Napa leaders may open the way to let city residents decide whether to increase the tax on hotel stays in hopes of raising more money for affordable housing.
Tuesday afternoon, the City Council instructed staff to draft a ballot measure raising Napa’s transient occupancy tax by 1 percent, to 13 percent, with the increase reserved for housing programs. Councilmembers would vote June 19 whether to place the bed-tax hike on the Nov. 6 ballot, where it would become law if at least two-thirds of voters support it.
Passing the room-tax increase would funnel another $2.1 million annually into city coffers, Housing Manager Lark Ferrell estimated.
Later Tuesday, Calistoga’s City Council also declared its openness toward the bed-tax increase, which would add about $500,000 to the Upvalley town’s estimated $6 million take from local lodgings.
The Napa County Board of Supervisors floated the room-tax increase idea May 8, saying it hoped to steer fresh revenue to support what it called “workforce” housing – including programs such as housing loans, land purchases and down-payment aid.
Across the Napa Valley, local governments could increase their tax take by up to $5 million a year if the hike were approved by voters in the unincorporated county and all five cities, which must consider the hikes separately.
The room tax, currently 12 percent in the city of Napa, is paid by tourists visiting hotels, resorts, bed-and-breakfast inns and city-licensed home-sharing hosts. Guests pay an additional 2 percent levy to the city’s Tourism Improvement District that promotes local tourism, for a total 14 percent surcharge on their hotel bills.
Clay Gregory, CEO and president of Visit Napa Valley, told the Board of Supervisors that the lodging industry would support a 1 percent transient occupancy tax hike.
In addition to supporting residential construction, funds from an increased hotel tax could be used to buy land for future developments or bolster Napa’s down-payment assistance fund for first-time home buyers, according to Ferrell, who saw a chance for the city to better assist families who have “missing middle” incomes between 60 and 120 percent of the median and often miss out on housing assistance.
Talk of raising hotel taxes across Napa County has bubbled up as its cities cope with a steady rise in rents and home prices that shows no signs of abating, squeezing lower-wage workers in the hospitality and wine industries that dominate the valley economy.
Wine production and hospitality account for the two largest shares of the county workforce, totaling 12,175 and 11,690 jobs respectively in 2017, according to data from the Workforce Alliance of the North Bay. Meanwhile, Napa’s median home price has reached $655,000, with city rents ranging from just over $1,700 to $2,900 a month – against a median monthly income of $2,275.