CITY COUNCIL REGULAR MEETING AGENDA PACKET 2-3-26

Page 2 of 5 The tax is collected by lodging operators from guests and remitted to the City. Pleasanton's TOT rate of 8 percent was established in 1983 and has not been adjusted since. In FY 2024/25, the City received $5.3 million in TOT revenue. $5.5 million is budgeted for FY 2025/26 and $5.6 million is budgeted for FY 2026/27. For the first half of FY 2024/25, the City received over $1.7 million in revenue. Pleasanton's 8 percent TOT rate is tied with Dublin and Livermore for the lowest in Alameda County, where rates range from 8 to 14 percent. Most other Alameda County cities charge between 10 and 14 percent, with five cities (Oakland, Alameda, Newark, Hayward, and San Leandro) at 14 percent. Pleasanton's rate has not changed in over 40 years, while several neighboring cities have increased their rates recently. Based on current occupancy levels, a 2- percentage-point increase to 10 percent would generate an estimated $1.4 million in additional annual revenue, while a 4-percentage-point increase to 12 percent would generate approximately $2.8 million per year. Like several other sources of revenue the City relies on, economic upswings and downswings make TOT volatile. Hotel tax accounts for 3.4 percent of the FY 2025/26 General Fund budgeted revenues and transfers from other funds. It was 3.0 percent for FY 2024/25, 3.4 percent for FY 2023/24, and 3.2 percent for FY 2022/23. Statewide Context TOT measures have historically performed well at the ballot. According to CaliforniaCityFinance's November 2024 Election Results report (Attachment 1), TOT measures achieved an 82 percent passage rate statewide. As a tax primarily paid by visitors rather than residents, TOT increases tend to generate less local opposition than taxes with direct resident or property owner impact. DISCUSSION Stakeholder Engagement Results Staff conducted outreach and a series of listening sessions with hotel operators during November and December 2025, representing a cross-section of Pleasanton's lodging market, including full-service properties, select-service and extended stay hotels, independent operators, and budget/economy properties. Staff reached out to representatives of all hotels in Pleasanton, offering the opportunity to meet with staff, although not all hoteliers attended. Key themes from stakeholder engagement include: • No opposition to a rate increase. No operator expressed intent to actively oppose a TOT measure. Feedback ranged from neutral acceptance to acknowledgment that the market can accommodate a higher rate. • Market capacity exists. Operators and industry representatives confirmed that Pleasanton's current rate is well below regional comparables, and that the market could absorb an increase to 12 percent without significant competitive disadvantage. • Preference for phased implementation. Some operators preferred incremental rate changes over a single large adjustment, citing concerns about guest perception. • Limited active engagement expected. Most operators indicated they would not Page 43 of 80