Wednesday, May 31, 2023

By a Thin Margin, Mendo’s Board of Supervisors Approve First Steps to Increase Taxes on Lodging and Restaurants

{L to R) Auditor-Controller / Treasurer-Tax Collector Chemise Cubbinson, 3rd District Supervisor John Haschak, 4th District Supervisor Dan Gjerde, Travis Scott of Visit Mendocino County, 5th District Supervisor Ted Williams, 2nd District Supervisor Glenn McGourty, 2nd District Supervisor Mo Muilheren, Emily Brown of Civitas Advisors

The Board of Supervisors gave a less-than-resounding nod of approval to the first step of an effort to increase tax assessments on businesses that appeal to tourists. 

The Mendocino County Tourism Commission and a contractor called Civitas Advisors told the Board that they believe the county should allow the Business Improvement District, or BID, to double its assessment from one to two percent on all lodging concerns, including campgrounds. The Commission also wants to evaluate the option of collecting a 1% assessment from what it calls “tourist facing” businesses, including restaurants and tasting rooms. The businesses and local government bodies in the cities and the unincorporated parts of the county would have to agree to the higher rate, which the businesses would pass on to their customers.

According to Commission Executive Director Travis Scott, the 2% assessment is an industry standard in northern California. The Commission’s efforts to promote the county are funded by the current 1% assessment, plus fifty cents on the dollar from the county general fund. The proposed higher assessment is intended to save the county money on marketing itself to visitors.

The Commission’s final goal is to reconfigure the parameters of the Business Improvement District, including its structure and the length of its contract. But yesterday, Emily Brown, of Civitas, told the Board that all she wants at the moment is access to information about the county sales tax and transient occupancy tax, to see if the plan is even worth pursuing. 

Supervisor Dan Gjerde was skeptical, saying, “You already know exactly how much the existing lodging produces, because you already receive a 1% BID from the existing lodging. The only thing you don’t have now is the assessment on the campgrounds, in terms of lodging. But we have a 10% ToT tax that the county is donating, per voter proposal, to the fire departments. But we already have that data. You just do a multiplier, or a division, of the ten percent tax that the campgrounds are collecting. And I believe it’s about $700,000 a year, so 1% would be $70,000 a year, one and a half would be a hundred and five. So that doesn’t need any new information from the county Treasurer (Tax Collector) Auditor (Controller)’s office. I don’t want to release the information about restaurants because that just stirs up a hornet’s nest, county-wide…it’s going to slow down this process, and we’re going to be voting on our county budget, and you will not have approval from any of the cities, I predict, if the restaurants are included in the discussion. And so what does that do? Well, 40% of the BID, right now, comes from the four cities. If you lose all that BID collection from the cities, you’ve gained almost nothing, even if you go from a one to a two percent BID. Because now you’ve lost 40% of your revenue. So your net increase is infinitesimal. And then you’re still going to be looking for a match from the county. Which we don’t have.”

Supervisor Glenn McGourty had a different take, explaining his support by reasoning that, “What we’re doing is we’re giving them (the businesses) the information. This is what it looks like if you decide to do this. This is what it’s going to cost you. This is how much money would be raised. You decide, not us. And then I think that that is a very different message than saying, we’re all going to fail because we know you’re opposed.”

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Martha Barra, an influential local business woman, said she thinks this is the wrong time to ask for an increased assessment, but that tourism is poised to overtake other sectors of the economy.

“Marijuana is dead,” she declared. “If you saw the front page of the Press Democrat on Sunday, when cannabis goes from $4000 a pound to $100 a pound, there’s no way that those growers can even work to become legal. So we’ve got tourism, and we need to put our efforts into making our county pristine, beautiful, and attractive. And as our businesses start doing better, this will be our hope for our county.”

Michael Katz, Executive Director of the Mendocino Cannabis Alliance, refuted one of Barra’s points. “Cannabis is not dead in Mendocino County,” he insisted. “It is also in a downturn — a significant downturn, part of which has been exacerbated by the Mendocino Cannabis Department and the Board (of Supervisors), but that is something that can be resolved. The few things that have (been) shown to provide reliable revenue recently have been tourism and cannabis.” He added that he supports funding the Commission to continue drawing tourists, many of whom he believes are drawn by the county’s reputation for high-quality cannabis.

Supervisor Ted Williams invoked the county’s ongoing budget woes, but eventually voted with Supervisors McGourty and Maureen Mulheren to grant Civitas the razor-thin margin it needed to access the financial data and to craft a nondisclosure agreement about it.

“I don’t want to see us start a fight with restaurants, and have this fail before it takes off,” he began. “Because we don’t know how bad our books are. We may find out we have much worse financial problems than we know. And in fact, just to give you a taste: the new jail wing, which is over budget, and will probably be even more over budget. If the county doesn’t have that new wing, we will have a major financial problem on our hands eventually. That’s a mandated service that we can’t provide without that new wing. And yet, we don’t have a line item in our budget for the staffing for that thing. Or the maintenance. And I imagine we’re talking three to five million (dollars) a year. We don’t have any way to pay for it. So when you put public safety, which is a requirement, on the weight scale with marketing the county, public safety is always going to win. That is our priority. I would hate for this to fail because we included restaurants and lost the city support. So I want to support the effort, but I want to ask that the parties be very careful that this becomes a win. If you don’t think it’s going to pass, if it’s on the edge, pull back.”

If the new model is viable and the businesses and city councils opt in, the Commission plans to roll it out in the fall of next year.

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  1. Great way to support the economy and workers. Pass the buck to taxpayers for your mishandling of funds all the while you cash your tax payer provided pay checks. I call BS!!

  2. Trailer for sale or rent, two thousand dead presidents no phone no pool no pets and you can’t smoke cigarets I spend eighty hours pushing brooms can’t afford a tiny room I’m a man without means in torn jeans….please hit the road.
    Stop spending millions fighting the poor and crushing the homeless. Ezekiel 16:49 the sin of Sodom was arrogance, fullness of bread, idleness, and abuse of the poor. No mention of sexual sin

  3. Restaurants are already having a hard time, due to labor shortages and inflation. Why make it even harder for them? How about just taxing certain “restaurants” like Jack in the Box, MacDonald’s and Taco Bell, etc.? Being large corporations, they can afford to absorb that kind of loss, whereas the smaller restaurants (which actually bring their not-so-huge profits into the local economy) may not be able to pay that extra 1%. Also, lodging facilities do not make much after having to pay the 10% bed tax and housekeeping and upkeep. Small B&B’s in particular might not like the new tax and be challenged by it. After what this county did to the cannabis industry you would think they would be more careful with the rest of the money-makers. The new jail wing is required? I’d like to see the hard facts on that.

  4. Thank you Mrs. Barra for finally shooting the horse the county supervisors saddled their hopes and dreams on and look at the state of our county because of it. My personal feeling is who wants to visit the Bermuda Triangle and become a permanent resident and the same goes for the so called Emerald Triangle. The county could have saved 6 million plus into not having anything available until the infastructure was laid by richer counties and the state as a guide book to the future of the 5 finger plant thats given this county it middle one and a black eye to boot.

  5. We are all getting squeezed by higher costs. Raising fees will discourage tourism and locals from frequenting Mendocino businesses. You will end up hurting the local economy. Take a look at our manager heavy county government for cuts rather than passing more fees.

  6. So as a local if I go out I pay a tourist tax to eat (on already inflated prices)?
    Soon only High Tech Democrats from the Bay Area will be able to go out to eat?

  7. The motels in Ukiah aren’t fit to stay in! And your going to raise the taxes on the people coming to visit ? Stupid politicians you have no idea of what a shit hole town Ukiah has become! It used to be a beautiful place to live and visit, now it’s just a fast food eyesore on the way to somewhere else.

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Sarah Reith
Sarah Reith
Sarah Reith is a radio and print reporter working in Mendocino and Humboldt counties, focusing on local politics and environmental news.

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