This November, East Palo Alto residents will be revisiting a hotel tax that hasn't been touched since it was first adopted more than 20 years ago.
Measure V seeks to increase the tax on anyone whose rental of a room is transient, defined as anyone renting a room in East Palo Alto for 30 consecutive days or less, according to a city resolution passed in July.
Currently, the city has a 12% tax on temporary guests. If the measure passes next month, the tax will increase to 14%, incrementally, by Jan. 1, 2023. The higher rate would not affect property owners or city residents.
The measure is estimated to bring in $390,000 in annual revenue, according to an impartial analysis by City Attorney Rafael Alvarado Jr. The funds would mainly go toward the city's affordable housing projects — specifically the rehabilitation and maintenance of low-income housing — but up to 15% of the money also can be spent on city staff and "overhead costs," according to the analysis.
The measure will also expand the definition of hotel to include homes, apartments, condominiums and townhouses, the analysis states. This would include rentals through Airbnb, the online rental and home-sharing marketplace.
The East Palo Alto City Council and this year's candidates have already shown unanimous support for the measure, characterizing it as an effort to preserve and support the city's low-income families.
"Preservation is key to preventing displacement," according to the ballot argument in favor of the measure, which was signed by Mayor Regina Wallace-Jones, Councilman Ruben Abrica, the Rev. Lawrence Goode of St. Francis of Assisi Church and Millicent Grant, president of East Palo Alto Senior Center. "Keeping existing housing affordable for East Palo Alto residents enables long-time community members to stay here."
Residents for a Just EPA for Measure V, a committee in support of the hotel tax increase, has raised just over $10,000 for its campaign.
Opponents of the measure, mainly the Silicon Valley Taxpayers Association, have called the tax increase "immoral" and a form of "theft."
The association — calling itself a protector against "over-reaching and over-spending of government" and previously opposing hotel tax increase proposals in other cities — said in a rebuttal argument that guests shouldn't have to pay for "services they will or cannot use."
"Do you go to a restaurant and always expect someone else to pick up the tab?" the rebuttal asks. "Those who do that are called grifters. Or petty thieves."
Similar to its argument against a similar 2018 measure in Palo Alto that won narrow support, the group said keeping the hotel tax at a lower rate will help local hotels and encourage people to visit the city.
The measure requires a two-thirds majority vote to pass.
If Measure V is approved, East Palo Alto would join the ranks of San Francisco and Oakland, which both currently have a 14% hotel tax. Palo Alto also increased its transient-occupancy tax in 2018 from 14% to 15.5%, making it the highest hotel tax throughout the entire state.