HomeMy WebLinkAbout04 - Transient Occupany Tax Amendment�EW�oR> CITY OF
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C9C /F00.NP City Council Staff Report Agenda Item No. 4
July 24, 2012
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Finance Department
Tracy McCraner, Director /Treasurer
949 - 644 -3123, tmccraner @newportbeachca.gov
PREPARED BY: Evelyn Tseng, Revenue Manager
APPROVED: 0,
TITLE: Municipal Code Amendment to Exempt Complimentary Hotel
Rooms from Transient Occupancy Tax and Visitor's Service Fee
and General Terminology Clean Up
ABSTRACT:
An amendment to the Newport Beach Municipal Code ( "NBMC ") to exempt
complimentary hotel rooms from Transient Occupancy Tax ( "TOT ") and the Visitor's
Service Fee ( "VSF "); and update the terminology from "Administrative Services Director"
to "Finance Director."
RECOMMENDATION:
Introduce Ordinance No. 2012 -18 amending NBMC Sections 3.16.040 and 3.28.035
to exempt complimentary hotel rooms from TOT and VSF; and amending Sections
3.16.020, 3.16.030, 3.16.040, 3.16.050, 3.16.060, 3.16.070, 3.16.075, 3.16.085,
3.16.090, 3.16.110, 3.16.120, 3.16.140, 3.28.010, 3.28.035, 3.28.050, 3.28.055,
3.28.060, 3.28.070 and 3.28.085 to reflect the terminology change from "Administrative
Services Director' to "Finance Director."
FUNDING REQUIREMENTS:
There are no funding requirements related to this item, but there will be some fiscal
impact. TOT revenues will decrease, but the amount is undetermined.
DISCUSSION:
Background
Newport Beach Municipal Code ( "NBMC ") Section 3.16 requires hotel guests
(transients) to pay 9% of the rent imposed by the hotel /operator as TOT and Section
Municipal Code Amendment to Exempt Complimentary Hotel Rooms from Transient
Occupancy Tax and Visitor's Service Fee and General Terminology Clean Up
July 24, 2012
Page 2
3.28.020 requires hotel guests to pay 1% as a VSF. Of the amount collected, 18% is
remitted to Visit Newport Beach, Inc. and the remaining 82% goes to the General Fund
to help pay for City services.
"Rent" is defined in NBMC Sections 3.16.020 and 3.28.010 as: "... the consideration
charged, whether or not received, for the occupancy of space in a hotel valued in
money, whether to be received in money, goods, labor or otherwise, including all
receipts, cash, credits and property and services of any kind or nature, without any
deduction."
Based on this provision, the tax and fee, calculated on the room value provided by the
hotel, had been imposed on all complimentary rooms.
Earlier this year, Visit Newport Beach, Inc. and the Marriott Hotel requested that the City
amend its ordinance to exempt complimentary rooms from TOT. Both entities cited
concern for charitable non - profit organizations and for the hotels. At Study Session on
July 10, 2012, the City Council expressed support for the complimentary room
exemption and directed staff to amend the NBMC to exempt complimentary rooms from
TOT.
Code Change
Staff recommends revising the Exemptions portion of the TOT and VSF ordinances to
specifically exempt complimentary rooms (NBMC Sections 3.16.040 and 3.28.035).
Gary Sherwin, President and CEO of Visit Newport Beach, Inc., and Dennis O'Neil, the
City's representative on Visit Newport Beach's Executive Board, reviewed and approved
the revised language in the attached draft. The proposed language would exempt
complimentary rooms from TOT, but not rooms that have been exchanged or bartered
for services. When hotels are audited for their TOT and VSF, the revenue auditor will
require the hotels to provide records of the exempt complimentary rooms.
Staff also changed "Administrative Services" to "Finance" within Sections 3.16.020,
3.16.030, 3.16.040, 3.16.050, 3.16.060, 3.16.070, 3.16.075, 3.16.085, 3.16.090,
3.16.110, 3.16.120, 3.16.140, 3.28.010, 3.28.035, 3.28.050, 3.28.055, 3.28.060,
3.28.070 and 3.28.085 in order to be consistent with the recently amended NBMC
Section 2.12.040.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act ( "CEQK) pursuant to Sections 15060(c)(2) (the activity will
not result in a direct or reasonably foreseeable indirect physical change in the
Municipal Code Amendment to Exempt Complimentary Hotel Rooms from Transient
Occupancy Tax and Visitor's Service Fee and General Terminology Clean Up
July 24, 2012
Page 3
environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378)
of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it
has no potential for resulting in physical change to the environment, directly or
indirectly.
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
Submitted by:
Tracy Mc aner
Finance rector/Treasurer
Attachments: A. Ordinance 2012 -18 Amending Chapters 3.16 and 3.28 of the
Municipal Code Pertaining to Taxes and Fees Levied on
Complimentary Hotel Rooms
B. Redline Sections Chapters 3.16 and 3.28
C. Draft Minutes of the City Council Study Session of July 12, 2012
ORDINANCE NO. 2012 -
AN ORDINANCE OF THE CITY COUNCIL OF
THE CITY OF NEWPORT BEACH,
CALIFORNIA AMENDING CHAPTERS 3.16
AND 3.28 OF THE NEWPORT BEACH
MUNICIPAL CODE PERTAINING TO TAXES
AND FEES LEVIED ON COMPLIMENTARY
HOTEL ROOMS AND GENERAL
TERMINOLOGY CLEAN UP
WHEREAS, the City of Newport Beach ( "City') is a tourist destination that
welcomes guests both from around the world and domestically; and
WHEREAS, many of the guests that visit the City stay in one of the world class
hotels located within the City; and
WHEREAS, the City places a small transient occupancy tax and visitor's fee on
hotel rooms to help fund marketing efforts on behalf of the City and the hotels, to
encourage more tourism to the City; and
WHEREAS, hotel operators occasionally provide complimentary rooms to guests
to encourage and promote, among other things, trade shows, conferences, community
service, or volunteer opportunities within the City; and
WHEREAS, the City Council desires to encourage and promote business
activities by removing regulations that may burden local businesses; and
WHEREAS, the City Council recently amended Newport Beach Municipal Code
( "Code ") Section 2.12.040 to change the name of the Administrative Services Director to
the Finance Director and the City has been revising terminology within the Code to be
consistent on a chapter -by- chapter basis.
NOW THEREFORE, the City Council of the City of Newport Beach ordains as
follows:
Section 1: Section 3.16.020 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.020 Definitions.
Except where the context otherwise requires, the definitions in this
section shall govern the interpretation and construction of the terms
of this chapter:
Finance Director. The term "Finance Director" shall mean the
Finance Director of the City of Newport Beach or his /her designated
representative.
City. The term "City" shall mean the City of Newport Beach.
Hotel. The term "hotel" shall mean any structure, or any portion of
any structure or the air space within any structure, which is
occupied or intended or designed for occupancy by transients for
dwelling, lodging or sleeping purposes for periods of thirty (30) days
or less. The term hotel includes any inn, residential dwelling unit,
motel, group residential or lodging house, bed and breakfast inn,
single room occupancy hotel, hostel, rental unit, public or private
residential club, mobile home, time -share project, house trailer at a
fixed location, or other structure or portion of a structure.
The term "hotel" shall also include a space, campsite or similar
facility which is occupied, or intended or designed for occupancy,
by a recreational vehicle, camper, van, trailer, motor home or
similar vehicle used, or intended for use as a dwelling, lodging or
for sleeping purposes.
Including. The term "including" shall mean "including, without
limitation" and "including, but not limited to" and shall not be
interpreted to imply any limitation on the more general preceding
provision unless otherwise expressly stated.
Individual. The term "individual" shall mean any natural person.
Occupancy. The term "occupancy" shall mean the use or
possession, or the right to use or possession of a specific campsite,
space, area, room or rooms in any hotel for the purpose of dwelling,
lodging or sleeping.
Operator. The term "operator" shall mean the person who is
proprietor of the hotel, whether in the capacity of owner, lessee,
sublessee, mortgagee in possession, licensee, time -share project
owner's association or any other capacity. Where the operator
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performs his 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 principal. Compliance
with the provisions of this chapter by either the principal or the
managing agent shall, however, be considered to be compliance by
both.
Person. The term "person" shall mean any individual, firm,
partnership, joint venture, association, social club, fraternal
organization, joint stock company, corporation, estate, trust,
business trust, receiver, trustee, syndicate, or any other group or
combination acting as a unit.
Qualifying Rental Agreement. The term "Qualifying Rental
Agreement' shall mean a written leasehold agreement signed by
both the operator and transient obligating the transient to pay rent
for use and possession of a room or space in a hotel for a period of
not less than thirty -one (31) consecutive days. The Qualifying
Rental Agreement shall be legally enforceable by both the operator
and transient and shall include in its terms both the right to occupy
and the obligation to pay for a room or rooms for thirty -one (31)
days or more. "Qualifying Rental Agreement' expressly excludes:
A. Any agreement, regardless of the rental term, which is
terminated for any reason, by either party, or by mutual consent,
prior to the thirty -first (31 st) consecutive day of occupancy; or,
B. Any agreement that would be unlawful or constitute a
violation of law.
Rent. The term "rent' shall mean the consideration charged,
whether or not received, for the occupancy of space in a hotel
valued in money, whether to be received in money, goods, labor or
otherwise, including all receipts, cash, credits, and property and
services of any kind or nature, without any deduction. Rent shall
include the consideration charged by an operator for
accommodations, including any (1) un- refunded advance rental
deposits or (2) separate charges levied for items or services which
are part of such accommodations including, but not limited to,
furniture, fixtures, appliances, linens, towels, non - coin - operated
safes, utilities (such as energy surcharges) and maid service.
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Time -share Interest. The term "Time -share Interest' shall mean
either a time -share estate or a time -share use (as those terms are
defined in Section 11003.5 of the Business and Professions Code)
and any similar form of ownership involving a right in perpetuity, for
life, or for a term of years, to occupy any room, space or area in a
time -share project.
Time -share Owner. The term "Time -share Owner" shall mean any
person or entity that owns a time -share interest.
Time -share Project. The term "Time -share Project' shall mean a
structure or real property (including airspace) in which a time -share
interest has been sold.
Transient. The term "transient' shall mean any individual who
exercises occupancy or is entitled to occupancy by reason of
concession, permit, right of access, license or other agreement for
a period of thirty (30) consecutive calendar days or less, counting
portions of calendar days as full days. Any individual occupying
space in a hotel shall be deemed to be a transient until the period
of thirty (30) days has expired, and the tax imposed by this chapter
shall be due upon all rent collected or accruing prior to the thirty -
first (31st) consecutive day of occupancy unless occupancy
extends to the thirty -first (31 st) day or thereafter. The term transient
shall not include any person who occupies any room, space or area
in a time -share project pursuant to a time -share interest and without
paying rent including: (a) a time -share owner; (b) a member of the
family or guest of the time -share owner; (c) any person who is
entitled to occupancy pursuant to any time -share exchange
program, or any similar program; and (d) any person entitled to
occupancy pursuant to any exchange or incentive program
involving or sponsored by the operator of the time -share project.
Section 2: Section 3.16.030 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.030 Tax Imposed.
For the privilege of occupancy in any hotel, each transient is
subject to and shall pay a tax in the amount of nine percent (9 %) of
the rent charged by the operator. The tax constitutes a debt owed
by the transient to the City, which is extinguished only by payment
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to the operator or to the City. The transient shall pay the tax to the
operator of the hotel at the time the rent is paid. If the rent is paid in
installments, a proportionate share of the tax shall be paid with
each installment. The unpaid tax shall be due when the transient
ceases to occupy space in the hotel. If for any reason the tax due is
not paid to the operator of the hotel, the Finance Director may
require that such tax shall be paid directly to the Finance Director.
Section 3: Section 3.16.040 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.040 Exemptions.
No tax shall be imposed upon:
A. Any person as to whom, or any occupancy as to which, it is
beyond the power of the City to impose the tax specified in this
chapter, and only when in the performance of official duties thereof;
B. Any officer or employee of a foreign government who is
exempt by reason of express provision of Federal Law or
international treaty;
C. A transient occupying a hotel pursuant to a Qualifying Rental
Agreement entered into prior to the first (1 st) day of occupancy;
D. An employee of an airline company who is occupying a hotel
room in the course of his or her employment, but only when the
room is rented by the airline employer pursuant to a Qualifying
Rental Agreement, that has been pre- approved by the Finance
Director;
E. Any person or transient occupying a hotel room provided
without rent charged (complimentary) to the person or transient by
the operator, including but not limited to:
1. Rooms provided to charitable organizations;
2. Rooms provided to meeting planners who may book future
hotel rooms and provide business and conferencing opportunities
for the economic benefit of the City;
3. Rooms provided to displeased guests; and /or
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4. Rooms provided to hotel employees.
F. No exemption shall be granted except pursuant to an
application filed when the rent is collected and under penalty of
perjury upon a form prescribed by the Finance Director. It is the
transient's responsibility to provide necessary proof of the
exemption.
Section 4: Section 3.16.050 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.050 Operator's Collection Duties.
A. Each operator shall collect the tax imposed by this chapter to
the same extent and at the same time as the rent is collected from
every transient. The amount of tax shall be separately stated from
the amount of the rent charged, and each transient shall receive a
receipt for payment from the operator. No operator of hotel shall
advertise or state in any manner, directly or indirectly, that all or a
portion of the tax will be assumed, waived, absorbed or refunded by
the operator.
B. Notwithstanding the provisions of subsection A, the operator
shall not be required to separately state the rent and the tax on
receipts and books of record, when room accommodations
constitute only a portion of a collective group of services, privileges,
entitlement or benefits ( "benefits ") that include, at a minimum, room
accommodations and food and beverage services or room
accommodations and at least one other benefit having an
ascertainable fair market value ( "special package ") offered for one
fixed charge ( "special package rate'), provided the operator
complies with subsection 3.16.050(C).
C.1. The operator shall file with the Finance Director a statement
of each special package on a form ( "special package application ")
provided by the Finance Director. The special package application
shall detail the benefits of the special package and an itemization of
that portion of the special package that is rent and tax and each of
the benefits. The operator shall provide written evidence to
establish the claimed fair market value of each benefit other than
rent and tax. The Finance Director shall mark the date of receipt on
the special package application and review the submitted
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information to determine if sufficient information is provided to verify
that the value of the benefits, rent and tax. The operator shall
designate a specific name or number to the special package as part
of the special package application. The special package application
shall not be accepted unless accompanied by a fee for processing
that has been established by resolution of the City Council.
2. The name or number designated on the special package
application shall appear on all receipts and books of record
whenever the special package is sold.
3. If the special package application is deemed incomplete, the
Finance Director will advise the operator of any required changes
within fourteen (14) City business days. The operator must either
make the required changes and resubmit the special package
application or comply with subsection 3.16.050(A).
4. The Finance Director shall approve, conditionally approve or
disapprove the special package within fourteen (14) days of receipt
of a complete special package application. In the event of
disapproval the Finance Director shall give the operator written
notice of the reasons for disapproval. The effective date of the
special package rate shall be the date on which the Finance
Director receives a complete special package application that is
approved. A new special package application shall be submitted
whenever the operator changes the rent or benefits of any
previously approved special package.
D. The tax shall apply only to the amount of rent identified in the
special package that has been approved by the Finance Director.
E. If an operator fails to comply with subsection 3.16.050(A)
and also fails to obtain approval of a special package rate pursuant
to subsection 3.16.050(C), the tax ( "imputed rate ") shall be the
lesser of (i) the amount collected for the total special package or (ii)
an amount equal to the median average double occupancy room
rate for the accommodations as posted in the room pursuant to the
requirements of Section 1863 of the Civil Code (or any successor
section).
F. Notwithstanding subsections 3.16.050(C) and 3.16.050(D), if
any audit reveals that the gross income to the operator attributable
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to the rent portion of special package ( "audited rate ") is more than
ten percent (10 %) greater than the rent specified in the special
package rate, the rent for purposes of calculating the tax shall be
the audited rate. In the event subsection 3.16.050(E) applies and
the audited rate is greater than the imputed rate, the rent for tax
purposes shall be the audited rate. The audited rate shall be
determined by an audit of a sample of the special packages sold by
the operator within each special package category. The audited
rate shall be the amount of the special package rate remaining after
deducting the fair market value of each of the benefits included in
the special package rate other than room accommodations and tax.
Where more than one type of special package is offered within the
audit period, each special package shall be audited separately for
purposes of determining the applicable audited rate. Credits or
offsets shall not be allowed between different special packages.
Section 5: Section 3.16.060 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.060 Registration of Hotel.
Within thirty (30) days after commencing business each operator of
any hotel renting occupancy to transients shall register the hotel
with the Finance Director and obtain a "transient occupancy
registration certificate" to be at all times posted in a conspicuous
place on the premises. The certificate shall, among other things,
state the following:
A. The name of the operator;
B. The address of the hotel;
C. The date upon which the certificate was issued;
D. The following statement: "This transient occupancy
registration certificate signifies that the person named on the
certificate has fulfilled the requirements of the Uniform Transient
Occupancy Tax Ordinance (Chapter 3.16 of the Newport Beach
Municipal Code) by registering with the Finance Director for the
purpose of collecting the tax from transients and remitting the tax to
the Finance Director. This certificate does not authorize any person
to conduct any unlawful business, to conduct any lawful business in
an unlawful manner or to operate a hotel without strictly complying
with all local laws, including those requiring a permit from any
board, commission, department or office of the City. This certificate
does not constitute a permit."
Section 6: Section 3.16.070 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.070 Reporting and Remitting.
A. Each operator shall, on a form provided by the City, make a
return to the Finance Director of the total rents charged and
received, the amount of tax collected for transient occupancies, the
number of rental units available on the premises, and such other
information as the Finance Director may reasonably require. The
return shall be made on or before the last day of the month
following the close of each calendar quarter or on the day specified
by the Finance Director if a different reporting period has been
established. Returns are considered made and taxes paid only
upon receipt of the tax return and the tax by the City. At the time
the return is filed, the full amount of the tax collected shall be
remitted to the Finance Director. The Finance Director may
establish either shorter or longer reporting periods for any individual
certificate holder or category of certificate holders if the Finance
Director deems it necessary or desirable in order to insure
collection of the tax or to increase the efficiency of its
administration. 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 trust for the
account of the City until payment is made to the Finance Director.
B. The filing of a return shall not preclude the City from
collecting by appropriate action any tax actually due and payable
pursuant to this chapter or taking any other action to enforce the
provisions of this chapter. Each return shall be subject to audit and
verification by the Finance Director or authorized agents of the City,
who are authorized to examine, audit and inspect such books and
records of any operator as may be necessary in their judgment to
verify or ascertain the amount of tax due. The Finance Director or
agent of the City shall not have right of access to, nor examine
records that are not pertinent to ascertaining the amount of tax due
unless the operator fails to provide City with the means of verifying
information relevant to the obligations imposed by this chapter.
M
Section 7: Section 3.16.075 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.075 Duty of Successor of Operator.
A. If an operator who is liable for any tax or penalties under this
chapter sells or otherwise disposes of the hotel operation, his /her
successor shall notify the Finance Director of the date of sale at
least thirty (30) days before the date of sale, or if the decision to sell
was made less than thirty (30) days prior to the actual sale, then
immediately and shall upon withhold a sufficient portion of the
purchase price to equal the amount of any unpaid taxes or penalty
until the selling operator produces a receipt from the Finance
Director showing that the tax or penalty has been paid or a tax
clearance certificate from the Finance Director stating that no tax or
penalty is due. If the seller does not present a receipt or tax
clearance certificate within thirty (30) days after such successor
commences to conduct business, the successor shall deposit the
withheld amount with the Finance Director pending settlement of
the account of the seller.
B. If the successor operator to the hotel operation fails to
withhold a portion of the purchase price as required in subsection
3.16.075(A). The successor operator shall be liable to the City for
the payment of the amount required to be withheld. Within thirty
(30) days after receiving a written request from the successor for a
tax clearance certificate stating that no tax or penalty is due, the
City collector shall either issue the certificate or mail notice to the
successor at its address as it appears on the records of the City
collector of the estimated amount of the tax and penalty that must
be paid as a condition of issuing the certificate.
Section 8: Section 3.16.085 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.085 False and Fraudulent Reports; Penalties.
A. It shall be unlawful for any operator or person to willfully
make, render, sign or verify any false or fraudulent report required
by this chapter with intent to defeat or evade the determination of
any amount required to be paid under this chapter.
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B. If the Finance Director determines that the nonpayment of
any remittance (tax and /or penalty) 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 any penalties stated in
Section 3.16.080.
Section 9: Section 3.16.090 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.090 Enforcement Proceedings; Appeal.
A. If any operator shall fail or refuse to collect the tax or to
make, within the time provided in this chapter, any report and
remittance of the full amount of the tax required by this chapter, the
Finance Director shall use his /her best efforts to obtain information
on which to base an estimate of the tax due. The Finance Director
shall, upon making a determination of the estimated tax or other
violation, provide the operator with written notice of the
determination and the factual basis for the estimated tax or other
violation. The written notice of determination shall be served on the
operator personally or by deposit in the United States mail, postage
prepaid, addressed to the operator at the last known place of
address. The operator may, within ten (10) days after service of
written notice of determination, appeal the determination by filing a
written appeal with the Finance Director specifying the basis of the
appeal and amount of tax or nature of violation contested.
B. If the operator fails to timely appeal a determination by the
Finance Director the determination shall be final and conclusive
and the tax, interest and penalties shall become immediately due
and payable and /or the violation shall be deemed established.
C. If the operator files a timely appeal of the determination, the
Finance Director shall appoint a hearing officer and give the
operator not less than fifteen (15) days written notice of the hearing
on the appeal. The operator shall have the right to present
evidence relevant to the determination and the hearing shall be
conducted in accordance with the general rules applicable to any
administrative hearing. The hearing officer shall submit to the City
Manager a transcript of the hearing together with recommended
findings of fact and conclusions of law. The City Manager shall
consider the material submitted by the hearing officer and render a
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decision within fifteen (15) days after submission. The decision of
the City Manager shall be final.
Section 10: Section 3.16.110 of the Newport Beach Municipal Code is hereby
amended to read as follows:
K�i[difiUl:TT3
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 period of not less than four years, all records
necessary to determine the amount of tax the operator was
required to collect and pay to the City. All retained records shall be
subject to audit as provided in Section 3.16.070. The Finance
Director shall have the right to inspect and /or audit these records at
any time during normal business hours on twenty -four (24) hours
written notice. The records shall be maintained at the operator's
premises or at a location convenient to the Finance Director. The
records shall include at least the following:
A. Daily summaries of room occupancies;
B. A record of each occupancy charge for which exemption is
claimed, the City provided form of exemption, if applicable,
including the name of the individual occupying the room, dates of
occupancy and reasons for exemption;
C. All qualifying rental agreements.
Section 11: Section 3.16.120 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.120 Refunds.
A. Claim Required. Whenever the amount of any tax, interest or
penalty has been overpaid, paid more than once or has been
erroneously or illegally collected or received by the City, the tax
may be refunded as provided in subsections 3.16.120(B) and (C)
provided that a written claim for refund is filed with the Finance
Director. The claim for refund must be filed within three years of the
date of payment, be made on forms furnished by the Finance
Director and be signed by the operator under penalty of perjury.
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B. Claim by Operator. An operator may claim a refund, or take
as credit against taxes collected and remitted, the amount overpaid,
paid more than once or erroneously or illegally collected or received
when it is established in a manner prescribed by the Finance
Director that the person from whom the tax has been collected was
not a transient. However, neither a refund nor a credit shall be
allowed unless the amount of the tax collected has either been
refunded to the transient or credited to rent subsequently payable
by the transient to the operator.
C. Claim by Transient. A transient may obtain a refund of taxes
overpaid or paid more than once or erroneously or illegally
collected or received by the City by filing a claim in the manner
provided in subsection 3.16.120(A), but only when the tax was paid
by the transient directly to the Finance Director, or when the
transient, having paid the tax to the operator, establishes to the
satisfaction of the Finance Director that the transient has been
unable to obtain a refund from the operator who collected the tax.
D. Evidence. No refund shall be paid under the provisions of
this section unless the claimant establishes his /her right by written
evidence and to the satisfaction of the Finance Director.
Section 12: Section 3.16.140 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.16.140 Penalty for Violations.
Any operator or other person who willfully (i) fails or refuses to
register as required by this chapter; (ii) fails to make any return
required to by this chapter; (iii) fails or refuses to furnish a
supplemental return or other data required by the Finance Director;
or (iv) makes a false or fraudulent return or claim, is guilty of a
misdemeanor and is punishable as provided in Section 1.04.010 of
this Code.
Section 13: Section 3.28.010 of the Newport Beach Municipal Code is hereby
amended to read as follows:
14W1411 PI enflT 9- T3
Except where the context otherwise requires, the definitions given
in this section shall govern the construction of this chapter:
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Finance Director. The term "Finance Director" shall mean the
Finance Director of the City of Newport Beach or his or her
designated representative.
Guest. The term "guest" shall mean any individual who exercises
occupancy or is entitled to occupancy by reason of concession,
permit, right of access, license or other agreement for a period of
thirty (30) consecutive calendar days or less, counting portions of
calendar days as full days. Any individual occupying space in a
hotel shall be deemed to be a guest until the period of thirty (30)
days has expired, unless there is a qualifying rental agreement
between the operator and the guest providing for a longer period of
occupancy.
Hotel. The term "hotel" shall mean any structure or any portion of
any structure or the air space within any structure, which is
occupied or intended or designed for occupancy by transients for
dwelling, lodging or sleeping purposes for periods of thirty (30) days
or less. The term hotel includes any inn, residential dwelling unit,
motel, group residential or lodging house, bed and breakfast inn,
single room occupancy hotel, hostel, rental unit, public or private
residential club, mobile home, time -share project, house trailer at a
fixed location, or other structure or portion of a structure.
Individual. The term "individual" shall mean any natural person.
Occupancy. The term "occupancy" shall mean the use or
possession, or the right to use or possession of a specific room or
rooms or portion thereof, in any hotel for dwelling, lodging or
sleeping purposes.
Operator. The term "operator" shall mean the person who is
proprietor of the hotel, whether in the capacity of owner, lessee,
sublessee, mortgagee in possession, licensee, time -share project
owner's association or any other capacity. Where the operator
performs his 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 principal. Compliance
with the provisions of this chapter by either the principal or the
managing agent shall, however, be considered to be compliance by
both.
14
Person. Except as used in the term "guest," the term "person" shall
mean any individual, firm, partnership, joint venture, association,
social club, fraternal organization, joint stock company, corporation,
estate, trust, business trust, receiver, trustee, syndicate, or any
other group or combination acting as a unit.
Qualifying Rental Agreement. The term "qualifying rental
agreement' shall mean a written leasehold agreement signed by
both the operator and guest obligating the guest to pay rent for use
and possession of a room or space in a hotel for a period of not
less than thirty-one (31) consecutive days. The "qualifying rental
agreement' shall be legally enforceable by both the operator and
guest and shall include in its terms both the right to occupy and the
obligation to pay for a room and /or rooms for thirty -one (31) days or
more. "Qualifying rental agreement' expressly excludes:
1. Any agreement, regardless of the rental term, which is
terminated for any reason, by either party, or by mutual consent,
prior to the thirty -first (31 st) consecutive day of occupancy; or,
2. Any agreement that would be unlawful or constitute a
violation of law.
Rent. The term "rent' shall mean the consideration charged,
whether or not received, for the occupancy of space in a hotel
valued in money, whether to be received in money, goods, labor or
otherwise, including all receipts, cash, credits and property and
services of any kind or nature, without any deduction.
Time -share Interest. The term "time -share interest' shall mean
either a time -share estate or a time -share use (as those terms are
defined in Section 11003.5 of the Business and Professions Code)
and any similar form of ownership involving a right in perpetuity, for
life, or for a term of years, to occupy any room, space or area in a
time -share project.
Time -share Project. The term "time -share project' shall mean a
structure or real property (including airspace) in which a time -share
interest has been sold.
15
Section 14: Section 3.28.035 of the Newport Beach Municipal Code is
hereby amended to read as follows:
3.28.035 Exemptions.
No fee shall be imposed upon:
A. Any person as to whom, or any occupancy as to which, it is
beyond the power of the City to impose the fee specified in this
chapter, and only when in the performance of official duties thereof;
B. Any officer or employee of a foreign government who is
exempt by reason of express provision of Federal Law or
international treaty;
C. A transient occupying a hotel pursuant to a qualifying rental
agreement entered into prior to the first (1 st) day of occupancy;
D. An employee of an airline company who is occupying a hotel
room in the course of his or her employment, but only when the
room is rented by the airline employer pursuant to a qualifying
rental agreement, that has been pre- approved by the Finance
Director;
E. Any person or guest occupying a hotel room provided
without rent charged (complimentary) to the person or guest by the
operator, including but not limited to:
1. Rooms provided to charitable organizations;
2. Rooms provided to meeting planners who may book future
hotel rooms and provide business and conferencing opportunities
for the economic benefit of the City;
3. Rooms provided to displeased guests; and /or
4. Rooms provided to hotel employees.
F. No exemption shall be granted except pursuant to an
application filed when the rent is collected and under penalty of
perjury upon a form prescribed by the Finance Director. It is the
guest's responsibility to provide necessary proof of the exemption.
16
Section 15: Section 3.28.050 of the Newport Beach Municipal Code is hereby
amended to read as follows:
It shall be the duty of every operator liable for the collection and
payment to the City of any fee imposed by this chapter to keep and
preserve, for a period of not less than four years, all records
necessary to determine the amount of fees the operator was
required to collect and pay to the City. All retained records shall be
subject to audit as provided in Section 3.16.070. The Finance
Director shall have the right to inspect and /or audit these records at
any time during normal business hours on twenty -four (24) hours
written notice. The records shall be maintained at the operator's
premises or at a location convenient to the Finance Director. The
records shall include at least the following:
A. Daily summaries of room occupancies;
B. A record of each occupancy charge for which exemption is
claimed, the City provided exemption form, if applicable, including
the name of the individual occupying the room, dates form
occupancy and reasons for exemption; and
C. All qualifying rental agreements.
Section 16: Section 3.28.055 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.28.055 Enforcement Procedures, Appeal.
The Finance Director shall enforce any failure or refusal of any
operator to collect the fee, or make any report or remittance of the
fee, required by this chapter in the same manner and subject to the
same conditions and procedures as provided in Section 3.16.090.
Section 17: Section 3.28.060 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.28.060 Duty of Successor of Operator.
A. If an operator who is liable for any fee or penalties under this
chapter sells or otherwise disposes of the hotel operation, his /her
successor shall notify the Finance Director of the date of sale at
17
least thirty (30) days before the date of sale, or if the decision to sell
was made less than thirty (30) days prior to the actual sale, then
immediately and shall upon withhold a sufficient portion of the
purchase price to equal the amount of any unpaid fees or penalty
until the selling operator produces a receipt from the Finance
Director showing that the fee or penalty has been paid or a
clearance certificate from the Finance Director stating that no fee or
penalty is due. If the seller does not present a receipt or clearance
certificate within thirty (30) days after such successor commences
to conduct business, the successor shall deposit the withheld
amount with the Finance Director pending settlement of the account
of the seller.
B. If the successor operator fails to withhold a portion of the
purchase price as required in subsection (A) of this section, the
successor operator shall be liable to the City for the payment of the
amount required to be withheld. Within thirty (30) days after
receiving a written request from the successor for a clearance
certificate stating that no fee or penalty is due, the City collector
shall either issue the certificate or mail notice to the successor at its
address as it appears on the records of the City collector of the
estimated amount of the fee and penalty that must be paid as a
condition of issuing the certificate.
Section 18: Section 3.28.070 of the Newport Beach Municipal Code is hereby
amended to read as follows:
[cam {:111H111:;mrrr o"
A. Claim Required. Whenever the amount of any fee, 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 subsections (B) and (C)
of this section; provided, that a claim in writing therefore, stating
under penalty of perjury the specific grounds upon which the claim
is founded, is filed with the Finance Director within three years of
the date of payment. The claim shall be on forms furnished by the
Finance Director.
B. Claim by Operator. An operator may claim a refund, or take
as credit against visitor service fees collected and remitted, the
amount overpaid, paid more than once or erroneously or illegally
IN
collected or received when it is established in a manner prescribed
by the Finance Director that the person from whom the fee has
been collected was not a guest; provided, however, that neither a
refund nor a credit shall be allowed unless the amount of the fee so
collected has either been refunded to the guest or credited to rent
subsequently payable by the guest to the operator.
C. Claim by Guest. A guest may obtain a refund of visitor
service fees overpaid or paid more than once or erroneously or
illegally collected or received by the City by filing a claim in the
manner provided in subsection (A) of this section, but only when
the fee was paid by the guest directly to the Finance Director, or
when the guest, having paid the fee to the operator, establishes to
the satisfaction of the Finance Director that the guest has been
unable to obtain a refund from the operator who collected the fee.
D. Evidence. No refund shall be paid under the provisions of
this section unless the claimant establishes his right thereto by
written records showing entitlement thereto.
Section 19: Section 3.28.085 of the Newport Beach Municipal Code is hereby
amended to read as follows:
3.28.085 Penalty for Violations.
Any operator or other person who willfully (i) fails or refuses to
register as required by this chapter; (ii) fails to make any return
required to by this chapter; (iii) fails or refuses to furnish a
supplemental return or other data required by the Finance Director;
or (iv) makes a false or fraudulent return or claim, is guilty of a
misdemeanor and is punishable as provided in Section 1.04.010.
Section 20: If any section, subsection, sentence, clause or phrase of this
ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall
not affect the validity or constitutionality of the remaining portions of this ordinance. The
City Council hereby declares that it would have passed this ordinance, and each
section, subsection, clause or phrase hereof, irrespective of the fact that any one or
more sections, subsections, sentences, clauses and phrases be declared
unconstitutional.
Section 21: The City Council finds that this ordinance is not subject to the
California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the
19
activity will not result in a direct or reasonably foreseeable indirect physical change in
the environment) and 15060(c)(3) (the activity is not a project as defined in Section
15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3,
because it has no potential for resulting in physical change to the environment, directly
or indirectly.
Section 22: The Mayor shall sign and the City Clerk shall attest to the passage
of this ordinance. The City Clerk shall cause the same to be published once in the
official newspaper of the City, and it shall be effective thirty (30) days after its adoption.
This ordinance was introduced at a regular meeting of the City Council of the City
of Newport Beach, held on the 24 day of July, 2012, and adopted on the 14 day of
August, 2012, by the following vote, to wit:
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT COUNCILMEMBERS
NANCY GARDNER, MAYOR
APPROVED AS TO FORM:
THE CITY ATTORNEY'S OFFICE
AARON C. HARP, CITY ATTORNEY
ATTEST:
LEILANI BROWN, CITY CLERK
20
REDLINE TOT SECTIONS
3.16.020 Definitions.
Except where the context otherwise requires, the definitions in this section shall govern
the interpretation and construction of the terms of this chapter:
Finance dm'^'stFat'.,^ Seew'Ges Director. The term "Finance dM' stFatPve c,,..,•np.,;
Director" shall mean the Finance^dMiRiStFative c^ ^°^^° Director of the City of Newport
Beach or his /her designated representative.
City. The term "City" shall mean the City of Newport Beach.
Hotel. The term "hotel' shall mean any structure, or any portion of any structure or the
air space within any structure, which is occupied or intended or designed for occupancy
by transients for dwelling, lodging or sleeping purposes for periods of thirty (30) days or
less. The term hotel includes any inn, residential dwelling unit, motel, group residential
or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental
unit, public or private residential club, mobile home, time -share project, house trailer at
a fixed location, or other structure or portion of a structure.
The term "hotel' shall also include a space, campsite or similar facility which is
occupied, or intended or designed for occupancy, by a recreational vehicle, camper,
van, trailer, motor home or similar vehicle used, or intended for use as a dwelling,
lodging or for sleeping purposes.
Including. The term "including" shall mean "including, without limitation" and "including,
but not limited to" and shall not be interpreted to imply any limitation on the more
general preceding provision unless otherwise expressly stated.
Individual. The term "individual' shall mean any natural person.
Occupancy. The term "occupancy' shall mean the use or possession, or the right to use
or possession of a specific campsite, space, area, room or rooms in any hotel for the
purpose of dwelling, lodging or sleeping.
Operator. The term "operator" shall mean the person who is proprietor of the hotel,
whether in the capacity of owner, lessee, sublessee, mortgagee in possession,
licensee, time -share project owner's association or any other capacity. Where the
operator performs his 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 principal.
Compliance with the provisions of this chapter by either the principal or the managing
agent shall, however, be considered to be compliance by both.
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Person. The term "person" shall mean any individual, firm, partnership, joint venture,
association, social club, fraternal organization, joint stock company, corporation, estate,
trust, business trust, receiver, trustee, syndicate, or any other group or combination
acting as a unit.
Qualifying Rental Agreement. The term "Qualifying Rental Agreement" shall mean a
written leasehold agreement signed by both the operator and transient obligating the
transient to pay rent for use and possession of a room or space in a hotel for a period of
not less than thirty -one (31) consecutive days. The Qualifying Rental Agreement shall
be legally enforceable by both the operator and transient and shall include in its terms
both the right to occupy and the obligation to pay for a room or rooms for thirty -one (31)
days or more. "Qualifying Rental Agreement" expressly excludes:
A. Any agreement, regardless of the rental term, which is terminated for any reason,
by either party, or by mutual consent, prior to the thirty -first (31st) consecutive day of
occupancy; or,
B. Any agreement that would be unlawful or constitute a violation of law.
Rent. The term "rent" shall mean the consideration charged, whether or not received, for
the occupancy of space in a hotel valued in money, whether to be received in money,
goods, labor or otherwise, including all receipts, cash, credits, and property and
services of any kind or nature, without any deduction. Rent shall include the
consideration charged by an operator for accommodations, including any (1) un-
refunded advance rental deposits or (2) separate charges levied for items or services
which are part of such accommodations including, but not limited to, furniture, fixtures,
appliances, linens, towels, non - coin - operated safes, utilities (such as energy
surcharges) and maid service.
Time -share Interest. The term "Time -share Interest" shall mean either a time -share
estate or a time -share use (as those terms are defined in Section 11003.5 of the
Business and Professions Code) and any similar form of ownership involving a right in
perpetuity, for life, or for a term of years, to occupy any room, space or area in a time-
share project.
Time -share Owner. The term "Time -share Owner' shall mean any person or entity that
owns a time -share interest.
Time -share Project. The term "Time -share Project" shall mean a structure or real
property (including airspace) in which a time -share interest has been sold.
Transient. The term "transient" shall mean any individual who exercises occupancy or is
entitled to occupancy by reason of concession, permit, right of access, license or other
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agreement for a period of thirty (30) consecutive calendar days or less, counting
portions of calendar days as full days. Any individual occupying space in a hotel shall be
deemed to be a transient until the period of thirty (30) days has expired, and the tax
imposed by this chapter shall be due upon all rent collected or accruing prior to the
thirty -first (31st) consecutive day of occupancy unless occupancy extends to the thirty -
first (31st) day or thereafter. The term transient shall not include any person who
occupies any room, space or area in a time -share project pursuant to a time -share
interest and without paying rent including: (a) a time -share owner; (b) a member of the
family or guest of the time -share owner; (c) any person who is entitled to occupancy
pursuant to any time -share exchange program, or any similar program; and (d) any
person entitled to occupancy pursuant to any exchange or incentive program involving
or sponsored by the operator of the time -share project.
3.16.030 Tax Imposed.
For the privilege of occupancy in any hotel, each transient is subject to and shall pay a
tax in the amount of nine percent (9 %) of the rent charged by the operator. The tax
constitutes a debt owed by the transient to the City, which is extinguished only by
payment to the operator or to the City. The transient shall pay the tax to the operator of
the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate
share of the tax shall be paid with each installment. The unpaid tax shall be due when
the transient ceases to occupy space in the hotel. If for any reason the tax due is not
paid to the operator of the hotel, the FinanceA FRiRistrative c^^^ ^^° Director may
require that such tax shall be paid directly to the FinanceAdm'n'° +rAt'vP Sepd .os
Director.
3.16.040 Exemptions.
No tax shall be imposed upon:
A. Any person as to whom, or any occupancy as to which, it is beyond the power of
the City to impose the tax specified in this chapter, and only when in the performance of
official duties thereof;
B. Any officer or employee of a foreign government who is exempt by reason of
express provision of Federal Law or international treaty;
C. A transient occupying a hotel pursuant to a Qualifying Rental Agreement entered
into prior to the first (1st) day of occupancy;
D. An employee of an airline company who is occupying a hotel room in the course
of his or her employment, but only when the room is rented by the airline employer
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pursuant to a Qualifying Rental Agreement, that has been pre- approved by the
Finance°'^,'^' °trati P Services Director;
E. Any person or transient occupying a hotel room provided without rent charged
(complimentary) to the person or transient by the operator, including but not limited to:
1. Rooms provided to charitable organizations;
2. Rooms provided to meeting planners who may book future hotel rooms and
provide business and conferencing opportunities for the economic benefit of the
City;
3. Rooms provided to displeased guests; and /or
4. Rooms provided to hotel employees.
€F. No exemption shall be granted except pursuant to an application filed when the
rent is collected and under penalty of perjury upon a form prescribed by the
FinanceAdm'n'strat' e Services Director. It is the transient's responsibility to provide
necessary proof of the exemption.
3.16.050 Operator's Collection Duties.
A. Each operator shall collect the tax imposed by this chapter to the same extent
and at the same time as the rent is collected from every transient. The amount of tax
shall be separately stated from the amount of the rent charged, and each transient shall
receive a receipt for payment from the operator. No operator of hotel shall advertise or
state in any manner, directly or indirectly, that all or a portion of the tax will be assumed,
waived, absorbed or refunded by the operator.
B. Notwithstanding the provisions of subsection A, the operator shall not be required
to separately state the rent and the tax on receipts and books of record, when room
accommodations constitute only a portion of a collective group of services, privileges,
entitlement or benefits ( "benefits ") that include, at a minimum, room accommodations
and food and beverage services or room accommodations and at least one other
benefit having an ascertainable fair market value ( "special package ") offered for one
fixed charge ( "special package rate "), provided the operator complies with subsection
3.16.050(C).
C.1. The operator shall file with the Finance^dministFatve c^ ^° ^^° Director a
statement of each special package on a form ( "special package application ") provided
by the Finance dm'^'StFative Serv'Ges Director. The special package application shall
detail the benefits of the special package and an itemization of that portion of the
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special package that is rent and tax and each of the benefits. The operator shall provide
written evidence to establish the claimed fair market value of each benefit other than
rent and tax. The Finance ^d- Ministra -five c° °c; Director shall mark the date of receipt
on the special package application and review the submitted information to determine if
sufficient information is provided to verify that the value of the benefits, rent and tax.
The operator shall designate a specific name or number to the special package as part
of the special package application. The special package application shall not be
accepted unless accompanied by a fee for processing that has been established by
resolution of the City Council.
2. The name or number designated on the special package application shall
appear on all receipts and books of record whenever the special package is sold.
3. If the special package application is deemed incomplete, the
c°^ ^^°° Director will advise the operator of any required
changes within fourteen (14) City business days. The operator must either make
the required changes and resubmit the special package application or comply with
subsection 3.16.050(A).
4. The Finance^A'miRistrative c^^^^°° Director shall approve, conditionally
approve or disapprove the special package within fourteen (14) days of receipt of a
complete special package application. In the event of disapproval the
Finance ^dFR'^'str; vP c °s Director shall give the operator written notice of
the reasons for disapproval. The effective date of the special package rate shall be
the date on which the Finance^'^•'^istrative c°^^^^° Director receives a complete
special package application that is approved. A new special package application
shall be submitted whenever the operator changes the rent or benefits of any
previously approved special package.
D. The tax shall apply only to the amount of rent identified in the special package
that has been approved by the Finance AArninistrativP c°^x°^as Director.
E. If an operator fails to comply with subsection 3.16.050(A) and also fails to obtain
approval of a special package rate pursuant to subsection 3.16.050(C), the tax
( "imputed rate ") shall be the lesser of (i) the amount collected for the total special
package or (ii) an amount equal to the median average double occupancy room rate for
the accommodations as posted in the room pursuant to the requirements of Section
1863 of the Civil Code (or any successor section).
F. Notwithstanding subsections 3.16.050(C) and 3.16.050(D), if any audit reveals
that the gross income to the operator attributable to the rent portion of special package
( "audited rate ") is more than ten percent (10 %) greater than the rent specified in the
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special package rate, the rent for purposes of calculating the tax shall be the audited
rate. In the event subsection 3.16.050(E) applies and the audited rate is greater than
the imputed rate, the rent for tax purposes shall be the audited rate. The audited rate
shall be determined by an audit of a sample of the special packages sold by the
operator within each special package category. The audited rate shall be the amount of
the special package rate remaining after deducting the fair market value of each of the
benefits included in the special package rate other than room accommodations and tax.
Where more than one type of special package is offered within the audit period, each
special package shall be audited separately for purposes of determining the applicable
audited rate. Credits or offsets shall not be allowed between different special packages.
3.16.060 Registration of Hotel.
Within thirty (30) days after commencing business each operator of any hotel renting
occupancy to transients shall register the hotel with the Fin ance^HM'nistrativP c°^^^°°
Director and obtain a "transient occupancy registration certificate' to be at all times
posted in a conspicuous place on the premises. The certificate shall, among other
things, state the following:
A. The name of the operator;
B. The address of the hotel;
C. The date upon which the certificate was issued;
D. The following statement: 'This transient occupancy registration certificate
signifies that the person named on the certificate has fulfilled the requirements of the
Uniform Transient Occupancy Tax Ordinance (Chapter 3.16 of the Newport Beach
Municipal Code) by registering with the Finance ^dM'^' ° +FAtiV^ °^^^ ^^° Director for the
purpose of collecting the tax from transients and remitting the tax to the
Finance dmon'stratove SeFViGes Director. This certificate does not authorize any person
to conduct any unlawful business, to conduct any lawful business in an unlawful manner
or to operate a hotel without strictly complying with all local laws, including those
requiring a permit from any board, commission, department or office of the City. This
certificate does not constitute a permit."
3.16.070 Reporting and Remitting.
A. Each operator shall, on a form provided by the City, make a return to the
Finance^dMiRistratove c° ^^^°° Director of the total rents charged and received, the
amount of tax collected for transient occupancies, the number of rental units available
on the premises, and such other information as the Finance A.drn'n'gtr ; #'.,o con,lrPg
Director may reasonably require. The return shall be made on or before the last day of
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the month following the close of each calendar quarter or on the day specified by the
Finance °d^•'^'°+• °" ••^ °^ ^•'^^° Director if a different reporting period has been
established. Returns are considered made and taxes paid only upon receipt of the tax
return and the tax by the City. At the time the return is filed, the full amount of the tax
collected shall be remitted to the Finance^AA-;,iRist�e —SeR.xirps Director. The
Finance Administrative Se Director may establish either shorter or longer reporting
periods for any individual certificate holder or category of certificate holders if the
Finance ^dm'Ristra+^•^ S-^^•' ^^° Director deems it necessary or desirable in order to
insure collection of the tax or to increase the efficiency of its administration. 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 trust for the account of
the City until payment is made to the Finance°r mini°* .rative c°^ ^^°s Director.
B. The filing of a return shall not preclude the City from collecting by appropriate
action any tax actually due and payable pursuant to this chapter or taking any other
action to enforce the provisions of this chapter. Each return shall be subject to audit and
verification by the Finance °d^•'^' °'•^'^•^ °^••^ ^es Director or authorized agents of the
City, who are authorized to examine, audit and inspect such books and records of any
operator as may be necessary in their judgment to verify or ascertain the amount of tax
due. The Finance °d^•'^' °'•^'^V^ c^^•'^^° Director or agent of the City shall not have
right of access to, nor examine records that are not pertinent to ascertaining the amount
of tax due unless the operator fails to provide City with the means of verifying
information relevant to the obligations imposed by this chapter.
3.16.075 Duty of Successor of Operator.
A. If an operator who is liable for any tax or penalties under this chapter sells or
otherwise disposes of the hotel operation, his /her successor shall notify the
Finance°'^,'^'°+•^'^•^ S^^^ ^^° Director of the date of sale at least thirty (30) days
before the date of sale, or if the decision to sell was made less than thirty (30) days prior
to the actual sale, then immediately and shall upon withhold a sufficient portion of the
purchase price to equal the amount of any unpaid taxes or penalty until the selling
operator produces a receipt from the Finance AdministFative. Rewi es Director showing
that the tax or penalty has been paid or a tax clearance certificate from the
Finance °dMiR' °tF ; #iV^ °^•vine° Director stating that no tax or penalty is due. If the seller
does not present a receipt or tax clearance certificate within thirty (30) days after such
successor commences to conduct business, the successor shall deposit the withheld
amount with the Finance ^dMiR' °+r ^}' •^ c^^x'^^° Director pending settlement of the
account of the seller.
B. If the successor operator to the hotel operation fails to withhold a portion of the
purchase price as required in subsection 3.16.075(A). The successor operator shall be
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liable to the City for the payment of the amount required to be withheld. Within thirty (30)
days after receiving a written request from the successor for a tax clearance certificate
stating that no tax or penalty is due, the City collector shall either issue the certificate or
mail notice to the successor at its address as it appears on the records of the City
collector of the estimated amount of the tax and penalty that must be paid as a condition
of issuing the certificate.
3.16.085 False and Fraudulent Reports; Penalties.
A. It shall be unlawful for any operator or person to willfully make, render, sign or
verify any false or fraudulent report required by this chapter with intent to defeat or
evade the determination of any amount required to be paid under this chapter.
B. If the Finance^'^•'^'°'•^}' •^ c^^•'^^° Director determines that the nonpayment of
any remittance (tax and /or penalty) 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
any penalties stated in Section 3.16.080.
3.16.090 Enforcement Proceedings; Appeal.
A. If any operator shall fail or refuse to collect the tax or to make, within the time
provided in this chapter, any report and remittance of the full amount of the tax required
by this chapter, the Finance"dministpative Sep,; ^^^ Director shall use his /her best
efforts to obtain information on which to base an estimate of the tax due. The
Finance"dMiRistrat^•^ c^^^^°° Director shall, upon making a determination of the
estimated tax or other violation, provide the operator with written notice of the
determination and the factual basis for the estimated tax or other violation. The written
notice of determination shall be served on the operator personally or by deposit in the
United States mail, postage prepaid, addressed to the operator at the last known place
of address. The operator may, within ten (10) days after service of written notice of
determination, appeal the determination by filing a written appeal with the
Finance A.drRiRistra'^v^ Director specifying the basis of the appeal and amount
of tax or nature of violation contested.
B. If the operator fails to timely appeal a determination by the Finance Ad
Sys Director the determination shall be final and conclusive and the tax, interest
and penalties shall become immediately due and payable and /or the violation shall be
deemed established.
C. If the operator files a timely appeal of the determination, the
Finance dmiR'° +r^+;.,^ c^^,; ^^s Director shall appoint a hearing officer and give the
operator not less than fifteen (15) days written notice of the hearing on the appeal. The
operator shall have the right to present evidence relevant to the determination and the
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hearing shall be conducted in accordance with the general rules applicable to any
administrative hearing. The hearing officer shall submit to the City Manager a transcript
of the hearing together with recommended findings of fact and conclusions of law. The
City Manager shall consider the material submitted by the hearing officer and render a
decision within fifteen (15) days after submission. The decision of the City Manager
shall be final.
3.16.110 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 period of not less than four
years, all records necessary to determine the amount of tax the operator was required
to collect and pay to the City. All retained records shall be subject to audit as provided in
Section 3.16.070. The Finance ^dPA'^'gtrat* v^ c^^•'^^° Director shall have the right to
inspect and /or audit these records at any time during normal business hours on twenty -
four (24) hours written notice. The records shall be maintained at the operator's
premises or at a location convenient to the Finance ^d- MiRi9 -#F; Ve- S^^^^^° Director.
The records shall include at least the following:
A. Daily summaries of room occupancies;
B. A record of each occupancy charge for which exemption is claimed, the City
provided form of exemption, if applicable, including the name of the individual occupying
the room, dates of occupancy and reasons for exemption;
C. All qualifying rental agreements.
3.16.120 Refunds.
A. Claim Required. Whenever the amount of any tax, interest or penalty has been
overpaid, paid more than once or has been erroneously or illegally collected or received
by the City, the tax may be refunded as provided in subsections 3.16.120(B) and (C)
provided that a written claim for refund is filed with the FlnanCendm'n'strAt'vo Spndrps
Director. The claim for refund must be filed within three years of the date of payment, be
made on forms furnished by the Finance' ^,,..,'..'strative c,,..,,,.es Director and be signed
by the operator under penalty of perjury.
B. Claim by Operator. An operator may claim a refund, or take as credit against
taxes collected and remitted, the amount overpaid, paid more than once or erroneously
or illegally collected or received when it is established in a manner prescribed by the
Finance ^dMiRistra vP °^^•'^^° Director that the person from whom the tax has been
collected was not a transient. However, neither a refund nor a credit shall be allowed
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unless the amount of the tax collected has either been refunded to the transient or
credited to rent subsequently payable by the transient to the operator.
C. Claim by Transient. A transient may obtain a refund of taxes overpaid or paid
more than once or erroneously or illegally collected or received by the City by filing a
claim in the manner provided in subsection 3.16.120(A), but only when the tax was paid
by the transient directly to the Finance"G'^•'Ri6trative c°^^^°° Director, or when the
transient, having paid the tax to the operator, establishes to the satisfaction of the
Finance A.drn'n'str,+, „o Rew' eg; Director that the transient has been unable to obtain a
refund from the operator who collected the tax.
D. Evidence. No refund shall be paid under the provisions of this section unless the
claimant establishes his /her right by written evidence and to the satisfaction of the
FinanceA.dm'^'strafi •^ °^^^ ^^° Director.
3.16.140 Penalty for Violations.
Any operator or other person who willfully (i) fails or refuses to register as required by
this chapter; (ii) fails to make any return required to by this chapter; (iii) fails or refuses
to furnish a supplemental return or other data required by the Finance” &AiRiRtrative
Sys Director; or (iv) makes a false or fraudulent return or claim, is guilty of a
misdemeanor and is punishable as provided in Section 1.04.010 of this Code.
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Redline Visitor's Service Fee Sections
3.28.010 Definitions.
Except where the context otherwise requires, the definitions given in this section shall
govern the construction of this chapter:
Finance dMiRistrat^•^ SewiGes Director. The term "Finance"dMiRistrative SeFV Ges
Director" shall mean the Finance dm'n'StFati •^ c^ ^°^^° Director of the City of Newport
Beach or his or her designated representative.
Guest. The term "guest' shall mean any individual who exercises occupancy or is
entitled to occupancy by reason of concession, permit, right of access, license or other
agreement for a period of thirty (30) consecutive calendar days or less, counting
portions of calendar days as full days. Any individual occupying space in a hotel shall be
deemed to be a guest until the period of thirty (30) days has expired, unless there is a
qualifying rental agreement between the operator and the guest providing for a longer
period of occupancy.
Hotel. The term "hotel' shall mean any structure or any portion of any structure or the air
space within any structure, which is occupied or intended or designed for occupancy by
transients for dwelling, lodging or sleeping purposes for periods of thirty (30) days or
less. The term hotel includes any inn, residential dwelling unit, motel, group residential
or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental
unit, public or private residential club, mobile home, time -share project, house trailer at
a fixed location, or other structure or portion of a structure.
Individual. The term "individual' shall mean any natural person.
Occupancy. The term "occupancy" shall mean the use or possession, or the right to use
or possession of a specific room or rooms or portion thereof, in any hotel for dwelling,
lodging or sleeping purposes.
Operator. The term `operator' shall mean the person who is proprietor of the hotel,
whether in the capacity of owner, lessee, sublessee, mortgagee in possession,
licensee, time -share project owner's association or any other capacity. Where the
operator performs his 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 principal.
Compliance with the provisions of this chapter by either the principal or the managing
agent shall, however, be considered to be compliance by both.
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Person. Except as used in the term "guest," the term "person" shall mean any individual,
firm, partnership, joint venture, association, social club, fraternal organization, joint stock
company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any
other group or combination acting as a unit.
Qualifying Rental Agreement. The term "qualifying rental agreement' shall mean a
written leasehold agreement signed by both the operator and guest obligating the guest
to pay rent for use and possession of a room or space in a hotel for a period of not less
than thirty -one (31) consecutive days. The "qualifying rental agreement' shall be legally
enforceable by both the operator and guest and shall include in its terms both the right
to occupy and the obligation to pay for a room and /or rooms for thirty -one (31) days or
more. "Qualifying rental agreement' expressly excludes:
1. Any agreement, regardless of the rental term, which is terminated for any
reason, by either party, or by mutual consent, prior to the thirty -first (31st)
consecutive day of occupancy; or,
2. Any agreement that would be unlawful or constitute a violation of law.
Rent. The term "rent' shall mean the consideration charged, whether or not received, for
the occupancy of space in a hotel valued in money, whether to be received in money,
goods, labor or otherwise, including all receipts, cash, credits and property and services
of any kind or nature, without any deduction.
Time -share Interest. The term "time -share interest' shall mean either a time -share
estate or a time -share use (as those terms are defined in Section 11003.5 of the
Business and Professions Code) and any similar form of ownership involving a right in
perpetuity, for life, or for a term of years, to occupy any room, space or area in a time-
share project.
Time -share Project. The term "time -share project' shall mean a structure or real
property (including airspace) in which a time -share interest has been sold.
3.28.035 Exemptions.
No fee shall be imposed upon:
A. Any person as to whom, or any occupancy as to which, it is beyond the power of
the City to impose the fee specified in this chapter, and only when in the performance of
official duties thereof;
B. Any officer or employee of a foreign government who is exempt by reason of
express provision of Federal Law or international treaty;
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C. A transient occupying a hotel pursuant to a qualifying rental agreement entered
into prior to the first (1st) day of occupancy;
D. An employee of an airline company who is occupying a hotel room in the course
of his or her employment, but only when the room is rented by the airline employer
pursuant to a qualifying rental agreement, that has been pre- approved by the
Finance ^drninistratmvp c°^^^°° Director;
E. Any person or quest occupying a hotel room provided without rent charged
(complimentary) to the person or quest by the operator, including but not limited to:
1. Rooms provided to charitable organizations;
2. Rooms provided to meeting planners who may book future hotel rooms and
provide business and conferencing opportunities for the economic benefit of the
City;
3. Rooms provided to displeased guests: and /or
4. Rooms provided to hotel employees.
F €. No exemption shall be granted except pursuant to an application filed when the
rent is collected and under penalty of perjury upon a form prescribed by the
Finance*^.'^'°+.^". ,^ Sep- xiges Director. It is the guest's responsibility to provide
necessary proof of the exeption.
3.28.050 Records.
It shall be the duty of every operator liable for the collection and payment to the City of
any fee imposed by this chapter to keep and preserve, for a period of not less than four
years, all records necessary to determine the amount of fees the operator was required
to collect and pay to the City. All retained records shall be subject to audit as provided in
Section 3.16.070. The Finance^^'^•'^' ^'• - ^" •^ S^^^^^^ Director shall have the right to
inspect and /or audit these records at any time during normal business hours on twenty -
four (24) hours written notice. The records shall be maintained at the operator's
premises or at a location convenient to the Finance^dmOR'stratm •^ R^^•'^^^ Director.
The records shall include at least the following:
A. Daily summaries of room occupancies;
B. A record of each occupancy charge for which exemption is claimed, the City
provided exemption form, if applicable, including the name of the individual occupying
the room, dates form occupancy and reasons for exemption; and
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C. All qualifying rental agreements.
3.28.055 Enforcement Procedures, Appeal.
The Finance "^'^•'^'s+..,tive Sepeirer Director shall enforce any failure or refusal of any
operator to collect the fee, or make any report or remittance of the fee, required by this
chapter in the same manner and subject to the same conditions and procedures as
provided in Section 3.16.090.
3.28.060 Duty of Successor of Operator.
A. If an operator who is liable for any fee or penalties under this chapter sells or
otherwise disposes of the hotel operation, his /her successor shall notify the
Finance °dFA'^' °trati P SPRxiges Director of the date of sale at least thirty (30) days
before the date of sale, or if the decision to sell was made less than thirty (30) days prior
to the actual sale, then immediately and shall upon withhold a sufficient portion of the
purchase price to equal the amount of any unpaid fees or penalty until the selling
operator produces a receipt from the Finance dm4n ;strA +,.,o Sews es Director showing
that the fee or penalty has been paid or a clearance certificate from the
Finance A.dM'^'°tFAti.,,, c,...,ig;es Director stating that no fee or penalty is due. If the
seller does not present a receipt or clearance certificate within thirty (30) days after such
successor commences to conduct business, the successor shall deposit the withheld
amount with the FinanceAnm'^', #r ;# •^ c^^•'^^° Director pending settlement of the
account of the seller.
B. If the successor operator fails to withhold a portion of the purchase price as
required in subsection (A) of this section, the successor operator shall be liable to the
City for the payment of the amount required to be withheld. Within thirty (30) days after
receiving a written request from the successor for a clearance certificate stating that no
fee or penalty is due, the City collector shall either issue the certificate or mail notice to
the successor at its address as it appears on the records of the City collector of the
estimated amount of the fee and penalty that must be paid as a condition of issuing the
certificate.
3.28.070 Refunds.
A. Claim Required. Whenever the amount of any fee, 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 subsections
(B) and (C) of this section; provided, that a claim in writing therefore, stating under
penalty of perjury the specific grounds upon which the claim is founded, is filed with the
Finance ^drninistrative Rew'Aes Director within three years of the date of payment. The
claim shall be on forms furnished by the Finance°r1w 1n1 °' .r^" ge R°^^^°° Director.
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B. Claim by Operator. An operator may claim a refund, or take as credit against
visitor service fees collected and remitted, the amount overpaid, paid more than once or
erroneously or illegally collected or received when it is established in a manner
prescribed by the Finance"dmiRistrative c°^^^°° Director that the person from whom
the fee has been collected was not a guest; provided, however, that neither a refund nor
a credit shall be allowed unless the amount of the fee so collected has either been
refunded to the guest or credited to rent subsequently payable by the guest to the
operator.
C. Claim by Guest. A guest may obtain a refund of visitor service fees overpaid or
paid more than once or erroneously or illegally collected or received by the City by filing
a claim in the manner provided in subsection (A) of this section, but only when the fee
was paid by the guest directly to the Finance dFRiRi6tFatiVB c°^fi^°° Director, or when
the guest, having paid the fee to the operator, establishes to the satisfaction of the
Finance Administrative. c°^^^°° Director that the guest has been unable to obtain a
refund from the operator who collected the fee.
D. Evidence. No refund shall be paid under the provisions of this section unless the
claimant establishes his right thereto by written records showing entitlement thereto.
3.28.085 Penalty for Violations.
Any operator or other person who willfully (i) fails or refuses to register as required by
this chapter; (ii) fails to make any return required to by this chapter; (iii) fails or refuses
to furnish a supplemental return or other data required by the FinanceAdmiRistFative
Sys Director; or (iv) makes a false or fraudulent return or claim, is guilty of a
misdemeanor and is punishable as provided in Section 1.04.010.
15
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CITY OF NEWPORT BEACH
City Council Minutes
City Council Study Session - 4:00 p.m.
July 10, 2012— 4 :00 p.m-
I. ROLL CALL - 4:00 pain
Present: Mayor Gardner, Mayor Pro Tem Curry, Council Member Rosansky, Council Member Hill,
Council Member Henn, Council Member Selich / ,y
Excused: Council Member Daigle
II. CURRENT BUSINESS
1. 'CLARIFICATION OF ITEMS ON THE CONSENT CALENDAR -None
2. SHIPS TO REEFS PRESENTATION. /100 -20121
Joel Geldin, Chairman and Chief Executuv`e-.Officer of California Ships to Reef, a non - profit
organization,. thanked Council for the opportunity to speak7and provided a PowerPoint
presentation on the organization's plan to` establi6h,iiiregional system of artificial reefs along
the California coast to improve and enhance, the Califoriti "fish, plant and marine ecosystem,
and to enhance the tourism industry that is centered -on fishingtiand diving. He addressed
current efforts, their pi�U7Vdse, available d ommiesioned surplus ships, current Federal
conditions, economic benefits of artificial reeng, underwater art, materials that can be used
for reefing, SCUBA tourism, economic benefits Cal fornia as a dive destination, ecological and
educational compon'efats, factors effecting reefing costs, proposed projects, funding sources,
actions by other cities too `allow' artificial reefing, and the possibility of the City partnering with
his organization.
In response to Council',Member\Henris question, Mr. Geldin addressed the rules changed by
the Federal Government relative Eo the types of ships available for artificial reefing, noting
that any ship built with insulating utaterials such as Polychlorinal Biphenyls (PCB) were to
be strieken from the list.
Dan Purcelhexpressed concerns about potential problems and risks with theprogram and the
impact on tlieGsea lion population. -
$. REQUEST TO AMENDIrTHE ORDINANCE REGARDING THE TAXATION OF HOTEL
ROOMS. /100 -2012/ - .
Assistant City Manager Smith referenced the staff report and indicated that staff is looking
for direction from Council regarding complimentary (comped) rooms, noting that the City is
currently collecting taxes on complimentary rooms.
Finance Director McCraner addressed the current calculation for the tax rate.
Mayor Pro Tern Curry believed that taxing people on a free room is not consistent with being a
business - friendly City, commended the City for its work in revenue generation, and stated
Volume 60 - Page 510
City of Newport Beach
City Council Study Session
July 10, 2012
that this is a case where direction should be given to not the charge tax on complimentary
rooms.
Council Member Henn distinguished between the various categories for offering
complimentary rooms and stated that he supports allowing some relief from charging taxes.
Council Member Hill noted that there are only two cities that charge taxes for complimentary
room of those surveyed and agreed with Mayor Pro Tem Curry regarding the importance of
remaining business - friendly.
Gary Sherwin, Visit Newport Beach (VNB), addressed the reasons why hotels provide
complimentary rooms including charitable reasons, reported on an upcoming event involving
meeting planners where rooms will be comped for business reasons o persuade them to book
thew meetings at City venues, and reported that the disgruntled - rN
guest category is a small
percentage of the total comped rooms offered.
Council Member Selich expressed agreement with Mayor Pro Tem Cur and? stated that he
was in favor of exempting the four categories in the 1portfrrom Transient Occupancy Taxes
(TOT).
Jim Mosher stated why the TOT is needed, su
promotional fee rather than the TOT, and commente
comping rooms for people in the hospitality industry.
George Schroeder believed that more information is needed
with comparable cities should have been made. -
Mr. Sherwin reported that the cities of
not charge TOTs on compedkfonms.
the possibility of waiving the
survey of surrounding cities and
that comparisons
and Laguna Beach do
Discussion followed regarding' validating comped rooms and the need to work with the hotels
rV i1 CN
to obtain an accurate, accounting of comped rooms per year, which will result in a potential
revenue loss to the City\ ti
Finance DirF ictor :'McCranerlreported`thaGathe- information will be checked during the audit
processand asked if`C uncil lbelieved that there should be a cap.
U Yor Pro Tem Curry stated ,that -,the matter should be administered in the most effective
Following�dscussion, staff was directed to generate the necessary ordinance that would
exempt all complimentary hotel rooms from TOT.
4. CHARTER UPDATE COMMITTEE DISCUSSION. (331100 -20121
Assistant to the Assistant City Manager Houston discussed the establishment of the Charter
Update Committee (CUC), meetings held, input received, timelines for the process, and the
need for specific Council direction.
Paul Watkins, Chair of the Charter Update Committee, expressed his appreciation to Council,
reported that the Committee had a busy six - weeks, commended CUC members and City staff,
referenced written comments submitted by the public, presented a summary of the
recommendations, noted that there was focus on Section 708 (Board of Library Trustees
Powers and Duties) which seemed to be a controversial part of the Charter, and addressed a
Volume 60 - Page 511