POINT ARENA CITY COUNCIL
AGENDA ITEM SUMMARY
AGENDA ITEM: IX C
MEETING DATE: 4/21/2026
TITLE
Consideration of a Transient Occupancy Tax (TOT) Rate Increase and Direction Regarding Placement of Measure on the November 2026 Election Ballot
RECOMMENDED ACTION
1. Approve or defer placing the Transient Occupancy Tax (TOT) measure before voters at the November 2026 General Election for tax increase.
If approved, then:
1. Select the Proposed Rate Increase
a. Increase the City’s TOT rate by 1% (from 12% to 13%), or b. Increase the City’s TOT rate by 2% (from 12% to 14%)
2. Authorize staff and the City Attorney to Prepare the necessary ordinance and ballot measure language
3. Direct staff to return to Council with a resolution formally placing the measure on the ballot in accordance with applicable deadlines (typically summer 2026).
ANALYSIS
The City of Point Arena currently assesses a 12% Transient Occupancy Tax (TOT) on lodging stays of 30 days or less, which is collected by local lodging operators and remitted to the City’s General Fund. Lodging operators remit a separate 1% TOT to Mendocino County. As such, visitors currently pay a combined 13% TOT, of which 12% benefits the City.
For Fiscal Year 2024–25, the City received ~$215,000 in TOT revenue. Based on this amount, AND assuming stable lodging activity, the estimated revenue impacts of potential increases to the City’s TOT rate are as follows:
• A 1% increase (from 12% to 13% City TOT) would generate ~$2,100 in additional annual revenue, for a total of ~$217,000
• A 2% increase (from 12% to 14% City TOT) would generate ~$4,300 in additional annual revenue, for a total of ~$220,000.
The TOT is paid by visitors, not by local lodging businesses directly. Hotels, motels, and short-term rental operators act as collection agents. Any increase in the TOT represents an increase in visitor contributions to the City, rather than a direct operating cost to local businesses. These funds are deposited into the General Fund and support essential City services, infrastructure, and initiatives that contribute to the overall quality of life for residents and the economic vitality of the community.
Pursuing an increase to the City’s TOT requires voter approval. Under California law, such a measure must be placed on a regularly scheduled election ballot. The next available opportunity is the November 2026 General Election. With the next opportunity in November 2028.
The policy decision before the Council is whether to:
• Pursue a 1% increase to the City’s TOT (to 13%), resulting in a total visitor-paid rate of approximately 14% when including the County’s 1%; • Pursue a 2% increase (to 14%), resulting in a total visitor-paid rate of approximately 15%; or
• Maintain the current rate and defer consideration until a future election cycle.
Accordingly, timely direction is necessary if the Council wishes to pursue a measure in the upcoming election cycle. To meet election requirements, the City Council would need to provide direction to staff to:
• Prepare ballot language and supporting documentation
• Coordinate with Mendocino County elections officials
• Adopt a resolution placing the measure on the ballot (typically required by summer 2026 deadlines)
Given ongoing fiscal needs and the City’s goal of improving long-term financial stability, a TOT increase represents an opportunity to enhance General Fund revenues without directly increasing taxes on residents.
FISCAL IMPACT
Cost of the election will be approximately $3,000. A 1%-2% increase in the TOT rate would generate approximately $2,100 and $4,300 respectively.
ATTACHMENTS
1. 5-YEAR TOT REVENUE PROJECTION
CITY MANAGER SIGNATURE
_________________________________
Molly C. Haviland, City Manager
Transient Occupancy Tax (TOT) Revenue Projection
Based on FY 2024–2025 Actuals
TOT Rate
Change
from
Current
Projected TOT
Revenue
Revenue
Increase
($)
12%
(Current) — $215,190 —
13% 1% $217,342 $2,152
14% 2% $219,493 $4,304
Projections assume the FY 2024–2025 revenue base
remains constant, with increases reflecting rate
changes only (no change in occupancy or lodging
demand).