PURPOSE:

The purpose of this report is to request City Council approval of an ordinance that would place a measure on the April 2007 General Election Ballot requesting voter approval to allow the City Council to increase the City�s Transient Occupancy Tax (TOT) from 10 percent up to a maximum of 12 percent.  If the voters approve the increase, the City Council would be able to establish the actual rate, and to either raise or lower it in future years, provided the maximum rate of 12 percent is not exceeded.

BACKGROUND:

The TOT, or �bed tax,� rate is currently 10 percent.  It was initially adopted in 1964 at a rate of 4 percent, and increased over the years to 10 percent in 1983.  It has remained at 10 percent since 1983.

Burbank�s history of the TOT follows:

• July 1964 - established at 4 percent

• January 1968 -   5 percent

• January 1978 -   6 percent

• September 1983 - 10 percent

On September 12, 2006, staff requested Council direction on how to proceed regarding placing this issue before the voters.  During FY 2005-06, Council renewed its interest in re-evaluating increasing this tax as a way to generate revenue to help fund City services such as public safety, transportation, library, parks and open space, development services and capital projects, as well as many other municipal services.  Not only are the City�s costs increasing, but also the Utility Users Tax and/or Franchise fees are at risk due to pending federal and state legislation.  Therefore, this requested increase in the TOT is a viable means to help cover any shortfalls.

The Council voted (4-1) to present the ballot measure to the voters on April 10, 2007 as a general tax increase setting the maximum amount of the tax not to exceed 12 percent.

ANALYSIS:

As a result of Council discussion at the September 12, 2006 meeting, staff was directed to prepare an ordinance calling for a Special Election to be consolidated with the 2007 General Election that would seek voter approval to allow the Council to increase the TOT from 10 percent up to a maximum of 12 percent.

Pursuant to Council direction, the City Attorney�s Office has prepared the ordinance.  The ballot measure language is proposed to read as follows:

�Shall the Burbank Municipal Code be amended to allow the City Council to increase the City�s existing transient occupancy tax from 10% to a maximum rate of 12% on persons occupying a room in a hotel, motel, inn or other lodging facility within the City for less than 30 days?�

FISCAL IMPACT:

If the TOT were increased to the maximum rate of 12 percent, the impact to the City�s General Fund would be approximately $1 million in annual incremental revenue.  For hotel clientele, the 12 percent rate would raise their daily stay cost by 2 percent.  The actual dollar amount will vary based on the daily hotel rates.

RECOMMENDATION:

It is recommended that the City Council approve the proposed ordinance.  If the Council concurs, the appropriate action would be a motion to introduce and adopt the ordinance entitled �AN ORDINANCE OF THE COUNCIL OF THE CITY OF BURBANK ORDERING A SPECIAL ELECTION TO BE HELD IN CONJUNCTION WITH THE GENERAL MUNICIPAL ELECTION ON APRIL 10, 2007, FOR THE PURPOSE OF SUBMITTING A BALLOT QUESTION TO THE VOTERS REGARDING AN INCREASE TO THE TRANSIENT OCCUPANCY TAX.�

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