Two years ago, the Fountain Valley City Council approved a large commercial and housing development at Brookhurst St. and the 405 freeway interchange that included a new Ayres Hotel. Ayres is well-known in southern California for the success they’ve had, and their new structures always seem welcome wherever they’re built as they’re great hotel tax generators. In FV’s situation, the development also revitalized an area that had been occupied by a ten year-vacant office building and its unused parking lots.
Ayres was a big win for a city which had only a handful of other hotels, and isn’t a tourist draw. Plenty of housing came along with the development — important to a city which is land-locked, +95% built out and takes 26% of its revenue from property tax.
Ayres quickly finished and opened the hotel this year, and then it took only months for the normally sleepy city council to jump on a piddling raise of the Transit Occupancy Tax (TOT) from nine to ten percent via Ballot Measure S. The Argument favoring S was signed by Councilmembers Nagel, Brothers, Collins and Mayor Michael Vo. Councilman Mark McCurdy wrote and signed the Rebuttal Argument.
The Register editorialized against the Measure last week, writing
…we do not believe it either necessary nor justified for Fountain Valley residents to pass Measure S. Measure S would slightly raise the transient occupancy tax in the city, which could generate more than $100,000 in revenue annually. Those funds would shore up the city’s finances. It is not exactly clear what the city would do with the revenues. The proponents of the measure frequently mention public safety in their official arguments sent out to voters, yet there is no clear crime problem in the city. In speaking with us, Mayor Michael Vo did not mention public safety, instead noting upcoming contract negotiations with city employees.
Fountain Valley is fiscally sound and doesn’t need chicken sh*t tactics to squeeze a few bucks out of new businesses that were welcomed to the city just months earlier. Per usual, Mayor Vo couldn’t articulate the Council’s justification for the proposed tax increase to the Register and hasn’t mentioned it in his campaign mailers (Vo, McCurdy and John Collins are up for re-election). We’re concerned that this Council just jumped on this revenue opportunity simply because other OC cities get away with a ten percent TOT — except for Anaheim which gouges its tourists and conventioneers for 15%.
Most of the current FV council candidates are campaigning for a more “business friendly” city, and attracting new ones to town. Raising the TOT isn’t the way to do it, just to capture an estimated $100k per year (2014-15 budget: $40.8 million). The FV council majority is sending the wrong message — would the Ayres family, which did the city an enormous favor by leading the redevelopment of a decade-unused property on the city’s busiest street, have built their hotel if they knew the Council would immediately hit its guests with an increased tax? This is bush league — taxation for taxation’s sake. Just like union raises for cops and firemen, the other cities get 10%, so why shouldn’t Fountain Valley?
Like the Rainbow Environmental controversy where the Council majority approved the renewal of an “evergreen” trash and recycling contract to their campaign contributor WITHOUT a competitive bid, this tax increase proposal suggests a level of financial negligence which is detrimental to the city’s long term growth. Measure S deserves a NO vote; Ayres deserves an apology and Fountain Valley government needs some new representation.