Downey considers raising hotel tax to 13% (UPDATED)

Downey’s hotel tax could increase to 13% under a proposal backed by the City Council. (Photo by Alex Dominguez)

This story has been updated to reflect the results of Tuesday’s meeting.

DOWNEY – DOWNEY - Hoping to raise money for infrastructure repairs, the City Council will allow voters to decide whether or not to hike the city’s hotel tax from 9% to 13%.

Downey’s transient occupancy tax has been at 9% since 1998. The fee is levied on customers staying at Downey hotels, motels and Airbnbs for less than 30 days.

Raising the tax to 13% would generate an additional $950,000 in annual revenue, city officials said. The money would be earmarked for infrastructure projects such as street repairs and park improvements, according to a staff report prepared by the city.

Downey voters approved a sales tax increase in 2016 – Measure S – that is funding improvements to the police and fire departments, along with parks and city facilities.

But there remains “a need for greater funding for residential roads and right-of-way improvements as they are in desperate need of rehabilitation,” City Manager Gilbert Livas wrote in a report to council members.

If the tax increase is approved by voters, Downey would have the highest transient occupancy tax among local cities, exceeding Cerritos, Buena Park, Commerce and Glendale, each of whom have 12% hotel tax rates.

On Tuesday, the City Council unanimously agreed to place the tax hike on the November 2022 ballot.

Council members also agreed to hire a public relations firm at a cost of $123,250 to provide public outreach and community education.