Sunny views of tax raise

Measure would increase cost of hotel stays in Costa Mesa, but it would still be less expensive than in nearby cities, some say.

October 26, 2010|By Mona Shadia,

COSTA MESA — Tourists who spend a few nights in town could pay the same amount of taxes here as they would in neighboring Orange County cities if voters approve Measure L, the ballot initiative that would increase the city's hotel tax.

Hotel guests could pay be charged an extra 11%, the same rate in Santa Ana, if Measure L raises the transient occupancy tax 2 percentage points to 8%. Costa Mesa officials recently raised the business improvement tax on hotels by 2 percentage points to 3%, which factors into the 11%.

Costa Mesa keeps revenue from the hotel tax, but gives the business improvement tax money to the city's Conference and Visitor Bureau, which works to attract tourists.


The city collected $4.7 million in hotel taxes last year, compared with the $10 million earned by neighboring Newport Beach.

Newport Beach charges 10% in hotel taxes, said Dan Matusiewicz, deputy administration services director of Newport. Of that amount, 82% of revenue goes to the city and the remainder to its visitor bureau, he said.

Ed Fawcett, president of the Costa Mesa Chamber of Commerce, says the increased taxes probably wouldn't persuade tourists to choose Newport Beach instead.

Costa Mesa's transient occupancy tax would still be lower than the county average, and the city could advertise that, Fawcett said.

"A 1% difference on any charge is probably not going to sway anybody," he said.

Jan K. Brueckner, an economics professor at UC Irvine, has said most people do not check the hotel tax before booking rooms.

These taxes are easy to collect because they don't directly affect the city's residents or businesses, he added. Some would call them "attractive taxes."

"More tax revenues paid by outsiders would conceivably help the city," Brueckner said. "If you don't want to spend any money, if you don't like public services, then I suppose you wouldn't like that tax revenue."

The business improvement tax applies only to guests staying at the 10 Costa Mesa hotels that work with the city's visitor bureau, said Shaun Robinson, bureau chairman and manager of Hilton Orange County.

With the overall increase, Robinson said, "I don't believe it will hurt businesses because we're still quite a bit below some of our major competitors."

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