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Paso Robles considering hotel tax increase

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Posted at 6:21 PM, Apr 18, 2022

The City of Paso Robles is looking at some new potential options to generate revenue to help with things like infrastructure and homelessness.

This includes potentially increasing the hotel tax or obtaining general obligation bonds.

Every time you stay in a hotel or short-term rental in Paso Robles, you're paying a 10% transient occupancy tax better known as the hotel tax.

The owner of Melody Ranch Motel, Frank Fritschle, says most of his customers are vocal about it.

"Our customers complain about the tax," Fritschle said. "Some of them say, 'woah,' and others don't say anything.

No matter what city you're in, it'll be tacked onto your bill, but the percentages vary.

The City of Paso Robles anticipates it'll rake in roughly $8.8 million this fiscal year from the tax, being the largest amount ever collected in city history.

"I think we're trending over 40% increase in TOT revenues over the last couple of years," said Ty Lewis, Paso Robles City Manager. "Of course, we had a downturn because of COVID but we've really rebounded strong."

The City of Paso Robles is now looking to possibly increase that tax by 1% to generate $700,000 to $800,000 more a year depending on pricing, occupancy rates, and length of stay.

The funds would be invested back into the city.

"Whether it's the roads that continue to need repair and improvement. We also have three major bridges that need to be built throughout the city and the community, a lot of them with regional impacts," Lewis said. "Of course, we've been talking about downtown parking a lot. We have homelessness."

Any change to the hotel tax requires a two-thirds vote of all members of the city council and then it would go into the hands of voters this November.

Meanwhile, the city is also eyeing general obligation bonds to fund several large capital projects like expanding the city library, new city hall facilities, and a downtown parking structure.

Unlike the hotel tax, property owners in Paso Robles would pay the entire cost of repaying the debt. However, staff is recommending that this waits until the 2026 and 2028 election cycles.

"A bond would be a tall order, I think, to be able to get before the voters in this November. A lot of preparation. It takes two-thirds majority vote," Lewis said.

If the hotel tax increase moves forward, it'll cost roughly $35,000 to put it on the ballot.