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City of Rancho Palos Verdes <br />Legislative Meetings,Sacramento,CA <br />January 8,2013 <br />Protect Local Collection of Transient Occupancy Tax (TOT) <br />-Fact Sheet and Talking Points <br />Background (not intended for discussion with Legislators) <br />~TOT is a tax that is levied on the consumer (not a hotel)as a percentage of the <br />full room rate charged. <br />~More than 400 California cities and 55 counties levy a local TOT. <br />~RPV TOT rate is 10%.TOT revenue for RPV is about $3.2 million (or about 13% <br />of total General Fund revenue). <br />~In .accordance with the City's Reserve Policy,TOT is transferred to the CIP <br />reserve for projects.This represents the single largest source of capital project <br />funding for the City. <br />~Based upon Staff's understanding of the current industry practice (described <br />below),online travel company sales result in less tax being remitted to the City: <br />o Online company has arrangement with hotel to purchase room rentals at a <br />discount.Arrangement is unknown to consumer. <br />o Consumer books a hotel room for $300.Rather than paying a specific <br />amount identified as "TOT"for $30 (based upon the 10%rate),the <br />consumer pays a lump sum for "taxes and fees"that may be something <br />like $38.50. <br />o The online company may send the hotel only $250 for the room,based on <br />the discount arrangement noted above.The online company will also send <br />$25 for the tax (based upon the 10%rate). <br />o The core issue is that the tax is levied on the consumer,not the hotel.If <br />the consumer pays $300 for the room,then $30 should be remitted for tax <br />(not $25 in this example). <br />Talking Points for Discussions with Legislators <br />~TOT is an important source of revenue to RPV,as it is used for infrastructure <br />projects. <br />~Any loss of this revenue will affect the City's ability to maintain its infrastructure. <br />~The City requests that the legislature ensure that no state law shall be enacted <br />that would reduce the TOT that should be collected from the consumer. <br />RECEIVED FROM..L.;d.l¥-/!JIJ.~~..J.il!i~1 <br />AND MADE A PART OF HE REC D AT THE <br />COUNCIL MEETING OF';w\.3)£013 <br />OFFICE OF THE CITY CLERK <br />CARLA MORREALE,CITY CLERK