Subpar Experience’ Remark Sparks Clash Over Eureka Hotel Tax Increase

[Image from the Ingomar Club]

The tourism appeal of Eureka became a point of contention as the City Council approved putting a two percent hotel bed tax increase to voters.

At its June 7 meeting, a majority of the council approved placing a measure on the November election ballot to increase the city’s Transient Occupancy Tax (TOT) from 10 percent to 12 percent.

Peter Wagner bounced his way into Halverson Park during this year’s Kinetic Sculture Race. [Photo by Mark McKenna]

TOT is a per room fee paid by hotel customers. An additional fee, for the Tourism Business Improvement District, is separate and is self-imposed by hotel owners.

Further increasing the cost of hotel room stays is concerning to hotel operators.

The fisherman statue on Woodley Island. [Photo by Ryan Hutson]

City Manager Miles Slattery said the 2 percent TOT hike will bring in $700,000 more annual revenue.

But during a public comment period, numerous hotel managers said it could backfire and some questioned Eureka’s drawing power. Magan Natha, longtime operator of the Townhouse Motel, described Eureka as being on the slide.

Magan Natha, operator of the Townhouse Motel. [Screenshot]

“I’ve seen the city decline in many areas over the years and the complaints from tourists are increasing more and more every year,” he said. “Common complaints are the homeless and the city feeling unsafe and being too expensive with not enough to do.”

In December of 2023, a rain-soaked makeshift shelter at the corner of 1st and A Street in Old Town Eureka. [Photo by Ryan Hutson]

He noted Arcata and Fortuna’s TOT rates, both at 10 percent, and said they “have a reputation of being more cleaner and having less problems with safety,” making Eureka “less attractive and more costly.”

Representing the Ramada Bayside Inn and Super 8 hotels, Alpesh Natha said higher-population cities with a lot more to do than Eureka have similar TOT rates and will further eclipse Eureka if there’s a TOT increase.

“Our population is barely 25,000 people and we could probably count on two hands the things that we tell tourists to do when they come to the area,” he continued. “Raising TOT just makes us look less and less attractive by charging a premium tax for a subpar experience when gas prices are already one of the highest in the states.”

Etta James Mural in Opera Alley, Eureka. Painted the day after her death, Blake scrapped his previously sketched plan in place of this tribute to one of music’s Titans for the first Eureka mural festival in 2018.

Other hoteliers also noted Eureka’s expense-to-experience ratio.

There was an unusually condemning response to the public comment from the dais.

“I am incredibly disappointed to hear people whose profession is rooted in getting people to come to Humboldt, to come to Eureka, to appreciate Eureka, to stand here and call this experience subpar,” said Councilmember Kati Moulton. “To describe Eureka as mid, is to undervalue what we have.”

Redwood Sky Walk [Photo from the Sequoia Park Zoo Facebook page]

She described the Sequoia Park Zoo Redwood Sky Walk as a “world-class destination” and said more TOT revenue could be used “to make Eureka cleaner, to make Eureka safer” and more of a draw.

Eureka Mayor Kim Bergel [Screenshot]

A stronger tongue-lash came from Mayor Kim Bergel. “I too sitting up here this evening felt very disappointed to hear people that should be supporting bringing people here, talking so negatively about this beautiful city we live in,” she said. “Unfortunately, that is part of the problem and so I would be remiss if I didn’t mention that – it’s very disappointing to hear that from people that allegedly want people to come here.”

Eric Hollenbeck working at Blue Ox Mill in Eureka.

Overall public commentary was critical of raising the TOT.

Chris Ambrosini, the managing partner of the Best Western Plus Humboldt Bay Inn, said city staff is “ doing a really great job on promoting Eureka right now” and a better option than raising TOT would be to “work together and create an ongoing robust marketing campaign to create and foster new events and come up with the next major attraction here in Eureka.”

Meredith Matthews of the Eureka Lodging Alliance said raising the TOT would make Eureka less competitive because “as travel costs continue to rise, visitors are increasingly sensitive to the overall cost of their trip.”

One of the areas in the greenbelt that was cleaned up in 2022. [Photo by Ryan Hutson]

There was some dispute of Slattery’s $700,000 revenue increase estimate.

Slattery noted that an analysis of the county’s TOT increase in the agenda packet was incorrect because it didn’t consider changes in the county’s accounting technique. His explanation of the county’s actual TOT revenue focused on “accruals,” which is bookkeeper-speak for the timing of recording earnings, and the wonkiness was noted during public comment by Nil Patel, operator of Home2 Suites by Hilton.

“I know Miles has been trying to spin this quite a ways and I’m the reason the whole accrual issue came up because I noticed that in this budget,” he said. “I just want you guys to be aware that just because you raise the tax, that doesn’t necessarily mean you’re gonna collect $700,000 and I don’t know if that’s with accruals, Miles, or without.”

It had been discussed prior to public comment by Councilmember Renee Contreras-DeLoach, who said the county’s TOT revenue did increase in fiscal year 2023-24 but has been decreasing since.

Tall ships sail behind homeless encampment in Eureka in 2016. [Photo by Bobby Kroeker]

Responding to arguments that the increase will discourage visitation, Councilmember Leslie Castellano said the proposed TOT hike would only increase the cost of a $160 room stay by $3.20 and “most travelers are able to absorb those increases in hotel costs.”

Contreras-DeLoach disagreed, saying the increase will have an impact in context of current economic conditions.

Councilmember Mario Fernandez is also concerned about the economic climate and his proposal to implement the two percent increase over a two-year period got support.

The vote to put the TOT hike to voters was approved in a 3-2 vote, with Contreras-DeLoach and Fernandez voting against.

Artist Dejanai Dunn performs her rhymes the Gazebo in 2021. [Photos by Ryan Hutson]