TITLE:
title
PROVIDE DIRECTION TO STAFF TO EXPLORE TWO CITY BALLOT INITIATIVES PERTAINING TO TRANSIENT OCCUPANCY TAX AND BUSINESS LICENSE TAX
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DEPARTMENT: FINANCE DEPARTMENT
PRESENTED BY: CAROL MOLINA, FINANCE DIRECTOR
CONTACT INFORMATION: CAROL MOLINA, FINANCE DIRECTOR, (714) 754-5036
RECOMMENDATION:
recommendation
Staff recommends the City Council:
1. Provide direction to staff to explore placement of potentially two ballot initiatives in the November 2026 elections to consider an increase in the City of Costa Mesa's Transient Occupancy Tax (Hotel tax) and/or Business License Tax.
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BACKGROUND:
Transient Occupancy Tax (Hotel Tax)
The City's first Hotel Tax went into effect in 1978 at a rate of 6%. In 2010, the City Council approved a ballot measure to increase the Hotel Tax from 6% to 8%, which was approved by the voters on November 2010.
Transient Occupancy Tax and Business License Tax revenues go into the City's general fund, providing flexible, non-property tax revenues that can be used for any municipal purpose the City Council directs, such as funding Public Safety, Capital Projects, etc. Per Costa Mesa Municipal Code 16-68, for the privilege of occupancy in any hotel or motel, each transient is subject to and shall pay a tax in the amount of 8% of the rent charged by the operator. The 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 hotel or motel operator at the time the rent is paid. Each operator shall file, on or before the last day of the month following the close of each calendar quarter or of such different reporting period as may be established by the Finance Department, a return to the Finance Department on forms provided by it, the total rents charged and received, the amount of tax collected for transient occupancies, and other information as reasonably required by the Finance Department. At the time the ret...
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