Will city council approve an incomplete budget without knowing the effects of the hotel ordinance?
By Nick Rimedio
A month ago, I wrote an op-ed on “The Road to Recovery” to start a conversation with all of you about the future of our city. He noted that as we reopen West Hollywood, we face a choice about how we run our board to replenish the financial reserves that have been used to cover the millions of dollars in deficits caused by the COVID closures. .
As I said, I firmly believe that we need an economic plan that focuses on creating jobs, stimulating tourism and filling our restaurants, bars and shops to ensure that we create surpluses. that support services for our most vulnerable populations and protect the jobs of city staff. Tonight the city officially presents the fiscal plan for fiscal year 2021/2022, which I was interested in reading to find out if that target was there. I was disappointed to learn that the plan shared several alarming concerns and, even worse, it appears incomplete as it fails to take into account the considerable costs of the hotel worker protection ordinance imposed by Mayor Lindsey Horvath and board member Sepi Shyne.
As a disclaimer I run a hotel so I really have strong feelings about the hotel ordinance which I can share at a later date. But my point of view for today’s story is from the point of view of someone who runs a business and is responsible for a budget to make sure my owners and employees are successful. As residents and businesses of West Hollywood, we are the shareholders of the city’s budget, and it is the responsibility of Council to ensure that the budget plan prepared by the staff is sound and is thoroughly researched. . Without research and planning, the numbers are fundamentally inaccurate, posing an inherent risk to resident services and the social programs they contain.
My first concern is the sobering forecast of continuing to run in the red for the foreseeable future. With a projected budget deficit of $ 10 million after losses of $ 20 million from last year, the report says “staff expect revenues will take several years to return to pre-pandemic levels.” . He further asserts that tourism is the city’s most important sector in terms of jobs and taxes, and that “West Hollywood depends on a healthy tourism industry to provide a significant portion of its municipal revenues.” If so, where is the overall plan needed to ensure that we have a strong tourism industry to fuel the city’s income?
Instead, Mayor Horvath and council member Shyne are pushing for vested interest legislation that will actually hurt the city’s revenues and increase the budget deficit. The Hotel Ordinance is the perfect example of this because it contains multiple impacts that have not been studied or examined with regard to this budget. This is particularly scandalous considering the fact that this point was organized in March, that is to say a month before the release of the first draft budget in April. But, not all were silent in the calls for study. Council member D’Amico and Mayor Pro Tem Meister both supported a study following the suggestion of the West Hollywood Travel & Tourism Board at the June 5 city council meeting, which also saw the recommendation of the new manager. municipal David Wilson to schedule a study session in July. These recommendations were summarily rejected by the majority of council, so this article continues to be ignored.
On the budget, the most urgent impact of the hotel ordinance is the unintended consequence that it is in fact a tourism cap that will cripple hotels in their recovery.
This creates a de facto limit on the number of rooms that housekeepers can clean, forcing a hotel that could sell 80 rooms to limit their occupancy to 40 rooms because there is a significant labor shortage on the premises. this labor market to find the necessary additional staff.
This will result in fewer rooms being sold and subsequently less hotel taxes created to support the city’s revenue. Fewer visitors to our hotels also means fewer people frequenting all of our other businesses such as restaurants, bars and shops, all of which generate sales tax. The Los Angeles Hotel Association conducted a survey of hotels and found that the potential impact on collective revenue is in the range of $ 50-80 million, at which the city’s exposure is 12.5% (this is the percentage of hotel tax levied on revenue hotel rooms) would be in the range of $ 6-10 million. The potential impact on sales tax is even greater.
In conclusion, the budget presented tonight is fraught with risk and should not be adopted without a commitment to conduct appropriate research and a study session with respect to the Hotel Ordinance. Questions should also be asked of the board regarding their long-term plans to balance the budget as well as how they propose to cover lost revenue generated by any potential legislation. It’s a simple calculation that any loss of income at this time poses a threat to our resident services and social programs. If you agree with me, please call the board and ask them to stop spending a budget without doing the homework first. West Hollywood, like all of us, is still healing from the past fifteen months, and it’s clearer than ever that the decisions made today will shape the outcome of our recovery.
Nick Rimedio is a seasoned hospitality veteran with twenty-five years of industry experience as General Manager of Hotel La Peer. Starting out as a restaurateur and dishwasher, Nick’s career has taken him from his hometown of Akron, Ohio to Chicago, Las Vegas, Napa, and now West Hollywood where he has worked for the past 8 years. During his second term as President of the West Hollywood Chamber of Commerce as well as the West Hollywood Design District, Rimedio also served as Secretary of the West Hollywood Travel & Tourism Board, Board of Directors of the Beverly Hills Chamber of Commerce. and Forbes Travel standards. Advisory committee which is an international board of directors of twenty hoteliers.