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Gilroy council agrees to explore raising hotel tax, asks staff to draft capped ballot option
Summary
City staff presented options to adjust the transient occupancy tax (TOT); council gave direction to study a rate increase and ballot language that would set a cap and preserve council flexibility, with possible placement in the November 2026 election.
The Gilroy City Council directed staff on Sept. 15 to pursue analysis and draft potential ballot language to raise the city's transient occupancy tax (TOT), including an option that sets a legal cap and allows the council flexibility to adjust the rate within that cap.
Finance Director Harjo Tsonga told the council the city's current TOT rate is 9% and that each one-percentage-point increase would produce roughly $200,000 a year based on preliminary fiscal 2024-25 receipts of about $1.5 million. Tsonga noted the city's TOT was established in 1971 at 5%, was raised to 9% in 1983, and that Gilroy's effective rate including the city's 2% Tourism Business Improvement District (TBID) is roughly 11% compared with higher rates in other county cities.
"Each 1% increment in…
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