St. Helena has a reputation for doing things its own way, but the City Council decided on Tuesday to go with the flow when it comes to the countywide push to increase hotel taxes.
The lodging industry is asking local governments to increase their transient occupancy tax (TOT) rate by 1 percent to raise money for housing. Napa County and the cities of Napa, Calistoga and Yountville have already signed on by arranging ballot initiatives for the November election.
The ballot measure would increase TOT from 12 percent to 13 percent. Combined with the hotel industry’s self-imposed 2 percent assessment for the Tourism Improvement District, the measure would bring hotel guests’ total tax to 15 percent.
After considering a different approach in May, the St. Helena City Council decided on Tuesday to present the city’s voters with the same option that will appear on other local ballots: a 1 percent special tax for housing.
Councilmembers Mary Koberstein and Geoff Ellsworth instead favored a 2 percent increase, with 1 percent set aside for housing and the other 1 percent going into the General Fund to be used as the council sees fit.
“It’s up to us to decide what kind of revenue this city needs,” Koberstein said. “It’s not the elected officials of Yountville or Calistoga or Napa who make that decision.”
However, a majority of the council decided to stay consistent with the rest of the county, noting that a 2 percent increase might put St. Helena hotels at a competitive disadvantage in attracting bookings.
Mayor Alan Galbraith also questioned whether a 2 percent tax would win the required two-thirds in the November election, even though it would be paid by visitors rather than residents.
“We’re better off joining … the rest of the cities in the county,” he said.
Councilmember Paul Dohring agreed, but he added that St. Helena should get a share of what the county raises from the new tax, since the county has a policy of encouraging housing in the cities. He also said the lodging industry should pursue a legislative change at the state level that would allow it to use a self-assessment to raise money for housing — a method the industry currently uses to fund marketing efforts.
Members of the public warned the council against deviating from the rest of the county.
“If we come out with a 2 percent (tax) that’s partly for this and partly for that … we stand a chance of losing any opportunity at all to raise some badly needed funds for housing,” said St. Helena resident Loraine Stuart.
Marcelle Adderley, general manager of Southbridge Napa Valley, said the St. Helena lodging industry supports the 1 percent increase being pursued by the rest of the county, but would oppose a 2 percent increase that would cause St. Helena hotels to lose potential group and individual bookings.
“Usually being unique and special are great attributes when it comes to promoting St. Helena,” she said. “When we’re talking about a collective effort to generate revenue and provide housing that’s affordable, we don’t want St. Helena to stand out and be different.”
A 1 percent TOT increase would raise about $279,000 a year in St. Helena, which councilmembers acknowledged isn’t much given the cost of housing. But it could help attract matching funds and serve as part of a broader strategy to address the city’s housing needs.
“We’re looking at a whole toolbox full of strategies to support more workforce and affordable housing in our community,” Councilmember Peter White said.
On June 26 staff will bring to the council a resolution to place the measure on the November ballot.