This story and the accompanying audio was updated at 9:00 a.m. Nov. 21 to reflect the fact that the commission reports data on its website that was not included in the county's response to KZYX's public records request.
The Ukiah City Council on Tuesday considered a controversial proposal from the Mendocino County Tourism Commission (MCTC) to increase its share of the transient occupancy tax (TOT) from 1% to 2% with an additional 0.5% increase included and to change the governance of the business improvement district that collects the tax.
Deputy City Manager Shannon Riley flagged several issues with the MCTC’s push to loosen oversight of its operations while increasing its funding. “There’s not a clear return on investment for the funds already being dedicated to the countywide business improvement district (BID),” Riley said, contrasting this with the city’s locally managed Visit Ukiah program.
Formed in 2006, Visit Ukiah receives a dedicated portion of the city’s TOT, also known as the hotel tax. “In that time, TOT revenue generated just within the city limits has more than doubled,” Riley noted, highlighting the program’s measurable success in driving local tourism growth.
Lack of Transparency Raises Questions
A public records request by KZYX News revealed that MCTC had failed to report granular performance metrics for marketing campaigns and digital advertising for the past five years, despite receiving millions in funding, including $1.25 million in TOT funds during the last fiscal year.
Their website features budgets, but not audited annual financial statements. And the performance metrics presented in annual reports are not put in context with other years, or with the cost of the program, so the effectiveness of each program is difficult to gauge.
Riley emphasized that the lack of transparency raises concerns, especially given MCTC’s proposal to switch to from annual to five-year renewals.
According to the most recent Mendocino County Lodging Business Improvement District 2024-2025 Annual Report, which was submitted to Mendocino County on April 4, 2024, tourism-related business activity grew 44% in the last five years (as measured by the increase in the transient occupancy tax). Meanwhile, the BID collections that fund the commission have increased 80%, from $989,481.07 in fiscal year 2018-2019 to $1,782,991.50 in fiscal year 2022-23 — the most recent data that is available.
Financial Implications for Ukiah
Riley warned that increasing the TOT rate to fund MCTC’s plan could limit Ukiah’s ability to raise local TOT rates in the future. “If we allow Visit Mendocino to take a larger portion of what is an acceptable taxable rate, then we lose the ability to increase the local TOT to generate the funds we need,” Riley explained.
Instead, Riley presented an alternative proposal: allocate the additional revenue generated by a 1% TOT increase proportionally to jurisdictions across the county. This approach would allow each area to invest directly in local tourism assets, enhancing the overall visitor experience and increasing tourism-driven revenue.
A Call for Stronger Partnerships
The council directed staff to explore Riley’s alternative plan, which aims to balance countywide collaboration with stronger local control. City Manager Sage Sangiacomo stressed that the city is not seeking to end its partnership with MCTC but wants greater accountability and better outcomes.
“We’re talking about strengthening partnerships and ensuring that the money collected is used for the best purposes possible,” Sangiacomo said. “Transparency and accountability are key concerns for us.”