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HomeMy WebLinkAboutItem 7.1 Ballot Measure to Amend Dublin Municipal Code Chapter 3.16 to Increase the Rate of the Transient Occupancy Tax Agenda Item 7.1 STAFF REPORT CITY COUNCIL Page 1 of 8 DATE: July 21, 2026 TO: Honorable Mayor and City Councilmembers FROM: Colleen Tribby, City Manager SUBJECT: Ballot Measure to Amend Dublin Municipal Code Chapter 3.16 to Increase the Rate of the Transient Occupancy Tax Prepared by: Felicia Escover, Economic Development Manager EXECUTIVE SUMMARY: The City Council will consider placing a measure on the November 2026 ballot to increase the City’s existing eight percent Transient Occupancy Tax (TOT) rate. The proposed ballot measure would increase the Transient Occupancy Tax by four percentage points through a phased implementation, increasing the rate from 8 percent to 10 percent effective July 1, 2027 and to 12 percent effective July 1, 2028, and would include an exemption for military families. The proposed measure has been structured as a general tax. Revenues generated through the measure would continue to be deposited into the General Fund and used for general governmental purposes as determined through the annual budget process. As a general tax measure, the proposed Resolution requires approval by at least four affirmative votes of the City Council for placement on the November 3, 2026 ballot. The measure would require approval by a simple majority (50 percent plus one) of Dublin voters at the November 3, 2026 General Municipal Election. STAFF RECOMMENDATION: Adopt the Resolution Ordering the Submission to the Qualified Electors of the City of Dublin an Ordinance Amending Chapter 3.16 of the Dublin Municipal Code to Increase the Rate of the Transient Occupancy Tax and Establish a Military Family Exemption; Calling for an Election to be Consolidated W ith the Statewide General Election to be Held on November 3, 2026; Fixing the Date and Manner of the Election and the Procedure for Voting Therein; And Providing for Notice Thereof. 442 Page 2 of 8 FINANCIAL IMPACT: A 1% increase to the Transient Occupancy Tax is estimated to generate annual revenue of approximately $175,000. A phased increase in the Transient Occupancy Tax from 8 percent to 10 percent and then from 10 percent to 12 percent is estimated to generate approximately $350,000 annually from the initial increase and approximately $700,000 annually in additional General Fund revenue once fully implemented. These numbers assume stable hotel performance and market conditions. The military exemption could reduce anticipated annual revenues up to an estimated $30,000. Staff estimates the cost to the City at $33,630 related to the placement of the measure on the November 3, 2026 General Municipal Election ballot. DESCRIPTION: Background Transient Occupancy Tax (TOT), often referred to as a “bed tax” or “hotel tax,” is authorized under California Revenue and Taxation Code Section 7280. The tax is imposed on the privilege of occupying a room or other living space in a hotel, inn, tourist home, motel, or similar lodging for a period of 30 days or less. The tax is collected by hotel operators and remitted to the City. Certain exemptions apply, including 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. The rate has remained unchanged since that time. As part of the City's fiscal sustainability strategy, the City Council has discussed increasing the TOT. During the April 15, 2025 and June 3, 2025 City Council meetings, the City Council expressed interest in evaluating a potential TOT increase as one component of its budget- balancing strategies. On February 17, 2026, the City Council directed Staff to prepare ballot measure language utilizing a phased implementation approach to increase the City's TOT from 8 percent to 10 percent effective July 1, 2027, and 12 percent effective July 1, 2028. At the June 2, 2026 City Council meeting, Staff presented the proposed ballot measure language and implementing resolution. The City Council requested additional information regarding potential impacts on the hospitality industry and the feasibility of exempting qualifying military family members from the tax. This Staff Report provides the requested information, along with relevant statewide data on TOT measures in the 2024 election . TOT Rate Comparison and Hospitality Trends The City of Dublin currently has six hotels within the city limits with 742 guest rooms. The hotels include:  Aloft (4075 Grafton St.)  Extended Stay America (4500 Dublin Blvd.)  Holiday Inn (6680 Regional St.)  Hyatt Place (4950 Hacienda Dr.) 443 Page 3 of 8  La Quinta Inn & Suites (6275 Dublin Blvd.)  IHG Army Hotel (operated at Camp Parks) Regional Context The Tri-Valley region currently has some of the lowest TOT rates in Alameda County and the East Bay, with Tri-Valley jurisdictions maintaining rates between 6.5 percent and 8 percent, as shown in Table 1. By comparison, the median TOT rate across Alameda County is 12 percent, with rates ranging from 8 percent to 14 percent. Table 1 compares Tri-Valley TOT rates, while Table 2 summarizes rates in other Alameda County cities. Table 1. 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 Table 2. 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 In addition to reviewing regional TOT rates, Staff evaluated current hospitality market conditions to better understand the potential impacts of a TOT increase. 444 Page 4 of 8 Hospitality Trends in Dublin and the Tri-Valley The Tri-Valley hospitality industry has continued its recovery from the COVID -19 pandemic, although market performance remains below pre-pandemic levels. Prior to the pandemic, occupancy rates in the Tri-Valley averaged between 74 and 76 percent. Occupancy dropped to 45 percent in 2020 and has gradually improved over the last several years. Through May 2026, average occupancy in the Tri-Valley reached 64.9 percent. Dublin hotels continue to outperform the broader Tri-Valley market, achieving approximately 70 percent occupancy in 2025. Despite strong occupancy levels, the hospitality industry continues to face challenges. Hotels throughout the region are experiencing increasing operating costs, including labor, insurance, utilities, and maintenance expenses. Dublin's average daily rates have remained relatively flat and have decreased in some cases, limiting revenue growth and placing additional pressure on hotel operating margins. Table 3 summarizes market performance in 2025. Table 3. 2025 Market Performance Metric Dublin Tri-Valley Occupancy 70% 62.9% Average Daily Room Rate $114.77 $135.89 Revenue per Available Room $80.33 $85.51 Although Dublin's occupancy rate exceeds the regional average, Dublin hotels generally command lower room rates than the Tri-Valley overall. One contributing factor is that Dublin has an older hotel inventory compared to neighboring communities. Much of Dublin's hotel stock was developed during the late 1990s and early 2000s, whereas other Tri-Valley cities have seen the addition of newer lodging products and renovations that allow them to achieve higher average daily rates. As a result, Dublin hotels tend to compete more aggressively on price while maintaining strong occupancy levels. Overall, the data indicate that both Dublin and the broader Tri-Valley market have recovered substantially since 2020. While occupancy levels have not yet returned to historic highs, Dublin's strong performance relative to the region underscores the importance of the hospitality industry to the City's economy and highlights its ability to maintain demand despite an aging hotel inventory. Potential Impacts of a TOT Increase To better understand the potential impacts of increasing the City's TOT, Staff reviewed recent academic research examining lodging tax increases, along with research done by other Bay Area cities when contemplating their own TOT rate increases. A 2021 study published in Tourism Economics examined lodging tax increases in eight U.S. destinations and found that, in most cases, higher lodging taxes did not result in significant declines in hotel occupancy, average daily room rates, or revenue. The study concluded that 445 Page 5 of 8 lodging tax increases generally had little measurable impact on hotel performance, even in destinations with tax rates higher than nearby competitors (Hudson et al., 2021). Similarly, a 2022 study published in Economic Development Quarterly concluded that hotel occupancy taxes had no statistically significant impact on hotel revenues or employment levels. The study found that hotel occupancy taxes generally have negligible impacts on hotel sales and employment and that visitors typically absorb much of the tax burden (Swenson, 2022). Other cities have done similar research in preparation for their own TOT ballot measures. In 2018, the City of Milpitas referenced a study done by the University of Hawaii Economics Department that analyzed a 1986 increase to Hawaii’s TOT rate from 4% to 9%, and which showed “no significant impacts to demand and hotel and motel revenue” resulting from the increase (Bonham, Fujii, Im, and Mak). While the Hawaii study is 30 years old, it is notable in that it analyzed data from hotels in the State of Hawaii over a 10-year period. The City of Milpitas ultimately passed an increase to TOT from 10% to 14% in 2018 (68% voted yes). In the year after the increase, Milpitas’ TOT revenue gre w from $12.1 million to $14.5 million (19.6%). Also in 2018, Marin County passed a TOT increase from 10% to 14%. Structured as a special tax, the measure passed with 74% approval. In advance of the County placing the measure on the ballot, the Marin Economic Forum released a study that looked at data for all 58 counties in California and concluded that raising the tax rate on overnight visitors was unlikely to reduce hotel and lodging demand significantly. Overall, the available research suggests that moderate increases in TOT are unlikely to significantly impact hotel demand or performance. Occupancy rates are dependent on a number of factors, including proximity to business or leisure amenities, quality of hotel rooms and services, base price in addition to all other fees, and the overall economy. While some studies note that highly price-sensitive travelers, tour groups, and certain market segments may be more responsive to lodging tax increases, the broader findings indicate that lodging tax increases generally do not result in substantial declines in hotel activity (Hudson et al., 2021). Statewide Context: 2024 Ballot Activity As part of the research for this Staff Report, Staff conducted a review of the 2 7 California cities and counties that had TOT measures on the November 2024 general election ballot (22 passed, five were defeated). The goal was to understand the full landscape of why agencies undertake these measures, and how they generally fare under certain circumstances. Staff examined each jurisdiction's fiscal condition at the time of the measu re, the rationale stated in ballot language and council staff reports, the size of the rate increase proposed, the number of years the rate had gone unchanged before the proposed increase, the outcome of the vote, and the percentage of yes votes received. Staff found that the reasons cities pursue TOT ballot measures can be grouped into three distinct categories: 1) they are experiencing a fiscal crisis; 2) they are engaging in prevention of a deficit that is either imminent or can be foreseen in the near future; or 3) they are taking a proactive approach – that is, they are not 446 Page 6 of 8 fiscally stressed but are actively seeking out long-term structural revenues, and are acutely aware of the fact that their TOT rates have not kept pace with other increased costs ove r a long period of time. The following is a brief discussion of TOT measures in each category. Attachment 3 provides the full data. (Note that Staff removed Coachella, Del Mar, and Del Rey Oaks from the data. All three passed TOT measures in 2024 related to short-term rentals only, not hotels). 1. Fiscal Crisis (four measures, 100% pass rate). The most direct driver of California TOT measures in 2024 was a declared general fund deficit. The four cities (Fairfield, Menlo Park, Pacifica, and Santa Rosa) named their budget shortfall explicitly in placing the measure on the ballot. Fairfield faced a $20 million deficit driven in part by programs created with one - time COVID relief funding that had since become ongoing obligations. Menlo Park projected an $800,000 deficit driven by state funding uncertainty and rising pension costs. Pacifica described a $3.2 million structural imbalance between its revenues and the cost of maintaining city services and characterized its fiscal position as a “tipping point.” Santa Rosa was contending with a $13.3 million general fund gap caused by chronically underperforming sales tax revenues. All four of these measures passed. It is worth noting, however, that the additional TOT revenue generated - ranging from roughly $600,000 to $3.6 million annually - addressed only a fraction of the deficits in question. In each case, the TOT increase was one element of a broader strategy that also included expenditure reductions, draws on reserves, and additional revenue measures. 2. Deficit Prevention (four measures, 100% pass rate). A second group of jurisdictions was not in active deficit but faced fiscal stress that was expected to worsen without intervention. Fort Bragg technically balanced its Fiscal Year 2024-25 budget, but only by $47,000 and by drawing on reserves. It projected an annual deficit of up to $1 million in coming years driven by pension costs, and the TOT measure was framed explicitly as deficit prevention. Newark cited inflationary cost pressures outpacing post-pandemic revenue recovery and used the measure to fund a new reserve for aging city infrastructure. Santa Barbara County, which had an $11.9 million surplus in Fiscal Year 2024-25, placed a measure on the ballot because its multi-year forecast showed a $2.6 million deficit arriving in the future that was projected to grow. 447 Page 7 of 8 3. Proactive Approach (16 measures, 69% pass rate). The largest category of TOT measures in 2024 involved agencies that were in sound fiscal health at the time but cited long- term stability - essentially, the ability to continue to provide essential services over time - as the reason for the measure. Most had also not updated their hotel tax rate in many years, leaving it out of step with neighboring jurisdictions and with the rising cost of services that tourism imposes on city infrastructure. Rancho Cucamonga's rate had been unchanged since 1983 (41 years), Hollister's since 1986 (38 years), and Auburn's since 1991 (33 years). The argument in these cases was not fiscal emergency but fairness: visitors using city roads, parks, and public safety services should contribute more equitably to the cost of providing them, and cities should not be leaving an ongoing revenue source on the table that neighboring jurisdictions are already collecting. Several jurisdictions used the TOT as a vehicle for funding a particular program rather than for general fiscal purposes. The Town of Mammoth Lakes, which was in strong financial shape with fund balances growing 9% year over year, passed a 2 -percentage-point increase and immediately dedicated 100% of the new revenue to its workforce housing program. Mono County's unincorporated areas similarly tied their increase to affordable housing, childcare, and public safety investments. Dunsmuir used its measure to f und the replacement of a public works facility. Of the five measures that failed in this category, notable examples include Avenal’s, which bundled three different taxes into one measure, and Mission Viejo’s, which was structured as a special tax requiring a 2/3 supermajority vote. Military Family Exemption At the June 2, 2026 City Council meeting, the City Council requested that Staff evaluate an exemption for qualifying military family members. Staff estimates that including a military family exemption would have a limited fiscal impact (less than $30,000) due to the relatively small number of qualifying stays, although the precise revenue reduction would depend on utilization. Summary Consistent with the City Council’s direction in February, Staff has prepared ballot measure language that increases Dublin’s Transient Occupancy Tax by four percentage points through a phased implementation, is structured as a general tax, and includes an exemption for military families. Revenues generated through the measure would continue to be deposited into the General Fund and used for general governmental purposes as determined through the annual budget process. As a general tax measure, the proposed Resolution requires approval by at least four affirmative votes of the City Council for placement on the November 3, 2026 ballot. The measure would require approval by a simple majority (50 percent plus one) of Dublin voters at the November 3, 2026 General Municipal Election. 448 Page 8 of 8 STRATEGIC PLAN INITIATIVE: Strategy 2: Fiscal Sustainability Objective B: Identify and pursue new ongoing revenue sources to support long-term fiscal stability. NOTICING REQUIREMENTS/PUBLIC OUTREACH: Prior to the February 17, 2026 City Council meeting, Staff conducted preliminary outreach and discussions with local hotel operators regarding market conditions, business trends, and the potential for a Transient Occupancy Tax increase as part of the City’s ongoing Hospitality Expansion initiative identified in the adopted Economic Development Strategy. Since that meeting, Staff has continued to provide updates to local hoteliers regarding the proposed ballot measure and has extended invitations for additional meetings and discussions. In addition to these conversations, Staff has continued ongoing efforts to support local hotels and hospitality businesses. These efforts have included creating a $250,000 Economic Development Support Reserve, developing promotional materials, and incorporating hospitality considerations into the City's marketing and branding strategy. Based on discussions to date, local hotel operators generally do not support increasing the TOT. Staff has not conducted formal public polling specific to the proposed measure. However, responses from the City's 2025 Community Survey indicate majority support for increasing the TOT paid by hotel guests as shown in Table 4. Table 4. 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% The City Council Agenda was posted. The Staff Report has also been shared with local hoteliers. ATTACHMENTS: 1) Resolution Ordering the Submission to the Qualified Electors of the City of Dublin an Ordinance Amending Chapter 3.16 of the Dublin Municipal Code to Increase the Rate of the Transient Occupancy Tax and Establish a Military Family Exemption ; Calling for an Election to be Consolidated with the Statewide General Election to be Held on November 3, 2026; Fixing the Date and Manner of the Election and the Procedure for Voting Therein; And Providing for Notice Thereof 2) Exhibit A to the Resolution – Ordinance Amending Section 3.16.030 of the Dublin Municipal Code to Increase the Rate of the Transient Occupancy Tax and Establish a Military Family Exemption 3) Summary of 2024 California TOT Ballot Measures 449 Reso. No. XX-26, Item X.X, Adopted 07/21/2026 Page 1 of 4 RESOLUTION NO. XX – 26 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF DUBLIN ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF DUBLIN AN ORDINANCE AMENDING CHAPTER 3.16 OF THE DUBLIN MUNICIPAL CODE TO INCREASE THE RATE OF THE TRANSIENT OCCUPANCY TAX AND ESTABLISH A MILITARY FAMILY EXEMPTION; CALLING FOR AN ELECTION TO BE CONSOLIDATED WITH THE STATEWIDE GENERAL ELECTION TO BE HELD ON NOVEMBER 3, 2026; FIXING THE DATE AND MANNER OF THE ELECTION AND THE PROCEDURE FOR VOTING THEREIN; AND PROVIDING FOR NOTICE THEREOF WHEREAS, the City of Dublin currently imposes a Transient Occupancy Tax (“TOT”) pursuant to Chapter 3.16 of the Dublin Municipal Code; and WHEREAS, the City Council adopted Ordinance No. 16-84 on September 10, 1984 establishing the City’s current TOT rate of eight percent; and WHEREAS, the TOT is imposed on the privilege of occupying a room or other lodging in a hotel, motel, inn, or similar facility within the City for a period of thirty (30) consecutive calendar days or less; and WHEREAS, the TOT is paid by visitors staying in hotels and lodging establishments within the City and is an important source of General Fund revenue supporting municipal services and operations; and WHEREAS, the City Council has identified the importance of maintaining long-term fiscal sustainability and identifying additional ongoing revenue sources to support municipal services, infrastructure, public safety, and quality of life initiatives; and WHEREAS, on February 17, 2026 the City Council received a report regarding the City’s Transient Occupancy Tax and directed Staff to prepare a ballot measure to increase the TOT utilizing a phased implementation approach; and WHEREAS, the proposed ballot measure would increase the TOT from 8% to 10% effective July 1, 2027, and from 10% to 12% effective July 1, 2028; and WHEREAS, the proposed measure is structured as a general tax measure, with revenues deposited into the City’s General Fund and available for general governmental purposes as determ ined through the annual budget process; and WHEREAS, pursuant to Article XIII C of the California Constitution and applicable provisions of the California Elections Code, a general tax proposed by a local government must be submitted to the voters at a regularly scheduled general municipal election and approved by a majority vote of the electorate. NOW, THEREFORE, BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF DUBLIN DOES HEREBY RESOLVE AND ORDER AS FOLLOWS: Section 1. That pursuant to the requirements of the Elections Code of the State of California and other applicable law, there is called and ordered to be held in the City of Dublin, California, on November 450 Reso. No. XX-26, Item X.X, Adopted 07/21/2026 Page 2 of 4 3, 2026 an election at which there shall be submitted to the qualified voters of the City a measure to amend Chapter 3.16 of the Dublin Municipal Code to increase the Transient Occupancy Tax. Section 2. The ballot question for the proposed ordinance shall be as follows: “Shall the measure to protect essential City of Dublin general services, such as police, fire, emergency medical, street maintenance, and parks and recreation, by increasing the City's transient occupancy tax, which is paid by hotel and lodging guests excepting families visiting servicemembers stationed at Camp Parks, from 8% to 10% on July 1, 2027 and to 12% on July 1, 2028, and generating approximately $7,000,000 over a ten year period that cannot be taken by the State, be adopted?” Section 3. The Ordinance to be considered by the voters pursuant to Section 2 of this Resolution is as set forth in Exhibit A. Section 4. (a) An election on the measure set forth in Section 2 shall be held in consolidation with the statewide general election to be held on November 3, 2026, and shall be held and conducted in the manner prescribed in Section 10418 of the Elections Code of the State of California. (b) The election on the measure set forth in Section 2 shall be held and conducted, the votes canvassed and the returns made, and the results ascertained and determined as provided by law. (c) The election for the measure set forth in Section 2 shall be held as required by law, and the Alameda County Registrar of Voters is authorized to canvass the returns of that election with respect to the votes cast in the City of Dublin. (d) At the next regular meeting of the City Council of the City of Dublin occurring after the returns of the election for the measure set forth in Section 2 have been canvassed and the certification of the results provided to the City Council, the City Council shall cause to be entered in its minutes a statement of the results of the election. Section 5. (a) In accordance with Elections Code sections 9282 and 9283, arguments submitted for or against the measure shall not exceed 300 words in length and shall be printed upon the same sheet of paper and mailed to each voter with the sample ballot for the election and may be signed by not more than five persons. (b) In accordance with Elections Code section 9282, the following headings, as appropriate, shall precede the arguments’ wording, but shall not be counted in the 300-word maximum: “Argument Against Measure __” or “Argument In Favor of Measure __” (the blank spaces being filled only with the letter or number, if any, designating the measure). (c) In accordance with Elections Code section 9283, printed arguments submitted to voters in accordance with section 9282 of the Elections Code shall be filed with the City Clerk, accompanied by the printed name(s) and signature(s) of the author(s) submitting it or, if submitted on behalf of an organization, the name of the organization and the printed name and signature of at least one of its principal officers. Arguments are due in the office of the City Clerk prior to 4:00 p.m., on August 3, 2026. Section 6. (a) Pursuant to Elections Code section 9285, when the City Clerk has selected the arguments for and against the measure, that will be printed and distributed to the voters, the City Clerk shall send copies of the argument in favor of the measure to the authors of the argument against, and copies of the argument against to the authors of the argument in favor. Rebuttal arguments shall be 451 Reso. No. XX-26, Item X.X, Adopted 07/21/2026 Page 3 of 4 printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument that it seeks to rebut. (b) Rebuttal arguments shall not exceed 250 words and shall not be signed by more than five persons. The persons that sign the rebuttal arguments may be different persons than the persons that signed the direct arguments. (c) The last day for submission of rebuttal arguments for or against the measure shall be by 4:00 p.m. on August 13, 2026. Section 7. In accordance with Elections Code section 9280, the City Attorney is directed to file with the City Clerk an impartial analysis of the measure, not to exceed 500 words, showing the effect of the measure on the existing law and the operation of the measure. Section 8. The City of Dublin recognizes that additional costs may be incurred by the County by reason of the measure and agrees to reimburse the County for such costs. The City Manager is hereby authorized and directed to appropriate the necessary funds to pay for the City's cost of placing the measure on the election ballot. Section 9. (a) The City Clerk is directed to file a certified copy of this resolution with the Board of Supervisors of Alameda County and the Alameda County Elections Department. The City Clerk is hereby authorized and directed to ta ke all steps necessary to place the measure on the ballot and to cause a synopsis of the measure to be published once in a newspaper of general circulation in accordance with California Elections Code 12111. A copy of the measure shall be made available to any voter upon request. The City Clerk is authorized and directed to give further additional notice of the measure in the time, form, and manner required by law. (b) In all particulars not recited in this Resolution, the election shall be held and condu cted as provided by law for holding municipal elections. Section 10. This Resolution and the measure are not a project under the California Environmental Quality Act (CEQA). {Signatures on the following page} 452 Reso. No. XX-26, Item X.X, Adopted 07/21/2026 Page 4 of 4 PASSED, APPROVED AND ADOPTED BY at least a two-thirds vote of the City Council of the City of Dublin, on this 21 day of July, 2026 by the following vote: AYES: NOES: ABSENT: ABSTAIN: ______________________________ Mayor ATTEST: _________________________________ City Clerk 453 Attachment 2 Exhibit A AN ORDINANCE OF THE CITY OF DUBLIN AMENDING CHAPTER 3.16 OF THE DUBLIN MUNICIPAL CODE TO INCREASE THE TRANSIENT OCCUPANCY TAX AND ESTABLISH A MILITARY FAMILY EXEMPTION The People of the City of Dublin do ordain as follows: Section 1. Effective July 1, 2027, Section 3.16.030 of the Dublin Municipal Code is amended to read as follows (material deleted from the Dublin Municipal Code is in strikeout type and additions shown in underline): Pursuant to the authority of Section 7280 and 7281 of the Revenue and Taxation Code, for the privilege of occupancy in any hotel, each transient subject to and shall pay a tax in the amount of eight percent (8%)ten percent (10%) effective July 1, 2027 and twelve percent (12%) effective July 1, 2028 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 of the hotel at the tim e 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 operator of the hotel, the Tax Administrator may require that such tax be paid directly to the Tax Administrator. Section 2. Effective July 1, 2027, Section 3.16.040 of the Dublin Municipal Code is amended to read as follows (material deleted from the Dublin Municipal Code is in strikeout type and additions shown in underline): A. No tax shall be imposed upon: 1. Any person as to whom, or any occupancy as to which, it is beyond the power of the city to impose the tax herein provided; 2. Any federal or state of California officer or employee when on official business; 3. Any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty. 4. Any member of the immediate family of a servicemember, during any period in which the servicemember is assigned to/stationed at or performing military duty at the Parks Reserve Forces Training Area. For purposes of this subsection, “servicemember” means a member of the Armed Forces, including any reserve component and the National Guard, regardless of duty status; and “immediate family” means an individual’s spouse or registered domestic partner, and the individual's child, parent, or legal guardian. B. No exemption shall be granted except upon a claim therefor made at the time rent is collected and under penalty of perjury upon a form prescribed by the Tax Administrator. 454 Attachment 3 #Jurisdiction County Rate change Outcome Note 1 Fairfield Solano 10% → 12%40 Passed 67%$600K City declared $20M deficit driven by COVID-era program expansions, rising costs, underfunded reserves. TOT was one of two ballot revenue measures to address the shortfall. 2 Menlo Park San Mateo 12% → 15.5%12 Passed 84%$3.6M City projected $800K general fund deficit for FY 24-25 driven by state funding uncertainty and rising pension/personnel costs. Council explicitly cited the TOT as a response to the structural shortfall. 3 Pacifica San Mateo 12% → 15%12 Passed 80%$720K City identified a $3.2M structural deficit between ongoing revenues and expenditures. General revenues insufficient to keep pace with rising 4 Santa Rosa Sonoma 9% → 11%31 Passed 67%$1.2M Adopted budget showed $13.3M general fund deficit. Measure placed on ballot explicitly to address the budget deficit. 1 Buellton Santa Barbara 12% → 14%15 Passed 54%$600K Measure framed around slowed budget growth, rising costs, and high impacts from tourism. 2 Fort Bragg Mendocino 12% → 14%8 Passed 80%$400K FY 2024-25 adopted budget balanced with only $47K surplus, requiring reserve draws. City projected $548K–$963K annual deficit without new revenue. TOT framed as deficit prevention. 3 Newark Alameda 10% → 14%23 Passed 80%$2.1M Biennial 2024-26 budget acknowledged inflationary pressures outpacing revenue recovery. City established a Maintenance Reserve Fund to address aging infrastructure gap. No declared deficit but cost pressures were the stated driver. 4 Santa Barbara County (uninc.) Santa Barbara 7 Passed 66%$3M fiscal problem arriving in the near term. 1 Alpine County (uninc.) Alpine 10% → 14%33 Passed 68%$364K Rate unchanged for 33 years; measure framed around rate modernization and competitive alignment. 2 Auburn Placer 8% → 10%33 Passed 66%$162K Rate unchanged for 33 years; measure framed around modernization and fairness. 3 Carpinteria Santa Barbara 12% → 15%16 Passed 75%$750K Measure framed around building general fund capacity ahead of rising costs,visitor equity and long-term fiscal health rather than crisis response Dunsmuir Siskiyou 10% → 12%not found Passed 73%$58K Measure framed around financial resiliency for the city. 5 Hollister San Benito 8% → 12%38 Passed 52%$300K First increase since 1986; intended to mitigate for visitor impacts on public safety, parks, streets. 455 Attachment 3 #Jurisdiction County Rate change Outcome Note Mammoth Lakes Mono 13% → 15%10 Passed 63%$4M Measure driven by program priorities rather than fiscal stress. 7 McFarland Kern 8.25% → 9.25%not found Passed 59%$1M Measure framed around funding general community needs and services: road resurfacing, public safety, other. 8 Mono County (uninc.) Mono 12% → 15%20 Passed 60%$1.1M Measure framed around funding general community needs and services: housing, public safety, childcare, parks. 9 Monterey Park Los Angeles 12% → 13%35+Passed 76%$500K First TOT change over 35 years; framed around funding services: fire protection, police patrols, park maintenance, senior/youth programs. 10 Rancho Cucamonga San Bernardino 10% → 12%41 Passed 58%$1M Rate unchanged since 1983. Measure framed around planning for the future and "long-term budgeting of key City functions" rather than closing a current shortfall. City conducted public opinion polling before placing measure on the ballot. 11 Solvang Santa Barbara 12% → 14%12 Passed 69%$1M No declared deficit, but a recognition that the city needed to build revenue capacity to stay in positive position. 12 Avenal Kings → 15%not found Failed 44%$84K Bundled three separate taxes into one vote - a vacancy tax on unused commercial spaces and uninhabited residences, setting a TOT at 15%, and business license tax update. 13 Mission Viejo Orange 8% → 12%39 Failed 47%$670K Only one in CA structured as a Special Tax, requiring 2/3 supermajority. Was to be dedicated specifically to police services, emergency response, and infrastructure. 14 San Bernardino County (uninc.) San Bernardino 7% → 11%22 Failed 43%$9.4M Measure framed around revenue opportunity and competitive positioning. 15 Turlock Stanislaus 9% → 14%15 Failed 38%$1.1M Fiscally healthy at the time of the measure. Measure framed around funding public safety, recreation, roads, other city services. 16 Ukiah Mendocino 10% → 13%18 Failed 45%$420K Measure framed around helping "the City better plan for long-term sustainability of key City functions." 456 Consideration of Ballot Measure to Increase the Transient Occupancy Tax and Establish an Exemption for Qualifying Military Family Members July 21, 2026 457 Background Council adopted the Fiscal Year 2024-2026 Strategic Plan that identified Long-Term Infrastructure and Sustainability Investments as a goal – “5A. Continue to explore funding mechanisms for capital and ongoing maintenance needs.” Council identified a potential TOT increase as part of the City’s fiscal sustainability and budget-balancing strategy. Council continued its discussion and expressed interest in further evaluating a potential TOT increase. Council unanimously directed staff to prepare ballot measure language for a phased increase from 8% to 10% in 2027 and 12% in 2028. 458 Background, 2 Council adopted the Fiscal Year 2026-2028 Strategic Plan that identified Fiscal Sustainability as a goal – “2B. Identify and pursue new ongoing revenue sources to support long-term fiscal stability.” Staff presented the proposed ballot measure. Council requested additional analysis of hospitality impacts and a potential military family exemption. Discussion and consideration continued. 459 Background, 3 •Authorized under California Revenue & Taxation Code §7280 •Applied to hotel stays of 30 days or less unless exempt •Established in 1984 at 8% •Any increase requires voter approval •A general tax requires: •A City Council 2/3 majority vote (4 of 5); and •A simple majority of voter (50% + 1) approval •Revenues deposited into the General Fund 460 Proposed Action •Establish an exemption for qualifying military family members •Increase the TOT in a Phased Approach •8% effective through June 30, 2027 •10% effective July 1, 2027 •12% effective July 1, 2028 Current 8%None $1.4M July 1, 2027 10%+ 350K $1.75M July 1, 2028 12%+ 700K $2.1M 461 Regional Context Contra Costa Danville 6.50% Contra Costa San Ramon 7.25% Alameda Livermore 8% Alameda Pleasanton 8% Alameda Albany 10% Alameda Fremont 10% Alameda (County)10% Contra Costa (County)10% Alameda Berkeley 12% Alameda Emeryville 12% Alameda Union City 13.86% Alameda Alameda 14% Alameda Hayward 14% Alameda Newark 14% Alameda Oakland 14% Alameda San Leandro 14% •Tri-Valley TOT rates remain among the lowest in the region Nearby jurisdictions currently range from 6.5% to 8%. •A 12% rate would align Dublin with the Alameda County median It would remain below several Alameda County cities with rates of approximately 14%. 462 Regional Context, 2 •The City of Pleasanton unanimously adopted a Resolution placing a ballot measure on the November 2026 ballot to increase TOT. •10% effective July 1, 2027 •12% effective July 1, 2028 •Authorized two Councilmembers to file a written argument in support of the measure. 463 Hospitality Context Tri-Valley average. •Strong occupancy: Dublin hotels outperformed the broader Tri-Valley market in 2025. •Lower room rates: Dublin’s average daily rate was approximately $21 lower than the regional average. •Narrower revenue gap: Despite lower room rates, Dublin’s stronger occupancy helped keep revenue per available room relatively close to the Tri-Valley average. Occupancy 70%62.9% Average Daily Room Rate $114.77 $135.89 Revenue per Available Room $80.33 $85.51 •Dublin has six hotels and 742 guest rooms. •Much of the City’s hotel inventory dates to the late 1990s and early 2000s. •Hotels continue to face rising labor, insurance, utility, and maintenance costs. •Regional occupancy has improved but remains below pre-pandemic levels. 464 Academic Research and Relevant Studies Multiple peer-reviewed academic studies examining lodging tax increases have found that moderate rate increases generally have minimal impact on hotel performance and result in measurable declines in: However, highly price-sensitive travelers, tour groups, and certain market segments may be more responsive to an increase. Hotel Occupancy Hotel Revenue Hotel Employment Average Daily Room Rate 465 Hudson et al. – Tourism Economics •Timing Published in 2021; analyzed monthly hotel data from 2010–2015. •Scope Eight destinations: Chicago, Atlanta, Huntsville, Riverside, El Paso, Cincinnati, Gilbert, and Maine. •Methodology Mixed-method study combining 27 stakeholder interviews with Smith Travel Research data. Researchers compared each destination with at least three nearby competitors and examined two years before and two years after the tax increase. •Measures Occupancy, average daily rate, RevPAR, room supply, room demand, and competitor room rates. •Results The study found no consistent evidence that higher lodging taxes caused an overall economic loss. Occupancy was generally unaffected, while room rates often increased, suggesting much of the tax was passed on to visitors. Results varied by market. •Key takeaway Across eight U.S. destinations, lodging-tax increases generally had limited effects on hotel performance. 466 Swenson - Economic Development Quarterly •Timing Published in 2022; examined California hotel data from 2003–2009. •Scope Approximately 11,000 hotels and motels per year across 241 California cities, totaling more than 77,000 establishment-year observations. •Methodology Used establishment-level sales, employment, location, and credit data from the National Establishment Time-Series database. Fixed-effects regression models compared city tax rates and the rates of nearby competitors. •Measures Hotel sales, employment, credit risk, city tax rate, tax-rate thresholds, and the tax-rate difference from the five nearest competitors. •Results Hotel-tax rates had no statistically significant effect on hotel sales or employment. Hotels in higher-tax cities showed some evidence of weaker credit ratings, but the main operating impacts were negligible. •Key takeaway Across thousands of California hotels, higher TOT rates were not associated with significant reductions in sales or employment. 467 University of Hawaii Study •Timing Published in 1991; Examined Hawaii’s 1986 increase from 4% to 9% using approximately 10 years of hotel data. •Scope Statewide Hawaii hotel and motel market. •Methodology Interrupted time-series analysis comparing hotel performance before and after the tax increase. •Measures Hotel demand and real hotel and motel revenue. •Results The study found no statistically significant effect on hotel demand or hotel and motel revenue following the tax increase. •Key takeaway Even a five-percentage-point increase showed no significant effect on statewide hotel demand or revenue. 468 Marin Economic Study •Timing Economic brief released in July 2018 while Marin County considered increasing the unincorporated-area TOT from 10% to 15%. •Scope Unincorporated Marin, Marin County overall, all 58 California counties, and regional comparisons with Sonoma, Napa, and San Francisco. •Methodology Combined a literature review with historical TOT revenue, taxable hotel sales, average daily rate, inflation-adjusted trends, county comparisons, and correlation analysis. Data generally covered FY 1991–92 through FY 2015–16. •Measures TOT revenue, hotel-room sales, average daily rates, tax rates, regional revenue trends, and economic indicators. •Results The brief concluded that the increase was unlikely to significantly reduce hotel demand. Marin’s TOT performance appeared more closely tied to regional tourism demand and broader economic conditions than to its tax rate alone. •Key takeaway The Marin analysis suggested that a higher TOT would have limited demand impacts, although it was a descriptive study rather than a causal evaluation. 469 2024 Transient Occupancy Tax Ballot Activity hotel-related TOT measures appeared on the November 2024 ballot in California Overall, 22 of 27 TOT Measure Passed in November 2024 | Overall Pass Rate 100% Passed 4 of 4 Measures Jurisdictions facing an active deficit used TOT increases as part of a broader budget- balancing strategy. 100% Passed 4 of 4 Measures Jurisdictions acted before deficits materialized, citing reasons like infrastructure needs and other rising costs. 69% Passed 11 of 16 Measures Jurisdictions in generally stable financial condition pursued long-term structural revenue. 470 Outreach, Hospitality Support, and Public Input •Staff conducted preliminary outreach before the February 17 Council meeting and continued to provide updates and invitations for additional discussion. •Local hotel operators generally do not support increasing the TOT. •Staff continues to support the hospitality industry through: •Destination marketing and promotional efforts •$250,000 Economic Development Support Reserve •Hospitality considerations incorporated into the City’s marketing and branding strategy •Continued coordination with local hotel operators and Visit Tri-Valley “Increasing the TOT paid by hotel and motel guest” Strong Support - 21% Somewhat Support – 31% Don’t Know – 13% Somewhat Oppose – 18% Strongly Oppose – 17% Total Support Total Oppose 471 Recommended Ballot Measure Language Shall the measure to protect essential City of Dublin general services, such as police, fire, emergency medical, street maintenance, and parks and recreation, by increasing the City's transient occupancy tax, which is paid by hotel and lodging guests excepting families visiting servicemembers stationed at Camp Parks, from 8% to 10% on July 1, 2027 and to 12% on July 1, 2028, and generating approximately $7,000,000 over a ten year period that cannot be taken by the State, be adopted? 472 Staff Recommendation Adopt the Resolution Ordering the Submission to the Qualified Electors of the City of Dublin an Ordinance Amending Chapter 3.16 of the Dublin Municipal Code to Increase the Rate of the Transient Occupancy Tax and Establish a Military Family Exemption; Calling for an Election to be Consolidated with the Statewide General Election to be Held on November 3, 2026; Fixing the Date and Manner of the Election and the Procedure for Voting Therein; and Providing for Notice Thereof. 473