News Summary
San Diego plans to increase its Transient Occupancy Tax (TOT) starting May 1, 2025, following voter approval of Measure C. The tax rate will rise based on property proximity to the Convention Center and is expected to generate $82 million in additional revenue for fiscal year 2026. The funds will primarily support Convention Center operations and homelessness initiatives. Delays in implementation arose due to legal challenges, but city officials are preparing for the upcoming changes and their impact on local services.
San Diego is set to implement an increase in its Transient Occupancy Tax (TOT) starting May 1, 2025. This change comes following the approval of Measure C by 65.24% of local voters in November 2020. The TOT rate is currently 10.5%, but as part of the new measure, it will be adjusted to 11.75%, 12.75%, and 13.75%, depending on the property’s proximity to the San Diego Convention Center.
The city anticipates that the new tax rates will generate approximately $82 million in additional revenue for the fiscal year 2026. Over the first decade of implementation, it is estimated that the TOT increase will raise about $1.04 billion in total revenue. This tax applies to any temporary stay under 30 days across various accommodations such as hotels, motels, RV parks, campgrounds, and short-term rental properties.
Allocation of the revenue generated from the tax increase will primarily benefit two key areas. In the first five years, 59% of the funds will be directed towards the Convention Center’s operations and improvements, while the remaining 41% will support homelessness initiatives, including the development of shelters and permanent supportive housing. From the sixth year through the tenth, while the allocation to the Convention Center remains the same, funding will shift to 31% for homelessness prevention efforts and 10% for street repairs.
The implementation of the TOT increase experienced delays due to legal challenges following its initial approval. A ruling by a San Diego Superior Court judge determined that Measure C required only a simple majority vote to go into effect. In response to this, the San Diego City Council voted 6-3 in 2021 to amend the approval requirement from a two-thirds majority to a simple majority, paving the way for the tax increase.
Despite some support for the council’s decision, critics have expressed concerns that such changes may undermine the integrity of local governance and public trust in government decisions. However, the measure has received backing from various city officials, including Mayor Todd Gloria, who noted its potential role in addressing homelessness and supporting local jobs.
Recently, the San Diego City Treasurer’s office has informed lodging operators and property owners about the forthcoming increase in the TOT. This communication aims to prepare affected parties for the adjustments linked to the new tax rates, ensuring they are aware of the changes and can plan accordingly for the transition.
The decision to increase the TOT reflects broader efforts in the city to generate additional funds for vital services, while also addressing immediate community needs. As the city moves forward with implementation, monitoring the effects of the tax increase and its impact on local revenue and services will be critical for future assessments.
As San Diego approaches the date for the new TOT rates to take effect, it will be essential for city officials to ensure clarity and transparency in how the revenue is utilized, especially in relation to addressing homelessness and sustainable urban development.
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Additional Resources
- San Diego Union Tribune: Arizona Couple’s San Diego Tax Complaint
- Google Search: San Diego Tax Increase
- NBC San Diego: City of San Diego’s Hotel Room Tax
- Encyclopedia Britannica: Transient Occupancy Tax
- Times of San Diego: City of San Diego Announces Hotel Room Tax Increase
- Google Scholar: Transient Occupancy Tax San Diego
- Fox 5 San Diego: San Diego’s Hotel Room Tax Increases Soon
- Google News: San Diego Transient Occupancy Tax
- CoStar: 5 Things to Know for May 1
Author: STAFF HERE SAN DIEGO WRITER
SAN DIEGO STAFF WRITER The SAN DIEGO STAFF WRITER represents the experienced team at HERESanDiego.com, your go-to source for actionable local news and information in San Diego, San Diego County, and beyond. Specializing in "news you can use," we cover essential topics like product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise drawn from years of dedicated reporting and strong community input, including local press releases and business updates. We deliver top reporting on high-value events such as Comic-Con International, San Diego County Fair, and San Diego Pride Festival. Our coverage extends to key organizations like the San Diego Regional Chamber of Commerce and United Way of San Diego County, plus leading businesses in biotechnology, healthcare, and technology that power the local economy such as Qualcomm, Illumina, and Scripps Health. As part of the broader HERE network, including HEREAnaheim.com, HEREBeverlyHills.com, HERECostaMesa.com, HERECoronado.com, HEREHollywood.com, HEREHuntingtonBeach.com, HERELongBeach.com, HERELosAngeles.com, HEREMissionViejo.com, and HERESantaAna.com, we provide comprehensive, credible insights into California's dynamic landscape.
