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County Supervisors to Consider Hotel Rebates, Proposed Bed-Tax Increase

Hotel Incentive Program would allow for transient occupancy tax rebates to new hotels and owners who make extensive renovations

The Santa Barbara County Board of Supervisors will consider on Tuesday a Hotel Incentive Program and whether to put a proposed bed-tax increase on the November ballot.

The Hotel Incentive Program would give transient occupancy tax rebates to new hotels and owners who make extensive renovations to their hotels in the unincorporated areas of Santa Barbara County.

For new projects, county staff recommended that 70 percent of the county’s TOT revenues be used for an incentive program, 20 percent for general county programs and 10 percent for tourism promotion.

Existing hotels doing renovations would receive a portion of bed tax from incremental increases in revenues, based off a three-year average.

Development firm Caruso Affiliated LLC asked the county for a 15-year bed tax rebate for its $170 million Miramar Hotel project in Montecito and was granted permit extensions in March. The property brings in about $568,000 in property taxes now and is estimated to bring in $1.7 million in property tax, $1.5 million in sales tax and $450,000 in bed taxes when the new 186-room hotel is completed, according to a county staff report.

Staff calculated that the recommended 70-20-10 split could provide a $21 million incentive and a net gain of $23.9 million in taxes to the county over 20 years. Caruso Affiliated’s Rick Caruso hasn’t been able to get financing for his project, which has been stalled for years, according to Caruso representative Matt Middlebrook.

“We plan on building it and making it a successful property, and we remain firmly committed to the project,” he told Noozhawk in February. “It’s great for the community and a great opportunity to bring back the Miramar. The TOT rebate is a common one in other jurisdictions and makes sense to get the project off the ground sooner rather than later.”

The Montecito Association supported the incentive program because the cleanup of the Miramar site is long overdue, according to a letter it sent to the county.

But the Santa Barbara County Action Network said the proposal should include an independent business evaluation to ensure the project can be completed, as well as a “corporate benefits agreement” to protect worker’s rights.

“We view this as a misuse of the voter-approved transient occupancy tax,” said Dick Flacks, SBCAN vice president for South County. “Any change in the dedication of TOT funds should be approved by the voters.”

The Board of Supervisors will also consider putting an ordinance on the November ballot proposing an increase in TOT from 10 to 12 percent in the unincorporated areas of the county. Goleta, Solvang and Carpinteria are also at a 10 percent rate, and their city councils have authorized the ballot measure. Santa Barbara has a 12 percent transient occupancy tax.

Even if there is an increase in the TOT rate, it would not impact the hotel incentive program. The rebate will be a portion of the 10 percent TOT rate, or less, according to a county staff report.

Noozhawk staff writer Giana Magnoli contributed to this report. Staff writer Alex Kacik can be reached at .(JavaScript must be enabled to view this email address). Follow Noozhawk on Twitter: @NoozhawkBiz, @noozhawk and @NoozhawkNews. Connect with Noozhawk on Facebook.

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