Del Rey Oaks to have TOT measure on Nov. ballot for increase up to 14%
DEL REY OAKS – The city of Del Rey Oaks will be asking its electorate to consider a ballot measure this November that would increase its transient occupancy tax from 10% to up to 14% to supplement its general fund.
Del Rey Oaks is pursuing an increase to its transient occupancy tax “to bring the rate consistent with other cities on the (Monterey) Peninsula, and to increase revenue to maintain and protect essential city services,” said Mayor Scott Donaldson.
The Del Rey Oaks City Council recently voted unanimously to place the measure on the ballot. The measure asks, “Shall the measure to protect city services including police and fire, parks, bicycle and pedestrian safety, roadways and storm drains, by increasing the Transient Occupancy Tax up to 4%, raising up to $60,000 in additional yearly revenue the State cannot take away and taxing rent charged to “hotel” guests, including by online travel and short-term rental companies, for transient occupancy, with annual independent audits, until ended by voters, be adopted?”
The general tax measure would require a simple majority, 50% + 1, of Del Rey Oaks votes to pass.
The ballot measure would allow increases up to a maximum of 4%, anywhere from 10% to 14%, but it was recommended that the initial increase be set at 12% to be consistent with other cities on the Peninsula, said Donaldson.
The transient occupancy tax, or TOT, is charged to visitors renting short-term rentals in Del Rey Oaks. The rate is currently at 10%, and the proposed tax measure would allow the council to increase TOT from the current rate to a maximum of 14% which would put the city at a level comparable to other Monterey Peninsula cities. Carmel currently has a TOT rate of 10%, with Monterey, Seaside, Pacific Grove and Sand City all pegged at 12%, while Marina has a TOT rate of 14%.
“Further increases would be based on economic factors,” said Donaldson. “The measure would allow the council to increase the rate to 14%, equivalent to Marina, without going through the expense and time of creating another ballot measure.”
Unhosted short-term rental units are capped at 25 in the city of Del Rey Oaks, plus there are about 10 units that are occupied by residents and periodically rented out, said Donaldson.
Those units are projected to bring $190,000 to the city’s coffers this year at the current TOT rate of 10%. Conservative estimates project a TOT rate of 12% would generate an additional $30,000 and a 14% rate would generate $60,000. With the passage of the ballot measure, Del Rey Oaks could realize anywhere between a projected $220,000 to $250,000 more to the city’s general fund.
The tax is a general tax and revenues are retained and used as general fund revenue. If approved by voters, the additional revenue generated would be used for general government purposes to maintain and protect essential city services such as public safety response, parks services, maintaining public infrastructure such as streets, sidewalks, parks and facilities.
Donaldson said Del Rey Oak’s TOT “equates to our fourth-largest revenue source” for the city and its citizens.
Other cities on the Monterey Peninsula have both short-term rentals and hotel rooms generating TOT revenue, but Del Rey Oaks does not currently have hotel facilities.
“Our Fort Ord property provides the city with an opportunity for a hotel, but we’re at the very beginning of the development process and it’s yet to be determined,” said Donaldson, who added the property will be the city’s biggest opportunity for revenue growth on the horizon.
The estimated cost of the November 2024 election including this ballot measure and the three seats on the City Council is approximately $15,000. The costs are included in the Fiscal Year 2024-2025 budget.
