City Council Study Session on Draft 2025 Economic Development Strategy - March 26, 2025

The Monterey City Council held a study session on March 26, 2025, to review and gather feedback on the draft 2025 Economic Development Strategy. City staff Nat presented an extensive overview of economic data, including employment, revenue sources, hotel tax reliance, SWOT analysis, and proposed goals. The council asked questions and provided feedback, and public comments were heard from community members and industry representatives. The meeting adjourned early due to a loss of quorum when Councilmember Smith left.

Public Comments & Testimony

• Monica Lull (Monterey Peninsula Chamber of Commerce): Expressed support for the strategy and offered to partner with the city. Highlighted opportunities for women-owned businesses and creating bridges with entrepreneurs.
• Janine Chakov (Portola Hotel & Spa): Encouraged the city to "dream big" and consider outside expertise. Pointed to opportunities at Heritage Harbor, Alvarado Street, and Wharf 2.
• Rob O'Keefe (C Monterey): Commended the planning and emphasized the power of possibility. Noted the importance of international travelers, upcoming major events, and resident sentiment. Expressed commitment to collaboration.
• Rick Aldinger (Monterey County Hospitality Association): Supported the vision and stressed the need to include residents in discussions to ensure they understand the benefits of tourism.
• Brian Rosen: Expressed concerns about environmental impacts, traffic, and social equity. Urged caution with development, called for bringing back the train, planting trees, and ensuring benefits reach all workers.
• Nina Beattie: Critiqued the plan as aggressive fast-track policy making. Questioned data accuracy and overstatements (e.g., regarding Montage Health). Advocated for reducing reliance on tourism, supporting local businesses, and addressing environmental and social issues.
• Lorna Moffin: Urged prioritizing environment over tourism. Criticized tree removal at Fisherman's Wharf. Called for mass transit, tree planting, and keeping the bay healthy.

Presentation of Draft Strategy

Nat presented the draft 2025 Economic Development Strategy. Key data points included:

• Employment: 24,944 individuals employed in non-military industries; majority commute in.
• Revenue reliance: Hotel Transient Occupancy Tax (TOT) accounts for 28% of city revenue, property tax only 15%, and sales tax 15%. In comparison, typical California cities rely on property tax at 47% and TOT at 7%. Later, TOT was cited as 30% of general fund revenue.
• Sales tax: 62% paid by non-residents; total sales tax revenue $15.528 million to general fund plus $11.849 million from Measure S.
• Property tax: City receives only 6 cents of every dollar collected; median home ($1.3M) yields $865.80 city property tax.
• Existing hotel inventory: 4,713 rooms; only 40 new rooms proposed, while neighboring cities are adding over 1,800 rooms.
• The draft strategy proposes five goals: 1) Remain competitive in hospitality marketplace; 2) Sustainable redevelopment of underutilized properties; 3) Business retention, attraction, and promotion; 4) Economic diversification; 5) Affordable workforce housing solutions.
• Financing tools discussed: Enhanced Infrastructure Financing Districts (EIFDs), Community Revitalization and Investment Authorities (CRIAs), Climate Resilience Districts, federal/state grants, and options like increasing Tourism Improvement District (TID) funding.
• Next steps: conduct focus groups and town halls in spring/summer 2025, potentially engage an economic development firm, and bring a final strategy to council for adoption later in 2025.

Council Discussion and Feedback

Council members asked clarifying questions and offered feedback:

• Councilmember Barber: Asked about direct revenue from healthcare vs. hospitality; noted healthcare nonprofits pay no property tax. Suggested adding lack of water as a weakness in SWOT.
• Councilmember Rash: Inquired about Measure S sales tax compared to pre-COVID; requested total sales tax figure.
• Councilmember Smith: Emphasized balance, resident inclusion, and proactive business retention. Suggested a "My Monterey" campaign and an adult behavioral health center at Ryan Ranch. Clarified "low complexity" not equal to low priority.
• Councilmember Garcia: Expressed excitement about the strategy. Highlighted opportunities beyond hospitality, including land use/zoning and infrastructure. Supported bringing in an economic development professional early.
• Councilmember Rash (further): Called for activating temporary uses of vacant spaces, liberal pop-up event approvals, requiring future rehab funding for public dollars, caution on density zoning fees, and focus on eco-tourism, public art, workforce development, and transportation. Supported considering a vacancy tax for affordable housing.
• Mayor Williamson: Thanked staff, highlighted CIP funding disparity (2% vs. typical 13-25%) and deferred maintenance. Endorsed pedestrianizing Alvarado Street on trial basis. Stressed arts, history, and diversification.

Key Outcomes

• The study session was the first step in developing a long-term economic development strategy.
• No formal votes were taken; the meeting was discussion-only.
• The meeting adjourned early due to loss of quorum after Councilmember Smith left.
• Next steps scheduled: community engagement (focus groups/town halls) in spring/summer 2025, possible hiring of economic development professional, and final strategy adoption later in 2025.