Hotel Fairness Initiative qualifies for fall ballot

Aaron Peskin and David Chiu were among those supporting the Hotel Fairness Initiative at a rally last week.
Luke Thomas/Fog City Journal

By Brittany Baguio

The Department of Elections has announced that the Hotel Fairness Initiative was approved for the November ballot. Labor and community groups last week turned in 10,544 signatures, a little more than the required 7,168 signatures needed to put an initiative on the ballot. The Department of Elections did a sample of 500 signatures to check the validity and reported that 478 of the 500 signatures sampled were valid, resulting in a 95.6 percent accuracy rate.

The Hotel Fairness Initiative would increase revenue by imposing a 2 percent hotel tax on San Francisco hotel rooms temporarily for 4 years, with an average surcharge of $3 per hotel room per night, and close loopholes that let some visitors avoid paying the hotel tax. The hotel tax is currently 14 percent. According to the Controller’s Office, if the Hotel Fairness Initiative passes, it is expected to raise $25 million a year in revenue.

The hotel tax is one of five measures proposed to help close the budget deficit, which we discuss in more detail in this week's paper. Mayor Gavin Newsom has also placed a measure of the ballot to also close the loopholes that lets airline employees and those who book hotels online avoid paying hotel taxes, as the Hotel Fairness Initiative would also do, but it includes a provision that would invalidate the hotel tax if his measure gets more votes.

Supporters of the Hotel Fairness Initiative claim that online booking companies and airline companies have been using corporate loopholes that have cost the city about $6 million per year. In total, online booking companies have escaped paying $70 million in hotel taxes through its loophole of taking the hotel tax out of a portion of the money the hotel receives, rather than the total amount the customer pays.

For example, Internet booking companies would charge customers $200 for a room and then pay the hotel $170. Internet booking companies argue that the hotel tax comes from a portion of $170, instead of $200. Similarly, airlines have avoided paying hotel taxes by renting blocks of rooms for its flight crews and claiming that airline companies are protected by the Permanent Resident Exclusion law. This law was originally intended to help the homeless and states that individuals who occupy a room for at least 30 days are tax exempted. However, airlines have been taking advantage of this law by moving different flight crews in and out of their hotel rooms rather than an individual person occupying the room for 30 consecutive days that is implied by the law.

Opponents of the Hotel Fairness Initiative, such as the San Francisco Chamber of Commerce and the Hotel Council, contend that the hotel tax would hurt tourism to San Francisco as well as cause job cuts. In a press release, Steve Falk, President & CEO of the San Francisco Chamber of Commerce said, “This misguided effort will discourage travel to San Francisco, hurt our city’s largest industry, and eliminate many of the union jobs the Labor Council seeks to protect. Raising city revenue at the expense of hotels and hospitality workers is not the answer to the city’s fiscal problems.”

A Hotel Council press release states that “the Hotel Fairness Initiative will lead to 7.3 jobs lost for every million dollars in revenue gained.” If this is true, about 182 jobs could be lost as a result of this initiative, offset by the city being able to save many public sector jobs and services with the revenue. The hotel industry already fluctuates in the number of positions available as a result of the market. According to California Labor Market Info’s latest data, the average amount of hotel jobs lost per month in 2009 was 143 jobs.

Although the Hotel Council and the Chamber of Commerce claim that the initiative would eliminate jobs, one of the biggest supporters of the hotel tax is UNITE HERE LOCAL 2, a union of hotel workers. UNITE HERE representative Ian Lewis emphasized that opponents of the issue are conveniently ignoring the lack of fairness in current hotel booking practices. “Hotel workers live in San Francisco,” Lewis told the Guardian, “We’re taxpayers like everyone else. We are in a severe budget crisis and everyone needs to carry their fair share.”

Community groups, retirees, and hospital workers all volunteered their time to collect signatures supporting the Hotel Fairness Initiative. Community groups such as UNITE HERE collected 1700 signatures, Keep the Arboretum Free collected 1000, and a collection of nonprofit groups collected more than 4000. With the efforts of these community groups, the coalition was able to collect an estimated 15,000 signatures.

Family health advocate for the Tenderloin Housing Clinic, Bobbi Lopez, said she found that those who signed the petition saw the hotel tax as a necessary step in closing the budget deficit, “They understood that the necessity of fighting the cuts, particularly the cuts to MUNI, to parks, and to hospitals,” Lopez told us, “I think that they were getting the idea that in desperate budget times, we need a temporary solution and long term solution and that’s exactly what the Hotel Fairness Initiative is.”

Community groups remain optimistic that this grass roots effort will pass. Brenda Barrows, a health care provider at San Francisco General Hospital, told the Guardian, “My hope is that in November it passes and the city’s financial situation gets better so that people who live in the city don’t have to suffer and also people who work for the city don’t have to suffer.”

Lopez told us she thinks that the initiative will pass if there is an ongoing effort on the issue. “We want to remind folks that this is just the beginning and now we have to embark on a long term campaign,” Lopez told us, “so it's really about sustaining the energy that we had on June 1 when we kicked off and reminding folks that its going to necessitate all the same volunteers to work together and make it reality.”


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