Hemet Municipal Code Art. III Transient Occupancy Tax

Footnotes:

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Cross reference— Businesses, ch. 18.

State Law reference— Transient occupancy tax, Revenue and Taxation Code § 7280 et seq.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Hotel means any structure or any portion of any structure which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes any hotel, inn, tourist home or house, short term rental, bed and breakfast, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, recreational vehicle park, campground, or parking area, or any other property rented to a "transient" or other similar structure or portion thereof.

Occupancy means the use or possession or the right to the use or possession of any room or portion thereof in any hotel for dwelling, lodging or sleeping purposes.

Operator means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession or licensee, or in 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 article and shall have the same duties and liabilities as his principal. Compliance with the provisions of this article by either the principal or the managing agent shall, however, be considered to be compliance by both.

Person means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee or syndicate, or any other group of combination acting as a unit.

Rent means 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 therefrom whatsoever.

Tax administrator means the city manager or his designated agent.

Transient means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of 30 consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of 30 days has expired, unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of the ordinance codified in this article may be considered.

(Ord. No. 488; Code 1984, § 4601; Ord. No. 2037, § 1, 11-5-24)

Cross reference— Definitions and rules of construction generally, § 1-2.

For the privilege of occupancy in any hotel, each transient is subject to, and shall pay tax in the amount of 12 percent of the rent charged by the operator. Such 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 upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the tax administrator may require that such tax shall be paid directly to the tax administrator.

The tax administrator may make rules and regulations not in consistent with the provisions of this article as may be necessary and desirable to aid in the enforcement and administration of this article. Any such rule or regulation that may affect the amount of tax owed to the city shall be subject to approval by the city council. The rules and regulations shall be filed in the office of the tax administrator and maintained by the city clerk in an orderly and accessible manner. Taxes are considered paid only upon receipt of the return, and penalty, interest, and completed exemption certificate when appropriate. The burden to secure and comply with the rules and regulations shall be upon the operator.

(Ord. No. 1185; Code 1984, § 4602; Ord. No. 1505, § 1, 12-27-94; Ord. No. 2037, § 2, 11-5-24)

(a) No tax shall be imposed under this article upon:

(1) Any of the exclusions or exemptions set forth in Revenue and Taxation Code § 7280 et seq., as may be amended from time to time.

(2) Any federal or state officer or employee when on official business.

(3) Any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty.

(b) No exemption shall be granted except upon a claim therefor made at the time rent is collected and under penalty of perjury upon a form prescribed by the tax administrator. When a claim of exemption is defective, the operator:

(1) Shall be responsible for all taxes due with respect to the purported exempt transient; and

(2) The tax administrator shall give notice to the operator of all taxes due as a result of the rejection of the exemption claim. The operator shall pay all sums due within ten working days of notification.

(Ord. No. 488; Code 1984, § 4603; Ord. No. 2037, § 3, 11-5-24)

Each operator shall collect the tax imposed by this article 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 a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator or that it will not be added to the rent or that, if added, any part will be refunded except in the manner provided in this article.

(Ord. No. 488; Code 1984, § 4604)

Within 30 days after the tax levied by this article is imposed by council vote, or within 30 days after commencing business, whichever is later, each operator of any hotel renting occupancy to transients shall register such hotel with the tax administrator and obtain from him a transient occupancy registration certificate, to be at all times posted in a conspicuous place on the premises. Such certificate shall, among other things, state the following:

(1) The name of the operator.

(2) The address of the hotel.

(3) The date upon which the certificate was issued.

(4) The following statement: "This Transient Occupancy Registration Certificate signifies that the person named on the face hereof has fulfilled the requirements of the Uniform Transient Occupancy Tax Ordinance by registering with the Tax Administrator for the purpose of collecting from transients the Transient Occupancy Tax and remitting the tax to the Tax Administrator. This certificate does not authorize any person to conduct any lawful business or to conduct any 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 the City. This certificate does not constitute a permit."

(Ord. No. 488; Code 1984, § 4605)

Each operator shall, on 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, make a return to the tax administrator, on forms provided by him, of the total rents 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 article shall be held in trust for the account of the city until payment thereof is made to the tax administrator.

(Ord. No. 488; Code 1984, § 4606)

(a) Original delinquency. Any operator who fails to remit any tax imposed by this article within the time required shall pay a penalty of ten percent 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 30 days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent of the amount of the tax in addition to the amount of the tax and the ten percent penalty first imposed.

(c) Fraud. If the tax administrator determines that the nonpayment of any remittance due under this article is due to fraud, a penalty of 25 percent of the amount of the tax shall be added thereto in addition to the penalties stated in subsections (a) and (b) of this section.

(d) Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this article shall pay interest at the rate of one-half of one percent per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which 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 required to be paid under this article.

(Ord. No. 488; Code 1984, § 4607)

If any operator fails or refuses to collect such tax and to make, within the time provided in this article, any report and remittance of such tax or any portion thereof required by this article, the tax administrator shall proceed in such manner as he may deem best to obtain facts and information on which to base his estimate of the tax due. As soon as the tax administrator procures such facts and information as he is able to obtain upon which to base the assessment of any tax imposed by this article and payable by any operator who has failed or refused to collect the tax and to make such report and remittance, he shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this article. In case such determination is made, the tax administrator shall give a 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 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 days' written notice in the manner prescribed in this section to the operator to show cause, at a time and place fixed in such notice, why such amount specified therein should not be 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 in this section of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after 15 days unless an appeal is taken as provided in section 74-79.

(Ord. No. 488; Code 1984, § 4608)

Any operator aggrieved by any decision of the tax administrator under this article with respect to the amount of such tax, interest and penalties, if any, may appeal to the council by filing a notice of appeal with the city clerk within 15 days of the serving or nailing of the notice of determination of tax due. The council shall fix a time and place for hearing such appeal, and the city clerk shall give notice in writing to such operator at his last known place of address. The findings of the council shall be final and conclusive, and shall be served upon the appellant in the manner prescribed in this section for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice.

(Ord. No. 488; Code 1984, § 4609)

It shall be the duty of every operator liable for the collection and payment to the city of any tax imposed by this article to keep and preserve, for a period of three years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and any payment to the city, which records the tax administrator shall have the right to inspect at all reasonable times.

(Ord. No. 488; Code 1984, § 4610)

(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 article, it may be refunded as provided in subsections (b) and (c) of this section, provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the tax administrator within three years of the date of payment. The claim shall be on forms furnished by the tax administrator.

(b) 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 tax administrator that the person from whom the tax has been collected was not a transient; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.

(c) 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 (a) of this section, but only when the tax was paid by the transient directly to the tax administrator, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the tax administrator that the transient has been unable to obtain a refund from the operator who collected the tax.

(d) No refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records showing entitlement thereto.

(Ord. No. 488; Code 1984, § 4611)

Any tax required to be paid by any transient under the provisions of this article shall be deemed a debt owed by the transient to the city. Any such tax collected by an operator which has not 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 article shall be liable to an action brought in the name of the city for the recovery of such amount.

(Ord. No. 488; Code 1984, § 4612)

(a) Any person violating any of the provisions of this article shall be guilty of a misdemeanor, and shall be punished in accordance with section 1-8.

(b) Any operator or other person who fails or refuses to register as required in this article, or to furnish any return required to be made, or who fails or refuses to furnish a supplemental return or other data required by the tax administrator, or who renders a false or fraudulent return or claim, is guilty of a misdemeanor, and is punishable as provided in this section. Any person required to make, render, sign or verify any report or claim who makes any false or fraudulent report or claim with intent to defeat or evade the determination of any amount due required by this article to be made is guilty of a misdemeanor and is punishable as provided in this article.

(Ord. No. 488; Code 1984, § 4613)

(a) The purpose of the hotel investment inventive program is to provide an incentive program for the renovation and expansion of hotel facilities which:

(1) Enhances the tourist and travel experience for visitors to the city;

(2) Provides attractive amenities to the public and desirable visitor service facilities and experiences;

(3) Assists the city in achieving its tourism goals;

(4) Encourages continued investment in lodging facilities; and

(5) Increases the transient occupancy tax revenue to the city.

(b) In the implementation of this program, the city council finds:

(1) The general welfare and material well-being of the residents of the city depends in substantial measure upon the growth and expansion of the tourism and travel industries in the city.

(2) The renovation and expansion of the inventory of hotels in the city will create desirable visitor-serving facilities that will:

a. Contribute to the growth and expansion of tourism and travel opportunities in the city;

b. Provide employment opportunities for the residents of the city;

c. Provide additional transient occupancy tax revenues to the city; and

d. Promote and enhance the economy of the city.

(3) It is in the best interest of the city to induce and encourage the expansion, renovation, and maintenance of hotel facilities that might not otherwise be as successful, thereby creating new sources of revenues for the city's general fund, which supports the public services the city provides its residents and visitors.

(4) The authority granted and the purposes to be accomplished by this chapter are proper local governmental and public purposes for which public funds can be expended, and the renovating, maintaining, and expanding of the inventory of hotels is of paramount importance to the city, its residents, and businesses.

(Ord. No. 2028, § 2, 2-27-24)

For the purposes of the hotel investment incentive program, the following definitions shall apply:

Approved hotel means any existing hotel that has submitted an application and a business plan for participation in the hotel investment incentive program and has been approved by the city to participate in the hotel investment incentive program.

Business plan means a written plan submitted to the city documenting, at a minimum:

(1) Planned improvements to the hotel property, including the estimated costs of the improvements; and

(2) An estimate of revenues and expenditures for the operation of the hotel through the term of the hotel investment incentive program.

The business plan shall compare past revenues with the future estimated revenues as a result of the proposed new expenditures.

Existing hotel means any property constructed, occupied, and operating as a hotel containing nine or more guest rooms for compensation and where the guest rooms are:

(1) Designed and intended as transient occupancy accommodations; and

(2) That was issued a final certificate of occupancy on or before February 1, 2024.

Furniture, fixtures, and equipment means movable furniture, fixtures, or other equipment that have no permanent connection to the structure of a building or utilities within the hotel. More specifically, furniture, fixtures, and/or equipment would include decorative items, wall coverings, flooring treatment, window treatments, casework, furnishings and accessories, furniture, data communications equipment, voice communications equipment, audio visual communications equipment, electronic surveillance equipment, electronic detection and alarm equipment, commercial equipment, food service equipment, entertainment equipment, athletic and recreational equipment, collection and disposal equipment operational supplies include all supplies needed for the operation of the hotel, such as stationery, computer equipment and accessories, guestroom TVs and mounts, alarm clocks in rooms, linens, pillows, housekeeping carts and supplies, trash cans, all items for the hotel restaurant and bar, banquet and conference facilities (including china, utensils, glasses, etc.). Furniture, fixtures, and equipment, for qualifying cost purposes, include all taxes, freight, warehouse expenses, installation fees, and purchasing fees.

Hotel, for the purposes of the hotel investment incentive program shall be defined as found in section 74-71, except that the hotel investment incentive program shall only apply to properties containing nine or more guest rooms for compensation and where the guest rooms are designed and intended as transient occupancy accommodations and does not include those properties offered as a bed and breakfast facilities, bed and breakfast inns, campground, guest houses, short term lodging units, homeless housing facilities, or residential care homes.

Hotel investment incentive program or incentive program means the transient occupancy tax increment rebate program established by section 74-100 et seq.

Indemnification agreement means the agreement between the city and an operator in which the operator agrees to indemnify and defend the city against any claims or lawsuits that are brought against the city (and all liabilities, damages, and costs incurred by the city in connection therewith) as a result of the application of this section 74-100 et seq. to a hotel participating in the incentive program.

Operating covenants means the operating covenants to be recorded against hotel properties for hotels participating in the incentive program, which shall include provisions regarding continuing use of the hotel as a hotel, maintenance, and non-discrimination.

Operator means the person who runs and operates a hotel, whether in the capacity of owner, developer, lessee, sub-lessee, mortgagee in possession, licensee, franchisee, or any other capacity, or the assignee or designee of such person.

Shell costs mean actual and direct third-party costs of all materials, labor, and equipment associated with the renovation or expansion of the hotel as determined by the city manager, acting in his/her sole and absolute discretion. Items excluded from shell costs include, without limitation, furniture, fixtures and equipment costs, architectural and engineering fees, permits and fees, legal costs, accounting costs, taxes, sales or lease commissions, marketing expenses, initial operating capital, and other indirect costs, as well as developer or hotel operator overhead.

Tax sharing agreement means an agreement between the operator and the city setting forth the details and obligations of the parties to renovate a hotel according to the approved business plan and receive transient occupancy tax increment as set forth in this chapter.

Transient occupancy means a stay of no more than 30 consecutive calendar days.

Transient occupancy tax means the tax established by and paid to the city pursuant to this chapter.

Transient occupancy tax base means the historical production of transient occupancy tax by an existing hotel calculated as the transient occupancy tax for the highest 12-month period during the prior five years as adjusted to present equivalent based on the Riverside Area Consumer Price Index—All Urban Consumers published by the U.S. Bureau of Labor Statistics.

Transient occupancy tax increment means, on an annual basis, the difference between the transient occupancy tax base and the amount of transient occupancy tax actually received by the city from the approved existing hotel after renovation. It is determined by reference to actual receipts by the city of transient occupancy tax from the improved approved hotel. Under no circumstances shall the city be liable for any reimbursement of transient occupancy tax increment not actually received and permanently retained by the city.

Transient occupancy tax sharing means the rebate from the city to the operator of an approved hotel of a portion of that hotel's transient occupancy tax increment, as determined each year for which the tax sharing agreement is valid. The payment of the approved hotel's portion of the transient occupancy tax increment shall be paid to the approved hotel within 30 days after the anniversary date of the issuance of the certificate of completion.

Under construction means that all necessary discretionary entitlements have been approved by the city, grading and building permits have been issued, inspection approvals by the city of grading and foundations to grade level have been obtained, and vertical construction of hotel rooms has begun.

(Ord. No. 2028, § 2, 2-27-24)

(a) To participate in the hotel investment incentive program, the operator of any existing eligible hotel which plans a renovation to improve the hotel facility must:

(1) Complete and submit to the city manager an application for participation in the incentive program on the city's official incentive program application form;

(2) Submit a business plan in writing.

(3) Allow the city to inspect the existing hotel to determine that the improvements contemplated by the business plan, which are the justification for the transient occupancy tax sharing, do not already exist, and, upon demand of the city, provide the city with such evidence of the approved business' intention and ability to proceed to construct the necessary improvements or make the necessary purchases, as are reasonably satisfactory to the city;

(4) Receive approval for participation in the incentive program from the city council;

(5) Enter into a transient occupancy tax sharing agreement in the form approved by the city, which shall include provisions for payment of, and adherence to, prevailing wage requirements and a commitment to use good faith efforts to hire local residents and contract with local subcontractors, suppliers, and other local businesses for property improvements;

(6) Execute and record against the hotel property the operating covenants in a form approved by the city;

(7) Execute an indemnification agreement in a form approved by the city; and

(8) Upon completion of the subject improvements or purchases and before transient occupancy tax sharing commences, allow the city to inspect the approved business to verify that the contemplated improvements and/or purchases have been made and completed to enable the business to increase its occupancy and/or room rate. If the improvements are approved by the city, the city shall issue a certificate of completion.

(b) Required level of improvements for eligibility.

(1) Minimum furniture, fixture, and equipment costs of not less than $15,000.00 per guestroom.

(2) In addition to the furniture, fixture, and equipment expenditures, shell/property improvements totaling at a minimum, $20,000.00 per guestroom.

(3) Expenses related to hotel expansion projects are eligible expenses provided they are qualifying shell costs or furniture, fixture, and equipment costs.

(c) Future hotels are ineligible for participation in the hotel investment incentive program, except where a future hotel complies with the requirement identified in subsection (a) above to rebuild any of the historic city hotels and the following:

(1) The minimum number of guestrooms shall be no less than 70.

(2) Required compliance with all industry standards of at least a 3-star rated hotel.

(3) The rebuilt historic hotel must be built within the area south of Oakland Avenue, north of Acacia Avenue, east of Gilbert Street, and west of Buena Vista Street.

(Ord. No. 2028, § 2, 2-27-24)

(a) The city council is authorized to enter into transient occupancy tax sharing agreements and required recordation of operating covenants with hotel operators who have demonstrated eligibility, and satisfied all incentive program participation requirements.

(b) Existing eligible hotels:

(1) The term of the incentive program shall be 25 years from the date an eligible hotel is issued a certificate of completion.

(2) From the first year through the tenth year of the date of incentive program participation approval and completed renovations, the hotel operator shall receive an amount of transient occupancy tax increment equal to 90 percent of the transient occupancy tax increment submitted to the city for the prior year.

(3) Starting at the eleventh year and continuing through the 15th year of incentive program participation, the hotel operator shall receive an amount of transient occupancy tax increment equal to 75 percent of the transient occupancy tax increment submitted to the city for the prior year.

(4) Starting at the 16th year and continuing through the 20th year of incentive program participation, the hotel operator shall receive an amount of transient occupancy tax increment equal to 50 percent of the transient occupancy tax increment submitted to the city for the prior year.

(5) Starting at the 21st year and continuing through the 25th year of incentive program participation, the hotel operator shall receive an amount of transient occupancy tax increment equal to 25 percent of the transient occupancy tax increment submitted to the city for the prior year.

(6) The cost share percentages shall remain the same in the event the city's hotel tax rate is increased.

(c) Rebuilt historic hotels.

(1) The term of the incentive program shall be for 30 years from the date an eligible hotel is issued a certificate of completion.

(2) From the first year through the 15th year of the date of incentive program participation approval and completed renovations, the hotel operator shall receive an amount of transient occupancy tax increment equal to 90 percent of the transient occupancy tax increment submitted to the city for the prior year.

(3) Starting at the sixteenth year and continuing through the 20th year of incentive program participation, the hotel operator shall receive an amount of transient occupancy tax increment equal to 75 percent of the transient occupancy tax increment submitted to the city for the prior year.

(4) Starting at the 21st year and continuing through the 30th year of incentive program participation, the operator shall receive an amount of transient occupancy tax increment equal to 50 percent of the transient occupancy tax increment submitted to the city for the prior year.

(5) The cost share percentages shall remain the same in the event the city's hotel tax rate is increased.

(d) The city council may, by development agreement, enter into a transient occupancy tax-sharing agreement on different terms.

(Ord. No. 2028, § 2, 2-27-24)

Each operator of a hotel that enters into a transient occupancy tax sharing agreement with the city shall record against the participating hotel property the following operating covenants to run with the land:

(1) Continuing use and operation. During the hotel's participation in the transient occupancy tax sharing incentive program, the operator covenants and agrees for itself, its successors, assigns, or designees, to continually operate and use the hotel property as a hotel. None of the rooms in the hotel will at any time be utilized as a non-transient residential property or rental periods that exceed 30 days, except for senior living units, which may still qualify for the incentive program so long as they meet all other requirements of the program. No part of the hotel will at any time be owned by a cooperative housing corporation. All uses conducted on the hotel property shall conform to all ordinances, statutes, rules, and regulations of the city, the county, and the state.

(2) Maintenance. During the hotel's participation in the transient occupancy tax sharing incentive program, the operator covenants and agrees for itself, its successors, assigns, or designees to continually maintain and repair or cause to be maintained and repaired, the hotel property, including, but not limited to, buildings, structures, parking areas, lighting, signs, and landscaping, to be in good condition conforming to all applicable laws, including all applicable provisions of this Code and to hotel industry standards applicable to that type of hotel, and shall keep the hotel property free from any accumulation of debris or waste materials.

(3) Nondiscrimination. During the hotel's participation in the transient occupancy tax sharing incentive program, the operator covenants and agrees for itself, its successors, assigns, or designees, that the hotel and any of its employees shall not discriminate against any person on the basis of sex, gender, gender identity, gender expression, marital status, domestic partnership status, sexual orientation, race, color, religion, ancestry, national origin, or disability.

(Ord. No. 2028, § 2, 2-27-24)

(a) All transient occupancy tax revenues or transient occupancy tax increment remitted to the city by an operator of a hotel that enters into a transient occupancy tax sharing agreement with the city shall be deemed general fund revenues of the city and shall be deposited in the city's general fund.

(b) The city may terminate the transient occupancy tax sharing agreement on ten days' notice if the operator violates any of the operating covenants, provided that such violation or violations continue to exist at the end of said ten-day period. Specifically, without limiting the generality of the foregoing, a failure to pay to the city, in a timely manner and in the correct amount, the transient occupancy tax which the operator collects shall permit the city to terminate the transient occupancy tax sharing agreement. The city shall give notice to the operator as required by the terms of the transient occupancy tax sharing agreement.

(c) The city may offer to purchase an existing hotel at fair market value. A fair market value determination shall be based on the fair market value of the hotel and shall be determined by a licensed and independent appraiser mutually agreed upon by the city and hotel operator. In the event of a disagreement on the choice of the appraiser, each party shall appoint one appraiser, and the two appointed appraisers shall jointly select a third appraiser. The appraiser(s) shall consider all relevant factors affecting the fair market value, including the hotel's current condition, market conditions, and any improvements.

(d) Upon any default of city, the hotel operator's remedy shall be limited to specific performance, and monetary damages shall not be available. A term to that effect shall be included in the tax-sharing agreement and/or operating covenants.

(e) The hotel operator shall retain all hotel financial records, whether audited or unaudited, regarding the hotel's revenues subject to city's transient occupancy tax during the term of the tax sharing agreement plus five years. The hotel operator agrees to make the hotel's financial records regarding the hotel's revenues subject to city's transient occupancy tax available to the city within 30 days of a written request for city audit purposes. Once the requested financial records have been supplied and reviewed or audited, the hotel operator's obligation to provide those financial records and subsequent retention shall cease.

(f) This hotel investment incentive program shall terminate as to the acceptance of new approvals to the program from participant hotels five years after the effective date of the ordinance codified in this section 74-100 et seq. unless extended by the city council.

(Ord. No. 2028, § 2, 2-27-24)