Measure MM : Measure MM: Transient Occupancy Tax (TOT)

Fremont Chamber Position: Support

Ballot language:
Shall the Fremont Municipal Code be amended to increase the transient occupancy tax (commonly called the "hotel tax") which is charged only to persons who occupy hotel or motel rooms in the City for 30 days or less, from the current 8% to 10%, in order to help maintain basic City services such as public safety and street and park maintenance?"
YES / NO

Measure Description: The measure would increase Fremont’s Transient Occupancy Tax from 8% to 10%, effective January 1, 2009, if approved by a majority of the voters.

For fiscal year 2007/08, Fremont’s TOT revenue (from the current 8% tax) is projected to be $3.2 million. Each 1% increase in the TOT rate is projected to increase revenue by $400K, so the proposed increase from 8% to 10% is projected to increase General Fund revenue by $800K.

While funds added to the General Fund are not restricted in their use, the Council has indicated its intent to use these funds for public safety and street maintenance. This is in alignment with the current allocation of General Fund resources: today 89% of the General Fund revenues are allocated to police, fire and park and street maintenance.

Chamber Rationale for Support: The Fremont Chamber of Commerce recognizes the City’s real needs for additional and locally-controlled sources of revenue to safeguard spending related to public safety and street maintenance. We also place a high priority on maintaining a healthy and competitive business environment. This proposed increase raises our hotel tax rate to that of our neighboring communities, yet keeps it below that of San Francisco and Oakland. The Chamber board voted to support this increase because we believe that protecting our police, fire, and street maintenance services at the local level is critical to a thriving business community.

Ballot language & arguments: www.ci.fremont.ca.us/CityHall/TOT/default.htm

Additional Background: Over a period of several weeks, the Council considered raising the transient occupancy tax to various levels above 10%, including up to 13%, and it also considered various approaches to raising the TOT in two steps, the first in January 2009 and the second in two or three years. In response to opposition from the Chamber and local hotels to raising the tax above that of our neighboring communities, thereby placing our hotels at a competitive disadvantage, the Council decided on the current language of the measure.

For comparison, hotel tax rates in other nearby cities are:

The Fremont Chamber of Commerce
39488 Stevenson Place, Suite 100, Fremont, California 94539
www.fremontbusiness.com  ::   fmtcc@fremontbusiness.com
510/795.2244  ::  fax 510/795.2240