The San Gabriel City Council approved two resolutions on Tuesday that place a measure on the Mar. 5, 2013 ballot proposing to increase the transient occupancy tax from 10 to 12 percent.
Looking to the hotel tax as a financial remedy, city officials attribute its budgetary problems to the state’s dissolution of redevelopment agencies, reductions in federal block grant and other funding sources, and increasing demands on aging infrastructure and facilities.
The council took up Resolutions 12-35 and 12-36 at their Nov. 6 meeting. The first called for the increase in the transient occupancy tax to be placed on the March ballot for the General Municipal election by a unanimous vote. But to pass 12-35, City Attorney Robert Kress explained that state law requires at least four affirmative votes from the council for this item.
The problem for passing the first resolution was that two sitting members, Councilmember Juli Costanzo and Vice Mayor Mario De La Torre, had potential conflicts of interests that would disqualify either one from voting on the resolution.
Costanzo is the director of sales for the existing Hilton Hotel and De La Torre has a “contingent real estate interest connected to the application pending” for the Crowne Plaza hotel, according to Kress.
The second resolution only required three votes. Resolution 12-36 sets priorities for ballot arguments authorizing all members of the City Council to author the ballot argument in favor of the measure and direct the City Attorney to prepare an impartial analysis.
Kress explained that a rule of necessity would require a random means of selection to include one of the members to participate in the discussion and vote on Resolution No. 12-35. “We want to take a conservative approach here because a tax on the hospitality industry does affect potentially the income of these two members of the council,” he said.
According to Kress, the law provides for a “rule of necessity,” which allows in this case a drawing by lottery to draft back one of the members of the council who would otherwise be disqualified from participating in the vote.
City Manager Steven Preston was asked by the council to draw one of the two names from a plastic bowl to determine who would stay in the room and vote on the first resolution. De La Torre’s name was pulled from the bowl, and Costanzo left the room.
Kress explained that the increase in the hotel bed tax would add an additional $200,000 to the city’s general fund each year. If approved, the funds would go into the general fund and not specifically to any project or special fund.
So, if placed on the ballot, it would pass with a simple majority without requiring a two-thirds majority, according to the City Attorney.
Kress explained that the reason behind this resolution, designated as “Measure SG,” is to tax individuals who are using the services of the city, such as its streets and safety services, because they are not paying taxes based on the residency of the city. The four council members voted 4-0 to approve the resolution.
After De La Torre was excused from the next vote, the council discussed 12-36, authorizing members of the council to draft the argument for a tax increase with a two-week turnaround.
However, Kress warned that careful wording would be needed to outline how the additional revenue was being raised to help the city’s budget.
“The fact that the money collected goes to the general fund, which is basically funding anything and everything – (and considering) we have in the past discussed the need to expand revenues if the public works and police projects are going to go forward – you can’t specifically tie the revenue measure to that because then that puts it into the two-thirds majority requirement,” said Kress.
The council passed the resolution 3-0.
