Friday, June 06, 2008

Montage Resort & Spa a Great Tax Collector

Due to the great tax revenue stream from the Montage Resort and Spa, there are many in town who take the position to just let the Athens Group do whatever they want to in redeveloping the Aliso Creek Inn. Letters to the editor and comments before city council thank the Athens Group for all the taxes they pay. They should not be thanking the Athens Group, they should be thanking me. Well, not me exactly, but those who insisted that a hotel be built.

Wasn’t the initial proposal for the former Treasure Island mobile home park to be converted entirely into residential lots? Laguna Beach taxpayers and the Chamber of Commerce should be pleased that the developer plans were rejected and shaped to better effect the City finances.

My understanding is that City taxes paid by a new residential subdivision is basically a wash with the cost of providing services about equal to the City’s share of property taxes paid. This is because the City receives only about 25% of the property taxes paid with the school district getting a chuck and the bulk going to the State of California.

Property tax is the main tax that the Montage pays. They receive services such as the Laguna Beach Police responding to guests allegedly brandishing guns which resulted in the police shooting and killing two Montage guests. When this matter is finally resolved, it may well consume all the property taxes paid to the City by the Montage.

What about sales taxes and transient occupancy taxes (bed tax)? There is a big difference in being a taxpayer and being a tax collector. These taxes are paid by others which the Montage collects.

Those, like me who have followed the city budget, insisted that a large hotel should be built as it offered the opportunity for an annual revenue increase equal to about 10% of the City’s general fund. Best is that the revenue is discretionary, and can be spent as the City Council chooses.

That the Montage collects the sales tax paid by others is icing on the cake. Of the 8.25% tax, most goes to the State, County, and the Orange County Transit Authority

Guests of the Montage pay 12% bed tax with the City imposed tax being 10%. This adds up to significant revenue to the City about $ 9 million this coming year with the Montage collecting about half that amount from their guests.

Those whose position was to let the developer do what he wants were wrong, and those you fought to have a large hotel built were right.


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