Port Hueneme Municipal Code Part B Transient Occupancy Tax

The tax levied by this Chapter shall be known as the "Transient Occupancy Tax."

Except where the context otherwise requires, the definitions contained in this section shall govern the construction of this Chapter:

(a) "Person" means 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.

(b) "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for temporary occupancy by transients for dwelling, lodging or sleeping purposes. "Hotel" shall include any inn, tourist home or house, motel, studio hotel, bachelor hotel, lodging house, rooming house, apartment house, dormitory, public or private club, mobile home or house trailer or other building or structure which is occupied, or intended or designed for temporary occupancy by transients for dwelling, lodging or sleeping purposes.

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

(d) "Operator" means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, or any other capacity. Where the operator performs his 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.

(e) "Rent" means the consideration charged, whether or not received, for the occupancy of space in a hotel, valued in money, whether 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.

(f) "Tax Administrator" means the City Manager of the City.

(g) "Transient" means any person who exercises occupancy or is entitled to occupancy or a space in a hotel 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 such person so occupying the same space in a hotel shall be deemed to be a transient until the period of thirty (30) days has expired.

For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of ten percent (10%) of the rent charged by the operator. Said 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.

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 herein provided;

(b) Any state or federal officer or employee when on official business and only when:

(1) Room reservations are made by a state or federal agency; and

(2) The state or federal government is billed directly for rent; and

(3) The rent is paid by the state or federal government in response to the billing in 2719(b)(2).

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

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 City Manager.

Each operator shall collect the tax imposed by this Chapter at the time 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 hereinafter provided.

Within thirty (30) days after the effective date of this Chapter, or within thirty (30) days after commencing business, whichever is later, each operator of any hotel shall register said hotel with the License Officer who shall issue a "Transient Occupancy Registration Certificate", which shall, at all times, be posted in a conspicuous place on the hotel premises. Said certificate shall, among other things, state the following:

(a) The name of the operator; and

(b) The address of the hotel; and

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

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 City Manager, make a return to the City Manager, 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 City Manager. The City Manager may establish shorter reporting periods for any certificate holder if he deems it necessary in order to ensure collection of the tax and he may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this Chapter shall be held in trust for the account of the City until payment thereof is made to the City Manager.

(a) Original Delinquency. Any operator who fails to remit any portion of any tax imposed by this Chapter, within the times required, shall pay a penalty of ten percent (10%) equal to the amount of the tax, in addition to the amount of the tax.

(b) Continued Delinquency. Any operator who fails to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty of ten percent (10%) equal to the amount of the tax in addition to the amount of the tax and the ten percent (10%) penalty first imposed.

(c) Fraud. If the City Manager determines that the non-payment of any remittance due under this Chapter is due to fraud, a penalty of twenty-five percent (25%) of the amount of the tax shall be added thereto in addition to the penalties stated in subparagraphs (a) and (b) of this Section.

(d) Interest. In addition to the penalties imposed pursuant to this Chapter, any operator who fails to remit any tax imposed by this Chapter shall pay interest at the rate of one percent (1%) per month or fraction thereof, on the unpaid balance of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid in full.

If any operator shall fail or refuse to collect said tax and to make, within the time provided in this Chapter, any report and remittance of said tax or any portion thereof, the License Officer 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 License Officer shall procure such facts and information as he is able to obtain upon which to base the assessment of any tax imposed by this Chapter due and payable by any operator who has failed or refused to collect the same 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 Chapter. In case such determination is made, the License Officer 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 address. Such operator may within ten (10) days after the serving or mailing of such notice make application in writing to the License Officer 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 License Officer shall become final and conclusive and immediately due and payable. If such application is made, the License Officer shall give not less than five (5) days written notice, in the manner prescribed here, to the operator to show cause at a time and place fixed in said notice why said 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 License Officer shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed herein of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after fifteen (15) days unless an appeal is taken as provided in Section 2725.

Any operator aggrieved by any decision of the License Officer with respect to the amount of such tax, interest and penalties, if any, may appeal such decision under the provisions described in Article I, Chapter 4 of this Code.

It shall be the duty of every operator liable for the collection and payment to the City or the tax imposed by this Chapter, to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of any payment to the City, which records the City Manager shall have the right to inspect at all reasonable times.

(a) Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the City under this Chapter, it shall be refunded as provided in subparagraphs (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 City Manager within three (3) years of the date of payment; any such payment for which a claim is not filed within said three (3) year period shall conclusively be deemed to have been lawfully and properly due to City. The claim shall be on forms furnished by the City Manager.

(b) An operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once if erroneously or illegally collected or received when it is established in the manner prescribed by the City Manager 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 subparagraph (a) of this Section, but only when such tax has been received by the City.

Any tax required to be paid by any transient under the provisions of this Chapter shall be deemed a debt owed by the transient to the City. Any such tax collected by an operator which has 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 Chapter shall be liable therefor in an action brought in the name of the City for the recovery of such amount.

(a) The purpose of this Chapter is to provide an incentive program for the operation, maintenance, renovation and expansion of hotel facilities which: i) enhance the tourist and travel experience for visitors to the City, ii) provide attractive amenities to the public and desirable visitor service facilities and experiences, iii) assist the City in achieving its tourism goals, and iv) increase the transient occupancy tax revenue to the City. In the implementation of this program, the City Council finds:

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

(2) The operation, maintenance, renovation and expansion of the inventory of hotels in the City will create desirable visitor-serving facilities that will: i) contribute to the growth and expansion of tourism and travel opportunities in the City, ii) provide employment opportunities for the residents of the City, iii) provide additional transient occupancy tax revenues to the City, and iv) promote and enhance the economy of the City.

(3) It is in the best interest of the City to induce and encourage the opening, operating, expanding, renovating and maintaining 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 that the opening, operating, renovating, maintaining and expanding of the inventory of hotels is of paramount importance to the City, its residents, and businesses.

(b) Definitions. For the purposes of this Chapter, the following definitions shall apply:

"Approved hotel" means any existing hotel or new hotel which has submitted an application for participation in the program and been approved by the city to participate in the program after a public hearing on a transient occupancy tax sharing agreement.

"Existing hotel" means any property containing four (4) or more guest rooms used by four (4) or more guests for compensation and where the guest rooms are: (i) designed and intended as transient occupancy accommodations; and (ii) that was issued a final certificate of occupancy on or before July 17, 2017.

"Hotel" means any property containing four (4) or more guest rooms used by four (4) or more guests for compensation and where the guest rooms are designed and intended as Transient Occupancy accommodations.

"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 to a hotel participating in the incentive program.

"New hotel" means any property containing four (4) or more guest rooms used by four (4) or more guests for compensation and where the guest rooms are designed and intended as transient occupancy accommodations that is issued a certificate of occupancy as a hotel after July 17, 2017. The term "new hotel" does not include all, or any portion of, an existing hotel.

"Operating covenants" means the operating covenants to be recorded against hotel properties for hotels participating in the 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, lessee, sub-lessee, mortgagee in possession, licensee, franchisee, or any other capacity, or the assignee or designee of such proprietor.

"Tax sharing report" means the report which shall be completed for any hotel which shall analyze the projected economic factors relating to the renovation of an existing hotel, or construction of a new hotel, and the projected impact of such renovation or construction on the hotel's receipt of transient occupancy tax, which shall be considered by the City Council in making its decision as to a particular hotel, and which the City Council may use, along with other evidence presented, in its sole discretion, to determine whether the subject hotel is approved to participate in the program, and if so, the appropriate transient occupancy tax sharing rate and time period for the transient occupancy tax sharing agreement. The tax sharing report shall be prepared by staff or by a qualified consultant employed by the City. In the case of a consultant, the cost of preparing the tax sharing report shall be paid by the operator of the hotel applying for participation in the program, unless the City, in its sole discretion, waives this requirement.

"Transient occupancy" means a stay of no more than thirty (30) consecutive calendar days.

"Transient occupancy tax" means the tax established by and paid to the City pursuant to Chapter 7, Part B of this Code, except that any increase in the rate of the transient occupancy tax approved by the voters after the date on which this Section 2729 becomes effective shall be excluded from the term transient occupancy tax for the purposes of this section, it being the intent of the City Council that any revenue derived from such a rate increase will not be shared.

"Transient occupancy tax base" means the historical production of transient occupancy tax by an existing hotel as calculated in the transient occupancy tax sharing report. The transient occupancy tax base shall be calculated in a manner as to take into account the then-current economic state relative to the historical performance of the hotel. In addition, it shall use a method determined by the preparer of the tax sharing report, for averaging production over an appropriate period adjusted for inflation, or other similar adjustment index, it being the intent that an approved hotel should receive a tax sharing arrangement which does not reward the hotel for improvements in transient occupancy tax arising from general economic conditions as opposed to the improvements made by the hotel operator as owner.

"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. With respect to new hotels, all transient occupancy tax received shall be deemed to be transient occupancy tax increment. 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 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 a reasonable time after the conclusion of each year.

"Transient occupancy tax sharing agreement" or "agreement" means an agreement between the City and an approved hotel which provides for the rebate from the City to the hotel operator of a portion of the hotel's transient occupancy tax increment, at a rate and for a time period as determined by the City. Said agreements may include such provisions, restrictions, conditions or other provisions as the parties then agree are necessary to give effect to the intent and spirit of this section.

"Transient occupancy tax sharing program" or "program" means the transient occupancy tax rebate program established by this section. A hotel's participation in the program extends as long as the time period provided for in a transient occupancy tax sharing agreement.

(c) Participation Requirements. To participate in the transient occupancy tax sharing program, the operator of: (1) any existing hotel which plans a renovation to improve the hotel facility, or (2) any new hotel must:

(1) Complete and submit to the City Manager an application for participation in the transient occupancy tax sharing program on the City's official transient occupancy tax sharing program application form;

(2) Receive approval for participation in the program from the City, after the public hearing as provided in this section.

(3) If approved by the City, enter into a transient occupancy tax sharing agreement in the form approved by the City;

(4) If approved by the City, execute and record against the hotel property the operating covenants; and

(5) If approved by the City, execute an indemnification agreement in a form approved by the City.

(d) Transient Occupancy Tax Sharing Program.

(1) The City Council is authorized to enter into transient occupancy tax sharing agreements with hotels in accordance with this section.

(2) In order to determine the appropriate rate of transient occupancy tax sharing for each hotel that has submitted an application pursuant to this section, the City Council shall cause to be prepared a tax sharing report, which shall analyze factors including the following. The City Council, in its sole discretion, may consider additional factors or require additional studies or reports, as it deems appropriate:

(A) For existing hotels, the existing level of transient occupancy tax generated by the facility, and the projected transient occupancy tax to be generated after a planned renovation project;

(B) For new hotels, the projected transient occupancy tax to be generated by the new facility;

(C) The amount of expected transient occupancy tax increment;

(D) For new and existing hotels, the quality of the facility and services provided by the hotel;

(E) For new and existing hotels, the total projected cost to construct the new hotel or renovate the existing hotel; and

(F) The necessity for public assistance.

(3) After considering the transient occupancy tax sharing report and such other factors, studies or reports as it, in its sole discretion, deems appropriate, and subject to the limitations of this section, the City shall determine the rate of transient occupancy tax sharing to be provided to a hotel that will be necessary or appropriate to achieve the goals and intent of this Chapter, if any.

(4) After considering all of the material outlined in this section, and subject to the limitations set forth in this section, the City shall determine, in its sole discretion, the time period over which transient occupancy tax sharing will be necessary or appropriate to achieve the goals and intent of this Chapter.

(5) The City Council shall hold a public hearing on all contemplated transient occupancy tax sharing agreements. Notice of the time and place of the hearing shall be published in a newspaper of general circulation in the City once a week for two (2) consecutive weeks prior to the hearing. At this hearing, the City Council shall consider all evidence before it, including the information contained in the tax sharing report.

(6) The City shall make all tax sharing reports available for public inspection and copying, at a cost not to exceed the cost of duplication, no later than the time of publication of the first notice of the public hearing mandated by this section.

(7) After the public hearing on a contemplated tax sharing agreement and if the City Council approves the hotel, the City may, by resolution, authorize City staff to negotiate and prepare a transient occupancy tax sharing agreement with the operator or owner of the approved hotel, which agreement shall be brought back for final approval on an open session agenda, unless the Council shall by majority vote to authorize an alternative procedure.

(8) Subject to the limitations set forth in this section, a tax sharing agreement may provide for the City to rebate to a hotel an appropriate rate of transient occupancy tax increment for an appropriate time period, at the rate and for the time necessary to achieve the goals and intent of this Chapter, as determined by the City Council in its sole discretion. The rate and time period determinations made by the City Council pursuant to this section shall be final and conclusive.

(e) The rate of transient occupancy tax sharing determined by the City Council is subject to the following limitations:

(1) For existing hotels, the amount of transient occupancy tax to be rebated shall not exceed fifty (50) percent of the hotel's transient occupancy tax increment actually received and retained by the City, unless the City Council, in its sole discretion, determines otherwise.

(2) For new hotels, the amount of transient occupancy tax to be rebated shall not exceed seventy-five (75) percent of the hotel's transient occupancy tax increment actually received and retained by the City, unless the City Council, in its sole discretion, determines otherwise.

(f) The time period of transient occupancy tax sharing determined by the City Council is subject to the following limitations:

(1) For existing hotels, the transient occupancy tax sharing agreement shall not exceed a time period of ten (10) years, unless City Council determines, in its sole discretion, that a longer time period is warranted to achieve the goals and intent of this Chapter.

(2) For new hotels, the transient occupancy tax sharing agreement shall not exceed a time period of ten (10) years, unless the City Council determines, in its sole discretion, that a longer time period is warranted to achieve the goals and intent of this Chapter.

(g) Operating Covenants. Each operator of a hotel which 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. During the hotel's participation in the transient occupancy tax sharing 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. 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 applicable provisions of the City's Municipal Code.

(2) Maintenance. During the hotel's participation in the transient occupancy tax sharing 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 the City's Municipal 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) Non Discrimination. During the hotel's participation in the transient occupancy tax sharing 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, marital status, race, color, religion, ancestry, national origin, physical handicap, sexual orientation, or domestic partnership status.

(4) Payment of Transient Occupancy Tax. During the term of the hotel's participation in the transient occupancy tax sharing program, the operator covenants to accurately and faithfully report the receipt of all transient occupancy taxes received and/or collected by it from its guests or any other source whatsoever, and to faithfully report the full amount of all such receipts to the City, and to faithfully remit in a timely manner consistent with ordinance and statute the full amount of the collected transient occupancy taxes to the City.

(h) General Fund Revenues. All transient occupancy tax revenues or transient occupancy tax increment remitted to the City by an operator of a hotel which 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.

(i) Termination of Tax Sharing. The City may terminate the transient occupancy tax sharing agreement on ten (10) days' notice if the operator violates any of the operating covenants, or fails to pay in a timely manner any of the transient occupancy tax received by the operator from the guests of the hotel, provided that such violation or violations continue to exist at the end of said ten (10) day period. The City shall give notice to the operator as required by the terms of the transient occupancy tax sharing agreement.

(j) Administrative Rules and Regulations. Consistent with the intent and goals of this Chapter, the city manager may adopt administrative rules and regulations for implementation and furtherance of the requirements of this Chapter.

(Ord. No. 729, § 1, 8-21-17)