City Council
Report
City Council Meeting: July 14, 2026
Agenda Item: 11.A
1 of 3
To: Mayor and City Council
From: Oliver Chi, City Manager, City Manager's Office
Subject: Council Direction Regarding Transient Occupancy Tax (TOT) Ordinance Update To Address TOT Assessments For Corporate Room Block Bookings That Extend Beyond 30 Days
Recommended Action
Staff recommends that the City Council take the following actions:
1. Direct the City Manager and City Attorney to prepare ballot measure language to update the City’s TOT regulations in order to ensure that corporate block hotel bookings which extend beyond 30 days are still required to pay the City’s established TOT rate; and
2. Direct that the City Manager and City Attorney bring the proposed measure back for formal review and consideration at the July 28, 2026, City Council meeting, to allow the City Council the option of placing the item on the November 2026 ballot for voter consideration.
Discussion
The City’s current regulations related to collecting Transient Occupancy Tax (TOT) for local hotel stays is contained in Chapter 6.68 of the Santa Monica Municipal Code.
Pursuant to that regulation, any “person” who books hotel rooms for more than 30 consecutive days is exempt from the City’s 15% TOT rate for the entire duration of their stay.
However, through the City’s ongoing work with Olympic-affiliated organizations exploring hospitality locations in Santa Monica, we have identified that a significant gap exists in our TOT regulations, which could result in a significant adverse financial impact for the City if left unaddressed.
2 of 3
Our current municipal code definition of “person” for the purposes of TOT collection includes “[a]ny individual, corporation, company, association, firm, copartnership, or any group of individuals acting as a unit.” That definition, coupled with the other TOT related regulations contained in Chapter 6.68, effectively means that corporate block bookings of hotel rooms in Santa Monica that extend for beyond 30 consecutive days would pay no transient occupancy tax for the entire stay.
While our current TOT regulations ensure that individuals who reside in hotels long-term are not taxed as tourists, those same regulations also apply to corporate block hotel bookings. Accordingly, our current TOT protocols create a circumstance whereby any sponsor, national delegation, media company, or hospitality operator that books a block of rooms in Santa Monica for more than 30 days would pay no transient occupancy tax at all.
If this issue is to be addressed, the City will have to update our municipal code definitions so that corporate and business entity hotel bookings of more than 30 days remain subject to the TOT assessment for the full stay, while preserving the transient occupancy tax exemption for long-term individual residents. However, because this change would extend the tax to a currently exempt class of payers, and because the relevant code provisions were adopted by voters through Measure CS in 2022, such a change requires voter approval.
To that end, staff recommends that the City Council direct and authorize the City Manager and City Attorney to develop and bring back at the July 28, 2026, City Council meeting, proposed ballot language that would address the current loophole whereby corporate hotel room blocks that extend beyond 30 days pay no transient occupancy tax amount.
Financial Impacts and Budget Actions
There is no immediate financial impact or budget action necessary as a result of the recommended action. Staff will return to Council if specific budget actions are required in the future.
3 of 3
Prepared By: Oliver Chi, City Manager
Approved Forwarded to Council
Attachments:
A. PowerPoint Presentation