CARLSBAD — Short-term rentals are on track for a rate increase after the Carlsbad City Council approved an ordinance to amend the Carlsbad Tourism Business Improvement District’s rate structure.
During its Aug. 25 meeting, the council approved moving forward with a recommendation from the CTBID advisory board to increase its rate from $1 per night to 2% of gross short-term room rentals.
Gina Reed, a project manager with Civitas and hired by advisory board, said her firm is assisting with modification of process with formation and renewal of business districts.
The increase would start Nov. 1 with an estimated budget increase of $1.2 million, although those monies will be lower due to the pandemic. Some funds will allow for marketing recovery efforts.
“This gives time for hoteliers to update their systems to incorporate the rate increase,” Reed said.
Under normal circumstances, the rate increase would be about $3.5 million, according to the staff report. Reed said there are about 270 short-term rental businesses in the city.
The city’s tourism board generates funds for marketing and visitor programs to promote the city of Carlsbad as a tourism destination and to fund projects, programs and activities to benefit hotels within the district’s boundaries.
The board also makes recommendations on expenditures for the district’s programs and activities, the district’s annual budget and provides end-of-year financial reports. Still, the board riled up several hotel and short-term vacation rental (STVR) owners.
Five protest letters from short-term vacation rental owners were submitted to the council railing against the 2% increase.
Thomas Hensley, management agent for The Helm Management Co., said the both Tamarack Beach Resort Hotel and Tamarack Beach Resort Vacation Owners Association oppose the 2% increase. Hensley said with lower incomes and an uncertain future, both the hotel and association’s board do not believe this is the proper time for a rate increase.
Also, Kenneth and Mary Jo Voertman, who own the Tamarack Beach Hotel, called the increase “outrageous.”
“To most of the affected properties, it would be a 400% increase or more and that is an outrageous increase,” they said. “If this increased money is truly needed, look to all the Airbnb-type rentals that take away from the very properties you are supposed to be helping. They get benefits from the CTBID tax without supporting their share.”
John and Lorna Hoopes, who own an STVR within the coastal zone, said while they are not opposed to a rate increase, they are opposed to it during the pandemic.
“We feel with the general decline of the economy, now is not the time to impose additional assessments,” their protest letter to the council read. “At such time as the economy recovers, we would be willing to reconsider and revisit the issue.”