HomeMy WebLinkAboutItem 2a: Adopt Ordinance 2264 Requiring Operators to Pay Taxes, Interest and Penalties as Condition of Judicial Review of Transient Occupancy Tax LiabilityORDINANCE NO. 2264
WHEREAS, Sections 2661, et seq., of the Arcadia Municipal Code impose a
transient occupancy tax ( "TOT ") upon the privilege of hotel occupancy within the City of
Arcadia; and
WHEREAS, if a hotel operator fails to remit the required amount of TOT to the City,
Arcadia Municipal Code Section 2664.5 empowers the tax administrator, after providing
notice of hearing and, if requested by the applicable operator, conducting a noticed
hearing, to issue a determination that the operator owes back TOT, interest and penalties;
and
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, CALIFORNIA AMENDING SECTION 2664.5.1 OF
THE ARCADIA MUNICIPAL CODE REQUIRING
OPERATORS TO PAY ALL TAXES, INTEREST AND
PENALTIES AS A CONDITION PRECEDENT TO SEEKING
JUDICIAL REVIEW OF A DETERMINATION OF TRANSIENT
OCCUPANCY TAX LIABILITY
WHEREAS, Arcadia Municipal Code Section 2664.5.1 allows an operator to appeal
a determination of the tax administrator to the City Council, whose decision, after a noticed
hearing, is final and conclusive; and
WHEREAS, Arcadia Municipal Code Section 2664.5.1 further requires an operator
to immediately pay any amounts determined to be due by the City Council upon service of
notice of the City Council's determination; and
WHEREAS, from time to time, operators may seek judicial review of the City
Council's TOT determination in a court of competent jurisdiction; and
WHEREAS, the California Court of Appeal, in the case of City of Anaheim v.
Superior court (Priceline.com) (filed Nov. 24, 2009), recently held that if a hotel operator
seeks judicial review of a City's TOT determination, the operator is not required to pay all
back TOT, interest and penalties prior to pursuing judicial review, unless a city's municipal
code explicitly includes a "pay first, litigate later" provision; and
WHEREAS, in order to better ensure TOT collection, the City Council desires to
include a "pay first, litigate later" provision in the Arcadia Municipal Code that requires hotel
operators to remit all amounts of back TOT, interest, and penalties determined to be owing
to the City prior to seeking judicial review of the City Council's TOT determination.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OFARCADIA,
CALIFORNIA, DOES ORDAIN AS FOLLOWS:
SECTION 1. Section 2664.5.1 of the Arcadia Municipal Code is hereby
amended to read as follows:
"2554.5.1. SAME. APPEAL:
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 Council by filing a
notice of appeal with the City Clerk within fifteen (15) days of the serving or mailing of the
determination of tax due. The City Council shall fix a time and place for hearing such
appeal, and the City Clerk shall give notice in writing to such operator at his last known
place of address. The findings of the City Council shall be final and conclusive and shall be
served upon the appellant in the manner prescribed above for service of notice of hearing.
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Any amount found to be due shall be immediately due and payable upon the service of
notice.
No injunction or writ of mandate or other legal or equitable process shall issue in
any suit, action or proceeding in any court against the City or an officer thereof, to prevent
or enjoin the collection of taxes sought to be collected pursuant to this Part and payment of
all tax, interest and penalties shall be required as a condition precedent to seeking judicial
review of any tax liability."
SECTION 2. If any section, subsection, subdivision, paragraph, sentence, clause
or phrase of this Ordinance or any part thereof is for any reason held to unconstitutional,
such decision shall not affect the validity of the remaining portion of this Ordinance or any
part thereof. The City Council of the City of Arcadia 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 section, subsection, subdivision,
paragraph, sentence, clause or phrases be declared unconstitutional.
SECTION 3. The City Clerk shall certify to the adoption of this Ordinance and shall
cause a copy of the same to be published in the official newspaper of said City within
fifteen (15) days after its adoption.
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ATTEST:
Passed, approved and adopted this day of , 2010.
City Clerk
APPROVED AS TO FORM:
Stephen P. Deitsch
City Attorney
Mayor of the City of Arcadia
DATE: March 2, 2010
TO:
FROM: STEPHEN P. DEITSCH, CITY ATTORNEY (?`b-
Prepared by: Lisa Mussenden, Chief Deputy City Clerk/Records Manager
SUBJECT: ORDINANCE NO. 2264 AMENDING SECTION 2664.5.1 OF THE
ARCADIA MUNICIPAL CODE REQUIRING OPERATORS TO PAY ALL
TAXES, INTEREST AND PENALTIES AS A CONDITION PRECEDENT
TO SEEKING JUDICIAL REVIEW OF A DETERMINATION OF
TRANSIENT OCCUPANCY TAX LIABILITY
Recommended Action: Introduce
SUMMARY
BACKGROUND
HONORABLE MAYOR AND CITY COUNCIL
STAFF REPORT
Office of the City Attorney
The proposed Ordinance amending Section 2664.5.1 of the Arcadia Municipal Code will
allow the City to continue collecting all taxes, interest and penalties from hotel operators
who wish to appeal Transient Occupancy Tax (TOT) determinations.
Arcadia Municipal Code Section 2664.5 empowers the tax administrator, after providing
notice of a hearing and, if requested by the applicable operator, conducting a noticed
hearing, to issue a determination that the hotel operator owes back TOT, interest and
penalties. Any operator who believes he or she is aggrieved by the determination of
the tax administrator may appeal to the City Council according to Arcadia Municipal
Code Section 2664.5.1. From time to time an operator may choose to seek further
review of the City Council's determination in a court of competent jurisdiction.
The California Court of Appeal, in the case of City of Anaheim v. Superior Court
(Priceline.com) filed November 24, 2009, held that if a hotel operator seeks judicial
review of a City's TOT determination, the operator is not required to pay all TOT,
interest and penalties prior to pursuing judicial review, unless a city's municipal code
explicitly includes a "pay first, litigate later" provision.
In order to ensure TOT collection, the City Attorney and staff recommend that the City
Council amend the Arcadia Municipal Code to include a "pay first, litigate later" provision
that requires hotel operators to remit all amounts of back TOT, interest, and penalties
determined to be owing to the City prior to seeking judicial review of the City Council's
TOT determination. This will ensure that essential public services dependent on the
funds are not unnecessarily interrupted.
FISCAL IMPACT
The recommended amendment to the Arcadia Municipal Code will have a positive fiscal
impact to the City by ensuring that there will be no unnecessary delay in the receipt of
TOT.
ENVIRONMENTAL ANAYSIS
No environmental review is required because the proposed amendment is not a project
governed by the California Environmental Quality Act.
RECOMMENDATION:
It is recommended that the City Council introduce Ordinance No. 2265 amending
Section 2664.5.1 of the Arcadia Municipal Code requiring operators to pay all taxes,
interest and penalties as a condition precedent to seeking judicial review of a
determination of Transient Occupancy Tax Liability.
APPROVED:
Donald Penman
City Manager
Attachment: Ordinance No. 2264
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