Calistoga should consider raising hotel taxes to create additional revenue to fund affordable housing programs and services, councilmembers agreed Tuesday.
There are currently ongoing countywide discussions of similar proposals in other Napa County municipalities that would increase the Transient Occupancy Tax (TOT or hotel tax) by 1 percent to 13 percent from the current 12 percent, said City Manager Dylan Feik.
“I think we all know (housing) is a countywide issue and so we have been talking about it far longer than any of our counterparts — the other cities in the county — have been, but there’s discussion now about, should this be a countywide activity to fund a need that exists countywide,” Feik said.
Mayor Chris Canning said that all the municipalities in the county would like to do this “in synergy with one another” with each municipality needing to adopt the tax increase separately.
Napa County supervisors held discussions on the tax hike for what they called “workforce” housing at an early May meeting. Municipalities would each start by creating a resolution or ordinance through their respective governing bodies and then place the measure on the November ballot where county voters would decide the outcome. A two-thirds vote in favor would be needed to pass the measure.
Canning stressed that hotel taxes are paid by hotel guests, not residents, unless, as Councilmember Gary Kraus pointed out, a resident stays in a hotel room as a guest.
For Calistoga, with a budget of more than $6 million expected in total hotel tax revenue for Fiscal Year 2017-18, the 1 percent increase is estimated to be a little more than $500,000 annually. If all five cities joined in, the total amount of money netted countywide for housing could be $5 million.
Kraus wanted, and got, assurance that any additional hotel tax money charged in Calistoga would stay in Calistoga, unlike the TID (Tourism Improvement District) hotel tax of 2 percent, which is shared countywide and is used for promotion of Napa County’s hospitality industry.
Canning, whose “day job” is executive director of the Calistoga Chamber of Commerce, said that Calistoga’s lodging industry is supportive of the increase because it is a special tax that would support affordable housing needs, a common problem in the region for people of modest to low incomes, some of whom work in the hospitality and wine industries.
The additional hotel tax – which equates to about $1 for every $100 – won’t affect tourism in Calistoga, Canning said, largely because most visitors are “leisure travelers,” a segment of the market that doesn’t comparison shop based on taxes as compared to groups and conventions, which do take hotel and other taxes into consideration.
Feik noted that the city council since 2014 has adopted annual goals to address “housing that is affordable” – a phrase that some have said draws attention to not just “low-income” workers, but also employees such as some managers who earn what is considered “moderate income” and have a difficult time finding housing in the county that they can afford comfortably.
Calistoga has actively pursued opportunities to assist or create affordable housing in the city including grant programs to support groups such as Calistoga Affordable Housing and Fair Housing Napa Valley, as well as partnering with nonprofit housing developers such as the Family Apartments on upper Washington and the Calistoga Senior Apartments on lower Washington Street, which offer rents to low-income farmworkers and senior citizens, respectively. Exercising creativity in finding housing solutions, the city recently purchased another parcel, and is exploring housing options for that site, and officials earlier this year approved a mixed-use condo complex set to be built on Grant Street that is required to offer a portion of its housing options as live-work units.
The city has also modified its policies and programs to promote new housing development to satisfy worker housing needs through such decisions as adjusting rules on granny units, reducing parking requirements, and amending utility connection fees for new so-called green building of multi-family units.
Vice Mayor Michael Dunsford, co-owner of Calistoga Inn Restaurant and Brewery, has been the loudest voice on the council over the last handful of years to call attention to the housing shortage with an eye to the future when two new resorts – the Silver Rose and Calistoga Hills – open and create an additional 500 hospitality jobs that will likely exacerbate the problem. Dunsford has intimate knowledge of the employee-housing challenge as an employer who has difficulty finding qualified workers to fill all positions because employees can’t find a place to live nearby that is affordable. He has also said that it’s not just line-level employees, such as dishwashers, who have trouble, but also management-level employees.
The existing council ad hoc housing subcommittee members – Canning and Dunsford – would be appointed to serve on a “2x2” countywide housing committee. The council agreed to follow the measure through to a November ballot.
A resolution or ordinance for the proposed increase needs to be delivered to the county less than 88 days prior to the election, which would be Aug. 9. The council will review the ordinance at its next regularly scheduled council meeting on Tuesday, June 5.