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Agenda Item No: 3.b
PLACENTIA CITY COUNCIL AGENDA REPORT
Meeting Date: June 16, 2026
Submitted by: Brooke Lovell
From: City Attorney's Office
Subject:
RESOLUTION SUBMITTING A HOTEL TAX MEASURE TO THE ELECTORATE AT THE NOVEMBER 3, 2026 GENERAL MUNICIPAL ELECTION AND REQUESTING THAT THE
ELECTION BE CONSOLIDATED WITH OTHER ELECTIONS TO BE HELD ON THAT DATE Financial Impact:
If enacted by voters, generates approximately $715,000 annually in new locally -controlled revenue. One time election -related costs of approximately $8.500.
Summary:
The Transient Occupancy Tax ("TOT") is a tax imposed on visitors who stay in hotels, short- term rentals, and similar lodging establishments within the City. Commonly referred to as a "hotel tax," the TOT has remained at a rate of ten percent (10%) for decades. The tax is paid by visitors occupying lodging accommodations within the City for periods of thirty (30) consecutive days or less. Revenue generated through TOT supports essential municipal services and helps offset the increased demand placed on City infrastructure, public safety, and other public services by visitors and hotel occupants. TOT revenue may be used to support a variety of municipal functions, including, but not limited to, neighborhood police patrols, fire protection, 911 response, and road repairs. Similar transient occupancy taxes are imposed by over 95% of cities throughout California.
Given increasing operational costs, inflationary pressures, and ongoing demands for municipal services, it is appropriate for the City to evaluate the feasibility of adjusting the TOT rate. Such an evaluation would help ensure that City revenues remain adequate to sustain current service levels, address future community needs, and support the City's long-term fiscal stability. Additionally, a potential adjustment to the TOT rate would help ensure that visitors and overnight guests contribute an equitable share toward the municipal services and infrastructure they utilize while staying in the City of Placentia.
Pursuant to California law, any increase to the City's TOT rate must be approved by the voters. The proposed action would adopt a Resolution placing before the voters, at the November 3, 2026 General Municipal Election, a ballot measure to increase the City's TOT rate by four percent (4%), increasing the rate from ten percent (10%) to fourteen percent (14%). The Resolution also directs the City Attorney to prepare an impartial analysis of the measure and authorizes the filing of ballot arguments and rebuttals in accordance with 1 applicable law.
Recommended Action:
It is recommended that the City Council:
1. Approve Resolution No. R-2026-49, a Resolution of the City Council of the City of Placentia, California Submitting a Hotel Tax Measure to the Electorate at the November 3, 2026 General Municipal Election and Reiterating its Request that the Election be Consolidated with Other Elections to be Held on that Date; and
2. Authorize the City Administrator, or designee, to execute all necessary documents and take all actions necessary to effectuate the intent of the Resolution, subject to approval as to form by the City Attorney.
Strategic Plan Statement:
This item is consistent with the City Council's adopted Strategic Goals to ensure the City's long-term financial stability through responsible fiscal management, strategic investment, and the maintenance of a balanced budget that supports high-quality municipal services.
If approved by the voters, the proposed TOT increase would provide an ongoing locally controlled revenue source to continue to support essential City services and programs, including but not limited to public safety, infrastructure maintenance and improvements, parks and recreational amenities, and community programs serving residents, seniors, and youth.
Discussion:
In March 2026, the City engaged William Berry and Embold Research to assist in evaluating the feasibility of placing a Transient Occupancy Tax increase before the voters. As part of this effort, community polling and outreach were conducted to obtain public input regarding their interest in a revenue measure that could appear on the November 3, 2026 General Municipal Election ballot.
The polling results indicated voter support for a proposed TOT increase at levels exceeding the simple majority threshold required for passage. In addition to public polling, the City developed an informational webpage and will be holding community engagement meetings to provide information regarding the proposed measure and solicit community feedback through surveys and public discussion. City staff has continued outreach efforts through existing City communication channels, including social media, email communications, and participation in community organizations and stakeholder meetings.
Based on the results of this outreach and community engagement process, staff has prepared a proposed ordinance that would increase the City's Transient Occupancy Tax rate by four percent (4%), from ten percent (10%) to fourteen percent (14%), subject to voter approval.
If approved by the voters, the measure is estimated to generate approximately $715,000 annually in additional revenue.
ANALYSIS:
The City of Placentia is committed to maintaining a high quality of life and providing reliable municipal services that support residents, businesses, and visitors. Maintaining these services requires ongoing investment in public safety, infrastructure, parks, and community programs.
If approved by the voters, the proposed TOT increase would diversify and strengthen the City's revenue base by generating additional locally controlled funding paid by visitors staying 2 in local lodging establishments. This increase would also ensure that out-of-town visitors pay their fair share of the local services they use when in Placentia.
The City currently imposes a ten percent (10%) TOT, which has remained unchanged since 1985. During that period, the City has experienced significant changes in tourism patterns, lodging accommodations, operational costs, and inflation. Additionally, the growth of short- term rental platforms has expanded the lodging market beyond traditional hotels and motels.
Compared to surrounding jurisdictions, the City's current TOT rate remains relatively modest.
A four percent (4%) increase would align the City more closely with rates imposed by neighboring cities, such as Anaheim which is currently at 15%.
Based on the available lodging data for Placentia, the estimated average daily room rate is about $145 per night. A proposed increase in the TOT from 10% to 14% would add an extra 4% tax to the nightly rate. This increase is estimated to result in an additional cost of approximately $5.80 per night on average for hotel and short-term rental guests.
Following adoption of the Resolution, City staff will complete all actions necessary to place the measure before the voters at the November 3, 2026 General Municipal Election. These actions include publication requirements, coordination with the Orange County Registrar of Voters, preparation of the City Attorney's impartial analysis, and administration of the ballot argument and rebuttal process pursuant to applicable provisions of the California Elections Code.
Financial Summary:
If approved by the voters, the proposed four percent (4%) increase in the Transient Occupancy Tax is estimated to generate approximately $715,000 annually in additional General Fund revenue.
The estimated incremental cost associated with placing the measure on the November 3, 2026 General Municipal Election ballot is $8,500.
If approved by the electorate, the Ordinance would become operative on January 1, 2027.
Attachments
CC RES R-2026-49 -TOT.docx
Exhibit A - Placentia TOT Ordinance.docx
3 RESOLUTION NO. R-2026-49
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PLACENTIA, CALIFORNIA, SUBMITTING A HOTEL TAX
MEASURE TO THE ELECTORATE AT THE NOVEMBER 3,
2026 GENERAL MUNICIPAL ELECTION AND
REITERATING ITS REQUEST THAT THE ELECTION TO
BE CONSOLIDATED WITH OTHER ELECTIONS TO BE
HELD ON THAT DATE
A. Recitals
WHEREAS, pursuant to Chapter 3.20 of the Municipal Code, the City imposes a transient occupancy tax ("Hotel Tax"); and
WHEREAS, the Hotel Tax is paid by or on behalf of "transients" (hotel guests) and is collected by the operators of each hotel and remitted to the City; and WHEREAS, pursuant to Section 5.08.500 of the Municipal Code, the current rate of the Hotel Tax is 10% of the rent paid by the hotel guest; and WHEREAS, proceeds of the hotel tax are deposited in the general fund, available for any lawful municipal purpose, and used by the City to fund general services such as neighborhood police patrols, fire protection, 911 response, and road repairs; and WHEREAS, by its Resolution No. R-2026-37 (the "Election Resolution"), the City Council has called a General Municipal Election for November 3, 2026 (the "Election") and has requested that the Election be consolidated with the statewide general election held on the same date and administered by the Orange County Registrar of Voters; and WHEREAS, the City Council desires to give the voters the opportunity at the Election to vote to increase the rate of the Hotel Tax.
B. Resolution
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PLACENTIA AS FOLLOWS:
Section 1. Recitals. The City Council hereby finds and determines that the foregoing recitals are correct.
Section 2. Ballot Measure Submitted. The City Council hereby orders, pursuant to Section 9222 of the Elections Code, that the ordinance attached hereto as Exhibit "A" and incorporated herein by reference, be submitted to the voters at the Election. Adoption of the ordinance requires a majority vote of those voting on the matter.
Resolution No. R-2026-49
4 Section 3. Ballot Question. The question submitted by Section 2 of this Resolution shall appear on the ballot as follows:
PLACENTIA HOTEL TAX MEASURE.
Shall the measure increasing the rate of the City of Placentia's existing transient occupancy tax (hotel tax), paid only by hotel guests, to 14%, funding city services such as police patrols, fire protection, 911 response, and road repairs; requiring citizen oversight and annual audits, generating about $715,000
annually, until ended by voters, be adopted?
YES
NO
Section 4. Consolidation. Pursuant Section 10400 et seq. of the Elections Code, the City Council reiterates its request set forth in the Election Resolution that Board of Supervisors of Orange County consolidate the Election with any other elections held on the same day in the same territory or in the territory that is in part the same.
Section 5. Conduct of Election. Pursuant to Section 10002 of the Elections Code, the City Council reiterates its request that the Orange County Board of Supervisors permit the Orange County Registrar of Voters to render all services specified by Section 10418 of the Elections Code relating to the election, for which services the City agrees to reimburse the County, in accordance with current County pro -rations and allocation procedures. The Board of Supervisors is authorized to canvass the returns of the Election pursuant to Section 10411 of the Elections Code. In all matters, the Election shall be held as set forth in the Election Resolution.
Section 6. Filing with County. The City Clerk shall file a certified copy of this Resolution with the Board of Supervisors and the Orange County Registrar of Voters.
Section 7. Impartial Analysis. The City Attorney shall prepare an impartial analysis of the measure. The analysis shall be included with other ballot materials.
Section 8. Arguments. Any person may prepare an argument for or against the measure not exceeding 300 words in length. Rebuttal arguments shall be permitted as provided by state law. If more than one argument is submitted for or against the measure, or more than one rebuttal is submitted for or against the measure, for each, the City Clerk shall select the argument/rebuttal to be included with the ballot materials in the manner provided by state law.
Section 9. Effective Date. This Resolution shall be effective upon its adoption.
Resolution No. R-2026-49
5 APPROVED and ADOPTED this 16th day of June 2026
Chad P. Wanke, Mayor
ATTEST:
Robert S. McKinnell, City Clerk
STATE OF CALIFORNIA
COUNTY OF ORANGE
I, Robert S. McKinnell, City Clerk of the City of Placentia, do hereby certify that the foregoing Resolution was adopted at a regular meeting of the City Council of the City of Placentia held on the 16th day of June 2026, by the following vote:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Robert S. McKinnell, City Clerk
APPROVED AS TO FORM:
Christian L. Bettenhausen, City Attorney
Resolution No. R-2026-49
6 Exhibit "A"
Tax Ordinance
Resolution No. R-2026-49
7 AN ORDINANCE OF THE CITY OF PLACENTIA,
CALIFORNIA, AMENDING SECTION 5.08.500 OF THE
MUNICIPAL CODE TO CHANGE THE RATE OF THE
TRANSIENT OCCUPANCY TAX AND ADDING SECTION
3.20.100 TO THE MUNICIPAL CODE TO REQUIRE
CERTAIN ACCOUNTABILITY MEASURES
WHEREAS, Section 3.20.020 of the Placentia Municipal Code requires that, for the privilege of occupancy in any hotel, each transient is subject to and shall pay a transient occupancy tax at the rate set forth in Section 5.08.500 of the Municipal Code; and WHEREAS, the transient occupancy tax is collected by the hotel operator from the transient and then remitted by the operator to the City; and WHEREAS, the transient occupancy tax is governed by Chapter 3.20 of the Municipal Code; and
WHEREAS, Section 3.20.010 of the Municipal Code provides that "transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of 30 consecutive calendar days or less, counting portions of calendar days as full days and that any such person so occupying space in a hotel shall be deemed to be a transient until the period of 30 days has expired unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy; and WHEREAS, Section 3.20.010 of the Municipal Code provides that "hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, motel, studio motel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof; and WHEREAS, Section 3.20.010 of the Municipal Code provides that "rent" means the consideration charged, whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever; and
WHEREAS, the rate of the Transient Occupancy Tax is currently 10%; and WHEREAS, the People of the City of Placentia desire to increase the rate of the tax to 14%, and to adopt certain accountability measures.
NOW, THEREFORE, THE PEOPLE OF THE CITY OF PLACENTIA DO HEREBY ORDAIN AS FOLLOWS:
8 SECTION 1. Section 5.08.500 of Chapter 5.08 (Finance Department—Business Licenses) of the Municipal Code is hereby amended to read:
§ 5.08.500 Transient Occupancy Tax
The rate of the transient occupancy tax imposed by Section 3.20.020 of this Code is 14% of the rent charged by the operator.
SECTION 2. Section 3.20.100 is added to Chapter 3.20 (Transient Occupancy Tax) of the Municipal Code to read as follows:
§3.20.100 Accountability
A. The proceeds of the transient occupancy tax as well as the expenditure thereof, shall be audited annually by an independent accounting firm. Such independent audit may be a part of any other independent audit of municipal finances. The report of the audit shall be filed with the City Council and shall be a public record of the City.
B. The citizen's oversight committee established by Section 3.32.020 of this code shall, in addition to its other duties, review the expenditure of funds generated by the transient occupancy tax. It shall prepare an annual report on such expenditures which shall be presented to the city council and shall also be published on the city's webpage. Unless otherwise directed by resolution or ordinance of the city council, or by Chapter 3.32 or other provision of this code, the committee shall not have any function, power, or authority other than those expressly provided in this section. In no event shall a failure of the city council or the committee to meet, or to take any other action required by this section, invalidate any tax imposed or collected under this chapter; however, any court of competent jurisdiction may issue an order to the city compelling the city to comply with the requirements of this section.
C. The proceeds of the transient occupancy tax shall be deposited in the general fund of the city and may be used for any lawful municipal purpose. The tax is a general tax imposed for general government purposes.
SECTION 3. The City Council may, by ordinance, amend this Ordinance. However, the City Council shall not increase the rate of the tax imposed by this Ordinance above the rate set forth in this Ordinance without the approval of the increase by a vote of the Electorate.
SECTION 4. If any section, subsection, sentence, clause, or phrase of this Ordinance is held invalid, such decision shall not affect the validity of the remaining provisions of this Ordinance.
SECTION 5. This Ordinance shall take effect on January 1, 2027.
9 PASSED, APPROVED AND ADOPTED by the People of the City of Placentia at the General Municipal Election held on November 3, 2026.
Chad P. Wanke, Mayor
ATTEST:
Robert S. McKinnell, City Clerk
10