CC 2014-12-09_09a Adopt Ord_Amend TBIDMEMORANDUM
TO: CITY COUNCIL
FROM: DEBBIE MALICOAT, DIRECTOR OF ADMINISTRATIVElV"
SERVICES
SUBJECT: CONSIDERATION OF ORDINANCE AMENDING CHAPTER 3.46
OF THE ARROYO GRANDE MUNICIPAL CODE RELATING TO
EXEMPTIONS AND VACATION RENTALS AND HOMESTAYS
DATE: DECEMBER 9, 2014
RECOMMENDATION:
It is recommended the City Council adopt an Ordinance amending 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.
IMPACT ON FINANCIAL AND PERSONNEL RESOURCES:
The AGTBID will experience a small increase in revenue from expansion to
include vacation rentals and homestays, as well as a small decrease from the
exemptions. It is anticipated the net result will be a minor increase. 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 AGTBID.
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. At the September 9, 2014 meeting, the
City Council adopted a Resolution of Intention to amend the AGTBID. At the
November 25, 2014 meeting, the Ordinance was introduced by the City Council.
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
Item 9.a. - Page 1
CITY COUNCIL
CONSIDERATION OF ORDINANCE AMENDING CHAPTER 3.46 OF THE
ARROYO GRANDE MUNICIPAL CODE RELATING TO EXEMPTIONS AND
VACATION RENTALS AND HOMESTAYS
DECEMBER 9, 2014
PAGE2
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.
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 to
adopt a Resolution of Intention, then hold a public meeting that must be noticed
45 days in advance, and finally hold a public hearing. Since the "public meeting"
requirement 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. At the November 25, 2014
Council meeting, the public meeting to introduce the Ordinance was held.
During the public hearing, if written protests are received from business owners
representing fifty percent (50%) or more of the assessments to be levied, no
further proceedings to modify the assessment may be taken for a period of one
year. If an insufficient number of protests are received, the City Council then
may proceed to adopt the Ordinance. For purposes of determining the
applicable majority protest figure, 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.
ALTERNATIVES:
The following alternatives are provided for the Council's consideration:
1. Adopt the Ordinance;
2. Do not propose expanding the AGTBID to include vacation rentals and
homestays and/or to include government employee exemptions;
3. Do not adopt the Ordinance; or
4. Provide staff other direction.
Item 9.a. - Page 2
'I
CITY COUNCIL
CONSIDERATION OF ORDINANCE AMENDING CHAPTER 3.46 OF THE
ARROYO GRANDE MUNICIPAL CODE RELATING TO EXEMPTIONS AND
VACATION RENTALS AND HOMESTAYS
DECEMBER 9, 2014
PAGE3
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 eqsier
for lodging businesses by making the exemptions consistent with transient
occupancy tax requirements.
DISADVANTAGES:
No disadvantages with the recommended action are identified.
ENVIRONMENTAL REVIEW:
No environmental review is required for this item.
PUBLIC NOTIFICATION AND COMMENTS:
Pursuant to State law, on September 11, 2014, staff mailed a letter to each
lodging business located within the City with a certified copy of the City Council's
Resolution of Intention to modify the Tourism Business Improvement District. A
summary of the Ordinance was published in the Tribune on December 3, 2014.
The agenda was posted in front of City Hall on Thursday, December 4, 2014 and
on the City's website on Friday, December 5, 2014. No comments were
received.
Attachment:
1. Notice of Public Meeting and Public Hearing
Item 9.a. - Page 3
ORDINANCE NO.
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF ARROYO GRANDE AMENDING CHAPTER 3.46 OF
THE ARROYO GRANDE MUNICIPAL CODE RELATING
TO THE TOURISM BUSINESS IMPROVEMENT DISTRICT
LAW
WHEREAS, the Parking and Business Improvement Area Law of 1989, sections 36500
et seq. of the Streets and Highways Code, authorizes cities to 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 as follows: 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, 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 also 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 equitable and appropriate to impose
the assessment on any vacation rentals or homestays that are permitted under the new
regulations.
NOW, THEREFORE BE IT ORDAINED by the City Council of the City of Arroyo Grande
as follows:
SECTION 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
Item 9.a. - Page 4
ORDINANCE NO.
PAGE2
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."
SECTION 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, bed and
breakfast or vacation rental, vacation room rentals or homestay that pays
transient occupancy tax. For purposes of this chapter the definition of "lodging"
shall not include RV parks"
SECTION 3. If any section, subsection, subdivision, paragraph, sentence, or clause of
this Ordinance or any part thereof is for any reason held to be unlawful, such decision shall
not affect the validity of the remaining portion of this Ordinance or any part thereof. The
City Council hereby declares that it would have passed each section, subsection,
subdivision, paragraph, sentence, or clause thereof, irrespective of the fact that any one or
more section, subsection, subdivision, paragraph, sentence, or clause be declared
unconstitutional.
SECTION 4. A summary of this Ordinance shall be published in a newspaper
published and circulated in the City of Arroyo Grande at least five (5) days prior to the
Item 9.a. - Page 5
ORDINANCE NO.
PAGE3
City Council meeting at which the proposed Ordinance is to be adopted. A certified
copy of the full text of the proposed Ordinance shall be posted in the office of the City
Clerk. Within fifteen (15) days after adoption of the Ordinance, the summary with the
names of those City Council Members voting for and against the Ordinance shall be
published again, and the City Clerk shall post a certified copy of the full text of such
adopted Ordinance.
SECTION 5. This Ordinance shall take effect thirty (30) days after its adoption.
On motion by Council Member ___ , seconded by Council Member ___ , and by
the following roll call vote to wit:
AYES:
NOES:
ABSENT:
the foregoing Ordinance was adopted this __ day of ___ , 2014.
Item 9.a. - Page 6
ORDINANCE NO.
PAGE 4
___________________________________
JIM HILL, MAYOR
ATTEST:
___________________________________
KELLY WETMORE, CITY CLERK
APPROVED AS TO CONTENT:
________________________________________
DEBBIE MALICOAT, ACTING CITY MANAGER
APPROVED AS TO FORM:
___________________________________
TIMOTHY J. CARMEL, CITY ATTORNEY
Item 9.a. - Page 7
NOTICE OF PUBLIC MEETING AND PUBLIC HEARING
CITY OF ARROYO GRANDE
CITY COUNCIL
MODIFYING THE ARROYO GRANDE
TOURISM BUSINESS IMPROVEMENT DISTRICT (AGTBID)
The purpose of the NOTICE is to provide you with information about a proceeding that will include
a public meeting and public hearing being conducted by the City Council of the City of Arroyo
Grande regarding modification of the Arroyo Grande Tourism Business Improvement District
(AGTBID) and its effect on the business that you own.
This Notice is being sent to you in accordance with Resolution No. 4622 passed by the City Council on
September 9, 2014 (a copy of which is enclosed), The Parking and Business Improvement Area Law of
1989 (California Streets and Highways Code Sections 36500 et. seq.,), and Government Code Section
54954.6
The purpose of the public meeting and public hearing is to consider an Ordinance making two
modifications to the Arroyo Grande Tourism Business Improvement District. The first is to amend
Chapter 3.46 of the Arroyo Grande Municipal Code to provide for the imposition of the AGTBID
assessment on any vacation rentals or homestays that are permitted by the City. The second would
provide that the same exemptions that apply to the Transient Occupancy Tax apply to the AGTBID
assessments. The Transient Occupancy 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 ..
Please be advised of the following:
The City Council will hold a Public Meeting on the proposed assessment and Tourism Business
Improvement District on November 25, 2014. The City Council meeting will begin at 6:00 p.m., in the City
Council Chambers located at 215 East Branch Street, Arroyo Grande.
The City Council will hold a Public Hearing on the proposed assessment and Tourism Business
Improvement District on December 9, 2014. The City Council meeting will begin at 6:00 p.m., in the City
Council Chambers located at 215 East Branch Street, Arroyo Grande.
PROTEST PROCEDURES: Pursuant to Streets and Highways Code Section 36524, at the public
hearing the City Council will hear and consider all protests against the modification of the proposed
Arroyo Grande Tourism Business Improvement District to include vacation rentals and homestays, as well
as to modify exemptions to be consistent with existing exemptions for transient occupancy taxes.
Protests may be made orally or in writing by any interested person. 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. In order to count as a protest as part of the determination of a majority protest
against the Arroyo Grande Tourism Business Improvement District, a protest must be in writing.
Pursuant to the statute, written protests must be received by the City Clerk before the close of the public
hearing and may be delivered or mailed to the City Clerk at City Hall, 300 East Branch Street, Arroyo
Grande, CA 93420.
Written protests shall contain a written description of the business in which the person signing he protest
is interested sufficient to identify the business. If the person signing the protest is not shown on the
ATTACHMENT 1
Item 9.a. - Page 8
official records of the City 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.
If, at the conclusion of the public hearing, written protests are received from owners of businesses in the
proposed 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 50 percent (i.e., there is a majority
protest), no further proceedings to modify the AGTBID, as contained in the 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.
DOCUMENTS AVAILABLE FOR REVIEW: The staff report and other supporting documents regarding
this matter will be available for public review at City Hall by November 21, 2014. It will also be available
on the City's website www.arroyogrande.org once the Agenda for the November 25, 2014 City Council
meeting has been posted, which 1s expected to be by Friday, November 21, 2014.
COMMENT ON THIS PUBLIC HEARING: Response to this notice can be made orally at the Public
Hearing and/or in writing before the hearing. Written comments can be made to the City Council by mail
or hand delivery to: City Clerk, 300 East, Branch Street, Arroyo Grande, CA 93420.
ADDITIONAL INFORMATION: The telephone number and address of the individual that interested
persons may contact to receive additional information about the assessment is the City Clerk, 300 East,
Branch Street, Arroyo Grande, CA 93420, (805) 473-5404.
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