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City will ask voters to hike motel tax

The tax paid by persons staying at the two motels in Ceres should be increased to 10 percent, the Ceres City Council suggested on Monday.

Voters will get the final say, however.

Ceres has a five percent Transient Occupancy Tax (TOT) in place but most cities in California have tax rates of between 7 and 10 percent tax, with the exception of Anaheim which capitalizes on Disneyland visits with a 15 percent rate and Mammoth Lakes which charges 12 percent. To increase the motel tax, voters of Ceres will have to approve a measure, and the council aims to have it placed on the November ballot.

City Manager Toby Wells suggested that the council approve an ordinance amendment to move forward to place the TOT increase on the November ballot - after talking to Ceres motel operators to gauge their support.

A 2002 Measure A to increase the TOT in Ceres to 8 percent failed in 2002 by a margin of 45 percent to 55 percent. Wells said the defeat was reportedly due to motel owners who at first supported then opposed the measure and began rallying public opposition against the tax about six weeks before the election. Some voters may not have understood that the tax only applies to those staying at motels in Ceres.

"That's really the key to any measure going forward and that's proper education," said Wells.

The Ceres TOT generates about $70,000 annually for the city with the number peaking to $91,000 in the 2005-06 fiscal year before the economic downturn put a serious dent in travel and tourism. Wells said a one percent increase would bring in an additional $14,000 to city coffers, thus a five percent increase would bring in an extra $70,000.

"Bottom line it's a revenue source... that doesn't necessarily impact our residents," said Wells.

Currently Ceres has about 110 rooms between the Howard Johnson Inn and the Microtel Inn, both located on Herndon Road. Wells said a 10 percent tax should not affect marketability of rooms in Ceres since motel and hotel rooms in 429 California cities are subject to a TOT and most people expect to pay one.

Modesto and Turlock charges a TOT rate of nine percent.

Wells suggested going for 9 percent TOT but Mayor Chris Vierra recommended placing a 10 percent tax before voters.

Wells suggested moving the election measure forward quickly to avoid a collision with the 2016 general election where a half-cent sales tax measure for transportation is expected to go before voters of Stanislaus County.

Vierra said he doesn't believe having a slightly higher TOT would place Ceres hotels at a disadvantage, saying he's never called a reservation desk and asked "Is your tax eight or 10 percent?"

"Ten percent falls within the bell curve of where most cities are in California," said Vierra.

Councilwoman Linda Ryno offered a more conservative approach of 8 percent tax but was outnumbered.

Vierra said the difference between 8 and 10 percent could mean $28,000 extra "which could fund a lot of things."

Councilman Ken Lane said he recently stayed in the Cannery Row area of Monterey where he paid a "ridiculous" tax while acknowledging that it didn't affect his decision to stay there.

"I didn't look at it and say ‘I'm not gonna stay here because of the tax,'" said Lane.

Vice Mayor Bret Durossette said he prefers to see the TOT increase before another lodging facility is built in Ceres. Hampton Inn and Suites was approved for construction on Service Road west of Mitchell Road in 2008 but may not develop.

Councilman Mike Kline said the city must do a better job of educating the voters that "it's not a tax on them."

Mariposa voters recently soundly rejected an increase in its TOT from 10 percent to 11.25 percent. Wells said successful measures have made an effort to educate citizens that they don't pay the tax unless they stay in the motels.

Since the city cannot spend money to campaign for the measure - it can educate the citizens - the Ceres Chamber of Commerce has pledged to help out. Chamber President Renee Ledbetter said she doesn't want to see the city spend $25,000 on a campaign consultant.

"Part of the education campaign will include ... reaching out to our service clubs," said Ledbetter. She also noted social media, Chamber website, newspaper editorials and Youtube videos will be used to promote the measure.

"A lot of it will be face to face, just reaching out to the community ... to let people know this is on the ballot and that the Chamber is behind this."

She said the revenue that is generated "will definitely help the city's coffers."

Ledbetter said she will also be talking to motel operators to see how the Chamber can help market Ceres lodging, and is hoping to attract trade shows at the Ceres Community Center.

Ceres Chamber of Commerce officials have talked to the Jamnadas family, owners of both Ceres motels, and they have indicated that they are not opposed to the increase.

Economic Development Director Steve Hallam said he spoke to the manager of Microtel recently and he indicated he doesn't care if the TOT is increased as long as the city "is doing things to encourage more overnight stays in our city."

The mayor suggested that the city Parks and Recreation offer flyers to direct out-of-town visitors to Ceres motels when it comes to youth baseball and soccer tournaments and large equestrian events at the Diamond Bar Arena.

"That might help drive up their numbers," said Vierra.

Because the city is not specifying a certain use for the new taxes - they would go into the general fund - the measure would pass with a simple majority vote.