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HomeMy WebLinkAbout995 - Ordinance ORDINANCE NO. 995 AN ORDINANCE OF THE CITY OF RANCHO CUCAMONGA, CALIFORNIA, AMENDING CHAPTER 3.40 OF THE RANCHO CUCAMONGA MUNICIPAL CODE TO CONFIRM THAT SHORT- TERM RENTALS ARE SUBJECT TO THE CITY'S TRANSIENT OCCUPANCY TAX, FURTHER CLARIFY THE DEFINITION OF HOTEL AND TRANSIENT UNDER THE CHAPTER, PROVIDE REGULATIONS FOR FILING AND APPEALS PROCEDURES, AND MAKE OTHER MINOR AMENDMENTS TO THE CHAPTER A. Recitals. 1. In August 2020, the City Council adopted Ordinance No. 969 allowing for short-term residential rentals (STRs), provided a short-term rental permit was obtained within permitted zones and owners complied with City regulations. The Ordinance also reiterated the requirement for STRs to collect and remit monthly Transient Occupancy Tax (TOT) because such rentals qualify as a "hotel" under the existing TOT ordinance. 2. The City's Finance Department has also received questions about the applicability of the TOT to non-human transients, such as corporations, and the City Council desires to provide a common sense clarification that a transient must be a human person. 3. The City Council also desires to make other minor amendments to the TOT ordinance in order to implement certain best practices in terms of TOT collection, such as identifying the Tax Administrator's role in administering the tax and clarifying updates to the filing and appeals procedures. 4. The provisions of this ordinance constitute restatements of existing law and/or address the administration of the TOT ordinance, but do not affect the rate or scope of the TOT. 5. All legal prerequisites prior to the adoption of this Ordinance have occurred. B. Ordinance. The City Council of the City of Rancho Cucamonga does ordain as follows: SECTION 1. Chapter 3.40 (Transient Occupancy Tax) of Title 3 (Revenue and Finance) of the Rancho Cucamonga Municipal Code is hereby amended in its entirety to read as follows: "Chapter 3.40 TRANSIENT OCCUPANCY TAX 3.40.010 Definitions. 3.40.020 Imposition of tax. 3.40.030 Exemptions 3.40.040 Allowance for collection costs. 3.40.050 Collection by operators. 3.40.060 Registration of hotel operators; issuance and contents of registration certificate. 3.40.070 Filing of report and remittance of tax collected. 3.40.080 Penalties for delinquent payment. 3.40.090 Cessation of business. Ordinance No. 995— Page 1 of 8 3.40.100 Determination of tax by director of finance upon failure of operator to collect and report. 3.40.110 Appeals. 3.40.111 Records to be kept for three years. 3.40.112 Enforcement. 3.40.113 Disbursement. 3.40.114 Violations. 3.40.115 Effective date. 3.40.010 Definitions. Except where the context otherwise requires, the definitions given in this section govern the construction of this chapter: 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, motel, studio hotel, bachelor hotel, lodginghouse, roominghouse, apartment house, dormitory, public or private club, mobilehome or house trailer at a fixed location, short-term rental (as defined in chapter 8.34), or other similar structure or portion thereof. Occupancy means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or portion thereof, in any hotel for dwelling, lodging or sleeping purposes. Operator means a person who is proprietor of the hotel, whether in the capacity of owner, lessee, sub-lessee, mortgagee in possession, licensee or any other capacity. Where the operator performs his or her functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his or her principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, 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, syndicate, or any other group or 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 means the tax imposed by this ordinance. Tax Administrator means the Director of Finance or his or her designee. The Tax Administrator is charged with interpreting the provisions of this chapter. Transient means any human 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 chapter may be considered. Ordinance No. 995— Page 2 of 8 3.40.020 Imposition of tax. A. For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of ten percent 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. 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 city. 3.40.030 Exemptions. No tax shall be imposed upon: A. Any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty. B. Any federal or state officer or employee when on official business. C. Any other person at whom, or any occupancy as to which, it is beyond the power of the City to impose the tax provided for in this chapter. D. Any amount subject to tax under the Sales and Use Tax Law (commencing with Revenue and Taxation Code § 6001) with respect to the sale of food products. For purposes of this subsection, the term "food products"means food and beverage products of every kind, regardless of how or where served, and shall specifically include, but not be limited to, alcoholic beverages and carbonated beverages of every kind. Except for Subsection D above, no exemptions shall be granted except upon a claim therefor made at the time the rent is collected and under penalty of perjury upon a form prescribed by the Tax Administrator. 3.40.040 Allowance for collection costs. From the full amount of the tax collected and transmitted to the director of finance pursuant to this chapter, each operator may deduct and retain as for his or her administrative expense in the collection of said tax, an amount equal to four percent of the total tax to be paid. 3.40.040 Collection by operators. 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 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. Ordinance No. 995— Page 3 of 8 3.40.050 Registration of hotel operators; issuance and contents of registration certificate. Within 30 days after commencing business, each operator of any hotel renting occupancy to transients shall register said hotel with the director of finance and obtain from him or her a transient occupancy registration certificate to be at all times posted in a conspicuous place on the premises. Every application for such a certificate shall be made upon a form prescribed by the Tax Administrator and shall set forth the name under which the operator transacts or intends to transact business, the location of the place of business and such other information as the Tax Administrator may require. The application shall be signed by the owner of the hotel if a natural person; by a member or partner, if association or partnership; by an executive officer or some person specifically authorized by the corporation to sign the application, if a corporation. The transient occupancy registration certificate must be in effect at all times while the business is in operation and shall be at all times posted in a conspicuous place on the hotel premises. Said certificate shall, among other things, state the following: A. The name of the hotel; B. The name of the operator; C. The address of the hotel; and D. The day upon which the certificate was issued; E. "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 said tax to the Tax Administrator. This certificate does not authorize any person to conduct any unlawful 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 this city. This certificate does not constitute a permit and does not apply in lieu of such other permits which are otherwise required to operate." 3.40.060 Filing of report and remittance of tax collected Each operator shall, on or before the last day of the month following the close of each month, 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/her, of the total rents charged and received and the amount of tax collected from transient occupancies. Each such return shall contain a declaration under penalty of perjury, executed by the operator or its authorized agent, that to the best of the signatory's knowledge, the statements in the return are true, correct and complete. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. Amounts claimed on the return as exempt from the tax pursuant to Section 3.40.030 shall be fully itemized and explained on the return or supporting schedule. At the time the return is filed, the tax fixed at the prevailing tax rate for the amount of occupancies charged or chargeable, which are not exempt from tax under Section 3.40.030, shall be remitted to the Tax Administrator. The Tax Administrator may establish shorter reporting periods for any certificate holder if he or she deems it necessary in order to ensure collection of the tax and he or she may require further information on the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this Ordinance No. 995— Page 4 of 8 chapter shall be held in trust for the account of the city until payment thereof is made to the Tax Administrator. 3.40.070 Penalties for delinquent payment. A. Original delinquency. Any operator who fails to remit any tax imposed by this chapter within the time required shall pay a penalty of ten percent 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 chapter 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 chapter shall pay interest at the rate 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 herein required to be paid. 3.40.080 Determination of tax by Tax Administrator upon failure of operator to collect and report. 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 portion thereof required by this chapter, the Tax Administrator shall proceed in such manner as he or she may deem best to obtain facts and information on which to base his estimate of the tax due. As soon as the Tax Administrator procures such facts and information as he or she is able to obtain, upon which to base the assessment of any tax imposed by this chapter and payable by any operator who has failed or refused to collect the same, and to make such report and remittance, he or she shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this chapter. In case such determination is made, the Tax Administrator shall give a notice of the amount so assessed by serving it personally or by depositing it in the United States mail, addressed to the operator so assessed, at his or her last known 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 the 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 herein 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 Tax Administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed herein of such determination and the amount of such tax, interest and penalties. The Ordinance No. 995 — Page 5 of 8 amount determined to be due shall be payable after fifteen days unless an appeal is taken as provided in section 3.40.090. 3.40.090 Cessation of business. Each operator shall notify the Tax Administrator,ten days prior to the sale or cessation of business of a hotel for any reason and returns and remittances are due immediately upon the sale or cessation of business. 3.40.100 Appeals. Any operator aggrieved by any decision of the Tax Administrator with respect to the amount of such tax, interest and penalties, if any, may appeal to the City Manager, or his or her designee, by filing notice of appeal with the City Clerk within 15 days of the serving or mailing of the determination of tax due. The appellant shall pay a non-refundable fee in an amount established by resolution of the City Council for such appeal. The City Clerk shall schedule an appeal hearing with the City Manager or designee within 15 days of an appeal being filed. The City Clerk shall give notice in writing to such operator at his or her last known place of address. The decision of the City Manager or his or her designee shall contain factual findings and legal conclusions which support the decisions and shall be final and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice. 3.40.110 Records to be kept for three years. 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, in the city, for a period of three years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the city, which records the Tax Administrator shall have right to inspect at all reasonable times. Such records shall be made available to the Tax Administrator or designee at all reasonable times to conduct audits for verification of the tax liability. The Tax Administrator may subpoena the records or use any other lawful method required to inspect the records if any operator refuses to make them available for examination upon request. If the above records are not provided by the hotel operator or are deemed incomplete or unacceptable by the Tax Administrator, a determination of the taxes, penalties, and interest due will be made by the Tax Administrator in the manner specified in Section 3.40.080. 3.40.110 Enforcement. 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 to an action brought in the name of the city for the recovery of such amount. Except in the case of fraud or the failure of a property owner to file a transient occupancy tax return, the city may institute an action to collect unpaid transient occupancy taxes within four years of the date on which the transient occupancy taxes were required to be paid. If the Tax Administrator determines that the failure to make any remittance or payment due under this chapter is due to fraud, the violation shall be punishable pursuant to Section 3.40.130. Ordinance No. 995— Page 6 of 8 3.40.120 Disbursement. All moneys received by the city from the collection of transient occupancy tax shall be paid into the general fund. 3.40.130 Violations. Any operator or other person violating any provisions of this chapter shall be guilty of a misdemeanor and shall be punishable therefor by a fine of not more than $500.00, or by imprisonment in the county jail for a period of not more than six months, or by both such fine and imprisonment. Any operator or other person who fails or refuses to register as required by this chapter 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 aforesaid. Any person required to make, render, submit 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 chapter to be made, is guilty of a misdemeanor and is punishable as aforesaid. 3.40.140 Effective Date. The tax imposed by this chapter became operative on July 1, 1983." SECTION 2. If any section, subsection, subdivision, paragraph, sentence, clause or phrase in this Ordinance or any part thereof is for any reason held to be unconstitutional, invalid, or ineffective by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof irrespective of the fact that any one or more sections, subsections, subdivisions, paragraphs, sentences, clauses or phrases be declared unconstitutional, invalid, or ineffective. SECTION 3. The City Clerk shall certify to the adoption of this Ordinance and shall cause the same to be published in the manner prescribed by law. Ordinance No. 995— Page 7 of 8 PASSED, APPROVED, AND ADOPTED this 211 day of February, 2022. is 0aer, Mayor 4eafi ' ATTEST: ice C. Reynolds, CI rk STATE OF CALIFORNIA ) COUNTY OF SAN BERNARDINO ) ss CITY OF RANCHO CUCAMONGA ) I, JANICE C. REYNOLDS, City Clerk of the City of Rancho Cucamonga, California, do hereby certify that the foregoing Ordinance was introduced at a Regular Meeting of the City Council of the City of Rancho Cucamonga held on the 19th day of January 2022, and was passed at a Regular Meeting of the City Council of the City of Rancho Cucamonga held on the 2"d day of February 2022. AYES: Hutchison, Kennedy, Michael, Scott, Spagnolo NOES: None ABSENT: None ABSTAINED: None Executed this 31d day of February 2022, at Rancho Cucamonga, California. J ice C. Reynolds, Cle k Ordinance No. 995— Page 8 of 8