DEL MAR — With a 4-0 vote at the Oct. 5 meeting, council authorized a 1 percent increase in the transient occupancy tax paid by hotel guests, but returning visitors will likely not notice the hike as it replaces a 1 percent fee charged by the Tourism Business Improvement District for the past five years.
Although TOT revenue goes into the general fund, the new money will be earmarked for the Del Mar Village Association to continue the marketing efforts of the TBID, which council members are in the process of dissolving.
Tax increases must be approved by voters. In the 2008 election, 62 percent of Del Marians supported a TOT increase from 10.5 percent to a maximum of 13 percent. Council only raised it to 11.5 percent at that time because of a weak economy.
At the new 12.5 percent rate the city expects to take in an additional $205,000 annually.
The TBID was authorized in 2010 under a five-year agreement that allowed hotel operators to charge guests an additional 1 percent fee that was collected with the transient occupancy tax. The fee has not been collected since Sept. 30 of this year, when the TBID contract expired.
The organization struggled with marketing and management issues for the first few years. The board of directors, made up of hoteliers, had difficulty showing concrete evidence their efforts were increasing hotel stays in Del Mar.
The TBID improved within the last 12 months with help from Dream Del Mar, a website hoteliers say produced good results.
When the renewal process began earlier this year hotel operators sought a 10-year extension but council members agreed to consider only another five-year term, if that.
All money raised from the 1 percent fee must be used for marketing to attract more visitors to lodging facilities in Del Mar, although some funds can go to downtown improvements and events, such as the annual Christmas tree lighting ceremony.
TBID money was also used to develop the historic Del Mar walking tour, pedestrian directory signs and a Del Mar Village brochure.
But council members have continually questioned whether the TBID is the best use of funds since it limits how the money can be spent. They said they would like to market the entire downtown area, including retail stores and restaurants.
After reviewing several options since this summer they opted at the Sept. 21 meeting to disband the TBID and replace it with a model that provides a comparable amount of funding from the TOT increase for downtown marketing.
The Del Mar Village Association, under an initial 18-month agreement, will help market the hotels and other businesses. If all goes well it will become an annual agreement beginning in fiscal year 2017.
A contract with DMVA was approved, pending final review by council liaisons Don Mosier and Al Corti, with an initial appropriation of $180,000 for the first nine months.