Hotel rates in Laguna could rise based on council’s support to raise taxes on stays

Hotel guests in Laguna Beach could pay more for their stays after a majority of the City Council on Tuesday supported raising a tax on visits of 30 days or less.

The council voted 4 to 1 for a subcommittee of Bob Whalen and Kelly Boyd and staff to develop a measure for the November ballot that would ask voters whether they approve an increase to the transient occupancy tax, known as “TOT.” Mayor Steve Dicterow dissented.

Laguna’s current TOT rate is 10%. Tax revenue helps cover general operating costs for Laguna’s police, fire, and marine safety services, according to a staff report.

City staff proposed a 4% hike, which would yield an extra $4 million per year, but the council did not want that high of an increase.

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Whalen proposed 3%, but Boyd suggested 1 to 2% instead.

“If we were to put it on the ballot, I would like to see a lot of the money going to public safety,” Boyd said.

The subcommittee will return to the council on July 26 with a proposed ballot measure, including a specific percentage increase.

In addition to public safety, tax revenue would help pay for infrastructure improvements to streets and sidewalks, and undergrounding utility equipment in a city that sees millions of annual visitors, the staff report said.

“This puts the payment obligation on the right group of people,” Whalen said.

The council did not favor creating another ballot measure that would ask voters if they supported raising Laguna’s sales tax by 1% from the current 8%.

Several business owners claimed such an increase could dissuade potential customers in a highly competitive retail environment.

“An increase in sales tax makes our retailers’ goods more expensive to the consumer at a time when brick and mortar stores are seeing sharp declines due to online shopping and consumer demand shifts to experience-based entertainment,” Laguna Beach Chamber of Commerce President Larry Nokes said in a letter emailed to chamber members earlier in the week.

Boyd, who owned the Marine Room Tavern downtown for 25 years, agreed.

“I know how that little 1% can affect you,” he said.

Discussion of possible ballot measures resulted from a community survey that culled residents’ feedback on a variety of issues.

In March the council agreed to pay $35,000 for Fairbank, Maslin, Maulin, Metz & Associates, a public research firm, to conduct the survey.

The firm, known as FM3, polled residents by phone and email from June 2 through 12, gaining responses from 543 residents.

Names were randomly selected from voter registration lists. FM3 used demographic data, including age, political party, voting history, to group residents of similar characteristics, Principal John Fairbank told the council.

To read the full survey, visit lagunabeachcity.net.

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Bryce Alderton, bryce.alderton@latimes.com

Twitter: @AldertonBryce