City of Hayward

Measure NN - Majority Approval Required

CITY ATTORNEY’S IMPARTIAL ANALYSIS OF MEASURE NN PROPOSED INCREASE OF HAYWARD’S TRANSIENT OCCUPANCY (‘TOT’ OR HOTEL) TAX

 Hayward voters will be presented with a measure at the November 3, 2020 general municipal election that could increase the city’s transient occupancy tax from its current rate of 8.5% up to a maximum of 14%, as determined by the city council. A transient occupancy tax, called ‘TOT’ for short, is also known as a ‘hotel tax.’ A TOT or ‘hotel tax’ is a tax imposed only on guests at hotels, motels, and other short-term lodging who stay up to 30 days. The tax is imposed on a per day basis, and is paid by the guest in addition to the daily rate charged by the hotel or motel. To avoid any confusion, this tax is not charged or imposed on renters or homeowners.

 As an example of how this tax works, a guest who pays $100 to stay in a hotel for one day now pays an additional $8.50 as the TOT or hotel tax. The guest pays a total of $108.50. The hotel collects $8.50 and sends it to the city. If this measure is approved, the guest could pay as much as $114.00 for one day, and the hotel would collect $14 and send it to the city.

 The TOT is a general tax used by the city for any unrestricted purpose. The financial analysis prepared by the city reports an average of $2.6 million currently generated annually in TOT revenues, with a potential of generating a projected $4.2 million if the maximum rate of 14% were charged. The financial analysis further reports the current 8.5% rate is among the lowest rates when compared to 16 Bay Area cities with populations over 100,000.

 The ballot question for this measure says the city will use this tax for street and sidewalk repairs, increased emergency response times by police and fire department personnel, disaster preparedness, extended library hours and after-school programs, and other city services.

 In order to increase the rate from its current 8.5%, the Hayward city council would be required to amend its municipal code at a public meeting noticed for this purpose. Under state law, the city council could increase the rate above 8.5% but not higher than 14% without further approval of the voters.

 A ‘yes’ vote will allow the TOT rate to be increased above 8.5% by the city council, but not higher than 14%.

 A ‘no’ vote means the current rate of 8.5% will remain unchanged.

 This measure requires a simple majority vote for approval. A simple majority is 50% of voters voting on the measure, plus one additional vote. If approved, it would become effective 10 days after the certification of its approval, pursuant to Elections Code sec. 9217.

 This analysis is prepared by the City Attorney of the city of Hayward, pursuant to Elections Code sec. 9280

 s/MICHAEL S. LAWSON

City Attorney, City of Hayward

ORDINANCE OF THE CITY OF HAYWARD, CALIFORNIA AMENDING SECTION 8-4.20 OF THE HAYWARD MUNICIPAL CODE RELATING TO TRANSIENT OCCUPANCY TAX

THE PEOPLE OF THE CITY OF HAYWARD DO ORDAIN AS FOLLOWS:

 Section 1. Section 8-4.20 of the Hayward Municipal Code is hereby amended to read as follows:

 SEC. 8-4.20 - TAX IMPOSED.

For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of eight and one-half percent (8½%) up to fourteen percent (14%) of the rent charged by the operator. Said tax constitutes a debt owed by the transient to the city which is extinguished only by payment to the operator or to the city. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Tax and License Administrator may require that such tax shall be paid directly to the Tax and License Administrator.

 Section 2. To the extent allowed under Article XIII C of the California Constitution, this Ordinance may be amended by the City Council without a vote of the people, except that voter approval shall be required for any amendment that increases the tax, within the meaning of Government Code section 53750(h), beyond the levels authorized by this chapter.

 Section 3. California Environmental Quality Act (CEQA). The City Council independently finds and determines that this action is exempt from CEQA pursuant to Section 15061(b)(3) of the CEQA Guidelines, as an activity that is covered by the general rule that CEQA applies only to projects which have the potential for causing a significant effect on the environment. The general exemption applies in this instance because it can be seen with certainty that there is no possibility that the proposed amendments could have a significant effect on the environment, and thus are not subject to CEQA. Thus, it can be seen with certainty that the proposed project would not have a significant effect on the environment.

 Section 4. If any section, subsection, paragraph or sentence of this Ordinance, or any part thereof, is for any reason found to be unconstitutional, invalid or beyond the authority of the City of Hayward by a court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance.

 Section 5. This Ordinance shall become effective 10 days after the certification of its approval by the voters at the Election pursuant to Elections Code section 9217.

 Section 6. Upon approval by the voters, the City Clerk shall certify to the passage and adoption of this Ordinance and shall cause it to be published according to law.