TO: Honorable Mayor and Members of the City Council
FROM: Tom Kisela, City Manager
1. Subject
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City of Orange Public Safety/City Services Transient Occupancy Tax Measure.
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2. Summary
On June 25, 2024, the Orange City Council directed staff to bring back a transient occupancy tax measure for consideration and discussion at the June 28, 2024, Special City Council Meeting.
3. Recommended Action
recommendation
1. Adopt Resolution No. 11567. A Resolution of the City Council of the City of Orange ordering the submission to the qualified electors of the City a certain measure relating to increasing the rate of the City’s transient occupancy tax at the November 5, 2024, General Municipal Election as called by Resolution No. 11545.
2. Identify Members of the City Council to file arguments for or against the measure and adopt Resolution No. 11568. A Resolution of the City Council of the City of Orange setting priorities for filing written arguments regarding a City measure and directing the City Attorney to prepare an impartial analysis for the measure to be submitted to the voters at the General Municipal Election to be held on Tuesday, November 5, 2024.
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4. Fiscal Impact
The County of Orange Registrar of Voters estimates it will cost $8,000 to place the measure on the November 5, 2024, ballot which will be funded through the General Fund (100).
5. Strategic Plan Goals
Goal 2: Be a Fiscally Healthy Community.
a. Analyze future fiscal needs and potential revenue opportunities.
6. Discussion and Background
On June 25, 2024, the Orange City Council directed staff to bring back an option for a transient occupancy tax (TOT) measure. Provided below is an analysis and TOT ballot question.
TOT Overview
TOT is a tax on persons staying in Orange for a period of 30 days or less. TOT generally applies to persons staying in hotels or short-term rentals, and as such is not typically paid by city residents. The current TOT rate for the City of Orange is 10%. To place a TOT measure on the ballot, 5/7 City Council members will need to vote in favor of placing the measure before Orange voters. Thereafter, Orange voters may approve the increase with a 50%+1 voter threshold.
Projected Revenue
The City currently has a 10% transient occupancy tax rate. The proposed measure would increase the TOT rate by 5% for a total of 15%. In Fiscal Year 2022-2023, the City collected $6,080,399 (actual) in TOT revenue. The proposed Fiscal Year 2024-2025 budget includes $5,850,000 in budgeted TOT revenue. By increasing the TOT rate to 15%, the City is estimated to generate an additional $2.9 million in TOT revenue.
Ballot Queston
If the City Council decides to place a TOT measure before the voters, provided below is how the ballot question will appear.
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City of Orange Public Safety/City Services Measure Shall the measure providing funding for City of Orange’s general government use such as maintaining 911 response, fire/police/paramedic services; recruiting/retaining well-trained police/firefighters; preventing property crimes; addressing homelessness; keeping public areas/parks safe/clean by increasing City of Orange ’s transient occupancy tax, paid only by hotel/motel and short-term rental guests from 10% to 15% providing approximately $2,900,000 annually until ended by voters; requiring audits, spending disclosure, all funds benefiting City of Orange residents, be adopted? |
Yes |
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No |
7. ATTACHMENTS
• Resolution No. 11567
• Resolution No. 11568