Nevada City residents ought to be asking where their money is going if they vote “no” on Measure Y

Nevada City residents are being asked to vote “No” on Measure Y, partly to increase the City’s TOT (transient occupancy  tax) via Airbnb rentals.

But savvy residents ought to be asking what the money is going to be used for.

As it turns out, it looks like the City is being stingy when it comes to promoting tourism with the TOT tax — which comes from, well, tourism. (TOT tax, or transient occupancy tax, comes from renting accommodations such as hotels, motels, B&Bs and Airbnb).

As The Union reports: “According to Cathy Whittlesey, executive director of Nevada City Chamber of Commerce, the city has given the Chamber 8 percent of its annual TOT taxes for the last 20 years. But the proposed 2016-2017 fiscal year budget replaces the percentage formula with a fixed rate of $22,000.”

“In a presentation in front of the council, Assistant City Manager Catrina Olson said the money the city saves by using the fixed rate will go into the city general fund.”

Huh? Only 8 percent of the TOT goes to the Chamber, which promotes tourism in the city?

As most of us know the “general fund” is a black hole of city government. There is no accountability whatsoever.

I totally agree with the Chamber in this case. More, not less, of the TOT money belongs to the Chamber, not the “general fund.”

The same goes for the County, where TOT money is going to the Nevada County Economic Resource Council for “economic development” but not necessarily tourism.

As for where the money goes, I also could not find a link anymore to the salaries at Nevada City Hall on the new city website, for example.

This is a serious issue for our community, because neighboring counties, such as Placer County, are spending more — not less — for tourism.

As a result, our community risks being left behind. For what? For “general fund” expenses. Wake up people.

Author: jeffpelline

Jeff Pelline is a veteran editor and award-winning journalist - in print and online. He is publisher of Sierra FoodWineArt magazine and its website Jeff covered business and technology for The San Francisco Chronicle for years, was a founding editor and Editor of CNET News, and was Editor of The Union, a 145-year-old newspaper in Grass Valley. Jeff has a bachelor's degree from UC Berkeley and a master's from Northwestern University. His hobbies include sailing and trout fishing.

18 thoughts on “Nevada City residents ought to be asking where their money is going if they vote “no” on Measure Y”

  1. Good point and as always, the ongoing question. Transparency would be but a simple & honest request, but don’t hold your breath.

  2. Do you know that the building the C of C is occupying is owned by the Citizens of Nevada City ?
    The C of C does not pay any rent for that space !
    You should be asking the C of C where their $$$$$$$ are going !
    The City knows how the Taxpayers $$$$$$$ are being spent.

    1. In fact, if the building was owned by an individual that building would rent for a minimum of $ 2000. per month because of it’s history and location.

  3. Some quick (well, maybe not so quick) history from an old-timer:

    In the early 1980s, as the Father’s Day bicycle race grew in popularity, City Hall wanted the chamber of commerce to pay $1,500 for added city services (police, fire, public works).

    At that time, the city gave the chamber zero percentage of bed tax, nor any other funding. What they did do, however, was provide free office space at the South Yuba Canal Building, and that continues to have value (as Niel points out).

    During the ‘80s, the topic of $1,500 from the chamber to the city found its way to the city council table more than once, but never gained majority support. I was on the chamber board of directors in ’82 and ’83, and was one of four members of the original bicycle race steering committee in ’83 & ’84, so I was directly involved with the issue of proposed chamber reimbursement for race-related city costs.

    Our position was that we were bringing in more money in sales tax and TOT for the city treasury than it was costing in employee overtime. Not to mention all the positive regional, state, national and even international media coverage in those years for the Nevada City Classic.

    That, then, was the situation in the 1980s when it came to City funding of the chamber of commerce.

    Eventually, City Hall dropped the idea of billing the chamber for city overtime and actually agreed to provide the chamber with 8% of the collected bed tax. In addition, the city council set aside 2% of TOT in order to provide small grants to local nonprofit groups that brought people to town.

    After a few years, the 2% set-aside was not being distributed, because nonprofit groups were not applying for the money.

    At some point, (and I’m not sure of the year), Pat Dyer and I met with Cathy Whittlesey and a couple chamber board members and told them we would support additional chamber funding by having the unexpended 2% added to the chamber’s existing 8% share of TOT.

    When Pat and I took the idea to City Hall, however, an alternative plan for helping the chamber was suggested. Instead of increasing the chamber’s share of TOT to 10% (which in those years would have meant $42-45K a year), the chamber would receive rent paid by the South Yuba Canal Building’s upstairs tenant.

    At that time, the upstairs was occupied by the historical society, at no cost, for its video studio, but they were leaving and the city-owned space was going to be fixed up and rented. So getting that rental income paid to the chamber, rather than upping the TOT share to 10%, was a good compromise.

    The initial rent for upstairs was $350 a month, (plus 1/2 of the building’s PG&E bill), and the idea of designating the extra $4,200 a year for chamber promotional purposes was supported by the city council.

    At that point the chamber enjoyed 8% of a healthy TOT flow, rent from the upstairs tenant, and free office space.

    Not sure what the situation is today, (and the news article makes no mention of chamber income from the upstairs tenant), but if the City plans to drop the chamber funding to a flat $22K, and they are no longer receiving (or will no longer receive) the rent from upstairs, then it’s a sad day for local promotional efforts.

    Something needs to be done to ensure that the chamber of commerce continues to receive no less than 8% of TOT –– plus rent from the upstairs tenant –– as well as continued use of the South Yuba Canal Building.

    Guess I will cross my fingers and hope the city council concludes that marketing and promoting Nevada City is an investment –– not an expense.

    Sure hope that happens.

    1. Steve, The City collects the rent which is not huge because of the lack of plumbing. Great historical information! There is no issue with marketing/promotion of the City. The discussion should be ” is the C of C the right organization since the primary purpose is business networking”.
      The C of C should be transparent with their money’s income/outgo. How much is used for direct marketing of the City ?

      1. When the California Preservation Foundation had their yearly meeting here in 2010 which was a success. Some 30 organization came together to help put this event together, the only sour apples were the 2 Chambers. The group was embarrassed by their attitude especially in front of the CPF organizers.
        We need a group like this to promote the County not just NC/GV. We enjoy more and this needs to be promoted.

  4. Niel:

    Unless there’s been a change in recent years, a portion of the chamber’s mission statement includes, “promote commerce, business and tourism through marketing campaigns, promotions and events.”

    So the chamber’s “primary purpose” is not, as you suggest, business networking. Networking is only one aspect of the chamber’s overall mission, and certainly not its primary purpose.

    As to your first question, then: Yes, I believe the Nevada City Chamber of Commerce is the appropriate organization to promote Nevada City. And I believe the City should be supporting that effort in a way that is consistent with previous agreements.

    Sorry to hear that City Hall apparently retains the upstairs rental income for its own purposes. That was not the agreement struck with the City when the space was remodeled and made available for rental –– plumbing or no plumbing.

    As for financial transparency, any member of the chamber of commerce can take a look and compare promotional expenditures against income. And I imagine the City of Nevada is a member of the chamber.

    One thing for sure: Cathy has always been transparent when it comes to the chamber’s income and expenditures. There are no secrets.

    That said, I guess we’ll have to respectfully disagree on the chamber’s role and responsibilities. Since 1901, it has promoted and marketed Nevada City to the outside world, and I think it’s done one helluva job.

    With better City support, it can do an even better job. And I hope that happens.

    1. Steve, For this County to survive in the very competitive tourist world, we have to think much larger and do not think either Chamber is capable.

  5. Unfortunately, I was disappointed to read this debate get off track from the Y issue. Am I the only person wondering why the CofC is even involved beyond the commercial districts of Nevada City and promoting potential damage to our Norman Rockwellian neighborhoods? It is too often a case of ‘cherchez l’argent’ with barely a sideways glance to the issue of increasing business in what are supposed to be R1 zoned districts.

    If you just google the myriad articles about trying to rein in the blight of short term rentals all over the country, (Vancouver, BC had a 63% increase in one year!!) you will soon understand the primary reason for the difference between yes on Y and no on Y. Yes and No BOTH allow renting 2 of your spare bedrooms in YOUR own residence or a small separate sleeping unit on the property on which YOU live.

    ONLY YES ON Y prohibits renting an entire home that the owner DOES NOT LIVE IN and could be used for residents of Nevada City. These long term renters, by the way, are having a very tough time finding places to rent!

    Refer to lines in the Hosted ordinance in place now under Hosted short term rentals…terms and conditions: #3, page 2: The Owner or Manager has to live at the property OR in Nevada County” and #7, page 2 and 3: This section DOES NOT and IS NOT INTENTED TO PERMIT an Owner to use his or her Property solely for Hosted short term rentals”. These CANNOT be mutually exclusive. That is unless someone can tell me how you can live in Alta Sierra or on Banner Mountain, for example, and Nevada City at the same time!!

    I personally don’t want to live next door to an empty house waiting for the next arrival and departure of UNHOSTED short term vacationers, no matter how lovely or how much money they spend in town or how much TOT they generate. VOTE YES ON Y

  6. correction: no, Vancouver, BC is not in this country, but they are cousins sharing a continent…does that count??

  7. I love the learning curve that occurs when I start ‘digging for understanding’ in the www. Sink your teeth into the fact that the largest lobbying unit in the country is…drum roll….the US Chamber of Commerce!!! to the tune of over $1 Billion, with the real estate lobby coming in second with only a third as much. Not only that, but their lobbying has a decidedly, fall off your chair slant to the right, including promoting (throwing money at) many Republican candidates. I’m sure the amount our local C of C pays to national is a drop in the bucket, but of that drop, i resent any of it being spent on a political agenda. My oldest son, an NU and Claremont McKenna graduate, now a Director of Finance at Google, majored in Economics, Politics and the Environment. Fortunately, he was able to explain to his mother that the majority of decisions made in the corporate world were based on all three of these factors. We can certainly see that in the Yes on Y issue, of which my biggest concern is preserving the current physical environment of our neighborhoods…politics and money be damned!! Don’t get me wrong. I think our local C of C does an amazing job, I was just sorry to realize my naivete included not knowing about the politics of the mother ship.

  8. Oh yes.. the national C of C is a corporate front responsible for more anti-consumer lobbying than any other organization in America.

    1. That’s true. And it’s interesting that in most cases local C of C’s are the exact opposite. The national C of C is bought and paid for by the 1% and corporate America wand promotes only their policies.

  9. the ‘w’ works because it is sort of a magic wand used by corporate America…or a $light of hand!! you may also be interested to know that corporate Airbnb is beginning to funnel money into C’s of C to promote the biz… Found an interesting article about how it is a franchise-less franchise and yet, each participant owns its own piece of Airbnb…or does Airbnb own a little piece of each participant??? hmmmm

  10. I think the whole discussion on promoting tourism critically leaves out the interests of the workers who make that economy (or any other) possible. The aggregate rise in rents for long-term tenants from promoting online short-term rentals will likely dwarf any gains in govt. revenues through sales tax, TOT tax or property taxes. Whether those funds are allotted to the Chamber of Commerce or the General Fund, they are not going to significantly defray the direct economic costs imposed on tenants to promote the interests of some home and business owners. My friend Molly and I have wrote something in YubaNet about this angle of the issue…

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