Council set to discuss Transient Occupancy Tax Increase

The agenda for Monday night’s city council meeting includes the consideration of an increase to the Transient Occupancy Tax (TOT) rate charged in Culver City from 14% to 16%. The measure is expected to generate $2 million annually for Culver City, which will further efforts to maintain a balanced budget following the injection of liquidity from the first round of bonds issued by the Culver City Public Finance Authority.

TOT is a charge added to the bills of visitors staying in Culver City for 30 days or less in hotels or homestays through companies like AirBnB. The increased demand for lodging that will come with the 2028 Olympics was a significant factor in city staff’s analysis of a TOT rate increase as “the most viable near‑term revenue measure.”

Finding opportunities for growth and efficiency in the city’s revenue streams has been a focus for City Manager Odis Jones since joining the city last December. While the city presented a balanced budget this fiscal year for the first time in several years, there are concerns that it could only achieve that balance by issuing bonds, which will incur long-term debt that will be paid off over decades.

The proposed increase will bring the city’s TOT rate towards the high end of its regional contemporaries. Culver City’s rate is uniform for both the city’s 19 hotel or motel locations and homestays, while some cities have kickers based on accommodation type and location that, in some cases, bring the rate above Culver City’s proposed 16%.

This will be higher than the base rates in Beverly Hills, Santa Monica, and Los Angeles, but the latter two have additional conditional assessments that bring the rates for some accommodations in these city's higher than 16%.

Culver City voters have been generous in allowing increases to the TOT, as it does not directly impact the tax rate paid by Culver City residents. The last increase of the TOT in Culver City — from 12% to its current rate of 14% — received a strong 83.3% approval rate by voters on the April 2012 ballot. A survey was also conducted, sampling approximately 400 registered Culver City voters about the possibility of another increase, and the results will be presented at Monday night’s City Council meeting.

Many of Culver City’s revenue sources are elastic, with major streams like sales tax and business taxes being subject to the whims of business activity. However, city staff note that the flow of TOT revenue is stable by comparison, with a relatively small variance between years in which new hotel facilities are not opened.

The $12.5 million to $13.5 million range of TOT revenue has remained steady since the 2023-24 fiscal year, reflecting recovery from the COVID-19 pandemic and the opening of the city’s newest hotel, The Shay, in October 2021.

Ideas about how to spend the money are broad, with the measure sampled in the survey directing the money’s use to “maintain Culver City 9-1-1 emergency response/ firefighter/ paramedic/ police staffing; affordable housing/ mental health/ homeless reduction programs; improve streets, roads, sidewalks, public transportation, storm drains, infrastructure, parks and provide other general fund services.”

This allows the increase to be classified as a general tax requiring a simple majority to pass, whereas a tax increase with targeted spending would be classified as a “special tax” and would require a 66% approval on the November ballot to pass.

Should the council decide to move forward with a TOT increase Monday night, Culver City staff will present specific language, rate proposals, and enabling ordinances and resolutions at the following city council meeting on July 27.