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Murrieta council reestablishes tiered hotel development impact fees tied to AAA diamond ratings

Murrieta City Council · July 16, 2025

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Summary

The Murrieta City Council voted unanimously July 15 to reestablish a tiered development impact fee program for hotels, linking fees to the AAA diamond rating and reducing rates for higher‑rated properties to attract upscale lodging. The resolution sets lower per‑square‑foot DIFs for 3‑ and 4‑diamond hotels and exempts 5‑diamond properties.

The Murrieta City Council on July 15 voted unanimously to reestablish a tiered development impact fee (DIF) program for commercial lodging and to tie rates to the American Automobile Association’s diamond rating system.

City staff presented a proposal to replace the previous amenity‑based hotel DIF with a diamond‑rating model. Under the action, the city will charge hotels a percentage of the citywide commercial DIF (currently $13.27 per square foot): budget hotels at 75% ($9.95/sq ft), 3‑diamond hotels at 50% ($6.64/sq ft), 4‑diamond hotels at 25% ($3.32/sq ft), and 5‑diamond properties would be exempt. The tiers will move with the city's DIF schedule and CPI adjustments.

The staff presenter, Mr. Agajani (city staff), said the change is intended to simplify the prior system and make Murrieta more competitive for higher‑end hotel brands after the city's April revision to the DIF schedule terminated the old hotel program. “So we’re here to fix that today,” he said during the presentation.

Council members asked how current and proposed projects would fit the tiers. Council member Holliday noted several hotels already in various stages of approval and asked which tier they would likely fall into; staff said most would qualify as 3‑diamond. Patrick Ellis, speaking for the chamber and Explore Murrieta, told the council the change would help recruit “better brand” hotels by giving the city tools to be flexible during negotiations: “we have to be very creative and be flexible in helping them make it pencil,” Ellis said.

Mayor Pro Tem LaValle moved to adopt the recommended resolution and Council member DeForest seconded the motion. The council approved the resolution unanimously, with the measure intended to encourage hotel development while recognizing the city’s interest in attracting higher‑quality lodging and the associated transient occupancy and sales tax benefits.

The resolution amending the city’s DIF program will be reflected in the city’s fee schedule going forward and is subject to the same CPI adjustments that apply to the broader commercial DIF program.