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The Pleasanton City Council unanimously gave staff the green light this week to draft the ballot language for a transient occupancy tax increase to be placed on the November ticket.
If approved by Pleasanton voters, the city’s hotel tax will rise from its current 8% rate to 10% by July 2027 and then to 12% in July 2028, which staff said would generate about $2.8 million in cumulative additional revenue per year.
“We really have no choice,” Councilmember Julie Testa said in regard to placing the tax measure on the November ballot. “We know we have serious deficit issues that remain given that we did not pass the half-cent sales tax.”
Testa was referring to the Measure PP sales tax revenue measure that voters defeated in 2024.
As Pleasanton continues to face an ongoing structural deficit, the city has been looking for new revenue streams over the past two years. That’s why, back in August, city staff introduced a number of potential revenue streams to address the city’s continuing structural deficit, including the hotel and motel tax.
A hotel tax — also known as TOT — are paid by visitors staying at hotels and do have any impact on local residents, City Manager Gerry Beaudin explained to the council.
According to the staff presentation, Pleasanton has not updated its hotel tax in the past 40 years, and it is also one of the lowest in Alameda County. At least five cities in the county have a TOT rate of 14% and a number of others are at 10%.
“All these cities started from a number that’s several percent higher than Pleasanton’s, and increased it even further and most of them passed with very significant margins,” Councilmember Jeff Nibert said during the Feb. 3 council meeting.
The council had directed staff in August to conduct stakeholder engagement with Pleasanton hotel operators and regional partners to assess the feasibility of getting voters to approve the rate increase during this year’s election.
Staff presented the results of those listening sessions this week, which overwhelmingly showed that most hotel operators were neutral to the rate increase and did not oppose the idea. Staff said the hotel operators also confirmed that Pleasanton’s rate is lower than other cities, but added that a phased implementation of the rate increase would be preferred because they can communicate those changes to their customers easier.
However, they also communicated that hotel operators would not actively campaign for or against the rate increase.
Tim Howard, a general manager for Marriott International who has had close to 30 years of experience in the hotel industry, was one of the operators who the city reached out to and who spoke up during the council meeting.
Howard said while he didn’t oppose the rate increase, he wants the city to move a bit more cautiously as staff continue developing ballot language because he feels like, given how much hotel visitor numbers have eroded post-COVID, the rate increase could have some long term impacts.
“If hotels can’t charge customers at a rate that they can viably make money in … you will see owner disinvestment,” he said. “It will be harder for us to operate our hotels, to employ our locals, to pay our bills.”
Mayor Jack Balch acknowledged Howard’s comments and noted that the city is still in the early phases of developing the tax measure ballot language and welcomed his and other hotel operator comments so that the city can truly learn about all of the impacts such a measure would have on the city.
But apart from Howard’s comments, the rest of the discussion was largely positive about what the tax rate increase from the city’s current 8% to 12% would have on the city’s finances.
During the 2024-25 fiscal year, the city received about $5.3 million in TOT revenue — the city budgeted for $5.6 million in fiscal year 2026-27, according to staff. If approved, based on the city’s current hotel occupancy levels, the city would see a nearly $3 million increase in additional revenues, which would go directly to the city’s general fund as currently laid out by the tax measure.
And while Beaudin acknowledged the nearly $3 million in potential additional revenue doesn’t quite make as much of a dent in the city’s structural deficit, he said it’s a step in the right direction.
“This doesn’t solve the problem, but $2.8 million certainly helps us,” Beaudin said. “It likely won’t fully address the operational, structural deficit that we have but (we are) certainly putting this forward because we think it starts to move us in the right direction.”
With the council’s support, staff will work over the next several months to develop the draft ballot language for the hotel tax before presenting it to the council in June to vote on officially placing it on the November ticket. Based on several factors (including whether someone challenges Balch for mayor, which would be the only citywide contest scheduled for the ballot, given council districting), placing the revenue measure on the ballot could cost the city anywhere from just over $242,000 to around $339,000.
If placed on the ballot, the measure would need a simple majority (50% + 1) in order to pass.
