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Health & Fitness

Sonoma's Real TOT and TID Story

Carol Giovanotto's article about TOT and tourism and the recent column by the large hotels both neglect to fully explain some critical TOT (Hotel tax) budgetary issues, and glosses over others. Let me explain.

Firstly, Sonoma's approved 2012-2013 budget explains that the basis of the TID (Tourism Improvement District) that collects a 2% levy on all guest rooms in Sonoma (approximately $450,000/year) was a request by the large hotels to replace funds "lost" through the dissolution of the Redevelopment Agency, which had been providing approximately $200,000 in funding to the Visitor's Bureau. Here's the rub: the funds were not "lost" and the successor agency to the Redevelopment Agency continued the funding of $218,000 for another three years. In other words, the TID funds ended up being added to the existing funding, not replacing it. The Visitor's Bureau ended up with over $758,000 for promotion, yearly, an all time record!

Secondly, the logic of generating the TID funds was to provide money for promotion to fill empty rooms, again at the request of the large hotels who felt that their occupancy rate was too low. Yet the hotels, in recent editorial, state that they oppose the Hotel Limitation Measure because they will not be able to add rooms. Thus, they want to add rooms despite the fact that they need financial assistance to fill the rooms they already have. And why, exactly, can't the large hotels finance their own promotional efforts?

Thirdly, Carol implies that the Initiative risks reducing the TOT collected by the city. This is a completely unsupportable statement. The Hotel Limitation Measure has no effect on new hotels 25 rooms and under, all of which will collect TOT. The economic effect of the initiative is neutral. Three 25-room hotels will collect as much TOT as one 75-room hotel, with much less impact on the surrounding area.

Finally, both Carol and the large hotel owners question the justification for setting a 80% annual occupancy threshold for permitting new hotels larger than 25 rooms. The purpose of using 80% occupancy is specific to reducing the likelihood that a large hotel will be built in Sonoma any time soon. We don't need any more large hotels right now; a substantial portion of the citizenry would just as soon not have any more at all, ever. We do not take that position, and believe that 25-room hotels can fit into our community well. The El Dorado and Sonoma Hotels are both about 25-rooms in size. Here are some interesting calculations; the 2% TID assessment on all overnight room charges will generate approximately $450,000/year. This could have been simply added to the TOT collected by the city for use of the General Fund. The 2% increase is an increase of 20% in the room related TOT/TID charge (was 10% and is now 12%); accordingly, the occupancy rate would have to rise (at present room rates) by 20% to generate that much income, and that works out to...85%! In other words, the money being spent on promotion to raise the TOT will, based on comments from our opponents, be more than the the increase in the TOT generated for the city. It's what we call a lose/lose proposition, except for the large hotels who get to spend less of their own money promoting their hotels.

There are many lodging establishments in Sonoma which are restricted in the number of rooms they can offer, including B&Bs (limited to five rooms) and Vacation Rentals. Yet the large hotels object to any limitation, essentially taking the position that they should have the perpetual and exclusive right to have as many rooms as they choose. If the voters in Sonoma are good enough and smart enough to elect their city council, they are good enough and smart enough to vote on setting a limit on the size of hotels. The business and hotel community don't like regulations; we understand they are afraid of changing the rules, but their predictions of disaster have never come true. They predicted disaster when Rosewood was defeated and when the UGB was created, and instead Sonoma has thrived. The Hotel Limitation Measure is about preserving the quality-of-life of the residents of Sonoma, not the quality-of-life of its large hotels. We make no apology for this, and doubt that the CEO of Marriott/Renaissance will have to cut back on his life-style because the 182-room Renaissance Lodge at Sonoma cannot add more rooms and get even bigger.

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