Loading...
HomeMy WebLinkAbout18. Discuss & Provide Staff Direction on Transient Occupancy Tax14-7411■ \ L�JI CITY MANAGER TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL. FROM: OFFICE OF Gilbert s That the City Council: 1) Discuss and provide direction to City Attorney on the preparation of ballot materials; and 2) Authorize the City Manager to issue a Request for Qualifications for community outreach services. RETTITATURT6717M Revenue and Taxation Code Section 7280 allows government agencies to assess a Transient Occupancy Tax (TOT), also known as a hotel bed tax. A TOT assessment is charged to travelers when they rent accommodations (i.e., a room, rooms, entire home, or other living space) in a hotel, inn, motel, or other lodging for a period of less than 30 days. A TOT is calculated as a percentage of the rent for the occupancy of a structure or any portion of a structure. The law requires that operators collect the tax from transients and remit them to the local jurisdiction. The City of Downey assessed a TOT rate in 1965 through Ordinance No. 255 and last amended its TOT in October 1998 through Ordinance No. 1057. Ordinance No. 1057 increased the City's TOT rate to 9 percent after voter approval. The City's TOT is levied on transients and not levied on or paid by residents of Downey. The City of Downey has made great strides, despite recent economic challenges and state take- aways, in ensuring financial stewardship, while preserving and continuing to improve the level of services provided to Downey residents. This can be seen with that passage of Measure S, an increase of 1/2 percent to the transactions and use tax that was approved by 63% of Downey voters. Measure S is generating monies to help maintain Police and Fire Departments, enhance crime prevention programs, improve Downey parks and city facilities, and invest in early streets and sidewalks maintenance to avoid future costly repairs. TOT DISCUSSION AND REQUEST FOR DIRECTION PAGE 2 While Measure S has made a significant impact, park and facility repairs will exceed the monies being generated by Measure S. Additionally, there is a need for greater funding for residential roads and right-of-way improvements as they are in desperate need of rehabilitation. With this mind, City staff began exploring revenue possibilities that would not affect Downey residents and that would help offset the costs of park and facility improvements, as well as residential road and right-of-way rehabilitation projects. A key funding source being considered is increasing the City's TOT rate. Staff conducted a TOT survey of surrounding cities and those similar in scope to Downey, Below are staff findings: IMMEM Bellflower* 9% Buena Park 12% Cerritos 12% Commerce 12% Glendale 12% La Mirada 10% Lakewood 8% —0/0 — Norwalk fo Pico Rivera 10% Santa Fe Springs 10% Whittier 10% Note*: Developed a City Council Subcommittee to review revenue enhancement options, including a TOT increase. Feb. 2019 Annually, the City receives approximately $1,700,000 in revenues at its current 9 percent TOT rate. Staff estimated the potential revenue projections if the City were to raise its TOT rate from 9 percent to 10 percent through 14 percent. These projections are listed below. Furthermore, staff prepared a comparison of the potential increase in the TOT rate for transients based on current hotel rates. TOT DISCUSSION AND REQUEST FOR DIRECTION PAGE 3 Based on these findings, staff is recommending to increase the TOT rate from 9 percent to 12 percent, which will result in a $510,000 increase in revenues for the City. To increase the rate, the new TOT will need to be placed on the ballot for vote in the November 2020 election. The new TOT would be a general tax and would need to pass by majority vote (50 percent +1). Attached is a ballot timeline. It should also be noted, that this process would also include modernizing Ordinance No. 1057 An Ordinance of the City Council of the City of Downey Amending Article Vl, Chapter 1A of the Downey Municipal Code Entitled, "Room Tax" (Attachment A) to include language regarding short -time home rentals, such as Airbnb, and to include modern descriptions. The City Council is being asked to provide direction to staff on the preparation of ballot materials (preparation of the transient occupancy ordinance, ballot title and question, and proposed resolutions) for placement on the November 2020 ballot, and to authorize the City Manager to issue a Request for Qualifications for community outreach and informational services to residents and other stakeholders regarding the ballot measure. There is no fiscal impact associated with the recommended action. However, the professional services agreement for the selected consultant conducting community outreach services will be brought back to the City Council for approval. CITY COUNCIL PRIORITIES Fiscal Responsibility Quality of life, Safety and Infrastructure ATTACHMENT Attachment A — Ordinance No. 1057 Attachment B — Ballot Timeline AMENDING ARTICLETI, UAMTEAI I I"T. 7TVITI ENTITLEDI "ROOM TAX" THE CITY COUNCIL OF THE CITY OF DOWNEY DOES ORDAIN AS FOLLOWS: Section 1. Article VI, Chapter 1A of the Downey Municipal Code is amended to read as follows: "Chapter IA - ROOM TAX SECTION 6126. DEFINITIONS. For the purposes of this Chapter, certain words and phrases are defined and shall be construed as herein set forth, unless it is apparent from the context that a different meaning is intended SECTION 6126.1 SAME. HOTEL. 'Hotel' means any public or private hotel, inn, hostelry, tourist home or house, motel, rooming house, or other lodging place within the city, wherein the Operator, for compensation, finnfishes lodging to any Transient. SECTION 6126.2 SAME. PERMANENT RESIDENT. 'Permanent Resident' means any person who, as of a given date, has occupied or has had the right to occupy a room or rooms in a particular Hotel for the ninety (90) consecutive days immediately preceding the given date. SECTION 6126.3 SAME. ROOM RENTAL. 'Room Rental' means the total charge made by any Hotel for lodging and/or lodging space furnished to any Transient. If the charge made by the Hotel to thee sient includes any charge for services or accommodations in addition to that for lodging and/or lodging space, then the portion of the total charge which represents only the lodging and/or lodging space shall be distinctly set out and billed to the Transient by the Hotel as a separate item. SECTION 6126.4 SAME. TRANSIENT. 'Transient' means any person who, for any period of ninety (90) consecutive days or less, at his or her own expense or at the expense of another, obtains lodging or the use of any lodging space in any Hotel for which a charge is made. Transient does not include Permanent Residents. SECTION 6126.5 SAME. OPERATOR. 'Operator' means the person who is proprietor of the Hotel, whether in the capacity of owner lessee, sublessee, mortgagee in possession, licensee, or any other capacity. Where the Operator performs his or her functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an Operator for the purposes of this Chapter, and shall have the same duties and liabilities as his or her principal. Compliance with the provisions of this Chapter by either the principal or the managing agent shall be considered to be compliance by both. ORDINANCE NO. 1057 (2) The address of the Hotel; (3) The date upon which the certificate was issued; (4) "This Transient Occupancy Registration Certificate signifies that the person named on the face hereof has fulfilled the requirements of Article VI, Chapter 1 A of the Downey Municipal Code by registering with the Tax Achninistrator for the purpose of collecting from transients the transient occupancy tax and remitting said tax to the Tax Administrator. This certificate does not authorize any person to conduct any unlawful business or to conduct lawful business in an unlawful manner, nor to operate a hotel without strictly complying with all local applicable laws, including but not limited to those requiring a permit from any board, commission, department or office of this Ci This certificate does not constitute a permit." I SECTION 6131. REPORTING AND REMITTING. Each Operator • or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period which may be established by the Tax Administrator shall make a return to the Tax Administrator, on forms provided by him, of the total Room Rentals charged and received and the amount of tax collected for Transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. The Tax Administrator may establish shorter reporting periods for any certificate holder if he deems it necessary in order to ensure collection of the tax and he may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by Operators pursuant to this chapter shall be held in mist for the account of the City until payment thereof is made to the Tax Administrator. SECTION 6132. PENALTIES AND INTEREST. (a) Original Delinquency. Any Operator who fails to remit any tax imposed by this chapter within the time required shall pay a penalty of ten percent (10%®) of the amount of the tax in addition to the amount of the tax. (b) Continued Delinquency. Any Operator who fails to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent (10%) of the amount of the tax in addition to the amount of the tax and 10% penalty first imposed. (c) Fraud. If the Tax Administrator determines that the nonpayment of any remittance due under this chapter is due to fraud, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to the penalties stated in subparagraphs (a) and (b) of this section. KI ORDINANCE NO. 1057 SECTION 6135. RECORDS. It shall be the duty of every Operator liable for the collection and payment to the City of any tax imposed by this chapter to keep and preserve, for a Administrator shall have the right to inspect at all reasonable times. 1; iti 31 at y g I I (a) Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the City under this chapter, it may be refunded as provided in this section. (b) No refund maybe made except upon a written claim verified by the person who paid the tax, or by his or her guardian or conservator, or by the executor or administrator of his or her will or estate. The written claim must be presented to the Tax Administrator within one (1) year after the payment of the amount sought to be refunded, and must state the grounds upon which the claim is made. An Operator may claim a refund or claim a credit against taxes collected but not yet remitted to the City of the amount overpaid, paid more than once, or erroneously or illegally collected. However, in the case of a tax erroneously or illegally collected by the Operator but not yet remitted to the City, no refund shall be allowed unless a written, verified claim has been submitted to the Operator, in the form prescribed above, by the person who paid the tax, and the amount thereof has either been refunded by the Operator to the person who paid the tax, or credited against Room Rental subsequently payable by such person. (c) No refund shall be paid under the provisions of this section unless a written claim for refund is presented according to this section. No suit for money, damages, or a refund may be brought against the City until a written claim for the refund has been presented to the City and has been acted upon or has been deemed to be rejected by the City, in accordance with this section. Only the person who filed the claim may bring such a suit, and if another person should do so, judgment shall not be rendered for the plaintiff. (d) No refund shall be paid under the provision of this section unless the claimant establishes his right thereto by written records showing entitlement thereto. SECTION 6137. ACTIONS TO COLLECT. Any tax required to be paid by any Transient under the provisions of this chapter shall be deemed a debt owed by the Transient to the City. Any such tax collected by an Operator which has been paid to the City shall be deemed a debt owed by the Operator to the City. Any person owing money to the City under the provisions of this chapter shall be liable to an action brought in the name of the City of Downey. 111111111piilj� MITV "N MTs T F I i11FTZTMTi �• 1 f- 11 - 19FITan (a) Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the tax herein provided; (c) Any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty; (d) No exemption shall be granted except upon a claim therefore made at the Room Rental is collected for a varticular transient and under penalty of perjury upon a form prescribed by the Tax Administrator. SECTION 6129. OPERATOR'S DUTIES. Each Operator shall collect the tax from every Transient. The amount of tax shall be separately stated from the amount of Room Rental charged, and each Transient shall receive a receipt for payment from the Operator. No -ff j—w1Pv*er 1 r itdirectiv. that the to the Room Rental, or that, it addecl, any part will ne rerundea except in tne Mmuirr liclulluutut provided. SECTION 6130 REGISTRATION. Within thirty (30) days after the effective date of this chapter, or within thirty (30) days after commencing business, whichever is later, each Operator of any Hotel renting occupancy to Transients shall register said Hotel with the Tax Administrator and obtain from him or her a "Transient Occupancy Registration Certificate" to be at all times posted in a conspicuous place on the premises. Said Certificate shall, among other things, state the following: (1) The name of the Operator; Q (d) Interest. In addition to the penalties imposed, •f who fails to remit any tax imposed by this chapter shall pay interest at the rate of one-half of one percent (.50%) per M-141*. 4x­fr&&1Tr1hc?0.j!.1 llr6 C a"hY&;V1- Alfrj-Zi7 4TPe the remittance first became delinquent until paid. (e) Penalties Merged With Tax. Every penalty imposed and such interest as accrues under the provisions of this section shall become a part of the tax require to be pai y s Chapter. SECTION 6133. FAILURE TO COLLECT AND REPOVL Determination of Tax by Tax Administrator. If any Operator shall fail or refuse to collect said tax and to make, within the time provided in this chapter, any report and remittance of said tax or any portion thereof required by this chapter, the Tax Administrator shall proceed in such manner as he or she may deem best to obtain facts and information on which to base his or her estimate of the tax due. As soon as the Tax Administrator shall procure such facts and information as he or she is able to obtain upon which to base the assessment of any tax imposed by this ordinance and payable by any Operator who has failed or reftised to collect the same and to make such report and remittance, he or she shall proceed to determine and assess against such Operator the tax, interest and penalties provided for by this chapter. In case such determination is made, the Tax Administration shall give notice of the amount so assessed by serving it personally or by depositing it in the United States mail, postage prepaid, addressed to the Operator so assessed at his last known place of address. Such Operator may within ten (10) days after the serving or mailing of such notice make application in writing to the Tax Administrator for a hearing on the amount assessed. If application by the Operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the Tax Administrator shall become final and conclusive and immediately due and payable. If such application is made, the Tax Administrator shall give not less than five (5) days' written notice in the manner prescribed herein to the Operator to show cause at a time and place fixed in said notice why said amount specified therein should not be so fixed for such tax, interest and penalties. At such hearing, the Operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing the Tax Administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed herein of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after fifteen (15) days unless an appeal is taken as provided in Section 6134. SECTION 6134. APPEAL. Any Operator aggrieved by any decision of the Tax Adrulinistrator may appeal the decision to the City Manager by filing a notice of appeal with the City Clerk within fifteen (15) days of the serving or mailing of the determination of tax due. The City Manager shall fix a time and place for hearing such appeal, and the City Clerk shall give notice in writing -by mail to such Operator at his or her last known glace of address. The findings of the City Manager or his designee shall be final and conclusive and shall be served it the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the mailing of the City Manager's or his designee's findings. ORDINANCE NO. 1057 SECTION 6138. ADDITIONAL POWERS AND DUTIES OF THE TAX ADMINISTRATOR. (a) The Tax Administrator shall have the power and duty, and is hereby directed to enforce each and all provisions of this Ordinance. (b) The Tax Administrator shall have the power to adopt rules and regulations not inconsistent with the provisions of this ordinance for the purpose of carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. A copy of such rules and regulations shall be on file in the Tax Administrator's office. (c) The Tax Administrator shall review all claims for exemption and shall determine the eligibility of any such claim. GARY P > K CAUGHAN Mayor ATTEST: (1ITH E. MC DONNEL City Clerk STATE OF CALIFORNIA COUNTY OF LOS ANGELES ss - CITY OF DOWNEY I BEREBY CERTIFY that the foregoing Ordinance No. 1057 was introduced at a regular meeting of the City Council of the City of Downey held on the 22nd day of e tuber 1998, and adopted by the City Council of the City of Downey at a regular meeting held on the 13th day of October 11 1998, by the following vote, to wit: AYES: 4 Council members: Brazelton, Riley, Lawrence, McCaughan NOES: 0 Council members: None ABSENT: 1 Council members: McCarthy ABSTAIN: 0 Council members: None SAWPWMAGDA1013XHOTELTAXORD a rq 'y JUD�ITHE. MC DONNELL, City aeri TOT BALLOT MEASURE