AB 385

Under current law, a city, village, or town (municipality) and a local exposition

district may impose a room tax. The room tax is a tax on the privilege of furnishing,

at retail, rooms or lodging to transients by hotelkeepers, motel operators, and other

persons who furnish accommodations that are available to the public, irrespective

of whether membership is required for use of the accommodations.

Generally, the maximum room tax that a municipality may impose is 8 percent.

A single municipality that imposes a room tax may create a commission, which is

defined as an entity to coordinate tourism promotion and tourism development

(tourism). If two or more municipalities in a zone impose a room tax, they must

create a commission. Current law defines a zone as an area made up of two or more

municipalities that, those municipalities agree, is a single destination as perceived

by the traveling public.

Current law requires a commission to contract with an organization to provide

staff, development, or promotional services for the tourism industry in a

municipality if a tourism entity does not exist in that municipality. A tourism entity

is defined under current law as a nonprofit organization that existed before January

1, 1992, and provides staff, development, or promotional services for the tourism

industry in a municipality. The bill changes the definition of tourism entity to be a

nonprofit organization that spends at least 51 percent of its revenue on tourism

promotion and development and provides destination marketing staff and services

for the tourism industry in a municipality. Also, under the bill, a tourism entity must

have come into existence before January 1, 2013, unless such an entity does not exist

in the municipality on January 1, 2013.

Under the bill, the majority of the members of a commission, and the majority

of the members of the governing body of a tourism entity that spends between 51

percent and 70 percent of its revenue on tourism promotion and tourism

development, must be owners or operators of restaurants, tourist attractions, or

lodging facilities that collect the room tax and that are located in the municipality

for which the room tax is collected, except that this membership requirement for a

tourism entity does not generally apply to an entity that receives room tax revenue

solely under contract with a commission. Also under the bill, the governing body of

a tourism entity must include at least one owner or operator of a lodging facility in

the municipality for which the room tax is collected.

Under current law, a municipality that first imposes a room tax after May 13,

1994, must spend at least 70 percent of the amount collected on tourism; the

expenditure may be spent directly by the municipality or forwarded to the

commission for its municipality or zone. The 30 percent or less of the room tax

revenue that is not spent on tourism may be retained by the municipality and used

for any other purpose. If a municipality collected a room tax on May 13, 1994, it may

retain up to the same percentage of the room tax that it retained on that date, even