Republicans on the Dana Point City Council vote to raise taxes yet again

Citigroup foreclosed on the St. Regis Hotel already – how many more will close due to higher taxes in Dana Point?

Our friend Jim Lacy has written a very interesting post over at the Flash Report (which has half our web traffic according to Alexa.com) about how the Republicans on the Dana Point City Council are raising taxes and possibly dooming their local economy.  Here are a few excerpts.  You can read the entire post by clicking here.

Of course I am a little prejudiced, having served on its city council and planning commission in the past, nevertheless, news reports of coastal Orange County’s City of Dana Point’s plans for the New Year help us understand why Obama actually beat McCain here in John Campbell’s Congressional District, of which Dana Point is a part. My hope in the New Year is that leaders in adjoining coastal cities won’t catch the “tax and regulate” flu that is now endemic on the Dana Point City Council and Planning Commission.

Dana Point is site to a lovely harbor and beautiful ocean views. It also is the locale of several luxury hotels. The City’s revenues, which have always been in tip-top shape, are largely tied to sales taxes associated with the hotel industry, namely, a “transient occupancy tax” of 10% added to traveler’s hotel bills. This “TOT” tax is stuck on top of the normal sales tax of 8.75% in Dana Point. So, a typical unsuspecting visitor to Dana Point has taxes of 18.75% added to their hotel bill. For the Marriott Laguna Cliffs least expense room on the internet to stay tonight ($189, and a bargain) the tax per night for this evening would be $35.44. The cost of a nice dinner at Harpoon Harry’s.

However, on January 1, a new, additional tax of $3 per room that was enacted with votes from “Republicans” on the council, will go into affect. The tax rate on the same Marriott Laguna Cliffs Hotel room, in percentage terms, will jump to over 20%. The tax is intended to “help market Dana Point as a destination city.” It is being implemented at a time when sales tax revenues are down 40% from last year because of the depression in the travel economy, and in the wake of the bankruptcy of the St. Regis Monarch Beach Resort a few months ago.

Advocates of the tax say “marketing Dana Point as a destination city” by City government employees (who have a union, an ample retirement system, and something close to life tenure) is necessary to increase travel and tourism because of the economy, poor City branding by the hotels, and because the hotels themselves want the tax. But the explanation is not entirely accurate, and the need to grow government to do this work is not really necessary. The desire to increase TOT taxes or find other new hotel tax vehicles has been around City Hall not just in these bad times, but also in the good times a few years ago. The Council resisted new taxes such as these in the past, citing such facts as the huge marketing departments that Ritz-Carlton, Marriott, the St. Regis brand, and Hilton Hotels (the Doubletree) already have working for their properties in Dana Point, the fact that marketing is usually not a good function of government, and that the local hotels could do the same thing privately by raising rates and pushing the extra dough through to the Chamber of Commerce or some other trade association to do the “marketing,” the fact that there is already a huge infrastructure of organizations promoting tourism in Orange County in general (Disneyland, Knott’s Berry Farm, you name it) that the City contributes to.


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