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Santa Clara County, CA November 5, 2002 Election
Measure C
Occupancy Tax
City of Morgan Hill

Majority Approval Required

4,875 / 73.7% Yes votes ...... 1,743 / 26.3% No votes

See Also: Index of all Measures

Results as of Nov 20 3:06pm, 100.0% of Precincts Reporting (21/21)
Information shown below: Impartial Analysis | Arguments | Full Text

Shall Ordinance 1580, New Series, be adopted to authorize the City to continue to impose the Transient Occupancy Tax at the current rate of 10% of the room rate?

Impartial Analysis from the City Attorney
The City currently collects a transient occupancy tax ("TOT") from transients, who are defined as those individuals occupying hotel rooms within the City for fewer than thirty (30) days. The transient pays the tax to the hotel, and the hotel pays the tax to the City. The City deposits the revenue into its General Fund, which supports a wide range of City services, including police and fire protection, youth recreation, and senior activities. City staff estimates that a 1% reduction in the TOT would result in the loss of approximately $90,000 a year to the City's General Fund.

The TOT is currently charged in the amount of 10% of the cost of the hotel room. Because TOT is deposited into the General Fund, it is a general tax. A complete description of the TOT is located in Chapter 3.24 of the City's Municipal Code, which may be found on the City's website at "www.morgan-hill.ca.gov."

In 1972, the voters adopted the TOT and established a 9% tax rate. In March 1991, the TOT was increased from 9% to 10% by the City Council. Proposition 218, adopted in November 1996, requires such increases to have voter approval, as does Proposition 62, adopted by initiative measure in November 1986. However, courts found Proposition 62 to be unconstitutional and it was not declared to be enforceable until 1995, when the California Supreme Court overturned lower court decisions declaring the measure unconstitutional. Since 1995, other court decisions have created uncertainty as to whether a general tax increased prior to the adoption of Proposition 218 and the date Proposition 62 was declared constitutional, requires voter approval.

This measure places an ordinance before the voters to validate and re-enact the 10% TOT rate. This ordinance will become effective if a majority of voters approve it. The above statement is an impartial analysis of Measure C. If you desire a copy of the measure, please call the City Clerk of the City of Morgan Hill at 408-779-7271 and a copy will be mailed to you at no cost.

  Please note

Because this material has been retyped from material filed with the Registrar of Voters there could be errors. For the official information please contact the Registrar of Voters.
Contact Phone Numbers
- listed with the Registrar of Voters

Irma Torres (408)779-7259; Fax: (408) 779-3117

Libertarian Party of Santa Clara Co.
News and Analysis

San Jose Mercury News - Oct. 26

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Arguments For Measure C
Your "YES" vote on Measure C supports vital Morgan Hill city services such as police, fire and paramedics.

Measure C enables voters to confirm the existing 10% tax rate on hotel/motel occupancy, called the Transient Occupancy Tax (TOT). It is NOT a new tax.

Recent court decisions have made it necessary for cities throughout California to ask voters to confirm existing general taxes.

The City Council increased the TOT rate from 9% to the current level of 10% following a series of public hearings in 1991. Morgan Hill's tax rate is very competitive with other communities, and has become one of the most important funding sources for vital city services. In the last year, the TOT brought in about $900,000 paid by hotel/motel patrons to support local services.

Measure C is a house-cleaning action to confirm our TOT rate that has been in place since 1991. It is endorsed by the Chamber of Commerce, by hotel/motel operators, and by taxpayer advocates. Unlike a San Jose ballot measure, we are NOT asking you to increase the tax.

Measure C is good government. The City Council and community leaders urge you to vote "YES" on Measure C.

/s/ Dennis Kennedy, Mayor
/s/ Larry Carr, City Council Member
/s/ Steve Tate, City Council Member
/s/ Greg Sellers, City Council Member
/s/ Hedy Chang, City Council Member

(No arguments against Measure C were submitted)

Full Text of Measure C


WHEREAS, on Chapter 3.24 of the City's Municipal Code authorizes the City to collect a transient occupancy tax ("TOT") for "the privilege of occupancy in any hotel"; and,

WHEREAS, prior to March 1991, the TOT rate was nine percent (9%) of the room rate charged by the hotel operator to the hotel user; and,

WHEREAS, on March 26, 1991, pursuant to Ordinance 1017, the City Council adopted an additional one percent (1%) TOT, to increase the TOT rate to a total of ten percent (10%); and,

WHEREAS, on November 4, 1986, the voters of California approved Proposition 62, which requires that all general taxes be adopted by a two-thirds vote of the legislative body, and approved by a simple majority of the voters "voting in an election on the issue"; and,

WHEREAS, a number of appellate courts, including in the case of City of Woodlake v. Logan, 230 Cal.App.3d 1058 (1991), decided that Proposition 62's requirement that general taxes be submitted to a referendum violated the California Constitution and was therefore unenforceable; and,

WHEREAS, Proposition 62 was not declared constitutional until December 14, 1995, in the case of Santa Clara County Local Transportation Authority v. Guardino 11 Cal.4th 220 (1995), in which the California Supreme Court overturned lower court decisions declaring the measure unconstitutional; and,

WHEREAS, since 1995, the California courts have vacillated on whether the provisions of Proposition 62 apply to taxes adopted between 1986 and 1995; and,

WHEREAS, on November 6, 1996, the voters of California approved Proposition 218, which added Articles XIIIC, section 2(c) of the California Constitution, which requires that any general tax, such as the TOT, must be approved by a majority vote of the voters voting on the issue of the imposition of the tax; and,

WHEREAS, on June 4, 2001, the California Supreme Court decided Howard Jarvis Taxpayers Association v. City of La Habra, 26 Cal.4th 236 (2001), which suggests that the City should seek voter approval of the ordinance increasing the TOT rate to ten percent (10%), and the City Council thereafter proposed this Ordinance to the voters to validate the ordinance.

WHEREAS, since 1991 the California State Legislature regularly balanced the budget of the State of California by taking a portion of the property taxes formerly paid to local agencies and giving those monies to the State, thereby resulting in a reduction of real revenue to fund governmental services, including police and fire; and,

WHEREAS, following terrorist attacks against the United States on September 11, 2001, all governmental units, including the City, have incurred and will continue to incur increased demands for police, fire and other emergency services, and maintaining the existing ten percent (10%) rate of the transient occupancy, or hotel bed, tax, is required to assist the City pay for such services; and,

WHEREAS, the slowing state and national economy, together with the effects of the energy crisis, have placed the state in a fiscal deficit, a deficit that will likely lead to further reductions in state funding for City services, and maintaining the existing ten percent (10%) rate of the transient occupancy, or hotel bed, tax is required to assist the City in maintaining general governmental services to the community in light of these fiscal threats.


SECTION 1. Amendment or Repeal. Chapter 3.24 of the Municipal Code of the City of Morgan Hill may be repealed or amended by the City Council without a vote of the people except as follows: as required by Propositions 62 and 218, any amendment to Chapter 3.24 that increase the amount or rate of tax beyond the levels authorized by this Ordinance must first be approved by a vote of the people.

SECTION 2. Validation of Existing Ordinance. Ordinance No. 1017, New Series, of the City of Morgan Hill, which increased the rate of the transient occupancy tax from nine percent (9%) to ten percent (10%) is hereby validated and re-approved, or approved to the fullest extent permitted by law.

SECTION 3. Re-enactment and Re-adoption of Existing Ordinance. Ordinance No. 1017, New Series, of the City of Morgan Hill, which increased the rate of the transient occupancy tax from nine percent (9%) to ten percent (10%), is hereby re-enacted and re-adopted.

SECTION 4. Intent. Section 2 of this Ordinance is intended to authorize the continued collection of the transient occupancy tax, to validate the adoption of that tax, and to validate taxes previously collected pursuant to Ordinance 1017, New Series. Section 3 of the Ordinance is intended to authorize future collection of the transient occupancy tax at the ten percent (10%) rate in the event it is determined that Section 2 is not sufficient to do so.

SECTION 5. Severability. If any part of this Ordinance is held to be invalid or inapplicable to any situation by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance or the applicability of this Ordinance to other situations.

SECTION 6. Effective Date: Publication. This Ordinance shall take effect ten (10) days after the vote upon it, to be taken at the General Municipal Election of November 5, 2002, is declared by the city Council as provided by California Elections Code section 9217 and 9222. The City Clerk is hereby directed to publish this ordinance pursuant to Sec. 36933 of the Government Code.

SECTION 7. Execution. The Mayor is hereby authorized to attest to the adoption of this Ordinance by the voters of the City by signing where indicated below.

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Created: December 6, 2002 03:15 PST
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