To: MAYOR AND CITY COUNCIL
From: EUGENE SOLOMON, CITY TREASURER
STEPHANIE MEYER, FINANCE DIRECTOR
TITLE
title
DISCUSSION AND POSSIBLE ACTION RELATED TO THE LANGUAGE OF THE CITY’S TRANSIENT OCCUPANCY TAX ORDINANCE AMENDING TITLE 8, CHAPTER 2, SECTION 8-2.03 OF THE REDONDO BEACH MUNICIPAL CODE
DISCUSSION AND POSSIBLE ACTION REGARDING PROPOSED LANGUAGE FOR THE TRANSIENT OCCUPANCY TAX BALLOT MEASURE PLANNED FOR THE CITY’S MARCH 2, 2027 GENERAL ELECTION
DISCUSSION AND POSSIBLE ACTION REGARDING AN UPDATE TO THE LANGUAGE OF THE CITY’S UTILITY USERS TAX ORDINANCE, AMENDING TITLE 8, CHAPTER 9 OF THE REDONDO BEACH MUNICIPAL CODE AND DIRECTION ON THE PREPARATION OF A RELATED BALLOT MEASURE FOR THE CITY’S MARCH 2, 2027 GENERAL ELECTION
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EXECUTIVE SUMMARY
The City has been considering updates to both its Transient Occupancy Tax (TOT) and Utility Users Tax (UUT) ordinances in order to remain current with recent legal developments and maintain revenue to support critical City services.
On February 3, 2026, staff presented a revised TOT ordinance and proposed ballot language for a March 2, 2027 TOT ballot measure, along with options for updates to the City’s current TOT rate and proposed ballot language for the March 2, 2027 general election (N.2 File # 25-1753). The City Council directed staff to prepare the ballot measure language for Council’s review, edits, and approval. This item presents the revised ordinance and ballot measure language.
The February 3, 2026 presentation also provided information on potential updates to the City’s UUT ordinance in order to ensure it can be applied to video services utilized within the City. On December 17, 2025, the California Court of Appeal ruled in favor of the City of Santa Barbara in the case of Disney Platform Distribution, Inc, et al. v. City of Santa Barbara. In April 2026, the California Supreme Court declined the Plaintiff’s request to review the Appellate Court’s decision. This decision provides legal guidance for the City to update its UUT ordinance.
As video service offerings have changed due to new technologies, the City’s Video Users Tax language can be modified to more appropriately align with current market offerings along with future advancements in those offerings. The UUT Ordinance would benefit from an update to apply the tax equitably to video users in the City’s jurisdiction. Staff recommends that the language of the City’s UUT ordinance be updated and that language be crafted to prepare a ballot measure for the City Council’s review and approval for inclusion as part of the City’s March 2, 2027 General Election.
BACKGROUND
During the FY 2025-26 budget adoption process, the City Council directed staff to prepare an item to discuss adjusting the City’s TOT rate. On November 18, 2025 and February 3, 2026, staff provided information on TOT rates in the vicinity, alternative options to raising the TOT rate, research on the impact of a TOT increase on wages for nearby hotels, and the process to increase the TOT rate. Council requested staff return with a proposed ballot measure and additional information that was requested during the course of the discussion.
TOT Ballot Measure
Staff has prepared a proposed ballot measure including revised ordinance language. Ballot measure text commonly includes details that frame the measure and provide voters with information regarding use of resulting revenue, who pays the tax, and the estimated revenue that would be raised.
At the February 2026 meeting, Council discussed revising the language to place less focus on police and fire, given that the public is already supporting police and fire services through Measure FP. The text below proposes removing the specific police and fire reference, but maintaining emergency response and preparedness. Consistent with February 2026 discussions, the language retains a reference to general government use, which is required for a general use measure and a simple majority vote to pass.
Proposed TOT Ballot Measure Language:
“To maintain critical City services, such as street and pothole repair, police and fire 911 emergency response and preparedness, park and landscape maintenance, senior and youth recreation programs; and for general government use; shall the City of Redondo Beach Ordinance raising the transient occupancy tax, paid only by hotel and lodging guests, from 12% to up to 15%, providing an estimated $750,000 of revenue annually per 1% increase, and all funds staying local, be adopted?”
As discussed in February, setting a not to exceed rate in the ordinance provides the City Council the ability to set a rate at or below the maximum amount, if voters approve the measure.
As currently drafted, Council would also set the tax increase effective date following the measure’s passage. Council could alternatively choose to identify an effective date in the measure. For the City’s 2005 TOT Measure, the ballot measure language included an effective date of July 1, 2005 following a March 8, 2005 election.
Utility Users Tax
In March 2009, Redondo Beach voters approved a modernization of the City’s UUT Ordinance (Redondo Beach Municipal Code §8.9). UUT continues to be a significant source of revenue for the City’s General Fund. Staff is recommending an update to the UUT ordinance in 2027 to align the language with current and evolving technologies and to keep current with recent court decisions that have affirmed the legality of these updates. Revisions to this Ordinance could be viewed to expand who pays the UUT. Therefore, the ordinance revisions are subject to Proposition 218 requirements (established in Article XIII C of the California Constitution) and require voter approval.
Staff has researched various approaches to the UUT update with both internal and external legal counsel. The first option is to target changes to the Video users’ section, and focus on making changes that permit the more equitable application of the section to all video services including streaming. Alternatively, the Council could take a more comprehensive approach to the update with the intention of modernizing the ordinance language for new and emerging technologies across all utility types covered by the UUT ordinance along with pertinent revisions, as advised, such as rate exemptions, appeal processes, or other modifications.
The City’s UUT auditor, Gold Coast Partners, projects that, if approved by voters, applying UUT to video streaming services could grow UUT revenues by approximately 10% per year through FY 2030, generating an additional $850,000 of estimated general fund revenue per year.
Staff recommends the City Council: 1) review and approve the proposed updated Transient Occupancy Tax ordinance language, 2) review and approve the proposed Transient Occupancy Tax ballot measure language, 3) review and provide direction on the proposed update to the City’s User Utility Tax ordinance language, 4) provide direction to the City Attorney’s Office for the completion of the ordinance updates, and 5) provide direction to the City Clerk’s office to create ballot measures to be placed on the March 2, 2027 General Election.
COORDINATION
This report was coordinated with the Financial Services Department, the City Treasurer’s Office, and the City Attorney’s Office.
FISCAL IMPACT
It is estimated that each 1% increase in the City’s TOT rate would increase annual General Fund revenue by $750,000. It is estimated that applying UUT to video streaming would increase annual General Fund revenue by $850,000 or more.
APPROVED BY:
Mike Witzansky, City Manager
ATTACHMENTS
• Reso - Draft TOT Ballot Measure
• Reso - Draft Exhibit A - TOT Ordinance Amendment
• Reso - No. CC-0412-146 Submitting a TOT Ballot Measure to Redondo Beach Voters on March 5, 2005
• Tax Measure Ballot Measure Examples (Source: Balletopedia)
• Disney Platform Distribution, Inc. v. City of Santa Barbara Second Appellate District Ruling, December 17, 2025
• Proposed DRAFT Redondo Beach UUT Municipal Code - Title 8, Chapter 9
• UUT PowerPoint Presentation