Jul. 2, 2009--RANCHO PALOS VERDES -- In addition to electing two members to fill the City Council seats that will be left vacant by Mayor Larry Clark and Councilman Peter Gardiner, Rancho Palos Verdes voters too will decide if a 2-percent hike in the city's hotel tax is appropriate.

Council voted 4-0 to raise the current transient occupancy tax, or TOT, rate from 10 percent to 12 percent and direct Clark and Councilman Doug Stern to draft the argument in support of the measure that will appear on the ballot for the Nov. 3 general election.

Gardiner was absent due to an ongoing illness.

The hotel tax, which would be levied on guests at the newly opened Terranea Resort and not RPV residents, will place the city's fee among its peers, officials said. For example, Redondo Beach, Avalon and Malibu charge a 12-percent "bedroom" tax, while the cities of Los Angeles, Beverly Hills and Santa Monica's rates are at 14 percent.

"The truth is, we have needs," Stern said. "We could either allow our city to hobble along -- and I think we've done that; none of us [were] pleased with the state of the city as we found it over the last few years. We've addressed one of the major issues -- the storm drains -- but there certainly are needs, in terms of roads. We want those to always be at an acceptable level."

While all members present at council's June 16 session were in favor of bringing the item back for consideration, the Tuesday night discussion was prefaced with uncertainty from Councilman Tom Long, who warned at the end of a previous meeting that he may change his vote.

However, Long's backing was critical, as City Attorney Carol Lynch noted that, in accordance with state law, all four members present, or two-thirds of council, needed to vote affirmatively for the tax increase to appear on the ballot.

While the timing of this proposed increase led Long to draw the conclusion that the increase was proposed as a direct result of the city's $8.2-million hotel tax sharing agreement, Clark said he would have pushed this initiative regardless.

Under the arrangement, Lowe Enterprises, the resort's owner and operator, will repay the city by 2013, or 2014 if a one-year extension is needed, with interest.

"This would put us in line with Redondo Beach and others, and would provide an additional augmented revenue stream," Clark said.

Incidentally, Lowe Enterprises Chairman and CEO Bob Lowe

said he would support the increase, as long as

it didn't exceed 12 percent.

Recused from the Terranea TOT vote because his law firm planned a retreat at the oceanfront venue, Long said his hesitation stems from council's decision to "essentially give away 80 percent of [its] revenue" via the agreement. That alone raises "significant" issues of fairness.

"I think it's appropriate for government to try to assist businesses, to try to make loans to help save a business, and I think this loan was not necessary to save the business ... On the one hand, we are not all that forthcoming with helping small business. Reasonably, on what I thought was a simple issue of, Could a small business even be allowed to even have consideration for alternate uses for its property, the Valero (gas station)? The answer was no."

Clark objected to Long's characterization of the situation.

But Long wasn't alone in his reluctance.

Councilman Steve Wolowicz suggested sunsetting the 2-percent TOT increase until the city receives full

repayment on the Terranea loan. His motion failed.

"I'm not comfortable with increasing it forever ... I just kind of cringe when I realize that whether it's an income tax or a TOT, it's still an increase in tax," Wolowicz said.

Stern reminded his colleagues that the 12-

percent rate could always be repealed by a subsequent council or by the voters.

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