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November 6, 2018 — California General Election

City of Pacific Grove
Measure U Ordinance - Majority Approval Required

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Election Results


5,622 votes yes (74.01%)

1,974 votes no (25.99%)

Amendment to Increase the Uniform Transient Occupancy Tax
— undefined

Shall the measure amending the Pacific Grove Municipal Code be adopted to increase the City of Pacific Grove's Transient Occupancy Tax (TOT), effective July 1, 2019, imposed on occupants of short-term rentals such as hotel rooms, from 10% to 12%, and apply TOT to total rent paid by a guest for the short-term rental, including online travel companies, which is anticipated to raise $1,135,000 annually and will continue until repealed by City Council or City voters?

What is this proposal?

Measure Details — Official information about this measure

YES vote means

A “Yes” vote on Measure U favors the increase of TOT from 10% to 12% of the total rent paid by the transient by amending PGMC Chapter 6.09.

NO vote means

 A “No” vote on Measure U opposes an increase in TOT and does not change the Municipal Code.

Impartial analysis / Proposal

Monterey County Elections Dept.

Measure U proposes to amend the Pacific Grove Municipal Code (Municipal Code) toincrease the Uniform Transient Occupancy Tax (TOT) from 10% to 12% in the City of Pacific Grove (City). This Measure was placed on the ballot by unanimous vote of the City Council. 

Often called a hotel tax, TOT is paid by “transients” for the privilege of renting hotel, motel or bed & breakfast rooms, including temporary short-term lodging occupied for less than 30 days. TOT applies to short-term rental units (STRs), including houses rented through rental operators or third-party booking services such as online travel companies like Expedia, Orbitz, Airbnb, or Vacation Rental by Owner (VRBO). TOT is calculated as a percentage of the cost of the rental lodging.  Neighboring cities on the Monterey Peninsula currently impose TOT in a range from 10% to 12%.

The City currently collects TOT at the rate of 10% of the amount charged by the operator. If this measure is adopted, the TOT rate shall increase to 12% and TOT shall also be based upon the total rent paid by the guest, not based on a lesser discounted rate that may be received by the hotel or rental operator from an online travel company or other third-party booking agent. This Measure also specifically amends portions of Municipal Code Chapter 6.09 to address online travel companies and other third-party booking agents. 

Measure U would enact a general tax; proceeds shall be placed in the City’s General Fund and may be used for any municipal purpose.  This Measure is not intended for regulation. Council determined financial circumstances of the City require enactment of this Measure to preserve the public peace, health and safety of the community, to avoid service disruptions, and to avoid permanent impairment of community services.  

If Measure U is approved, City staff estimates potential revenue from increased TOT to yield approximately $1,135,000 per year based on projections for the period ending in Fiscal Year 2017/18. This estimate does not include adjustments related tothe City’s recent STR license lottery, or the pending citizens’ initiative ballot measure regarding STRs.

A majority of voters of the City casting ballots in favor of this Measure is required to modify the Municipal Code and authorize the increase in TOT within the City. If approved, the TOT increase required by Measure U shall take effect on July 1, 2019.  This Measure has no sunset date.  

A “YES” vote on Measure U favors the increase of TOT from 10% to 12% of the total rent paid by the transient by amending PGMC Chapter 6.09

A “NO” vote on Measure U opposes an increase in TOT and does not change the Municipal Code.


/s/ David C. Laredo

City Attorney, City of Pacific Grove


Published Arguments — Arguments for and against the ballot measure

Arguments FOR

The City of Pacific Grove’s current Transient Occupancy Tax (TOT) is 10% of lodging costs for guests at Inns and STR’s in Pacific Grove.  This ballot measure proposes to increase the TOT to 12%.  A successful measure would add about $1.2 million per year to the city’s general fund.  The last time the TOT was changed was 1987.  

 Pacific Grove offers superb ambience to visitors and residents alike, from our beautiful coastline to our quaint charm and our safe, walkable streets.  It is only fair that our visitors help support our city.  Our roads that visitors use, the parks they enjoy, the coastline that is accessible to all, the maintenance and beautification of our downtown where they shop and eat, public safety presence at visitor venues – all these would be supported by passage of the measure. 

 Many cities are at 12% TOT or more; Marina is at 12% and moving to 14%.  Monterey hotels pay 10% TOT but also pay an additional assessment for the convention center renovations.  Sonoma County is at 12%; Santa Barbara, 12%; Healdsburg, 14%.   12% is a fair rate for the PG experience.  Credible evidence suggests this measure will not harm the city lodging establishments or their competitiveness in the market.   

 Maintaining our city and our services becomes more expensive every year.  Residents have been paying for these increased costs without additional help from visitors.  This measure is essential to meet accelerating, significant, and unavoidable expenses over the next 5 years. 

 Please support a fair level of TOT in keeping with the extraordinary quality of the PG environment and the visitor experience in our City.  Please vote Yes on Measure U. 

 /s/ Bill Kampe, Mayor 

 /s/ Cynthia Garfield, Councilmember 

 /s/ J. David Myers 

 /s/ Margaret Jean Anton 

 /s/ Nick Smith, Councilmember

— Monterey County Elections Dept.

Arguments AGAINST

The Pacific Grove Chamber of Commerce opposes the measure to increase the transient occupancy tax (TOT) in Pacific Grove from 10 to 12 percent, making it the highest in Monterey County, for the following reasons:

• Pacific Grove allows short-term vacation rentals. The number of permitted STRs is almost equal to the number of hotel rooms in town and compete with all lodging establishments.

• Lodging establishments already pay more than their fair share of taxes. An increase would raise the cost of doing business.  What industry or taxpayer would accept a 20 percent tax hike?

• TOT in Carmel and Monterey is 10 percent.  We compete with both.

• TOT increases would create lower visitor spending on shopping, dining, and attractions.

• Tax increases create rate resistance in a highly competitive groupmarket segment.

• It is more effective to allow innkeepers to further invest in their marketing efforts rather than increase taxes.

• Passage of Transportation Agency of Monterey County (TAMC) Measure X will generate over $200,000 annually to the City of Pacific Grove supports street and sidewalk repair

• An estimated 60 percent of lodging guests are repeat visitors to Pacific Grove.  A TOT increase would negatively impact future visits.

• The introduction of 3 days of paid sick leave and rising minimum wage to $15 per hour will increase the cost of doing business.

• Thank to measure U in 2012, innkeepers are adding rooms.  TOT will grow organically.

• The City has over $11 million in reserves.

• In February 2008, the City Council approved a deal with innkeepers not to increase TOT as long as the innkeepers joined the MCCVB and formed the Hospitality Improvement District, which the innkeepers have done.

/s/ Moe Ammar

Pacific Grove Chamber of Commerce,President 


— Monterey County Elections Dept.

Replies to Arguments FOR

Transient occupancy tax (TOT) is collected as a percentage of lodging revenue in Pacific Grove. The City receives an enormous amount of revenue from this tax. Since 1987, the tax has been 10% of the price of a room-night, while revenues from TOT have increased from half a million to almost $5 million annually since the rate was set at 10%. Additionally, in the last four years, the City Council doubled the amount of lodging options by allowing 290 homes to rent to tourists in the residential zone, significantly increasing competition to lodging establishments. 

 Eighty-two percent of the STR owners are from out of the area.  

 The impact of STRs on small inns and hotels has been substantial and has lowered their occupancy rates and revenue significantly. An increase in taxes on visitors price out budget-conscious visitors and negatively impact valuable business from repeat customers, resulting in further decreases in occupancy levels for Pacific Grove hotels. 

 On many occasions, attempts were made to earmark proposed increases in TOT to infrastructure improvements such as roads, parks and the coastline, but the City Council rejected these ideas. Voters and taxpayers cannot be certain the taxes they pay will go toward addressing specific needs that benefit the residents of Pacific Grove. 

 Please support the small inns of Pacific Grove that have been impacted by vacation rentals and vote against a tax increase. 

 /s/ Moe Ammar, President 

 /s/ Merrillee Spence 

 /s/ Siddique Noonari 

 /s/ Catherine A. Bonnici 

 /s/ Roshan Patel 


— Monterey County Elections Dept.

Replies to Arguments AGAINST

This measure proposes only a 2% increase in room tax for guests who stay in Pacific Grove lodging.  The guests pay the tax, not the lodging hosts or the PG taxpayers.

Location, condition, amenities, and ratings make far more difference to the traveler than the TOT.  Look at online offerings.  Room prices are featured in large type and vary widely.  From a quick look for a non-peak night, they range from $100 to $470 in PG.  A 2% difference is lost in such a range of choices.

The room tax is buried deeper on websites and in small type.  For PG you find 10%; Carmel, 11%; Monterey, 12% or 14.35% depending on the hotel type.  PG is more than competitive at the proposed rateof 12%.

Repeat visitors know the charm of PG.  PG offers value, and that’s why this increase in TOT to 12% is fair.  It will not inhibit repeat visitors, reduce occupancy in our lodging establishments, or reduce visits to our shops and restaurants.

Further, lodging across our peninsula faces the same cost factors for labor.  It’s a level playing field.

A City must adapt to changing conditions.  This measure will generate from visitors the additional $1 million per year needed to maintain our city and todeliver full services to our residents.  

Please vote Yes on Measure U.

/s/ Bill Kampe, Mayor

/s/ Nick Smith, Councilmember

/s/ Margaret Jean Anton

/s/ Cynthia Garfield, Councilmember

/s/ J. David Myers


— Monterey County Elections Dept.

Read the proposed legislation

Proposed legislation

The text set forth in existing Section 6.09.010, Definitions, of Chapter 6.09 of the Pacific Grove Municipal Code shall be changed by the deletion of all text shown in strikeout text (strikeout text) and the addition of all text shown in bold, italic, underscored text (bold, italic, underscored text), as follows:

6.09.010 Definitions.

Except where the context otherwise requires, the definitions given in this section govern the construction of this chapter:

“Hotel” means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structures or portion thereof, except that no lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location or other similar structure shall be deemed a hotel, when less than 10 percent of the annual dollar value of the rentals it earns derives from transient occupancy, and when it does not by signs or other advertising invite transient occupancy.

“Occupancy” means the use or possession, or the right to the use or possession of any room or rooms or portion thereof, in any hotel for dwelling, lodging or sleeping purposes.

“Online Travel Company” means any person, whether operating for profit or not for profit, which enables transients to purchase occupancy of space in a hotel via the Internet, or by similar electronic means. 

“Operator” means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee or any other capacity. Where the operator performs his or her functions through a managing agent of any type or character other than an employee, including but not limited to an online travel company, the managing agent shall also be deemed an operator for the purpose of this chapter and shall have the same duties and liabilities as his or her principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both.

“Person” means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.

“Rent” means the consideration charged to the transient (including but not limited to, room rates, service charges, retail markup, commissions, processing fees, cancellation charges, attrition fees or online booking fees), whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever.

“Tax administrator” means the city clerk.

“Transient” means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of 30 consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of 30 days has expired unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of the ordinance codified in this chapter may be considered.  

The text set forth in existing Section 6.09.020 of Chapter 6.09 of the Pacific Grove Municipal Code shall be changed, effective July 1, 2019, by the deletion of all text shown in strikeout text (strikeout text) and the addition of all text shown in bold, italic, underscored text (bold, italic, underscored text), as follows:

For the privilege of occupancy in any hotel on and after July 1, 2019, each transient is subject to and shall pay a tax in the amount of 10twelve percent (12%) of the total rent charged paid by the transient 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 operator of the hotel at the time 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 the operator of the hotel, the tax administrator may require that such tax shall be paid directly to the tax administrator.

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