City Council
Report
City Council Meeting: February 28, 2023
Agenda Item: 5.K
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To: Mayor and City Council
From: Gigi Decavalles-Hughes, Director, Finance Department, Revenue Subject: Adoption of a Resolution to Establish an Advisory Committee to Make Recommendations Regarding Expenditure of additional funds raised by increasing the transient occupancy tax above 14%
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Adopt the attached resolution establishing an advisory committee to make recommendations regarding the expenditure of additional funds raised by increasing the City’s transient occupancy tax rate by 1% for hotel stays and 3% for home-share stays pursuant to Measure CS.
Summary
Measure CS, which increases the City’s transient occupancy tax from 14% to 15% for hotels/motels and to 17% for home shares, was overwhelmingly approved by Santa Monica voters at the November 8, 2022, General Election. The new rates will go into effect on March 1, 2023. The more than $4 million in additional annual funds raised by the rate increase will provide new resources to help fund on-going urgent community priorities, specifically in the areas of enhancing safety and addressing homelessness.
To provide an additional level of accountability and oversight on the use of the revenues generated by Measure CS, the ballot measure requires that Council create an Advisory Committee that would make non-binding recommendations on the use of the additional TOT revenues. The measure further requires that the Advisory Committee be created 2 of 3
by a resolution no later than February 28, 2023. The attached resolution will formally establish a five-member committee that includes Santa Monica residents and representatives from local hospitality businesses and the homeless behavioral health services community.
Discussion
The staff report recommending placing Measure CS on the ballot discussed a possible structure for a five-member committee with members representing local businesses including the hospitality industry, homeless behavioral health sector, and residents.
Within the attached resolution, staff is proposing a Committee made up of the following:
• Two members who are Santa Monica residents
• Two representatives or members from local hospitality businesses • One member representing the homeless behavioral health services community (not-for-profit, governmental or hospital)
Staff recommends that the Board members of Santa Monica Travel and Tourism provide recommendations to the City Council for the representatives from the hospitality business community. Aside from the City Manager or their designee, members of the Board of Santa Monica Travel and Tourism are selected equally by the Council and the Chamber of Commerce, so it is anticipated that the selection will be representative of the City’s broad business community. Staff also recommends that Council seek and recommend the resident members and the member representing the homeless behavioral health services community.
The scope of work of the Committee is to provide non-binding recommendations as to the use of the additional funds raised from the rate increases adopted by the voters pursuant to Measure CS. The Committee is subject to the rules of the Brown Act. It is proposed that Committee members would have two-year terms. The Committee will provide recommendations to the City Manager. The Committee members will select a Chair and Vice Chair at the first meeting of the calendar year. The Committee will meet at least once a year between February and May, with the goal of completing appointments this year to convene the Committee in May 2023, allowing for the Committee to provide its recommendations along with the adoption of the budget. The 3 of 3
Finance Department will staff the administration of the Advisory Committee. The attached resolution provides further detail on the structure and scope of work of the Committee.
Environmental Review
Creation of the Advisory Committee is categorically exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines. Creation of the Committee is covered by the common sense exemption which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” Creation of the Committee would not result in adverse physical impacts on the environment, and as such, is categorically exempt from CEQA.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Recommendations made by the Committee may result in how funds are allocated in the annual adopted budget.
Prepared By: David Carr, Assistant City Treasurer
Approved Forwarded to Council
Attachments:
A. 14108 - Resolution
B. Exhibit A - Resolution 11337