Measure A - Proposed hotels
WHAT IS MEASURE A?
Measure A allows for the development of two new hotels on the northwest corner of Madrone Parkway and Cochrane Road by amending the existing Planned Development Master Plan for the "Madrone Village Shopping Center". A hotel use is consistent with the City’s adopted General Plan and the Economic Blueprint.
WHY IS THIS ON THE BALLOT?
A group of local hotels known as “The Hotel Coalition” submitted a referendum petition to the City Council opposing the hotel development. As a result, the City Council chose to ask the voters to decide if the City should allow two new hotels to be built.
WHY ARE HOTELS BENEFICIAL FOR MORGAN HILL?
Hotels generate revenue through Transient Occupancy Tax (TOT) paid by visitors. The added revenue supports the City’s General Fund, which helps pay for critical City services such as police, fire, emergency medical services, streets maintenance, and other essential services.
WHAT ARE THE ADDITIONAL BENEFITS OF NEW HOTEL DEVELOPMENT?
Hotels support the business industry which depend on clean and safe lodging services. Hotels also support tourism and overnight stays for sporting events. Other economic benefits include the indirect spending of visitors at local restaurants, shops, and gas stations. This added sales tax supports City services.
WOULD MORGAN HILL RESIDENTS HAVE TO PAY?
No, only hotel guests pay TOT.
WHAT PERCENTAGE DOES THE CITY GET FROM THE HOTEL (TOT) TAX?
The City receives 100% of the TOT which is paid by hotel visitors. As compared to sales and property taxes, the City receives only 1% of the 9% sales tax. The remaining 8% goes to other agencies. For property taxes, property owners pay 1% of the assessed value of their home, the City receives only 10% of that 1% of property taxes paid.
WHAT IS THE FISCAL IMPACT OF MEASURE A TO THE CITY?
A YES vote would allow the two hotels to begin construction. Hotels in Morgan Hill collect an 11% Transient Occupancy Tax (TOT) which helps pay for critical City services such as police, fire, emergency medical services, streets maintenance, and other essential services. It is estimated the two new hotels would generate $800,000 annually in TOT revenue.
Adversely, the City, in response to the referendum petition, had to use General Fund monies (approximately $94,000) to put Measure A on the ballot. The delay of the construction of the hotels, caused by the ballot measure, has resulted in a loss of potential revenue to the City.
WHAT WILL THE NEW REVENUE BE USED FOR?
The new hotels will support the City’s General Fund, which helps pay for critical City services such as:; police, fire, emergency medical services, streets maintenance, and other essential services. The City needs approximately $7.3 million annually for staffing a 3rd fire station, police services, pavement rehabilitation, and street and park maintenance. The new hotels are expected to generate approximately $800,000 annually, which could fund approximately 4 new Police Officers or 4 Fire Fighter Engineer/Paramedics, each year.
DOES MORGAN HILL HAVE ENOUGH HOTELS?
Less than half of the hotels in Morgan Hill are considered mid-scale or upper scale. Most hotels are older facilities that require significant capital investment. Local companies have expressed the need to have more available hotel rooms that are newer, cleaner, and safer for their customers.
WOULD A GROCERY STORE BE BETTER ON THIS SITE?
The site has been marketed to potential grocery stores for over 10 years with no interest.
WOULD THE HOTELS GENERATE MORE TRAFFIC?
Traffic from visitors associated with hotels often occurs during the off-peak time, therefore the traffic impact is less significant than many other commercial uses.