TITLE
Recommendation to receive and file a report on a proposed Transient Occupancy Tax Incentive Program. (Citywide)
DISCUSSION
With the dissolution of the Redevelopment Agency and elimination of the State Enterprise Zone Program in California, municipalities have largely curtailed economic development incentives for business attraction. One type of economic incentive that has been utilized in the City is the Retail Sales Tax Incentive Program. This program was established by the City Council on March 17, 1992, to encourage large-scale retail development, improve retail sales tax productivity, and stimulate private investment in the retail section of the City’s economy.
Used as a business retention or attraction tool, the program allows either a developer or end user seeking to complete a commercial project, to request economic incentives from the City. The City undertakes an analysis to determine if the project has an economic need. If such a need exists, the City may choose to participate in a sales tax sharing agreement, whereby it will rebate up to 50 percent of sales tax revenue generated by the business and received by the City, in excess of the first $50,000 or its existing sales tax base, whichever is higher. The agreement would continue for a period of 15 years, or until the need is met, whichever first occurs. Since inception of the program, the City has entered into nine tax sharing agreements pursuant to the Retail Sales Tax Incentive Program, five of which are still active.
Another area of the City’s economy that would likely benefit by a similar incentive is hospitality, specifically hotel development. The tourism industry is one of the most highly taxed and labor intensive sectors of the economy. For the past few years, the City has been focused on bringing additional hotels to Long Beach. This has been challenging because even with significant private capital available to be invested in the high-risk hotel and tourism industry, the return o...
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