1. Approve an ordinance (Attachment 1) of the voters of the City of Fairfield amending Chapter 18 Article III Transient Occupancy Tax of the Fairfield Municipal Code; and

Fairfield is a full-service city, equipped with its own City-run police, fire, park, and public works including water utility services. The health, safety and welfare of all residents, businesses and visitors in the City of Fairfield (“the City”) is the City’s top priority. The City of Fairfield faces a structural budget deficit that it is trying to solve; and the general fund pays for important City services such as police, fire, and paramedic services; 911 emergency response; emergency street repairs and maintenance; neighborhood park and recreation services; and general municipal services to the public.

At the March 12, 2024, City Council Study Session, the council directed staff to bring back approval of Transient Occupancy Tax and Business License Tax Modernization and Simplification Ballot measures to a future council meeting to be considered for submission to the voters at the November 2024 election. Any increases to Fairfield’s hotel/motel tax and business license tax must be approved by local voters. If approved by local voters, these measures would provide locally controlled funding for essential services, including:

• Maintaining rapid 9-1-1 emergency response times
• Supporting firefighters, paramedics, and police patrols
• Fixing potholes and maintaining Fairfield’s 793 miles of local streets
• Maintaining parks and public areas
• Supporting afterschool and recreational programs for children, families and seniors

The City of Fairfield charges a local TOT to visitors staying in local hotels and motels. This hotel/motel tax is only paid by visitors to ensure they contribute to maintaining the roads, infrastructure, public safety services and other resources they utilize while staying in Fairfield. The tax is collected by hotel/motel operators and paid over to the City.

The tax was established in 1965 and the current 10% tax rate was last adjusted 40 years ago in 1984. The current tax yields approximately $2.9 million annually. The City is considering increasing the hotel/motel tax rate to 12% to bring it in line with neighboring communities and generate approximately $600,000 annually in additional revenue to support local general services.

The TOT is not imposed on Fairfield residents, rather it is imposed on occupants of hotels, inns, and other eligible facilities for stays of 29 days or less. The TOT is applied to a customer’s lodging bill. The TOT is a general tax that is deposited into the City’s general fund. For comparison, the existing TOT rates in neighboring cities are set forth below:

 Table: Transient Occupancy Tax Rates in Nearby Cities

*Total sum includes TOT rate, Tourism Business Improvement District (TBID) and excise taxes.

**City of Napa is planning to introduce a measure to increase their TOT in November

The proposed measures would be subject to fiscal accountability protections to ensure funds are spent properly, including:

• Required public disclosure of all spending and mandatory annual audits
• No funds may be taken away by the State
• All funds would stay in Fairfield for local services and infrastructure only

To qualify for the ballot, 2/3 of the City Council (at least 5 out of 7 members) are required to vote affirmatively to approve the transient occupancy tax ordinance. If a council member is absent from the meeting, 5 City Council Members are still required to vote affirmatively for the item to qualify for the ballot. If so, approved by the Council, and then passed by a majority of the voters (50% plus 1) on Tuesday, November 5, 2024, it would go into effect on January 1, 2025.

The proposed TOT rate increase of two percent would provide approximately a $600,000 increase in revenue per year to the general fund. The projections are based on current economic data and trends and are subject to change with changes to economic activity within the City.

State law requires that such measures coincide with local City Council elections for public vote on the November 2024 General Election. The City Council could also forgo placing a revenue measure on the ballot. If such direction is given, then no further action is necessary.

Savita Chaudhary, Assistant City Manager

schaudhary@fairfield.ca.gov