Also serving the communities of De Luz, Rainbow, Camp Pendleton, Pala and Pauma

COVID-19 causes third quarter TOT revenue loss

The coronavirus shutdowns began March 12 and impacted three weeks of the 13-week third quarter of fiscal year 2019-2020, but Transient Occupancy Tax revenue for San Diego County went down by 36.5%.

“It really is dark when you look at the numbers,” Dan McAllister, treasurer-tax collector of San Diego County, said. “As we look at everything to date, the numbers are weak compared to what they were.”

The third quarter of the fiscal year covers January through March. In 2019, the county collected $1,491,782.64 of TOT revenue including $89,099.16 from Fallbrook facilities, $20,890.09 generated in Pauma and $4,467.85 paid by Bonsall lodgers.

The countywide total for those months in 2020 was $947,175.31. The Fallbrook collections of $45,354.28 equate to a 36.5% decrease; Pauma Valley quarterly payments dropped 51.5% to $10,121.08, and Bonsall revenue declined 86.78% to $593.77.

“I think that’s directly attributable to COVID-19,” McAllister said.

TOT revenue for the second quarter which covers October through December increased from $1,184,690.39 in 2018 to $1,342,438.23 during 2019.

“COVID-19 took its toll on the industry, and it’s sad because it cost everybody money,” McAllister said. “It kept people away.”

The facility operator must submit payment to the county on a quarterly basis by the last day of the month following the end of the quarter. If the facility ceases operation the payment must be made within 30 days after the operator ceases doing business, and if the facility is sold or its name is changed the county must receive the TOT payments for occupancy before the sale or name change within 30 days of the transaction. If the payment is postmarked by the end of the month following the quarter but not received by the end of that month there is no penalty.

“COVID-19 is probably responsible for the biggest decline across the board,” McAllister said. “They’re not paying the hotels or the places to stay.”

The Transient Occupancy Tax, which was reduced from 9% of the lodging unit rate to 8% in October 2007, is collected from occupants of hotels, motels, bed-and-breakfast venues, mobile home parks, private campgrounds and other structures occupied or intended for occupancy by nonresidents for lodging or sleeping purposes.

A timeshare unit used by an ownership partner or an owner’s guest is not subject to the TOT, although if it is rented to the general public that unit is subject to the tax for that period.

If a campground has a membership program a member or a member’s guest is exempt from TOT payments. Campgrounds at the eight county parks with such facilities are not subject to the TOT, nor are lodging facilities on Indian reservations or other areas where San Diego County has no taxing power.

Units occupied or rented for more than 30 consecutive days are not subject to the tax.

The TOT is collected only from lodging facilities in the county’s unincorporated area, although the revenue is used for the county’s Community Enhancement program and may be given to organizations in incorporated cities as well as unincorporated communities.

Community enhancement funds, which are allocated during the county’s annual budget process, are intended to promote tourism including visitors from other parts of the county.

If the payment is either late or postmarked by the deadline and not processed by the sixth of the following month the revenue is reported for the quarter after the money was collected. McAllister indicated that such late processing usually involves fourth quarter payments.

Significant decreases in revenues can also be attributed to closures, which in some cases involve permanent closures and in other cases involve renovation-related temporary closures. McAllister and his staff did not notice any such activities that could have decreased third quarter revenue.

“The only significant impact we see that probably cost a number of dollars was COVID-19. It really did hit very hard in a lot of ways,” McAllister said. “I don’t see anything at all other than COVID-19 being the big hurdle.”

Representatives from five rentals notified the office of the treasurer-tax collector that they had ceased business. Two of those were in Borrego Springs, one on Palomar Mountain, one in unincorporated Escondido and one in unincorporated San Diego.

“We saw some rentals close,” McAllister said.

Some facilities are in their first year of providing lodging services and submitting TOT payments.

“We did have more rentals filing TOT forms this year,” McAllister said.

An increase in bed-and-breakfast venues is the likely cause of that. Forms were filed by 246 establishments during the third quarter of fiscal year 2018-2019 and by 268 venues during the third quarter of fiscal year 2019-2020.

“We added rental units across the county, but we still have those closures,” McAllister said.

The three weeks affected by the coronavirus shutdown included spring break for many potential visitors, which could explain why the losses were disproportionate to the time the shutdown involved. McAllister cannot confirm that spring break was the cause of the loss which exceeded the percentage of the quarter's time the quarantine was in effect.

“We don’t collect data on why people would be out,” McAllister said.

The payments themselves only account for the quarter and do not specify individual days. Daily revenue information would be obtained only if an establishment is audited.

“We don’t like to speculate. We like to work from our data. And we don’t keep that data, so I don’t know,” McAllister said.

Some community losses are due to a revision in the community definitions rather than to losses for a specific establishment.

“We did change how to categorize these areas,” McAllister said.

Last year unincorporated Chula Vista was listed and Bonita was not; the 2019-2020 report includes Bonita but not Chula Vista. Mountain Empire was a 2018-2019 community but is not included this year while Mount Laguna is new for 2019-2020. San Pasqual and Vallecitos both had 2018-2019 fourth quarter revenue and neither community is part of the 2019-2020 report under those names. The most recent report adds Jacumba, Lakeside, unincorporated La Mesa, Palomar Mountain, Ranchita, Santa Ysabel and Valley Center to the list. What was called Pauma in the 2018-2019 report is now Pauma Valley.

“The majority are reclassifications,” McAllister said. “We’re trying to specify as clearly as we can where the areas are.”

Portions of some communities have ZIP codes which are different from the community identity, and facility operators may utilize a post office box or private mail box address rather than the address of the physical location.

“We categorized the establishment based on the area listed in their address,” McAllister said.

McAllister noted that the 2019-2020 report currently covers three quarters instead of all four for the fiscal year.

“Sometimes it’s good to have the whole picture,” he said.

Fourth quarter collections had to be postmarked by July 30 and have not yet been processed by the county, but the quarantine covered all 13 weeks of the quarter from April to June.

“Business has been very tough the second half of the year,” McAllister said. “COVID-19 continues on, and it continues to wreak havoc. It will dampen the number of total dollars we generate.”

Summer is traditionally the heaviest travel period, and the July through September quarter provided the county’s largest quarterly collection from 2015 through 2019.

“We just have to keep pursuing business,” McAllister said.

Joe Naiman can be reached by email at [email protected].

Author Bio

Joe Naiman, Writer

Joe Naiman has been writing for the Village News since 2001

 

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