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Costa Mesa staff recommends shelving transient occupancy tax increase, cites hotel competitiveness
Summary
After council feedback and hotel community concerns, staff recommended not pursuing a transient occupancy tax (TOT) increase and instead focusing on business license reform; staff estimated roughly $500,000 potential TOT from active short‑term listings but noted enforcement costs around $100,000.
City staff recommended the council not pursue an increase to the transient occupancy tax (TOT) at this time, citing concerns from local hoteliers about competitiveness with neighboring cities and council direction from prior meetings.
Anna Acosta told the council that staff identified more than 100 active short‑term rental listings across platforms (including both permitted home shares and prohibited rentals) and estimated potential TOT revenue from those listings at approximately $500,000 annually, but also projected implementation and enforcement costs of about $100,000. Based on the balance of potential revenue and the council’s prior direction, staff recommended focusing resources on a revised business license structure instead.
Council members asked staff to provide a more detailed enforcement and revenue analysis for short‑term rentals later if the council wants to pursue TOT collection from currently unpermitted listings. The council did not adopt a TOT measure during the session and directed staff to proceed with business license ballot submittal.
