CITY COUNCIL REGULAR MEETTIMG AGENDA PACKET 7-7-26

Page 2 of 5 rebuttal. BACKGROUND As documented in the FY 2026/27 Mid-Term Budget Update Report and General Fund Ten- Year Financial Forecast presented on May 19, 2026, the baseline forecast projects annual General Fund operating deficits ranging from approximately $4.4 million to $8.3 million over the forecast period; the projected structural deficits do not include the $44.0 million annual infrastructure funding gap identified in the Asset Management Plan. At the City Council’s direction, staff has been working to proactively address the deficit with a combination of reducing spending and exploring new revenue opportunities. Prior City Council Actions On August 19, 2025, staff presented a range of potential new or expanded revenue options. The City Council directed staff to focus on a Transient Occupancy Tax (TOT) increase and to begin stakeholder engagement with Pleasanton’s hotel operators. In late 2025, staff had informal conversations with Pleasanton hotel operators to understand the potential impacts of a TOT adjustment on the local lodging market. On February 3, 2026, the City Council directed staff to return with draft ballot language for a TOT measure at a target rate of 12 percent, phased over two years, for the November 3, 2026, general municipal election. On June 2, 2026, staff presented the draft resolution, draft ordinance, and draft ballot question, along with community survey results. The City Council voted unanimously to place a TOT measure on the November 3, 2026, ballot with majority consensus to proceed with the phased rate structure (10 percent effective July 1, 2027, and 12 percent effective July 1, 2028). Final versions of the proposed ballot language, resolution, and ordinance are attached to this report. Regional Context Pleasanton’s TOT rate of 8 percent was established in 1983 and has not been adjusted since. Pleasanton’s rate is tied with Dublin and Livermore for the lowest in Alameda County, where rates currently range from 8 percent to 14 percent. 10 of the 13 cities with a TOT are at 10 percent or higher. The most recent voter-approved increases were in Newark (January 2025, 80 percent approval) and Hayward (August 2025, 72 percent approval). Even at the full 12 percent rate, Pleasanton would remain at or below most Alameda County jurisdictions. DISCUSSION Proposed Tax Measure If approved by voters, the ordinance would amend Section 3.20.030 of the Pleasanton Municipal Code to increase the TOT rate from 8 percent to 10 percent effective July 1, 2027, and from 10 percent to 12 percent effective July 1, 2028. The TOT is collected by hotel and motel operators from guests at the time of payment and remitted to the City. Based on current TOT collections, staff projects the measure would generate approximately $1.4 million in additional annual revenue once the 10 percent rate takes effect and approximately $2.8 million in additional annual revenue once the 12 percent rate takes effect. The proposed tax would be a general tax paid primarily by visitors staying in Pleasanton hotels and motels. The measure would be approved if it receives a majority of affirmative votes from eligible City voters (50 percent plus one). Placing the measure on the November ballot Page 134 of 214