Dispute between Sonoma County supervisors stalls proposed ballot measure to widen lodging tax

Division among Sonoma County supervisors has sunk an effort to place an update to the county’s lodging tax ordinance on the November ballot.

It has also highlighted a long simmering disagreement inside county government over how revenue from the tax on overnight stays is dispersed among the county’s five supervisorial districts.

Officially known as the county’s transient occupancy tax, it is a general levy charged to lodging operators, like hotels and inns, outside city limits. The current rate is 12% of the total “rent” paid for lodging.

County officials want to update the ordinance to expand the scope of businesses subject to the tax to include operators that use online booking sites like Airbnb and the hosts of those online platforms.

The change was expected to generate an additional $1.5 million in revenue, according to a conservative estimate calculated by Granicus, a county vendor that assists with ongoing monitoring of short-term rental websites.

The proposal, which needs voter approval, first came to the board last week. Instead of placing the amendment on the ballot, the board asked staff to revise the proposed ordinance again so that organized camps, which are exempt from lodging tax, are more narrowly defined as sites serving youth and transitional-age customers. The ordinance currently exempts all organized camps.

The revision was sought by Supervisor Lynda Hopkins, whose west county district has one of the higher shares of overnight destinations, including vacation rentals, camps and retreat centers, in the county.

But Tuesday, when the revised amendment returned to the board for approval for the ballot, two rounds of voting failed to move it forward.

Supervisor David Rabbitt objected to the new language and said he was not clear what businesses would now be included in the measure.

Hopkins had sought the revision because she said the current definition creates a loophole, where “high-end” sites advertising themselves as a camp ― like a corporate retreat or an adult yoga camp charging $1,000 a night ― do not have to pay lodging taxes.

Rabbitt, however, was skeptical.

“Apparently there are thousand dollar yoga camps,” Rabbitt said in a later interview, adding that he needed more information before being comfortable advancing the revised language.

He also questioned whether the process was transparent.

“We talk about doing outreach. I don’t think it was very transparent to throw something in and try to vote on it,” Rabbitt said.

On Tuesday, he voted against placing the revised measure on the ballot, and with Supervisor James Gore absent, the vote failed to get the required four-fifths majority.

Attempting to salvage the measure, Supervisors Susan Gorin and Chris Coursey proposed voting on the original language without the update requested by Hopkins. During that second vote, Rabbitt was in favor, but Hopkins was against and the measure failed for a second time.

In a later interview, Hopkins said she didn’t vote for the original measure because the existing loophole for organized camps would create inequities.

She said she was “shocked” Rabbitt voted against the measure with the revisions she sought and rejected his contention that the process had not be transparent.

“It’s disappointing, because there’s revenue on the table that we’ll not be collecting and it was spelled out literally in the ordinance and it was transparent because it took place at Board of Supervisors meetings and it was covered in the media the last time,” Hopkins said, referring to recent news coverage on the matter.

In separate interviews, both Rabbitt and Hopkins said they were concerned about missing out on the additional revenue the ordinance change was expected to generate if passed in November. Hopkins suggested considering a special election next year before peak tourist season.

The discord over the measure illuminated an entrenched disagreement among current supervisors — and extending to their predecessors — over how revenue from the county’s lodging tax is allocated.

The first 75% of revenue raised by the 12% tax rate is allocated to the General Fund, which gets a third of that share, and to the Community Investment special revenue fund, which gets two-thirds. The Community Investment Fund

The last 25% is directed to the county’s Measure L fund which covers fire services, road projects and affordable housing, among other needs associated with tourism impacts.

The county’s five supervisorial districts receive tourism impact funds in proportion to the amount of TOT revenue raised in the district.

Between Fiscal Year 2018-19 and 22-23, Hopkins’ 5th District had the highest tourism impact fund balance out of all five districts, according to a county breakdown of those disbursements, which noted that unspent funds are rolled over into the next year. In that same period, Rabbitt’s 2nd District, spanning south county, routinely had the lowest balance.

In the 2022-23 fiscal year, the 5th district’s tourism impact fun balance totaled $426,239 and the 2nd District’s balance totaled $3,796.

Rabbitt has been loudly calling for the board revisit how the revenue is disbursed and consider equal allocation among the districts. But he has struggled to get enough support on the board to put the issue up for a vote.

In an interview Wednesday, he suggested the dispute over the camp revisions sought by Hopkins was tied to how the funds are distributed among the districts.

“Personally I think that has a lot to do with what you saw,” Rabbitt said.

His call for more fundamental changes in tourism tax aligns with his broader critique that the board too often adopts a fractured, district-first approach to county spending.

“I think we need to put guardrails around that, we need to have it be more equitable and we need to stop having this fight for return to source,” Rabbitt said in an interview. “Let’s just layout the county’s top priorities and fund those.”

Hopkins pushed back.

“I think that tourism impacts are proportionate to the amount of transient occupancy tax that’s generated,” she said, noting that her district sees some of the highest volumes of tourists during peak season impacting travel and roads.

The board’s deadlock Tuesday means it will not have enough time in its current schedule to return to the issue and cast two formal votes on any proposed ballot measure before the Aug. 9 deadline.

You can reach Staff Writer Emma Murphy at 707-521-5228 or emma.murphy@pressdemocrat.com. On Twitter @MurphReports.