Merced hotels to get coronavirus relief. Plans to help businesses remain on drawing board
Hotels and motels in the City of Merced received some good news Monday, as City Council unanimously agreed to move forward with deferring transient occupancy tax (TOT) payments until July 31.
The 6-0 council decision, minus Mayor Mike Murphy who recused himself, followed a letter and public comments from Merced Hotel Motel Association members asking the city to provide relief during the coronavirus pandemic.
“The hotel and lodging industry have been devastated with layoffs, furloughs and closures,” said Edwin Kainth during public comment. Kainth is a Merced Hotel Motel Association representative and owner of the Merced Courtyard by Marriott and Quality Inn.
City officials expect the 90-day deferral to officially pass as a resolution at the next City Council meeting.
The TOT feeds the city’s general fund with a 10% tax of each hotel or motel room that a customer pays for. April 30 was the deadline to for hotels and motels to pay the city — but the three month deferral will waive late fees or penalties for those in good financial standing with the city.
“We understand they’re hurting,” City Manager Steve Carrigan told the Sun-Star.
Representatives from the Holiday Inn and Suites on Parsons Avenue say the normal hotel occupancy rates are down about 80%.
“The outlook for hotels in the city of Merced for the next several months, or possibly longer, is going to be a rough road ahead, and (we) need help,” Holiday Inn representatives said, in a statement read during public comment.
“As hotels are a big part of the local economy, we are hoping the City of Merced can assist the local hotels by providing temporary assistance.”
The combined deferrals from all the hotels and motels totals about $320,000 delayed, Carrigan said. City Council will assess whether an additional deferral is necessary once the 90 days expire, but the city will receive the payment eventually.
“This is a good deferral program, so this will definitely help our hotel owners,” Kainth, of the Merced Hotel Motel Association, told the Sun-Star. “I really appreciate all the support from the City Council and the Merced Mayor.”
Kainth said he hopes the 90 days will be enough for the lodging industry to begin to bounce back.
Hotel occupancy rates have improved a little, but slowly, Kainth said. At its worst, the pandemic forced occupancy rates down as low as 10% normal capacity. Now, it has risen to 15-20%, he said.
While the tax deferral helps, Kainth noted other expenses like paying employees, utilities and the bank. At least 50% occupancy is needed for hotels to pay these expenses and survive, Kainth said.
Additional support may come in the form of a grant or paying water and sewer bills, Carrigan said. The city will continue to discuss needs with the Merced Hotel Motel Association and identify the exact cost.
“Any assistance will be very helpful,” Kainth said. “We have to survive during this time of crisis,” he added, noting that the health of the lodging industry has a direct impact on the city.
Other possible relief
Merced City Council Monday also continued to hammer out details for an eventual COVID-19 Recovery Plan.
The TOT deferral is part of the preliminary six-pointed plan considered by the city, but was the only aspect of the plan City Council agreed to move forward with Monday.
The five additional points include a small business program including loans and grants, rent support, food bank assistance, a one-time utility bill rebate and a voucher program for residents to use at Merced businesses.
The council has not voted on the six-pointed plan, although most expressed support for most of the plan with the exception of utility payments and the voucher program. Further discussion will take place before the next Council meeting, where more information will be presented, Carrigan said.
The plan (excluding the deferred TOT payment) incurs about a $2 million expense, with the utility rebate claiming roughly half of the total cost. A combination of community development block grants, general fund dollars, utility credit and private funds would pay for the plan.
City Council Monday also addressed eviction concerns, but reached a similar consensus as the Merced County Board of Supervisors last month in noting existing protections at the state and federal level.
“There’s been a lot done on this issue,” said Councilmember Matt Serratto, who requested to add the discussion to the agenda. “I think 95% of the protections are already in place.”
Several city officials noted that currently, evictions do not seem to be taking place. The question is whether this will remain to be true, they said.
Serratto noted the City of Fresno’s leniency period giving tenants affected by coronavirus six months to pay back late rent once the city’s emergency declaration is lifted. Councilmember Fernando Echevarria said he would like to see a similar program in Merced, but with a grace period as long as a year.
The Council set up a subcommittee consisting of Serratto and Echevarria. The councilmembers will engage landlords, realtors and tenants rights groups before coming back to the council with information at a later meeting.
Coronavirus in Merced County
Known Merced County coronavirus cases held steady at 146 Tuesday, according to County Public Health. One additional case added this morning was later retracted by Public Health on account of the individual not being a Merced County resident.
Those having recovered from the disease tallied 81 Tuesday. Individuals still ill total 62 and three have died.
In California Tuesday, there are 58,281 confirmed COVID-19 cases and 2,365 deaths.
This story was originally published May 5, 2020 at 6:49 PM.
