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HomeMy WebLinkAboutItem 8.2 Report on Dublin’s Transient Occupancy Tax and Direction on a Potential Increase STAFF REPORT CITY COUNCIL Page 1 of 6 Agenda Item 8.2 DATE: February 17, 2026 TO: Honorable Mayor and City Councilmembers FROM: Colleen Tribby, City Manager SUBJECT: Report on Dublin’s Transient Occupancy Tax and Direction on a Potential Increase Prepared by: Felicia Escover, Economic Development Manager EXECUTIVE SUMMARY: The City Council will receive a report on the City’s Transient Occupancy Tax (TOT), including historical context, existing TOT structure, revenue trends, and regional context. This report also includes information on a potential increase to the TOT and seeks direction on whether to proceed with preparation of ballot materials for a potential TOT increase. STAFF RECOMMENDATION: Receive the report and direct Staff to prepare ballot materials to increase the City’s Transient Occupancy Tax rate to 12 percent in the 2026 General Election. FINANCIAL IMPACT: Increasing the Transient Occupancy Tax rate to 12 percent is estimated to generate additional revenues of $700,000 annually and $7,000,000 over ten years. The estimated cost to prepare ballot materials for the 2026 General Election is $33,630 as shown in Table 1. Because a municipal election is already scheduled for November 2026, no additional election -related costs would be incurred for ballot placement. 224 Page 2 of 6 Table 1: Estimated Transient Occupancy Tax Ballot Measure Expenses Category Item Estimated Cost Ballot Materials Language Translation $900 Printing (English) $6,900 Printing (Translated Materials) $5,200 Educational Materials Postcard Printing (1) $4,600 Postcard Postage (1) $5,700 Voter Information Flyer $330 Legal Expenses City Attorney Time and Materials $10,000 Total $33,630 DESCRIPTION: During Item 8.1 of the April 15, 2025 meeting and Item 7.1 of the June 3, 2025 meeting, the City Council expressed interest in considering a potential increase to the Transient Occupancy Tax (TOT) as part of its budget-balancing strategies. Background Transient Occupancy Tax, often referred to as a “bed tax” or “hotel tax”, is authorized under California Revenue and Taxation Code Section 7280. This statute allows local agencies to levy a tax on the privilege of occupying a room or other living space in a hotel, inn, tourist home, motel, or similar lodging, provided the occupancy is for a period of 30 days or less. Certain exemptions include official state and federal government travel. On September 10, 1984, the City Council adopted Ordinance 16 -84, establishing the City’s TOT at 8 percent, which has remained unchanged. Any increase to the TOT requires voter approval through a ballot measure. As a general tax, it requires approval by a simple majority (50 percent plus one). Revenues received from the TOT are deposited into the General Fund and support a wide range of City services, including public safety, infrastructure maintenance, and community programs. Hotels in Dublin and Transient Occupancy Tax Revenue Trends There are currently six hotels in Dublin including:  Aloft (4075 Grafton St.)  Extended Stay America (4500 Dublin Blvd.)  Holiday Inn (6680 Regional St.)  Hyatt Place (4950 Hacienda Dr.)  La Quinta Inn & Suites (6275 Dublin Blvd.)  IHG Army Hotel (operated at Camp Parks) Over the past decade, the City’s TOT revenue levels have been influenced by multiple factors, including hotel occupancy rates, average daily room rates, business travel demand, and 225 Page 3 of 6 overall economic conditions as shown below in Table 2. Table 2: 10-Year Transient Occupancy Tax Performance Fiscal Year Actuals 2024-25 $1,324,612 2023-24 $1,481,868 2022-23 $1,533,093 2021-22 $1,255,575 2020-21 $743,962 2019-20 $1,567,987 2018-19 $2,084,992 2017-18 $1,621,423 2016-17 $1,498,493 2015-16 $1,525,219 Dublin’s TOT revenue was strong and stable from Fiscal Years 2015-16 through 2018-19, peaking at approximately $2.1 million. Revenue declined during the COVID-19 pandemic, reaching a low of just under $750,000 in Fiscal Year 2020-21. Beginning the following year, revenue rebounded as travel activity resumed and continu ed to grow to $1.5 million in Fiscal Year 2022-23. Fiscal Year 2024-25 figures show revenue of $1.3 million, indicating modest softening but continued recovery above pandemic-era levels. Regional Context The Tri-Valley region currently has some of the lowest TOT rates in Alameda County and the East Bay area, with Tri-Valley jurisdictions maintaining rates between 6.5 percent and 8 percent, as shown in Table 3. By comparison, the median TOT rate across Alameda County is 12 percent, with rates ranging from 8 percent to 14 percent. Table 4 shows TOT rates in other cities in Alameda County. Table 3: Tri-Valley Transient Occupancy Rates County City Tax Rate (%) Effective Date Contra Costa Danville 6.5 07/08/1982 Alameda Dublin 8 09/10/1984 Alameda Livermore 8 10/01/1983 Alameda Pleasanton 8 09/01/1983 Contra Costa San Ramon 7.25 04/01/1993 Alameda (County) 10 01/01/2003 Contra Costa (County) 10 10/30/1990 226 Page 4 of 6 Table 4: Transient Occupancy Rates in Other Alameda County Cities City Tax Rate (%) Alameda 14 Albany 10 Berkeley 12 Emeryville 12 Fremont 10 Hayward 14 Newark 14 Oakland 14 San Leandro 14 Union City 13.86 Within this regional context, the City Council’s interest in exploring a potential TOT increase aligns with actions being taken by the City of Pleasanton. On February 3, 2026, the Pleasanton City Council directed staff to proceed with developing a ballot measure that would establish a target rate of 12 percent with phased implementation (10 percent effective July 1, 2027, and 12 percent effective July 1, 2028), and return with draft ballot language for the City Council to consider. Estimated Fiscal Impact of a Potential Increase To illustrate the potential fiscal impact of a TOT rate adjustment, Staff prepared a general revenue projection based on current estimated annual TOT collection of approximately $1.4 million at the existing 8 percent rate. The projections in Table 5 below assume stable hotel performance and are intended for illustrative planning purposes only; actual revenues will vary based on economic conditions, occupancy levels, and market dynamics. Table 5: Projected Transient Occupancy Tax Revenue Comparison TOT Rate Annual 10-Year Revenue Increase from 8% Revenue Increase from 8% 8% (Current) $1,400,000 $14,000,000 10% $1,750,000 $350,000 $17,500,000 $3,500,000 12% $2,100,000 $700,000 $21,000,000 $7,000,000 14% $2,450,000 $1,050,000 $24,500,000 $10,500,000 Community Survey Findings The 2025 Community Survey included a question related to potential budget -balancing strategies, including a possible increase to the TOT in Dublin. Survey results indicate community support, with 52 percent of respondents expressing support for a potential increase (Table 6). 227 Page 5 of 6 Table 6: Polling Results for the Statement: “Increasing the Transient Occupancy Tax Paid by Hotel and Motel Guests” Strongly Support Somewhat Support Somewhat Oppose Strongly Oppose Don’t Know Total Support Total Oppose 21% 31% 18% 17% 13% 52% 35% In addition to feedback received through the Community Survey, Staff has been meeting with local hoteliers as part of the Hospitality Expansion initiative outlined in the City’s adopted Economic Development Strategy. These discussions have focused on market conditions, operational challenges, opportunities for City support, and the potential for a T OT increase. Based on conversations to date, feedback from hotel operators regarding a potential TOT increase has been generally supportive. Staff will continue outreach and engagement with the hospitality community as this process moves forward to ensure ongoing dialogue and coordination. Policy Framework and Direction Staff recommends increasing the TOT rate to 12 percent. Any increase to the City’s Transient Occupancy Tax would require voter approval and could be placed on the November 2026 ballot. Consistent with current City practice, Staff recommends that any proposed TOT increase be structured as a general tax, rather than a special tax. A general tax is recommended because it provides the City Council with the flexibility to allocate revenues through the annual budget proc ess to address evolving community needs and operational priorities. In contrast, a special tax would require that revenues be restricted to specific purposes identified in the ballot measure, limiting the City’s ability to respond to changing fiscal conditions, service demands, or emergent priorities over time. Additionally, special taxes require a two-thirds voter approval threshold, whereas a general tax requires approval by a simple majority, increasing the likelihood of voter approval. Under a general tax framework, increased TOT revenues would be deposited into the General Fund and used to support a broad range of City services and strategic priorities as directed by the City Council through the budget process, including public safety, infrastructure maintenance, and the preservation of core municipal services as is the current practice. Timeline and Next Steps If the City Council directs Staff to move forward, Staff will continue meeting with key stakeholders and community partners and begin preparing the necessary ballot language and required resolution following the general timeline shown in Table 7 below. Staff will return to the City Council with these materials by May in order to meet the requirements for placement on the November 2026 ballot. Following Council action, Staff would prepare the required impartial analysis and coordinate submission of all election-related materials to the Alameda County Registrar of Voters. This schedule would allow sufficient time to meet all statutory deadlines and comply with the August filing deadline, in accordance with applicable County requirements. 228 Page 6 of 6 Table 7: Tentative Election Timeline Date Action May 19, 2026 City Council adopts a resolution submitting to the voters the ordinance amending the municipal code. June 16, 2026 City Council adopts a resolution calling the general municipal election. August 7, 2026 Resolutions and analysis are due to the Alameda County Registrar of Voters. August 24, 2026 Arguments and rebuttals are due to Alameda County Registrar of Voters. November 3, 2026 Election Day. STRATEGIC PLAN INITIATIVE: Strategy 5: Long-Term Infrastructure and Sustainability Investments. Objective 5A: Continue to explore funding mechanisms for capital and ongoing maintenance needs. NOTICING REQUIREMENTS/PUBLIC OUTREACH: The City Council Agenda was posted. The Staff Report has also been shared with local hoteliers and Visit Tri-Valley. ATTACHMENTS: None. 229 Report on Dublin’s Transient Occupancy Tax and Direction on a Potential Increase February 17, 2026 230 Purpose During the April 15, 2025 and June 3, 2025 meetings, the City Council expressed interest in exploring a potential increase to the Transient Occupancy Tax (TOT) as part of its budget- balancing strategies. 231 Background •Transient Occupancy Tax •Authorized under California Revenue & Taxation Code §7280 •Applied to hotel stays of 30 days or less •Often referred to as a “bed tax” or “hotel tax” •Revenues deposited into the General Fund •Current Structure •Established in 1984 at 8% •Any increase requires voter approval •As a general tax, requires simple majority (50% + 1) 232 Dublin’s Hotel Inventory •Aloft (4075 Grafton St.) •Extended Stay America (4500 Dublin Blvd.) •Holiday Inn (6680 Regional St.) •Hyatt Place (4950 Hacienda Dr.) •La Quinta Inn & Suites (6275 Dublin Blvd.) •IHG Army Hotel (operated at Camp Parks) 233 10-Year Transient Occupancy Tax Performance Fiscal Year Actuals 2024-25 $1,324,612 2023-24 $1,481,868 2022-23 $1,533,093 2021-22 $1,255,575 2020-21 $743,962 2019-20 $1,567,987 2018-19 $2,084,992 2017-18 $1,621,423 2016-17 $1,498,493 2015-16 $1,525,219 234 Regional Context County City Tax Rate (%) Contra Costa Danville 6.5 Alameda Dublin 8 Alameda Livermore 8 Alameda Pleasanton 8* Contra Costa San Ramon 7.25 Alameda (County)10 Contra Costa (County)10 City Tax Rate (%) Alameda 14 Albany 10 Berkeley 12 Emeryville 12 Fremont 10 Hayward 14 Newark 14 Oakland 14 San Leandro 14 Union City 13.86 Tri-Valley Alameda County 235 City of Pleasanton Action On February 3, 2026, Pleasanton City Council directed staff to pursue a ballot measure to increase TOT to a target of 12%, phased over two years. •10% effective July 2027 •12% effective July 2028 236 Fiscal Impact Scenarios Based on an estimate of $1.4 million annually at 8% 8%$1.4M N/A 10%$1.75M + 350K 12%$2.1M + 700K 14%$2.45M +1.05M 237 Ballot Measure Costs Estimated cost to prepare ballot materials: •Includes: •Translation •Printing •Educational Materials •Legal Services 238 Community Survey Results (2025) Strongly Support Somewhat Support Somewhat Oppose Strongly Oppose Don’t Know Total Support Total Oppose 21%31%18%17%13% Polling Results for the Statement: “Increasing the Transient Occupancy Tax Paid by Hotel and Motel Guests” 239 Hotelier Outreach Staff has been meeting with local hoteliers through the Hospitality Expansion initiative. Discussion topics: •Market conditions •Operational challenges •City support •Potential TOT increase 240 Policy Framework Staff recommends structuring any increase as a general tax at 12%. This approach: •Is in alignment with the Community Survey sentiment. •Supports the City Council’s request to identify budget balancing strategies. •Allows flexibility in addressing evolving community priorities. •Requires simple majority for approval (not 2/3 threshold). •Results in cost savings given that a municipal election is scheduled. •Aligns with the actions of the Pleasanton City Council. 241 Timeline (If Directed to Proceed) City Council adopts a resolution submitting to the voters the ordinance amending the municipal code. City Council adopts a resolution calling the general municipal election. Resolutions and analysis are due to the Alameda County Registrar of Voters. Arguments and rebuttals are due to Alameda County Registrar of Voters. Election Day. 242 Staff Recommendation Receive the report and direct Staff to prepare ballot materials to increase the City’s Transient Occupancy Tax rate to 12 percent in the 2026 General Election. 243