City officials presented an introductory staff report on a possible transient occupancy tax revenue‑sharing program designed to encourage new hotel construction and renovations in Arcata. Assistant City Manager Tabitha Miller framed the proposal as an early-stage concept and asked the council whether they were interested in staff pursuing a program design.

The program would use a share of incremental TOT — the local tax collected on accommodations inside city limits — to fill identifiable financing gaps for developers. “The transient occupancy tax is also known as the hotel tax,” Miller said, explaining the concept of using only incremental revenue tied to a new or renovated property rather than diverting existing collections.

Miller reviewed examples from other California cities and described typical program features: a requirement that a project demonstrate a third‑party‑verified funding gap, program eligibility standards (for example, minimum room counts or a star/quality rating), a limited revenue‑sharing term (sunset), and developer obligations such as job‑ or procurement‑related commitments in some jurisdictions. She used a simple three‑year average example to show how a revenue share would be calculated: a renovated hotel that grew annual TOT from $50,000 to $75,000 would generate a $25,000 increment, a share of which could be rebated to the developer while the city retained the base $50,000.

Staff noted Arcata’s TOT history and recent impacts: annual TOT revenues dropped when two hotels were taken offline for Project Homekey, lowering collections to around $1.5 million before an estimated $1.6 million in the most recent fiscal year. Miller said staff saw the program as a tool to retain lodging dollars locally and capture related spending on food, retail and transportation.

Council members asked questions about program design and priorities — for example, whether incentives should favor new construction vs. renovation, how to avoid cannibalizing existing hotels, and how to set completion deadlines so projects do not linger incomplete. Miller said those choices are policy decisions the council would set if it wished staff to return with a draft program: “You can have as much…involvement in them as you want,” she said.

No formal action was taken. Miller asked for general direction; several council members gave verbal support and nods for staff to continue developing options and to align the work with the city’s forthcoming economic strategic plan.

Nut graf: The proposal would rely on a share of new TOT collections rather than existing base revenues and would be structured to bridge specific financial gaps. Staff outlined common guardrails — time limits, third‑party feasibility verification and quality standards — and the council signaled preliminary support but asked staff to return with program specifics before any ordinance or agreement was drafted.

Background and next steps: Staff said any Arcata program would be tailored to local priorities (for example, downtown development or historic rehabilitation), include eligibility criteria and timelines, and could require council approval of individual agreements. If the council wants to proceed, staff will draft policy options and possible ordinance language for later meetings.