(Transient Occupancy Tax)
The City of Indian Wells currently imposes a transient occupancy tax (“TOT”), also generally known as a “hotel” tax, at the rate of eleven and one-quarter percent (11.25%) of rent paid by guests to occupy lodging space in a hotel or certain other residential lodging (collectively, “hotel”). This TOT is imposed upon occupancy of a hotel within the City for dwelling, lodging, or sleeping purposes for thirty (30) consecutive days or less. The TOT currently provides approximately $6,900,000 annually to the City’s General Fund to pay for general City services and programs such as public safety, public works, planning and building, water conservation, and community activities.
The City-owned Indian Wells Golf Resort has consistently operated at a financial loss since its new clubhouse was constructed and two eighteen-hole golf courses reconstructed in or around 2006/2007. The Golf Resort’s annual operating loss last year was $799,000, and has been between $43,000 and $799,000 annually for the past five years. The Golf Resort’s operating losses are projected for the next five years to be between $330,000 and $552,000 annually. The City’s General Fund covers all such losses.
Measure “GG” would increase the rate of TOT from eleven and one-quarter percent (11.25%) to twelve and one-quarter percent (12.25%) of the payment by guests to occupy lodging space. This rate increase will generate estimated annual revenues of approximately $630,000.
Measure “GG” expressly provides that the 1% TOT rate increase is a “special tax”. Therefore, these new revenues must be deposited into a special City account and spent only for the limited purpose of construction, reconstruction, operation and maintenance of the Indian Wells Golf Resort. This would relieve the General Fund from paying for at least a portion of Golf Resort annual losses, thereby allowing the General Fund to pay for continued or increased general City services and programs described above. The current 11.25% TOT rate will remain a “general tax,” which revenues will continue to be spent on general City services and programs.
A survey conducted by City staff indicates that TOT rates of other Coachella Valley cities range from nine percent (9%) to thirteen and one-half percent (13.5%). TOT rates of certain large business and tourist destinations in the southwest United States range from twelve point fifty-seven percent (12.57%) in Phoenix to fourteen percent (14%) in Los Angeles.
Since Measure “GG” is a “special tax” the revenues from which could only be used for the Indian Wells Golf Resort as described above, Measure “GG” must be approved by a two-thirds (2/3) supermajority of the voters pursuant to California Proposition 218.
A “Yes” vote on Measure “GG” will authorize the 1% TOT rate increase as a special tax.
A “No” vote on Measure “GG” will not authorize the 1% TOT rate increase.
The above statement is an impartial analysis of Measure “GG”. If you desire a copy of the Measure, please call the elections official’s office at (760) 346-2489 and a copy will be mailed at no cost to you.
By: STEPHEN P. DEITSCH, City Attorney
