Imperial Beach to vote on 14 percent hotel tax

To help fund city services, Imperial Beach voters approved a one percent sales tax increase last year. This November, they'll vote on raising the hotel tax, too.

The city council on August 3 unanimously passed an ordinance to put a four percent increase on the ballot. The city's current 10 percent "transient occupancy tax" for hotels, motels and short term rental units would increase to 14 percent - likely the highest in the county.

Critics say it could drive away visitors, while residents and many business owners, including the hotels, welcome the extra funding. A community survey found the top priorities are safe, clean neighborhoods and improved public safety and recreational opportunities, which the tax could support, along with better lighting and wider sidewalks in areas tourists frequent.

"We're voting to tax the visitors who come to I.B. - but it's as good as democracy gets," said mayor Serge Dedina. "We've seen the positive impacts of the one percent sales tax."

He called the approval of the ordinance that will send it to the ballot an "historic vote in the city of Imperial Beach." If it passes, the new rate would take effect on January 1, 2023.

The city has two large hotels (Pier South and Hampton Inn), one small one (Sandcastle Inn), and 101 operating vacation rentals. The tax applies to all nightly and short-term rentals of less than 30 days.

At the current tax rate, the city estimates $1.3 million in TOT in fiscal year 2022. Assistant city manager, Erika Cortez-Martinez, said the tax hike would generate another $400,000 per year.

All revenue remains local, in the general fund, she said. It's money that can be used for the services locals want, but even though they aren't paying the tax, voters must approve a change in the collection rate a city assesses.

The TOT increase would be considered a general purpose tax, requiring more than half of the residents to vote in favor, a staff report said.

The funds would help expand the park ranger program, also on the wish-list of hotels, which support the raise. "As you know, this is our first year celebrating our parks & recreation department," Cortez-Martinez said. "We didn't have one" before last year, she said.

Dante Pamintuan, a realtor and former president of the Imperial Beach Chamber of Commerce, suggested that instead of raising the tax, the city should reduce it to a pre-inflation eight percent, saying he opposed last year's local sales tax ballot measure for the same reason - locals are struggling with expenses.

"How will this affect our visitors who already pay costly increases in gas and food?" he asked. "They will stop coming. Or choose a closer, lower cost beach town or vacation spot other than IB."

Chula Vista and National City charge a 10 percent hotel tax. In Coronado, it's 10.5 percent. San Diego's rate is 12.5 percent, while Del Mar and Solana Beach set theirs at 13 percent.

According to a staff report, TOT rates in San Diego County range between 6 percent and 13.5 percent. Statewide, rates range from four to 15 percent.

"It would just bring us to the modern day and age," said councilmember Paloma Aguirre.