Twentynine Palm’s five-year experiment with its downtown Tourism Business Improvement District has come to an end, following a 3-to-2 vote against maintaining the taxing arrangement that funded the program.
In 2018, the city council approved a proposal by city staff to establish the Twentynine Palms Tourism Business Improvement District to levy and collect assessments from all hotels, motels, and vacation home rentals, and any other businesses within the 59.1 square-mile boundaries of the city accommodating visitors which were already subject to the city’s transient occupancy tax, i.e., bed tax. The funds raised were used to promote tourism within the city.
As a consequence, all motel, hotel and vacation rentals were subject to a 1.5% charge that was tacked on to the bills of those staying in those facilities.
California’s Parking and Business Improvement Area Law, which was passed in 1989 and was incorporated as Section 36500 et. sequitur of the California Streets and Highways Code, authorizes cities to establish business improvement areas for the purposes of promoting tourism.At its September 12 meeting, the city council was scheduled to consider reconfirming the levying of the tax, which was referred to in a staff report as an assessment.
As might have been anticipated, the tax to support the Twentynine Palms Tourism Business Improvement District has not been popular with the owners of motels, hotels or short-term rentals, although the concept of taking active measures to increase awareness of Twentynine Palms as a tourist destination and thereby bringing in more tourists who would fill vacancies in rooms that otherwise remain empty was appreciated by some elements of the local hospitality industry.
According to the city, Twentynine Palms offers more than 590 hotel rooms, more than 175 recreational vehicle spaces and 480 or more permitted vacation rentals. Something like 32 percent of those tourists staying in Twentynine Palms come from California, roughly 16 percent come from the Western United States, 12.6 percent hail from Europe, another 12.6 percent are Midwesterners, 12 percent are Canadians and 6 percent are Northeasterners.
According to the city, it realized around $220,000 in the Tourism Business Improvement District tax revenue in Fiscal Year 2017-18, slightly over $250,000 in Fiscal Year 2018-19, saw a drop-off to roughly $190,000 in 2019-2020, something near $283,000 in 2020-21, $360,000 in 2021-21 and almost $270,00 in the first three quarters of 2022-23.
Some questioned how effective the campaign to bring tourists into Twentynine Palms has been.
Under California law, a tax cannot be imposed without it being ratified by a vote of those to bear the financial burden of the tax. Local agencies, however, have steered around that requirement by using a so-called protest vote or protest process to make that ratification. Thus, those to be taxed are given notice of what is usually a 30-day or one month window during which they have an opportunity to file a protest in writing with regard to the tax. Those who lodge such a protest are deemed to have voted against the tax. Those who do not mail in a protest are deemed to have supported the tax.
With the city’s authority to impose the Tourism Business Improvement District tax set to elapse, the city made a call for protests of those upon whom the tax is imposed. The vote was weighted such that those eligible to participate in the vote were given a percentage of the available ballots in the ratio that their individual business contributed toward the total of the Tourism Business Improvement District tax collected. If more than 50 percent of the ballots had been cast against the continuation of the tax, it would have sunsetted this year, taking with it the existence of the district.
When the deadline for lodging a protest arrived, the percentage of the operators of hotel, motel and vacation home rentals who opposed the district, based on their respective degree of contributing toward the total tax revenue, stood at 18.82 percent.
Nevertheless, a significant number of those operating the city’s hotels, motels and short-term rentals were on hand on September 12 to let the council know they disapproved of the tax. In response, Councilman Octavious Scott, trying to signal to those entrepreneurs that he had their back, made a motion to discontinue the Tourism Business Improvement District’s charter. Scott and Councilman Steve Bilderain then supported Scott’s motion, but were outvoted by Wright and councilmen Joel Klink and Daniel Mintz.
An alternate motion to reauthorize the imposition of the 1.5 percent tax followed. Wright then joined with Scott and Bilderain in voting against the reauthorization of the tax, which had the effect of killing the district, which draws its lifeblood from that transitory occupancy assessment.
Scott said a large number of local hospitality industry entrepreneurs did not want to be in the district, particularly because it was not meeting their needs or expectations, and he opposed forcing them to participate in it.
In effect, the Twentynine Palms Tourism Business Improvement District will cease to exist as of October 1.