The council didn't seem to care when they lost all TOT, property tax and incoming tourists when they supported the County's move to convert the Sebastopol Inn into Elderberry Commons. The county overpaid for the hotel by 3x it's appraised value (biggest winner - commercial real estate moguls who sold the hotel). If the council was willing to forfeit 100% of TOT and incur the ongoing expenses of increased city services to Elderberry Commons residents, it should be a no-brainer to in 50-50 with Barney on bringing in tourists and generating at least some TOT.
If the council was so concerned about TOT revenue, they should have made that clear with the county before the hotel conversion and asked for annual, on-going reimbursement for lost TOT and property tax. It would be so much better if that hotel was still there, city services weren't being taxed by Elderberry Commons residents and we had some sort of base for tourists in our downtown area. It probably would have helped support future hotel development as well.
Great point! We shouldnt forget how much the elderberry commons cost the city and taxpayers in both lost revenue (TOT and property tax) and now the ongoing perpetual supports costs. And we shouldn't forget such when evaluating the new hotel proposal and what it could bring ( TOT at 50%, sales tax, sales for local business ) and what would cost to support.
I want to expand briefly on my concern about the request to grant back 50% of the TOT to the Barlow Hotel developer.
A close cautionary tale is Donald Trump’s Commodore Hotel/Grand Hyatt deal in NYC. It's not a one-to-one comparison, because that deal involved property tax abatements rather than TOT. But the public-policy lesson is still relevant: a private hotel developer argues that a project cannot move forward without public tax relief, the city gives up future revenue in the name of economic development, and the long-term cost to the public becomes much larger than it appeared at the beginning.
In the 1970s, Trump redeveloped the Commodore Hotel near Grand Central Terminal into the Grand Hyatt. New York City was in fiscal crisis, and the project was presented as a needed revitalization effort. The city ultimately granted an extraordinary 40-year tax break. ProPublica reports that, according to NYC Dept. of Finance, the break cost the city $410,068,399.55 in forgone revenue to Trump and later hotel owners.
That should give us pause.
A 50% TOT rebate for ten years is not a minor amendment. It's a public subsidy. TOT is not the developer’s money; it's public revenue collected because visitors are staying in our community. That money should go to support city services, infrastructure, public safety, parks, roads, etc.
The Grand Hyatt example shows how these deals can age badly. At the beginning, the subsidy is framed as necessary. The projections are optimistic. The benefits are emphasized. But once the agreement is in place, the public carries the long-term risk.
Before considering any rebate of TOT, the city should require a full accounting of the projected value of the subsidy, the opportunity cost to city services, enforceable public benefits, audit rights, clawback provisions, and a clear explanation of why this developer should receive a benefit that other businesses do not.
Sebastopol should not make a long-term fiscal decision based on pressure, optimism, or fear of an empty lot. Future TOT revenue belongs to the public, and it should not be quietly split with a private developer.
I recall the meeting about Gravenstein Commons when it was first voted down – as it should have been by any intelligent person who read the WHOLE document. At the very end it said that the city is responsible should SVDP not be able to meet its fiscal responsibility.
Now we see that they are 1.5 million short for construction!
Mayor McLewis asked a good question “, if St. Vincent de Paul still owned the properties, they’d said they could sell to make up the difference.” Plasse said they do still own the properties, but they want to come up with those funds by loans or donations. Good luck on either of those.
This project should have been dead from the beginning, and it was, until Diana Rich took Sandra M to have a chat with the charming Jack Tibbets (who is now a cowboy in Oregon running as a Republican for Oregon Senate District 6) and talked her into changing her vote. Sandra then changed her vote and here we are – this could bankrupt the city.
There is a hold harmless agreement that says the city will not be on the hook, but who was our attorney at the time and who knows if that will hold up in court? But one thing we all know, it will be more money to lawyers.
You could see the Barlow Bailout coming from 10 miles away as some have been commenting here for ever. Once they started dragging their feet, it was obvious. The city must completely reject this and all future bailouts. If it is not commercially viable, we don't want it. It is a money loser for the city, and will not even cover the additional services the city must supply. The Barlow Bailout will continue for ever, why would people pay $500/night to stay there for anyway? To see empty restaurants in the Barlow? To see empty storefronts downtown? To ride on awful bike paths on the streets? To see an accident on the dangerous streets? Not only that, Sebastopol residents will not be allowed to visit the rooftop bar. But that's OK we can visit rooftop bars in Healdsburg,
Thank you Laura for sorting this all out for us, every two weeks. My dream Council meeting? In a quarterly special session, everyone in the room (elected, staff, and public) can only speak out about what they are for, not against. It would clear up who is talking about what.
It is easy to say the city should reject giving the Barlow a tax rebate..."we don't need a stinkin hotel". The problem is the city needs a lot of new revenues to continue delivering vital services and catch up on long neglected street and storm drain repairs.
The initial budget for next year has revenues decreasing by 0.5% and operating expenses going up by 4.5%. If you add the expense of proposed street work next year expenses grow by 6.5%. The projected operating deficit is about $1MM. The planned street work next year is $1.2MM. As you can imagine the budget committee is already questioning whether the street repairs are necessary. The $1.2MM is coming from the recent Measure U sales tax increase which promised street repairs.
Mayor McLewis forced the last council to pass a policy requiring at least 40% of the Measure U money go to streets. She may have suspected that the promises to voters on the ballot would be short lived. The budget committee was informed that this is a city policy, but the city council decides city policy so it can be changed.
Should be interesting. Here we are, not a dollar of measure U money has been spent on roads. The 40% has been put into a reserve fund and there is a plan to spend it next year for street improvements. That is unless the Council follows the example of councils for the last 10 years and defers road repairs in order to balance the budget. At this point only 1/2 the streets are rated poor and very poor. Sebastopol is frequently identified as having the worst streets of any city in the county. The number of public suggestions for streets in need of repair would suggest it be a priority.
The city actually needs both hotels and both hotels need to be very successful. The alternative is a 10-15% cut in services - largely staff. Of course, a tax increase is an option. Sales tax is maxed out so they would have to craft a parcel tax or two. Larry Mcloughlin stated that residents have always overwhelmingly approved tax increases.
The city might be able to create a separate Parks and Rec District funded with a parcel tax. Expenses for parks, landscaping, senior center, Community Center and Library could all be shifted out of the general fund. A separate parks and rec board might be a popular option for residents unhappy with how the city runs these operations. The parcel tax could be set at a level to provide the recreational services residents are requesting.
At least the council got their 300% raise approved.
The hotels are a fantasy, they will never happen unless the taxpayers cover the cost. Why is the government funding hotels anyway, isn't that Socialism? They are not feasible and why should they be in the era of VRBO and AirBNB? Sure it would be nice if if hotels were very successful but the experts don't think so. Reject the Barlow Bailout, the free market has spoken. Find another way. Congrats on the 300% raise, which is really just to distract us from the real disaster - Barney's Barlow Bailout.
Pretty sure the era of residents approving tax increases is over. We are being overcharged for water and sewer and not getting any road repairs done with the Measure U money. Why would anyone want to give the city more money NOT to do what needs to be done?
Questions: how much is 50% of the TOT (transient occupancy tax) for ten year? If the hotel owners was to use this for Sebastopol promotion, would this reduce the bucks the city would have to spend? If the city only received 50% of the TOT, is it all upside, or it there some incremental costs to support the hotel?
I seem to remember Barney after an issue with a giant Cock at the East entrance of the town..
So many issues with the hotel. Traffic, dipping wine industry, the fact that we have a hotel in town already. The Barlow is cute, and folks from other towns in Soco come visit (they don't visit the rest of the town but okay). What would be cool is building housing for folks who actually want to live in the town and boost our economy. Or a community event center or something. The other plot across the square could be a garden or the sculptures were beautiful! So many things could happen instead of giving money to the hotels in a struggling economy.
The council didn't seem to care when they lost all TOT, property tax and incoming tourists when they supported the County's move to convert the Sebastopol Inn into Elderberry Commons. The county overpaid for the hotel by 3x it's appraised value (biggest winner - commercial real estate moguls who sold the hotel). If the council was willing to forfeit 100% of TOT and incur the ongoing expenses of increased city services to Elderberry Commons residents, it should be a no-brainer to in 50-50 with Barney on bringing in tourists and generating at least some TOT.
If the council was so concerned about TOT revenue, they should have made that clear with the county before the hotel conversion and asked for annual, on-going reimbursement for lost TOT and property tax. It would be so much better if that hotel was still there, city services weren't being taxed by Elderberry Commons residents and we had some sort of base for tourists in our downtown area. It probably would have helped support future hotel development as well.
Great point! We shouldnt forget how much the elderberry commons cost the city and taxpayers in both lost revenue (TOT and property tax) and now the ongoing perpetual supports costs. And we shouldn't forget such when evaluating the new hotel proposal and what it could bring ( TOT at 50%, sales tax, sales for local business ) and what would cost to support.
I want to expand briefly on my concern about the request to grant back 50% of the TOT to the Barlow Hotel developer.
A close cautionary tale is Donald Trump’s Commodore Hotel/Grand Hyatt deal in NYC. It's not a one-to-one comparison, because that deal involved property tax abatements rather than TOT. But the public-policy lesson is still relevant: a private hotel developer argues that a project cannot move forward without public tax relief, the city gives up future revenue in the name of economic development, and the long-term cost to the public becomes much larger than it appeared at the beginning.
In the 1970s, Trump redeveloped the Commodore Hotel near Grand Central Terminal into the Grand Hyatt. New York City was in fiscal crisis, and the project was presented as a needed revitalization effort. The city ultimately granted an extraordinary 40-year tax break. ProPublica reports that, according to NYC Dept. of Finance, the break cost the city $410,068,399.55 in forgone revenue to Trump and later hotel owners.
That should give us pause.
A 50% TOT rebate for ten years is not a minor amendment. It's a public subsidy. TOT is not the developer’s money; it's public revenue collected because visitors are staying in our community. That money should go to support city services, infrastructure, public safety, parks, roads, etc.
The Grand Hyatt example shows how these deals can age badly. At the beginning, the subsidy is framed as necessary. The projections are optimistic. The benefits are emphasized. But once the agreement is in place, the public carries the long-term risk.
Before considering any rebate of TOT, the city should require a full accounting of the projected value of the subsidy, the opportunity cost to city services, enforceable public benefits, audit rights, clawback provisions, and a clear explanation of why this developer should receive a benefit that other businesses do not.
Sebastopol should not make a long-term fiscal decision based on pressure, optimism, or fear of an empty lot. Future TOT revenue belongs to the public, and it should not be quietly split with a private developer.
Ref: https://www.propublica.org/article/trump-pushed-for-a-sweetheart-tax-deal-on-his-first-hotel-its-cost-new-york-city-410-068-399-and-counting
Gravenstein Commons
I recall the meeting about Gravenstein Commons when it was first voted down – as it should have been by any intelligent person who read the WHOLE document. At the very end it said that the city is responsible should SVDP not be able to meet its fiscal responsibility.
Now we see that they are 1.5 million short for construction!
Mayor McLewis asked a good question “, if St. Vincent de Paul still owned the properties, they’d said they could sell to make up the difference.” Plasse said they do still own the properties, but they want to come up with those funds by loans or donations. Good luck on either of those.
This project should have been dead from the beginning, and it was, until Diana Rich took Sandra M to have a chat with the charming Jack Tibbets (who is now a cowboy in Oregon running as a Republican for Oregon Senate District 6) and talked her into changing her vote. Sandra then changed her vote and here we are – this could bankrupt the city.
There is a hold harmless agreement that says the city will not be on the hook, but who was our attorney at the time and who knows if that will hold up in court? But one thing we all know, it will be more money to lawyers.
You could see the Barlow Bailout coming from 10 miles away as some have been commenting here for ever. Once they started dragging their feet, it was obvious. The city must completely reject this and all future bailouts. If it is not commercially viable, we don't want it. It is a money loser for the city, and will not even cover the additional services the city must supply. The Barlow Bailout will continue for ever, why would people pay $500/night to stay there for anyway? To see empty restaurants in the Barlow? To see empty storefronts downtown? To ride on awful bike paths on the streets? To see an accident on the dangerous streets? Not only that, Sebastopol residents will not be allowed to visit the rooftop bar. But that's OK we can visit rooftop bars in Healdsburg,
Thank you Laura for sorting this all out for us, every two weeks. My dream Council meeting? In a quarterly special session, everyone in the room (elected, staff, and public) can only speak out about what they are for, not against. It would clear up who is talking about what.
It is easy to say the city should reject giving the Barlow a tax rebate..."we don't need a stinkin hotel". The problem is the city needs a lot of new revenues to continue delivering vital services and catch up on long neglected street and storm drain repairs.
The initial budget for next year has revenues decreasing by 0.5% and operating expenses going up by 4.5%. If you add the expense of proposed street work next year expenses grow by 6.5%. The projected operating deficit is about $1MM. The planned street work next year is $1.2MM. As you can imagine the budget committee is already questioning whether the street repairs are necessary. The $1.2MM is coming from the recent Measure U sales tax increase which promised street repairs.
Mayor McLewis forced the last council to pass a policy requiring at least 40% of the Measure U money go to streets. She may have suspected that the promises to voters on the ballot would be short lived. The budget committee was informed that this is a city policy, but the city council decides city policy so it can be changed.
Should be interesting. Here we are, not a dollar of measure U money has been spent on roads. The 40% has been put into a reserve fund and there is a plan to spend it next year for street improvements. That is unless the Council follows the example of councils for the last 10 years and defers road repairs in order to balance the budget. At this point only 1/2 the streets are rated poor and very poor. Sebastopol is frequently identified as having the worst streets of any city in the county. The number of public suggestions for streets in need of repair would suggest it be a priority.
The city actually needs both hotels and both hotels need to be very successful. The alternative is a 10-15% cut in services - largely staff. Of course, a tax increase is an option. Sales tax is maxed out so they would have to craft a parcel tax or two. Larry Mcloughlin stated that residents have always overwhelmingly approved tax increases.
The city might be able to create a separate Parks and Rec District funded with a parcel tax. Expenses for parks, landscaping, senior center, Community Center and Library could all be shifted out of the general fund. A separate parks and rec board might be a popular option for residents unhappy with how the city runs these operations. The parcel tax could be set at a level to provide the recreational services residents are requesting.
At least the council got their 300% raise approved.
The hotels are a fantasy, they will never happen unless the taxpayers cover the cost. Why is the government funding hotels anyway, isn't that Socialism? They are not feasible and why should they be in the era of VRBO and AirBNB? Sure it would be nice if if hotels were very successful but the experts don't think so. Reject the Barlow Bailout, the free market has spoken. Find another way. Congrats on the 300% raise, which is really just to distract us from the real disaster - Barney's Barlow Bailout.
Pretty sure the era of residents approving tax increases is over. We are being overcharged for water and sewer and not getting any road repairs done with the Measure U money. Why would anyone want to give the city more money NOT to do what needs to be done?
Questions: how much is 50% of the TOT (transient occupancy tax) for ten year? If the hotel owners was to use this for Sebastopol promotion, would this reduce the bucks the city would have to spend? If the city only received 50% of the TOT, is it all upside, or it there some incremental costs to support the hotel?
You assume the city spends anything to promote itself?
I seem to remember Barney after an issue with a giant Cock at the East entrance of the town..
So many issues with the hotel. Traffic, dipping wine industry, the fact that we have a hotel in town already. The Barlow is cute, and folks from other towns in Soco come visit (they don't visit the rest of the town but okay). What would be cool is building housing for folks who actually want to live in the town and boost our economy. Or a community event center or something. The other plot across the square could be a garden or the sculptures were beautiful! So many things could happen instead of giving money to the hotels in a struggling economy.