Publication Date: Wednesday Oct 28, 1998

EPA hotel tax: Hotel tax would add 12 percent to room cost

East Palo Alto voters will have a chance next week to decide on Measure A, a tax on hotel visitors that the City Council placed on the ballot with an eye toward the future.

It's a "future" tax because the city currently doesn't have any hotels. A 230-room hotel, however, is part of the University Circle redevelopment project the City Council approved for Whiskey Gulch. The project has been stalled because of a legal challenge from a group of Menlo Park residents who fear it will cause traffic congestion in their neighborhood.

Hotel taxes, also called transient occupancy taxes, are common in surrounding cities, including Palo Alto and Menlo Park.

The issue that caused debate on the City Council was the amount of the tax. A 12 percent charge was eventually agreed upon after a proposed 14 percent tax was rejected.

Both Palo Alto and Menlo Park have 10 percent hotel taxes, as does San Jose and Burlingame. San Francisco's hotel tax is 14 percent.

One fear may be that too high a tax will drive potential hotel guests to hotels in nearby towns, although the planned hotel at University Circle will still likely be an obvious draw for Silicon Valley and Stanford University visitors.

University Circle developer Linda Law says she is "wholeheartedly in support of the tax" as a revenue source for the city. No one submitted any ballot arguments to the county against the tax.