07-27-2010 CC RPT 14 - Laserfiche WebLink

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City Council Memorandum TO: HONORABLE MAYOR AND CITY COUNCIL DATE: July 27, 2010 FROM: DEVELOPMENT DEPARTMENT ITEM NO: 14 WARDS: ALL SUBJECT: RESOLUTION ORDERING AND GIVING NOTICE OF AN ELECTION TO INCREASE THE TRANSIENT OCCUPANCY TAX RATE ISSUE The issue before the City Council is whether to approve a resolution to place a measure on the November 2, 2010 ballot that would allow for a phased increase of the City's Transient Occupancy Tax ( "TOT ") rate by a total of 2%, from 11 % to 12% in 2012 and from 12% to 13% in 2014. RECOMMENDATIONS The Finance Committee recommends that the City Council: 1. Adopt the attached Resolution (Exhibit "A ") ordering, providing for and giving notice of an election to be held on November 2, 2010, for the purpose of submitting to the qualified electors of the City of Riverside an amendment to Chapter 5.32 of the Riverside Municipal Code to allow a phased increase of the City's TOT rate by 2 %, from 11 % to 13 %. 2. Designate the members of the Finance Committee to author the argument in favor of the measure. COMMITTEE RECOMMENDATION On July 21, 2010, the Finance Committee (all members present) voted unanimously to recommend adoption of the resolution to place the proposed TOT increase on the November ballot and designate the members of the Finance Committee to author the argument in favor of the measure. BACKGROUND The City initiated the TOT in 1966 and the current rate is 11 %. The TOT has historically provided funding to market the City and attract tourism through conventions and special events, manage the convention center, and off -set general city services such as public safety and other general fund services and improvements. By law, none of these dollars can be taken by the State of California. On March 2, 2010 and June 22, 2010, as part of the Renaissance Initiative, the City Council discussed the proposed expansion of the Convention Center. The City Council requested that staff evaluate funding sources for Convention Center expansion and operation along with other Renaissance projects. After reviewing available options, staff proposes to raise the TOT rate by 2% which would not impact City residents or property owners and instead would be increased revenue collected from recreational and business visitors to the City. The proposal to increase the TOT rate could go to the voters for consideration. on November 2, 2010. Revenue from the TOT rate increase will be used to fund a variety of City programs, services and infrastructure. It is proposed that the TOT increase would take the form of a phased increase, with an initial 1% increase to take effect on July 1, 2012, and the remaining 1% increase to take effect on July 1, 14 -1