San Francisco County Municipal Code Art. 7 Tax on Transient Occupancy of Hotel Rooms

Sec. 501. Additional Definitions. Sec. 502. Imposition and Rate of Tax. Sec. 502.5. Imposition of Surcharge. Sec. 502.6. Imposition of a 1.25 Percent Surcharge. Sec. 502.6-1. Imposition of a Cumulative Surcharge. Sec. 502.6-2. Continuation of Two Percent Hotel Tax Surcharge. Sec. 502.7. Temporary Suspension of Tax and Surcharges for Occupancies in Hotels in Certain Redevelopment Project Areas. Sec. 502.8. Imposition and Rate of Tax in Certain Redevelopment Project Areas – Transient Occupancy Tax – San Francisco Redevelopment Agency. Sec. 502.8-1. Imposition of Additional Surcharge in Certain Redevelopment Project Areas. Sec. 503. Occupant to Pay Tax to Operator. Sec. 504. Collection of Tax by Operator; Receipt to Occupant; Rules for Collection Schedules. Sec. 505. Unlawful Advertising Regarding Tax. Sec. 506. Exemptions. Sec. 515.01. Hotel Tax Allocations.

When used in this Article the following terms shall mean or include: (a) "Operator." Any person operating a hotel in the City and County of San Francisco, including, but not limited to, the owner or proprietor of such premises, lessee, sublessee, mortgagee in possession, licensee or any other person otherwise operating such hotel. (b) "Occupant." A person who, for a consideration, uses, possesses, or has the right to use or possess any room in a hotel under any lease, concession, permit, right of access, license to use or other agreement, or otherwise. (c) "Occupancy." The use or possession, or the right to the use or possession of any room or apartment in a hotel or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of the room. (d) "Hotel." Any structure, or any portion of a structure, including any lodginghouse, roominghouse, dormitory, Turkish bath, bachelor hotel, studio hotel, motel, auto court, inn, public club, or private club, containing guest rooms and which is occupied, or is intended or designated for occupation, by guests, whether rent is paid in money, goods, labor, or otherwise. It does not include any jail, hospital, asylum, sanitarium, orphanage, prison, detention, or other building in which human beings are housed and detained under legal restraint. (e) "Guest Room." A room occupied, or intended, arranged, or designed for occupation, by one or more occupants. Every 100 square feet of superficial floor area in a dormitory is a guest room. (f) "Rent." The consideration received for occupancy valued in money, whether received in money or otherwise, including all receipts, cash, credits, and property or services of any kind or nature, and also the amount for which credit is allowed by the operator to the occupant, without any deduction therefrom whatsoever. (g) "Permanent Resident." Any occupant as of a given date who has or shall have occupied, or has or shall have the right of occupancy, of any guest room in a hotel for at least 30 consecutive days next preceding such date.

(Added by Ord. 87-61, App. 4/26/61; amended by Ord. 231-91, App. 6/12/91; Ord. 19-98, App. 1/16/98)

There shall be paid a tax of eight percentum on the rent for every occupancy of a guest room in a hotel in the City and County. (Amended by Ord. 251-78, App. 6/1/78; Ord. 19-98, App. 1/16/98)

There shall be an additional tax of 1.75 percent on the rent for every occupancy of the guest rooms in a hotel in the City and County of San Francisco between July 1, 1980 and August 14, 1993 and an additional tax of 2.75 percent on the rent for every occupancy on and after August 15, 1993. When rent is paid, charged, billed or falls due on either a weekly, monthly or other term basis, the rent so paid, charged, billed or falling due shall be subject to the tax of eight percent herein imposed to the extent that it covers any portion of the period prior to July 1, 1980, and to the tax of eight percent herein plus the 1.75 percent surcharge imposed to the extent that it covers any portion of the period between July 1, 1980 and August 14, 1993, and the 2.75 percent surcharge imposed to the extent that it covers any portion of the period on and after August 15, 1993, and such payment, charge, bill or rent due shall be apportioned on the basis of the ratio of the number of days falling within the periods prior to July 1, 1980, between July 1, 1980 and August 14, 1993, and on and after August 15, 1993 to the total number of days covered thereby. Where any tax has been paid hereunder upon any rent without any right of occupancy therefor, the Tax Collector may by regulation provide for credit or refund of the amount of such tax upon application therefor as provided in this Code. The surcharge tax so collected shall be deposited in the General Fund subject to appropriation pursuant to the budget and fiscal provisions of the Charter. By adopting this ordinance the People of the City and County of San Francisco do not intend to limit or in anyway curtail any powers the Board of Supervisors may exercise as to the subject matter of this ordinance, including, but not limited to, raising the rate of taxation or surcharge, lowering the rate of taxation or surcharge, eliminating the tax or surcharge, or creating or defining new categories of taxpayers under this ordinance. (Added by 6/3/80; portions of this Section require ballot measure to amend; amended by Ord. 244-93, App. 8/10/93; Ord. 19-98, App. 1/16/98)

OCCUPANCIES IN HOTELS IN CERTAIN REDEVELOPMENT PROJECT AREAS. (a) Suspension. Commencing on October 1, 1994, the provisions of Sections 502, 502.5 and 502.6 hereof shall be temporarily suspended and inapplicable to the occupancy of any guest room in any hotel located within the boundaries of the following San Francisco Redevelopment Agency Project Areas: (1) Yerba Buena Center Project Area, as described in the Redevelopment Plan adopted by the Board of Supervisors on April 25, 1966, as amended on July 26, 1971, October 9, 1973, September 13, 1976, August 8, 1977, August 13, 1979, November 2, 1981 and December 1, 1986; (2) Embarcadero-Lower Market (Golden Gateway) Project Area, as described in the Redevelopment Plan adopted by the Board of Supervisors on May 25, 1959, as amended on July 31, 1961, July 13, 1964, November 23, 1964, May 15, 1967, July 22, 1968, November 29, 1976 and December 1, 1986; (3) Western Addition Project Area A-1, as described in the Redevelopment Plan adopted by the Board of Supervisors on May 28, 1956, as amended on January 30, 1961, July 31, 1961, January 14, 1963, February 25, 1963, July 3, 1964, October 26, 1981 and May 3, 1985; (4) Western Addition Project Area A-2, as described in the Redevelopment Plan adopted by the Board of Supervisors on October 13, 1964, as amended on August 3, 1970, June 6, 1976, December 15, 1986, November 9, 1987 and August 10, 1992; (5) South of Market Earthquake Recovery Redevelopment Plan (South of Market Project Area), as described in the Redevelopment Plan adopted by the Board of Supervisors on June 11, 1990; and (6) Chinese Cultural and Trade Center Redevelopment Project Area, as described in the Redevelopment Plan adopted by the Board of Supervisors on November 8, 1965. Each of the foregoing project areas shall hereinafter be individually referred to as a "SFRA Project Area."

(b) Duration. The foregoing suspension of Sections 502, 502.5 and 502.6 shall continue and remain in effect so long as Section 502.8 remains in effect. Immediately upon Section 502.8 no longer being effective, Sections 502, 502.5 and 502.6 shall again apply to all the SFRA Project Areas. In the event any portion of the transient occupancy tax levied by the City pursuant to Section 502.8 hereof is found to be invalid, illegal or unconstitutional, the suspension of Sections 502, 502.5 and 502.6 shall be rescinded by operation of law and the taxes and surcharges levied under such Sections shall be deemed to have been in full force and effect during the period the City collected the transient occupancy tax found to be invalid, illegal or unconstitutional. (Added by Ord. 246-94, App. 6/30/94)

Unless prohibited by the laws of the United States or the State of California, or exempted by the provisions of this Article, every occupant occupying a guest room in a hotel in this City and County shall be required to pay the tax imposed herein to the operator along with the rent for the occupancy. This obligation is not satisfied until the tax has been paid to this City and County, except that a receipt indicating payment of the rent from an operator maintaining a place of business in this City and County or from an operator who is authorized by the Tax Collector to collect the tax shall be sufficient to relieve the occupant from further liability for the tax to which the receipt refers. (Amended by Ord. 395-84, App. 9/20/84)

OCCUPANT; RULES FOR COLLECTION SCHEDULES. Every operator maintaining a place of business in this City and County as provided in Section 503 herein, and renting guest rooms in this City and County to an occupant, not exempted under Section 506 of this Article shall, at the time of collecting the rent from the occupant, also collect the tax from the occupant and on demand shall give to the occupant a receipt therefor. In all cases in which the tax is not collected by the operator, as aforesaid, the operator shall be liable to the Tax Collector of the City and County for the amount of the tax due on the amount of taxable rent collected from the occupant under the provisions of this Article, the same as though the tax were paid by the occupant. In all cases of transactions upon credit or deferred payment, the payment of tax to the Tax Collector may be deferred in accordance therewith, and the operator shall be liable therefor at the time and to the extent that such credits are paid or deferred payments are made in accordance with the rate of tax owing on the amount thereof. The Tax Collector shall have the power to adopt rules and regulations prescribing methods and schedules for the collection and payment of the tax and such methods and schedules shall eliminate fractions of one cent. (Amended by Ord. 395-84, App. 9/20/84)

It is unlawful for any operator to advertise or hold out or state to the public or to any guest, 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 rental of the guest room, or that, if added, it or any part thereof will be refunded. (Added by Ord. 87-61, App. 4/26/61)

No tax shall be imposed hereunder: (a) Upon a permanent resident; (b) Upon a corporation or association having a formally recognized exemption from income taxation pursuant to Section 501(c) or 501(d) or 401(a) of Title 26 of the United States Code as qualified by Sections 502, 503, 504 and 508 of Title 26 of the United States

Code; or (c) Where the rent is less than at the rate of $60 a day or $149 per week. For multiple-occupancy guest rooms where the hotel determines who will share the rooms, the exemption shall be based on the rent charged per person. (d) At some point between September 1, 2027 and September 1, 2029, the Controller’s Office shall review the exemption amounts in subsection (c), and make a written report and recommendation to the Mayor as to whether the amounts should be adjusted to take into account, among other things, changes in the economy; the cost of living; impact on the City’s revenue; and affordability and overall impact on the market for hotel guest rooms subject to the transient occupancy tax. (Amended by Ord. 395-84, App. 9/20/84; Ord. 368-86, App. 8/29/86; Ord. 19-98, App. 1/16/98; Ord. 113-98, App. 4/2/98; Ord. 291-00, File No. 001676, App. 12/22/2000; Ord. 4-15 , File No. 141146, App. 1/20/2015, Eff. 2/19/2015; Ord. 189-19, File No. 190549, App. 8/9/2019, Eff. 9/9/2019, Oper. 10/1/2019; Ord. 175-24, File No. 240639, App. 7/12/2024, Eff. 8/12/2024, Oper. 9/1/2024)

(a) The portion of monies collected pursuant to the tax imposed by Section 502 of this Article 7 representing a tax of 1.5%, including any penalties, interest, and fees related to such 1.5% tax (“Allocable Hotel Tax Revenues”) shall be deposited to the credit of the Hotel Room Tax Fund, established in Administrative Code Section 10.100-80, and shall be allocated as specified in subsections (b) and (c). (b) Subject to subsection (c), the monies in the Hotel Room Tax Fund shall be appropriated and used solely as follows: (1) Allocation Number 1 (Grants for the Arts): $16,300,000 to the City Administrator to distribute general operating and other support to nonprofit cultural organizations in the City, including any administrative costs associated with this grant-making process. Any unexpended balance remaining in Allocation Number 1 at the close of any fiscal year shall be deemed to be provided for a specific purpose within the meaning of Section 9.113 of the Charter and shall be carried forward and accumulated in said allocation for the purposes recited herein. (2) Allocation Number 2 (Cultural Equity Endowment): $6,400,000 to the Arts Commission for programs that move San Francisco arts funding toward cultural equity, including any associated administrative costs. Any unexpended balance remaining in Allocation Number 2 at the close of any fiscal year shall be deemed to be provided for a specific purpose within the meaning of Section 9.113 of the Charter and shall be carried forward and accumulated in said allocation for the purposes recited herein. (3) Allocation Number 3 (Cultural Centers): $3,800,000 to the Arts Commission to support the operation, maintenance, and programming of City-owned community cultural centers to assure that these cultural centers remain open and accessible and remain vital contributors to the cultural life of the City, including any associated administrative costs. Any unexpended balance remaining in Allocation Number 3 at the close of any fiscal year shall be deemed to be provided for a specific purpose within the meaning of Section 9.113 of the Charter and shall be carried forward and accumulated in said allocation for the purposes recited herein. (4) Allocation Number 4 (Cultural Districts): $3,000,000 to the Mayor’s Office of Housing and Community Development for Cultural Districts in the City’s neighborhoods, including any associated administrative costs. Allocations for Cultural Districts shall be used solely to address the effects of destabilization on residents and businesses in the City’s Cultural Districts. For purposes of this Section 515.01, “Cultural District” means a geographic area or location within the City, designated by the Board of Supervisors by ordinance, as an area or location that embodies a unique cultural heritage. Any unexpended balance remaining in Allocation Number 4 at the close of any fiscal year shall be deemed to be provided for a specific purpose within the meaning of Section 9.113 of the Charter and shall be carried forward and accumulated in said allocation for the purposes recited herein. (5) Allocation Number 5 (Arts Impact Endowment): $2,500,000 to the Arts Commission to address needs in the arts community, including any associated administrative costs, to be determined by a cultural services allocation plan prepared no later than March 1, 2019, and every five years thereafter, by the Director of Cultural Affairs with community input and approved by the Arts Commission and the City Administrator. Any unexpended balance remaining in Allocation Number 5 at the close of any fiscal year shall be deemed to be provided for a specific purpose within the meaning of Section 9.113 of the Charter and shall be carried forward and accumulated in said allocation for the purposes recited herein. (6) Allocation Number 6 (Refunds): All amounts necessary to the Tax Collector for refunds of any overpayment of the 1.5% portion of the tax imposed under Section 502, including any related penalties, interest, and fees. (7) After the specific purpose allocations required by this Section 515.01(b), as adjusted under Section 515.01(c), all remaining revenues shall be transferred to the General Fund, to be expended for unrestricted general revenue purposes of the City. (c) The amounts described in subsections (b)(1) through (b)(5) as Allocation Numbers 1, 2, 3, 4, and 5, shall be subject to the following adjustments: (1) Fiscal Year 2018-2019 Adjustment: For fiscal year 2018-2019, each amount in subsections (b)(1) through (b)(5) shall be half of the amount stated. (2) Annual Adjustment: Commencing in fiscal year 2019-2020, subject to subsection (c)(3), each amount in subsections (b)(1) through (b)(5) shall be adjusted annually by the percentage increase or decrease in Allocable Hotel Tax Revenues collected in the current fiscal year compared with the prior fiscal year; provided, however, that such percentage increase or decrease shall not exceed 10% annually.

(3) Grants for the Arts and Cultural Equity Endowment: For fiscal years 2019-2020 and 2020-2021, one-half of the amount of the adjustment to Allocation Number 1 (Grants for the Arts) under subsection (c)(2) due to any increase in Allocable Hotel Tax Revenues shall be allocated instead to Allocation Number 2 (Cultural Equity Endowment). (d) Commencing with a report filed no later than February 15, 2020, covering the fiscal year ending on June 30, 2019, the Controller shall file annually with the Board of Supervisors, by February 15 of each year, a report containing the amount of monies collected in and expended from the Hotel Room Tax Fund during the prior fiscal year, the status of any project required or authorized to be funded by this Section 515.01, and such other information as the Controller, in the Controller’s sole discretion, shall deem relevant to the operation of this Section 515.01. (Added by Ord. 300-97, App. 7/25/97; amended by Ord. 301-97, App. 7/25/97; Ord. 302-97, App. 7/25/97; Ord. 360-97, App. 9/5/97; Ord. 2-98, App. 1/16/98; Ord. 254-98, App. 7/31/98; Ord. 183-01, File No. 011174, App. 8/17/2001; Ord. 166-13 , File No. 130541, App. 8/2/2013, Eff. 9/1/2013; Ord. 170-13 , File No. 130545, App. 8/2/2013, Eff. 9/1/2013; Proposition E, 11/6/2018, Eff. 12/14/2018, Oper. 1/1/2019) Editor’s note: As stated in Section 6 of Proposition E, 11/6/2018: “The 50% adjustment for fiscal year 2018-2019 provided in Section 515.01(c)(1) of the Business and Tax Regulations Code takes into account the mid- fiscal year operative date of this ordinance.”

(Added by Ord. 227-94, App. 6/9/94; amended by Ord. 170-13 , File No. 130545, App. 8/2/2013, Eff. 9/1/2013; repealed by Proposition E, 11/6/2018, Eff. 12/14/2018, Oper. 1/1/2019)