HomeMy WebLinkAbout1985-10-22; City Council; 8027-1; Collection Procedures Transient Occupancy TaxLn
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CI:°'� OF CARLSBAD — AGENL''BILL i 00'�L;l
AB#-PL,Z _-i- TITLE: REVISIONS TO COLLECTION PROCEDURES DEPT. N
MTG. 10/22/85 FOR THE TRANSIENT OCCUPANCY TAX CITY AT
DEPT. FIN CITY ME
RECOMMENDED ACTION:
That the City Council introduce Ordinance No. J 2 ?8^
ITEM EXPLANATION
The City has recently experienced several serious problems in
collecting transient occupancy tax. In two cases it was necessary
to ask the City Attorney's office to commence litigation in order to
collect. These problems have pointed up some deficiencies in the
City's municipal code. In that regard, attached is an ordinance
which would revise the collection procedures for the transient
occupancy tax and essentially implements in Carlsbad what is already
being done in the City of San Diego. A memorandum from the City
Attorney discussing the recommended changes is attached.
FISCAL IMPACT
Some additional administrative expense will be required as a result
of the new reporting and payment schedules. This should be more than
offset by increased collections and reduced cost of enforcement.
EXHIBITS
Ordinance No. / �2 PS
Memorandum from City Attorney
B
ORDINANCE NO. 1285
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AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
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CARLSBAD, CALIFORNIA AMENDING TITLE 31 CHAPTER
3.12 OF THE CARLSBAD MUNICIPAL CODE BY THE
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AMENDMENT OF SECTIONS 3.12.060 AND 3.12.080 AND
BY THE ADDITION OF SECTION 3.12.160 THROUGH
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3.12.220 TO REVISE THE PROVISIONS FOR THE
COLLECTION OF THE TRANSIENT OCCUPANCY TAX.
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The City Council of the City of Carlsbad, California
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does ordain as follows:
SECTION 1: That Chapter 3.12, Section 3.12.060 of the
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Carlsbad Municipal Code is amended by the deletion of the last
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sentence of that section which reads, "This certificate does not
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constitute a permit." and by the addition of the following
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sentence: "It shall be unlawful to operate a hotel in the City
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of Carlsbad without a currently valid certificate."
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SECTION 2: That Chap'.er 3.12, Section 3.12.080 o the
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Carlsbad Municipal Code is amended by the addition of subsection
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(g ) to read as follows:
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"(g) Revocation. In addition to the other penalties
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provided by this section, if an operator is delinquent in any
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waymore than one time in any twelve month period the tax
administrator may revoke the operator's transient occupancy
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registration certificate."
SECTION 3: That Chapter 3.12 of the Carlsbad Municipal
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Code is amended by the addition of Sections 3.12.160, 3.12.170,
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3.12.180, 3.12.190, 3.12.200, 3.12.210 and 3.12.220 to read as
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follows: .
113.12.160 Revocation of certificate. Whenever any
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operator fails to comply with any provision of this chapter
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relating to occupancy tax or any rule or regulation of the tax
and adopted
administrator relating to occupancy tax prescribed
under this chapter, the tax administrator upon hearinq, after
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giving the operator ten days notice in writing specifying the
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time and place of hearing and requiring him to show cause why
his certificate should not be revoked, may suspend or revoke
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5
500
1 the certificate held by the operator. The tax administrator
shall qive the operator written notice of the suspension or
2 revocation of his certificate. The notice herein required may be
served personally or by mail in the manner prescribed for service
3 of notice of a deficiency determination. The tax administrator
shall not issue a new certificate after a revocation unless he is
4 satisfied that the former holder of the certificate will comply
with the provisions of this chapter relating to the occupancy tax
5 and regulations of the tax administrator.
3.12.170 Closure of hotel without certificate. During
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any period of time during which a certificate has not been issued
7 or is suspended, revoked or otherwise not validly in effect, the
tax administrator may require that the hotel be closed.
8 3.12.180 Recording notice of lien. If any amount
9 required to a remittedor paid to t e C y under this chapter is
not remitted or paid when due, the tax administrator may, within
10 three years after the amount is due file for record in the office
of the San Diego County recorder a Notice of Lien specifying the
11 amount of tax, penalties and interest due, the name and address
as . it appears on the records of the tax administrator of the
12 operator liable for the same and the fact that the tax
c administrator has complied with all provisions of this chapter in
the determination of the amount required to be remitted and paid.
13 From the time of the filing for record, the amount required to
be remitted together with penalties and interest constitutes a
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°z o W CC lien lien upon all real property in the county owned by the operator
o a ° 15 or afterwards and before the lien expires acquired by him. The
CO ��� lien has the force, effect and priority of a judgment lien and
z W w c 16 shall continue for ten years from the time of filing of the
LU ; Notice of Lien unless sooner released or otherwise discharged.
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17 3.12.190 Priority and lien of tax. (a) The amounts
1$ required to a paid y any operator under-7-his chapter with
penalties and interest shall be satisfied first in any of the
19 following cases:
(1) Whenever the person is insolvent;
20 (2) Whenever the person makes a voluntary
assignment of his assets;
21 ( 3 ) Whenever the estate of the person in the hands
of executors, administrators, or heirs is insufficient to pay all
22 the debts due from the deceased;
(4) Whenever the estate and Affects of an
23 absconding, concealed or absent person required to pay any
This
amount under this chapter are levied upon by process law.
24 chapter does not give the City a preference over any recorded
lien which attached prior to the date when the amounts required
25 to be paid became a lien.
(b) The preference qiven to the City by this section
26 shall be subordinate to the preferences given to claims for
personal services by Section 1204 and 1206 of the Code of Civil
27 Procedure.
2.
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3.12.200 Warrant for collection of tax. At any time
1 within three years after any operator is delinquent in the
2 remittance or payment of any amount herein required to be
remitted or paid or within three years after the last recording
3 of a Notice of Lien under Section 3.12.180, the tax administrator
may issue a warrant for the enforcement of any liens and for the
collection of any amount required to be paid to the City under
this chapter. The warrant shall be directed to any sheriff,
5 marshal, or constable and shall have the same effect as a writ of
execution. The warrant shall be levied and sale made pursuant to
6 it in the same manner with the same effect as a levy of and a
sale pursuant to a writ of execution. The tax administrator may
7 pay or advance to the sheriff, marshal, or constable the same
fees, commissions and expenses for his services as are provided
8 by law for similar services pursuant to a writ of execution. The
tax administrator, and not the court, shall approve the fees for
publication in a newspaper.
10 3.12.210 Seizure and sale. At any time within three
yeas after any operator is delinquent in the remittance or
11 payment of any amount, the tax administrator may forthwith
collect the amount in the following manner. The tax
12 administrator shall seize any property, real or personal, of the
e operator and sell the property, or a sufficient part of it, at
public auction to pay the amount due together with any penalties
9 13 and interest imposed for the delinquency and any costs incurred
0! a on account of the seizure and sale. Any seizure made to collect
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o occupancy taxes due shall be only of property of the operator no
m<o 15 exempt from execution under the provision of the Code of Civil
u < Procedure.
Z ` 16 3.12.220 Withhold notice. If any person or operator
k^ 17 is delinquent in the remittance or payment of the amount required
a to be :emitted or paid by him or in the event a determination has
t 18 been male against him for the remittance of tax and payment of
the penalty, the City may, within three years after the tax
19 obligation became due, give notice thereof personally or by
registered mail to all persons, including the state or any
20 political subdivision thereof, having in their possession or
under their control any credits or other personal property
21 belonging to the taxpayer. After receiving the withholding
notice, the person so notified shall make no disposition of the
22 taxpayer's credits, other personal property or debts until the
City consents to a transfer or disposition or until sixty days
23 elapse after the receipt of the notice, whichever expires
earlier. All persons, upon receipt of said notice, shall advise
24 the City immediately of all such credits, other personal property
or debts in their possession, under their control or owing by
25 them. If such notice seeks to prevent the transfer or other
disposition of a deposit in a bank or other credits or personal
25 property in the possession or under the control of the bank, to
be effective the notice shall be delivered or mailed to the
27 branch or office of such bank at which such deposit is carried or
at which such credits or personal property is held. If any
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1 person so notified makes transfer or disposition of the property
or debts required to be held hereunder during the effective
2 period of the notice to withhold, he shall be liable to the City
to the extent of the value of the release up to the amount of the
3 indebtedness owed by the taxpayer to the City."
4 EFFECTIVE DATE: This ordinance shall be effective
5 thirty days after its adoption, and the City Clerk shall certify
6 to the adoption of this ordinance and cause it to be published
7 at least once in the Carlsbad Journal within fifteen days after
8 its adoption.
9 INTRODUCED AND FIRST READ at a regular meeting of the
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Carlsbad City Council on the 22n1 ,lay of October
11 1985, and thereafter
12 PASSED AND ADOPTED at a regular meeting of said City
29th October
13 Council held on the day of . 1985 by
d0:
� w � 14 the following vote, to wit:
o` o 15 AYES: Council Members Casler, Lewis, Kulchin, Chick and Pettine
v
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0 17 ABSENT: None
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191 APPROVED AS TO FORM AND LEGALITY
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22 C , JR. Attorney
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24 MAR�H.A
SLER, Mayor
25 ATTEST:
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28 1ALETHA L. RAUTENKRANZ, City Cle k
I.,
August 8, 1985 L3�5 6 78S'� y(
4110 1�8
�, AC/
TO: Assistant City Manager. - Patchett Of S
r, C ty
call � P40
FROM: City Attorney s',, c/
SUGGESTED REVISIONS TO TRANSIENT OCCUPANCY TAX ORDINANCE
In October the Finance Director asked our office to file lawsuits
against two hotel operators in the City who had refused to pay a ;
substantial amount of the City's transient occupancy tax
($55,000+). As a consequence we had occasion to review Chapter
3.12 of the Carlsbad Municipal Code which provides for the tax.
As a result, in a memorandum dated October 24, 1984 we suggested
some changes to the ordinance to prevent similar problems in the
future. A copy of that memorandum is attached for your ready
reference.
In response to the memorandum the Finance Director recommended
some changes to our ordinance to the City Council. The Council
approved them on July 22, 1985 by their adoption of Ordinance No.
1275.
Notwithstanding those changes, we continued to experience
problems. As a result I consulted with the city attorney in Palm
Springs who probably has as much experience with transient
occupancy tax as anyone in California. He made some suggestions
as to how our ordinance could be improved to minimize the
collection problem. Attached to this memorandum is a draft
ordinance which is drawn from the Palm Springs municipal code
which implements his suggestions.
The primary problem we are trying to solve is one of remedies for
nonpayment. At the present time if an operator refuses to pay it
constitutes a debt to the City which we have to collect in court
through a civil action. Even if we win that can take a
substantial period of time during whicl: the City is deprived of
the use of the money and the possibility exists that the operator
may be insolvent, have left the area, or sought protection in the
federal bankruptcy courts. In all of those situations the City
would not be able to collect. The ordinance attempts to prevent
things from getting that far. The pr'nary means used is a permit
system. In the event of a delinquency the tax administrator
would have the ability to revoke the permit. The ordinance then
provides for a summary remedy of closing the business. Attached
to this memorandum is a notice for that used by Palm Spring.
Although the legality for these provisions have never been
established in court Palm Springs reports a 100$ successful
collection record using this procedure without having to resort
to litigation. They have found it particularly effective to post
the notice on Thursday afternoon which is usually followed with
payment by noon Friday.
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The ordinance also makes some other changes which would aid the
City in collecting by making a deficiency a lien against the
property. The primary purpose of these sections is to help when
impress upon the operators the need to promptly pay Y
required.
We think the suggested ordinance would solve substantially all
•,f our collection problems and we ask that you consider
recommending its adoption to the City Council. Please let us
know if you need any further information.
VINCENT F. BIONDO, JR.
City Attorney
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attachments
c: Finance Director
with attachments
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N0:'ICE OF CLOSING
OF
BUSINESS
TO:
PURSUANT TO SECTION 3.12.160 OF THE CITY OF CARLSBAD TRANSIENT
OCCUPANCY TAX: ORDINANCE, YOU ARE HEREBY ORDERED TO CEASE AND
DESIST FROM OPERATING A HOTEL BUSINESS AT THE ABOVE ADDRESS
UNTIL SUCH TIME AS YOU HAVE VALIDLY IN EFFECT A PROPER TRANSIENT
OCCUPANCY REGISTRATION' PERMIT SO TO DO, AND WHICH IS OBTAINABLE
UPON YOUR COMPLIANCE WITH ALL THE APPLICABLE REQUIREMENTS OF
SAID CITY OF CARLSBAD TRANSIENT OCCUPANCY TAX ORDINANCE. YOGI,
AND ALL OTHER PERSONS CONCERNED WITH OPERATION OF THE HOTEL AT
THE ABOVE ADDRESS, ARE FURTHER ADVISED THAT ANY PERSON
PARTICIPATING IN THE OPERATION OF A HOTEL BUSINESS WITH KNOWLEDGE
THAT THE TRANSIENT OCCUPANCY REGISTRATION PERMIT THEREFOR IS
NOT IN EFFECT, IS GUILTY OF A CRIMINAL OFFENSE AND SUBJECT TO
ARREST.
THIS ORDER SHALL BE EFFECTIVE 19 AND SHALL
REMAIN IN EFFECT UNTIL ORDERED OTHERWISE BY THE UNDERSIGNED OR
BY THE CITY MANAGER. THIS ORDER SHALL, HOWEVER, BE DEEMED
RESCINDED AT SUCH TIME AS A VALID TRANSIENT OCCUPANCY REGISTRA-
TION PERMIT BEARING THE SAME OR A LATER DATE OF THIS NOTICE HAS
BEEN ISSUED BY THE UNDERSIGNED AND HAS BEEN POSTED IN A
CONSPICUOUS PLACE ON THE PREMISES AS REQUIRED BY SECTION 3.12.160
OF THE CITY OF CARLSBAD TRANSIENT OCCUPANCY TAX ORDINANCE.
ADDITIONAL EXPLANATORY INFORMATION:
SIGNED THIS DAY OF
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TAX ADMINISTRATOR
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