City Council
Report
City Council Meeting: July 28, 2026
Agenda Item: 11.A
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To: Mayor and City Council
From: Oscar Santiago, Director, Finance Department, Revenue Subject: Adoption of Resolution Placing Proposed Ballot Measure Amending Chapter
6.68 of the Santa Monica Municipal Code on the November 3, 2026 Ballot to Maintain Existing Tax Rates; Authorize the City Council to Establish Major Event Periods When the Tax Will Apply to Corporate Bookings of More than 30 Days and to Adjust the Tax Rate During those Major Event Periods; Clarify When Returns Are Available; and Authorize the Adoption of Administrative Guidelines
Recommended Action
Staff recommends that Council
1. Adopt a finding of Categorical Exemption pursuant to Section 15061(b)(3) (common sense exemption) of the California Environmental Quality Act (CEQA) Guidelines; and
2. Adopt a resolution placing a measure on the November 2026 election that would amend the City Transient Occupancy Tax to: (1) keep existing transient occupancy tax rates unchanged; (2) authorize the City Council to establish defined Major Event Periods when the tax will apply to lodging paid for or obtained by corporations and other legal entities for stays over 30 days; (3) authorize the City Council to reduce the tax rate for hotels and motels for such stays during Major Event Periods; (4) clarify that TOT refunds require a natural person to occupy the room for thirty-one consecutive days; and (5) authorize related administrative regulations; and
3. Direct the City Attorney to prepare an impartial analysis of the measure.
Executive Summary
To ensure the City’s Transient Occupancy (TOT) ordinance is modernized for significant growth and activity on the horizon, staff recommends placing a measure on the ballot to update the TOT ordinance. The proposed amendments are intended to update key definitions that affect both tax applicability and eligibility for tax refunds, ensuring the TOT ordinance remains clear and aligned with the City’s future operational needs. 2 of 6
If approved, the ordinance would be modernized ahead of the 2028 Olympics to taking into account evolving hotel booking patterns, particularly those involving corporate groups and long-term activations. The changes would also provide Council with additional flexibility during any future major events similar in nature to the Olympics, while also looking to establish more defined pathways for exemptions for individuals experiencing catastrophic circumstances. The proposed ballot measure and ordinance language are attached.
Discussion
Consistent with the direction established in the City Council’s Realignment Plan, Santa Monica is preparing for a period of renewed growth and activation, a “renaissance” fueled by several major events, including the 2026 Ocean Way Festival, the 2027 Super Bowl, and the 2028 Los Angeles Olympic and Paralympic Games. As global interest accelerates, hotel package deals have emerged to meet demand from event visitors and corporate groups seeking premium accommodation. In parallel, questions have surfaced concerning the application of Transient Occupancy Tax (“TOT”) to corporate block bookings, as Santa Monica’s lodging establishments manage changing usage needs and varying booking approaches.
In light of major upcoming events, including the 2028 Olympic and Paralympic Games, the City has received an increased number of inquiries regarding corporate block bookings over extended periods of time that exceed 30 days during the 2028 Olympic and Paralympic Games.
As currently crafted, our existing TOT ordinance would exempt all such stays of more than 30 days from paying any TOT rate at all. Historically, this TOT structure has not created a material financial consideration for the City, and aligns with how competitor jurisdictions handle TOT assessments for stays of 30+ consecutive days. For instance, Beverly Hills, Newport Beach, Huntington Beach, Marina Del Rey, Long Beach, and Santa Barabara all have TOT collection regulations that mirror our practice in Santa Monica.
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However, in light of how hotel booking pattens could evolve in Santa Monica during the 2028 Olympics – especially when considering the number, volume, and scale of the Olympic-related activations that are planned in the City – the lack of ability to collect TOT for corporate hotel bookings of 30+ days could be meaningful.
To address this particular circumstance, staff has been engaged in discussions with relevant stakeholders to assess the best way to address the potential loss of TOT collections during the 2028 Olympics, while also taking into account hotel operator considerations as it relates to existing corporate booking practices that extend beyond 30 days. Those conversations were meaningful, and during the outreach process, the City learned that our local hotels do at times serve groups that remain in the same hotel room for 31 or more days due to displacement, medical treatment, or business related travel.
Taking into account that feedback, while also addressing the TOT collection issues that could emerge for extended duration stays during the 2028 Olympics, staff has developed a narrowly crafted update to our TOT ordinance that would, if enacted, create the following new procedure.
• The update would allow the City Council to recognize and designate Major Event Period in Santa Monica, including the 2028 Olympic and Paralympic Games. • During that Major Event Period, corporations and other corporate entities would have to pay TOT for the entire duration of the stay.
• Further, to address concerns raised by hoteliers regarding the competitive landscape, the proposed update would establish that during Major Event Periods, the City Council would have the authority to adjust the TOT rate for hotels and motels to a rate of between 0% to 15%.
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• Of note, there would no change to natural persons making hotel reservations on their own, as any such individual booking a room for more than 30 days would be subject to the same TOT regulations as currently exist.
The proposed adjustment of establishing a formal Major Event Period would apply to both hotel / motel and homeshare stays, would ensure that any TOT adjustment would be temporary, and would also be clearly tied to a defined timeframe in which tourism activity is expected to surge for longer durations of time. Such temporary adjustments may be used when doing so is expected to meaningfully increase tourism, enhance visitor experience, encourage attendance, or support local business activity.
In addition to the adjustments related to Major Event Periods, the proposed ordinance updates also take into account an administrative fix related to how TOT is handled for a natural person staying in a hotel for more than 30 days outside of Major Event Periods.
Our current TOT regulations do not have an express exemption for permanent residents, and instead, Section 6.68.040 contains a refund mechanism for stays over 30 days. The proposed measure seeks to clarify that Section 6.68.040’s refund mechanism is limited to when the same natural person completes thirty-one consecutive days of occupancy or more and qualifies as a permanent resident under Section
6.68.010(f). Ultimately, if enacted, this additional adjustment would establish that when a natural person is staying in the same hotel for 31 or more days, the TOT refund may be applicable whether the stay is paid for by either the individual or a corporate entity.
Additionally, the proposed update authorizes the Finance Director, or their designee, to establish administrative regulations to implement Chapter 6.68 and to administer exemptions for individuals who qualify as permanent residents and face catastrophic circumstances such as natural disasters, medical treatment or similar situations in which room rentals are paid by non-natural persons are appropriately recognized and exempted in accordance with the updated definitions. This ensures compassionate, consistent administration aligned with the refined definitions. 5 of 6
Attached as Exhibit A is the resolution submitting this measure to the voters of the City of Santa Monica. The measure text is as follows:
MEASURE " ":
Shall the measure, which maintains the
existing transient occupancy tax rates;
authorizes the City Council to establish
Major Event Periods, as defined, when
the tax applies to lodging paid for or
obtained by corporate entities for stays
over 30 days, and to adjust the hotel and
motel tax rate for such stays; clarifies
that refunds require a natural person to
complete at least thirty-one consecutive
days of occupancy, and authorizes
administrative regulations, be adopted?
YES ________
NO _________
Environmental Analysis
The proposed resolution and/or ordinance are exempt from the provisions of California Environmental Quality Act (CEQA) pursuant to 15061(b)(3) of the State Implementation Guidelines (common sense exemption). The proposed amendments to the City’s Transient Occupancy Tax ordinance are administrative in nature, and based on the evidence in the record, it can be seen with certainty that there is no possibility that the proposed resolution ordinance may have a significant effect on the environment.
Financial Impact
There is no immediate financial impact or budget action necessary as a result of recommended action. While temporary rate adjustments may cause short-term decreases in TOT collection per stay, these effects are expected to be offset by increased average daily rates, visitation, and other economic activity. Staff will return to Council if specific budget actions are required in the future. 6 of 6
Prepared By: Haley Favre-Smith, Business and Revenue Operations Manager Approved Forwarded to Council
Attachments:
A. Reso - TOT Major Event Period Ballot Measure 07.28.26 B. PowerPoint Presentation