotel Tax measure, it should be noted that Los Angeles County (County) placed ballot measure "Measure ER" , also known as the Essential Services Restoration Act, on the June Primary election. The ballot measure temporarily increases the countywide sales tax by a half-cent (0.5%) to fund local public Los Angeles County healthcare services for the next five years. This action was in response to H.R. 1 (One Big Beautiful Bill Act) and anticipated federal funding cuts affecting the County’s healthcare system. The measure passed by
50.61% of Los Angeles County voters. Beginning October 1, 2026, Downey's sales tax rate will go from 10.5% to 11%. The ballot measure sparked significant debate as many Los Angeles County residents expressed concern about affordability, and the additional tax burden that could further strain family budgets without guaranteeing proportionate local benefits.
If the City Council is desirous to proceed with placing a Hotel Tax ballot measure on the November election, staff would need to prepare a Resolution for the July 28, 2026 City meeting for the placement of a general tax measure on the November 3, 2026 general municipal election ballot for a proposed ordinance amending the City’s Hotel Tax code by increasing the maximum rate from 9% to 13%, requesting the county of Los Angeles to consolidate said election with the statewide general election of even date; and setting rules and deadlines for arguments and rebuttals for and against the measures. These aforementioned items would need to come before the City Council for approval no later than the July 28, 2026 meeting to meet election filing deadlines. The anticipated cost to place this ballot measure on the November ballot is approximately $315,000.
CITY COUNCIL PRIORITIES
Fiscal Responsibility
Public Engagement
FISCAL IMPACT
No impact associated with this item. The anticipated cost to place the Hotel User's Tax ballot measure on the November ballot is approximately $315,000.