The city of Palm Desert is rising up against the state’s tax takeaways by asking its residents to raise a fee on visitors—and this is all unfolding in the shadow of a well-publicized scandal involving the former city manager.
According to city officials, the state of California has taken about $40 million away from the state every year in redevelopment funds. So on July 28, City Council members unanimously voted to place a measure on the November ballot that would increase the local transient occupancy tax (in other words, the hotel tax) from 9 percent to 11 percent, to replace a small fraction of the $40 million the state takes every year. That 11 percent would be on par with what other valley cities charge.
They nicknamed it Measure T. That may sound somewhat familiar to Palm Springs residents, who in 2011 passed something called Measure J. However, the similarities in the ballot initiatives end there: Palm Springs’ Measure J increased the sales tax by 1 percent, while Measure T will affect only people staying at the city’s hotels and motels.
Some of that Measure J money was used for downtown redevelopment in Palm Springs, and was at the center of the high-profile FBI raid at the City Hall which also apparently targeted then-Mayor Steve Pougnet.
Palm Desert Mayor Bob Spiegel was adamant that his city would not end up having any such problems if residents pass Measure T.
“I don’t think it is appropriate or relevant to talk about challenges facing other cities,” Spiegel said. “Palm Desert has earned a well-established reputation for fiscal responsibility and good stewardship of public resources.”
Spiegel said certain steps would be taken by the city to prevent any possible misuse of the funds generated by the proposed Measure T.
“Measure T is subject to strong accountability provisions, including independent audits, public oversight and local control of funds that cannot be taken by state,” Spiegel said.
While Spiegel claimed Palm Desert has a “well-established reputation for fiscal responsibility and good stewardship of public resources,” it is worth noting that the Palm Desert City Council earlier this year gave former City Manager John Wohlmuth a severance package valued at nearly $300,000 after he allegedly showed a nude photo of a co-worker to his colleagues at City Hall.
City officials claimed they approved the severance package to avoid being sued by Wohlmuth.
Anyway, back to Measure T: Spiegel said the Measure T funds would help the city deal with rising public-safety costs.
“For the first time in Palm Desert’s history, public-safety costs have exceeded 50 percent of our annual budget,” he said. “Measure T will provide a dedicated local source of funding.”
Palm Desert contracts with the Riverside County Sheriff’s Department for law-enforcement services.
“We work closely with the (sheriff’s department) to address the community’s needs,” said Justin McCarthy, Palm Desert’s interim city manager. “If, in consultation with them, additional deputies are required, we would recommend adding them.”
McCarthy, who is being paid $119 per hour as the interim city manager, said Measure T would generate approximately $2.2 million annually.
Palm Desert is home to 12 hotels with 2,171 rooms. There are also numerous timeshare properties that will be affected by Measure T, depending on their vacancy.
“The city has three vacation ownership (timeshare) properties that function like hotels: Marriott Shadow Ridge (1,093 rooms), Westin Desert Willow Villas (268 rooms) and Embarc Palm Desert—Intrawest Resort (88 rooms),” said Palm Desert spokesman David Hermann.
According to Hermann, the three timeshare properties function as hotels when the units are not booked by owners.
“The resorts advertise the rooms on online travel sites, etc.,” he said. “And when guests pay their bill, the resort collects the transient occupancy tax along with the charge for their lodging.”
Measure T would obviously bring in even more revenue with additional hotel development—and city officials say two new hotels are under construction.
“Hotel Paseo is a boutique hotel being built next to The Gardens on El Paseo,” Hermann said. “It will have 150 rooms. The brand is the Marriott Autograph Collection, and the hotel is expected to open in September of 2017.”
A Fairfield Inn, near Interstate 10 and Cook Street, has a projected October 2017 opening date.