CC 2014-09-09_08.f. Resolution of Intent Vacation Rental_HomestaysMEMORANDUM
TO: CITY COUNCIL
FROM: STEVEN ADAMS, CITY MANAGER
SUBJECT: CONSIDERATION OF RESOLUTION OF INTENTION TO AMEND
CHAPTER 3.46 OF THE ARROYO GRANDE MUNICIPAL CODE
RELATING TO EXEMPTIONS AND VACATION RENTALS AND
HOMESTAYS
DATE: SEPTEMBER 9, 2014
RECOMMENDATION:
It is recommended the City Council adopt a Resolution of Intention to amend
Chapter 3.46 of the Arroyo Grande Municipal Code to provide that the same
exemptions that apply to the Transient Occupancy Tax apply to Arroyo Grande
Tourism Business Improvement District (AGTBID) assessments and amend the
definition of "lodging" to include vacation rentals and homestays.
FINANCIAL IMPACT:
The AGTBID will experience a small increase in revenue from expansion to
include vacation rentals and homestays. The only impact on staff time is the
process of establishing the ordinance.
BACKGROUND:
In May 2013, the City Council adopted an Ordinance establishing the Arroyo
Grande Tourism Business Improvement District. The District was formed under
the Parking and Business Improvement Law of 1989, Sections 36500 et seq. of
the Streets and Highways Code and incorporated into the Arroyo Grande
Municipal Code in Title 3, Chapter 3.46. It was recently renewed for FY 2014-15.
ANALYSIS OF ISSUES:
The provisions in the Arroyo Grande Municipal Code relating to the AGTBID
assessments do not include exemptions for governmental officials. Section
3.24.040 of the Arroyo Grande Municipal Code relating to the transient
occupancy tax includes the following exemptions: any person as to whom, or any
occupancy as to which, it is beyond the power of the City to impose the tax
provided for in this chapter; any federal and state officer or employee when on
official business; or any officer or employee of a foreign government who is
exempt by reason of an express provision of federal law or international treaty.
Item 8.f. - Page 1
CITY COUNCIL
CONSIDERATION OF RESOLUTION OF INTENTION TO AMEND CHAPTER
3.46 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO
EXEMPTIONS AND VACATION RENTALS AND HOMESTAYS
SEPTEMBER 9, 2014
PAGE2
Since the assessment for the AGTBID is applied to occupied rooms for all
transient occupancies, it would be appropriate to have the same exemptions that
apply to the transient occupancy tax applied to the AGTBID assessments. The
intent when the TBID was established was to maintain consistent regulations and
procedures to minimize the effort of compliance by lodging businesses.
However, this discrepancy was brought to the City's attention after it had taken
effect.
In addition, regulations for vacation rentals and homestays were recently
established. Direction was provided to apply both transient occupancy tax and
AGTBID assessments to permitted vacation rentals and homestays. Currently,
the definition of "lodging" subject to the AGTBID assessment expressly excludes
vacation rentals. This change has been recommended by the AGTBID Advisory
Committee.
Streets and Highways Code Section 36541 provides the procedure to modify the
basis and method of levying the assessment. It requires the City Council hold a
public meeting, adopt a Resolution of Intention, and then hold a public hearing
that must be noticed 45 days in advance. Since the "public meeting" requirement
only applies to a "new or increased assessment", it applies to the application of
the assessment to vacation rentals and homestays, which would constitute a
"new" assessment on such businesses. Introduction of the Ordinance is
recommended to be considered by the City Council at the November 25, 2014
meeting. Adoption would then be considered at a public hearing at the
December 9, 2014 meeting.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
1. Approve staff's recommendations;
2. Do not propose expanding the AGTBID to include vacation rentals and
homestays;
3. Do not adopt the Resolution of Intention; or
4. Provide staff other direction.
ADVANTAGES:
The recommendations will enable the City to expand the AGTBID, which
provides a mechanism to generate funding to promote hotel stays and tourism in
the City, which increases transient occupancy tax revenue and supports local
businesses. It will also make compliance with the AGTBID requirements easier
for lodging businesses by making the exemptions consistent with transient
occupancy tax requirements.
Item 8.f. - Page 2
CITY COUNCIL
CONSIDERATION OF RESOLUTION OF INTENTION TO AMEND CHAPTER
3.46 OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO
EXEMPTIONS AND VACATION RENTALS AND HOMESTAYS
SEPTEMBER 9, 2014
PAGE3
DISADVANTAGES:
No disadvantages with the recommended action are identified.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
The Agenda was posted in front of City Hall on Thursday, September 5, 2014
and on the City's website on Friday, September 6, 2014. No public comments
were received.
Item 8.f. - Page 3
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE DECLARING ITS INTENTION TO
AMEND CHAPTER 3.46 OF THE ARROYO GRANDE
MUNICIPAL CODE WITH MODIFICATIONS RELATING TO
EXEMPTIONS FROM THE TOURISM BUSINESS
IMPROVEMENT DISTRICT ASSESSMENT AND ADDING
VACATION RENTALS AND HOMESTAYS TO THE
DEFINITION OF "LODGING" BUSINESSES SUBJECT TO
THE ASSESSMENT
WHEREAS the Parking and Business Improvement Area Law of 1989, sections 36500
et seq. of the Streets and Highways Code, authorizes cities t9 establish business
improvement districts for several purposes, one of which is promotion of tourism; and
WHEREAS the Arroyo Grande Tourism Business Improvement District (AGTBID) was
established in May, 2013 and incorporated into the Arroyo Grande Municipal Code
under Chapter 3.46 which provides for the imposition of an assessment on lodging
businesses; and
WHEREAS, the City also imposes a Transient Occupancy Tax and that Tax includes
exemptions that are contained in Section 3.24.040 of the Arroyo Grande Municipal
Code which includes the following: any person as to whom, or any occupancy as to
which, it is beyond the power of the city to impose the tax provided for in this chapter;
any federal and state officer or employee when on official business; or any officer or
employee of a foreign government who is exempt by reason of an express provision of
federal law or international treaty; and
WHEREAS, since the assessment for the AGTBID is applied to occupied rooms for all
transient occupancies, the City Council finds that it would be appropriate to have the
same exemptions that apply to the Transient Occupancy Tax applied to the AGTBID
assessments; and
WHEREAS, the City has developed regulations for vacation rentals and homestays,
and currently the definition of "lodging" subject to the AGTBID assessment expressly
excludes vacation rentals and it would be appropriate to impose the assessment on any
vacation rentals or homestays that are permitted under the new regulations; and
WHEREAS, Streets and Highways Code Section 36541 provides that in order to adopt
modifications to the basis and method of levying the assessment the City Council is
required to adopt a resolution of intention which states the proposed modification and
then hold a public hearing; and
Item 8.f. - Page 4
RESOLUTION NO.
PAGE2
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Arroyo
Grande as follow:
Section 1. The City Council hereby declares its intention to amend Chapter 3.46 of
the Arroyo Grande Municipal Code to provide for the following
modifications:
1. Section 3.46.050 of the Arroyo Grande Municipal Code is hereby
amended to read as follows:
"3.46.050 Levy of assessment, reporting and exemptions.
The AGTBID shall include all lodging businesses located within the
AGTBID boundaries. The assessment to be levied on all lodging businesses
within the AGTBID boundaries shall be based upon two percent of the rent
charged by the operator per occupied room per night for all transient
occupancies. The assessment shall be collected quarterly, based on two
percent of the rent charged by the operator per occupied room per night in
revenues for the previous quarter. New lodging businesses within the
boundaries shall not be exempt from the levy of assessment authorized by
Section 36531 of the law. Assessments pursuant to the AGTBID shall not
be included in rent revenue for purpose of determining the amount of the
assessment. The value of extended stays of more than thirty (30)
consecutive calendar days shall be exempt from the levy of assessment.
Stays by persons who are otherwise exempt from the imposition of a
transient occupancy tax as defined in AGMC Section 3.24.040 shall be
exempt from the assessment.
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 director of administrative services,
make a return to the director of administrative services, on forms provided
by him or her, of the total rents charged and received and the amount of
assessment collected for transient occupancies. At the time the return is
filed, the full amount of the assessment collected shall be remitted to the
director of administrative services. The director of administrative services
may establish shorter reporting periods for any operator if he or she deems
it necessary in order to insure collection of the assessment, and he or she
may require further information in the return. "
Item 8.f. - Page 5
RESOLUTION NO.
PAGE3
2. The definition of "Lodging" contained in Section 3.46.020 of the Arroyo
Grande Municipal Code is hereby amended to read as follows:
" 'Lodging' 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, motel, inn, 9f bed and
breakfast, vacation rental or homestay that pays transient occupancy tax.
For purposes of this chapter the definition of "lodging" shall not include RV
parks and vacation rentals .. "
Section 2. The City Council hereby sets November 25, 2014 as the date for a public
meeting on the modifications and amendments to Chapter 3.46 and the AGTBID and
December 9, 2014 as the date for a public hearing on the modifications and
amendments. Both the pubic meeting and the public hearing will be held at 6:00 p.m.,
or as soon thereafter as practicable, in the City Council Chambers, located at 215 East
Branch Street, Arroyo Grande.
Section 3. At the public meeting and public hearing the testimony of all interested
persons for or against the modifications and amendments to Chapter 3.46 and the
AGTBID will be heard. A protest may be made orally or in writing by any interested
person. However, only written protests will be considered in determining if there
is a majority protest.
Any protest pertaining to the regularity or sufficiency of the proceedings shall be
in writing and clearly state the irregularity or defect to which objection is made. To
count in the determination of a majority protest against the modifications and
amendments to Chapter 3.46 and the AGTBID, a protest must be in writing.
Written protests must be received by the City Clerk of the City of Arroyo Grande
before the close of the public hearing scheduled herein and may be delivered or mailed
to the City Clerk, City of Arroyo Grande, 300 East Branch Street, Arroyo Grande, CA
93420. A written protest may be withdrawn in writing at any time before the conclusion
of the public hearing.
Each written protest shall contain a written description of the business in which
the person signing the protest is interested sufficient to identify the business. If the
person signing the protest is not shown on the official records of the City of Arroyo
Grande as the owner of the business, then the protest shall contain or be accompanied
by written evidence that the person is the owner of the business.
A written protest which does not comply with this section shall not be counted in
determining a majority protest.
Item 8.f. - Page 6
RESOLUTION NO.
PAGE4
Section 4. If, at the conclusion of the public hearing, written protests are received
from owners of businesses in the AGTBID which will pay fifty percent (50%) or more of
the assessments proposed to be levied and protests are not withdrawn so as to reduce
the protest to less than fifty percent (50%) (i.e., there is a majority protest), no further
proceedings relating to the modifications and amendments to Chapter 3.46 and the
AGTBID, as contained in this Resolution of Intention, shall be taken for a period of one
year from the date of the finding of a majority protest by the City Council. For purposes
of determining the applicable majority protest figure for the initial formation of the
district, the proposed assessment to be levied will be calculated based on the
assessment rate multiplied by the most recent available data for the lodging operations'
gross lodging rent as reported to the City during fiscal year 2013-2014.
Section 5. Further information regarding the proposed AGTBID may be obtained
from the City Clerk, City of Arroyo Grande, 300 East Branch Street, Arroyo Grande, CA
93420.
Section 6. The City Clerk is instructed to provide notice of the public meeting and
public hearing in accordance with the requirements of Streets and Highways Code
Section 36523, including giving notice of the public hearing by causing this resolution of
intention to be published once in a newspaper of general circulation in the City no less
than seven days before the public hearing, and sending a copy of this resolution of
intention by first-class mail within seven days of its adoption to the owner of each
business in the AGTBID which will be subject to the assessment.
On motion of Council Member , seconded by Council Member
and by the following roll call vote, to wit:
AYES:
NOES:
ABSENT:
the foregoing Resolution was passed and adopted this _ day of 2014.
Item 8.f. - Page 7
RESOLUTION NO.
PAGES
TONY FERRARA, MAYOR
ATTEST:
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
STEVEN ADAMS, CITY MANAGER
APPROVED AS TO FORM:
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 8.f. - Page 8