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Home My WebLink About03 - Uniform Transient Occupancy TaxCITY OF NEWPORT BEACH CITY COUNCIL STAFF REPORT CCL'1CIL ACE'`DA N0. 3 s� �po Agenda Item No. 3 August 11, 2009 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Administrative Services Department Dennis C. Danner, Administrative Services Director (949) 644 -3123 or DDanner(q)_NewportBeachCA.gov Glen Everroad, Revenue Division Manager (949) 644 -3144 or GEverroadONewportBeachCA.gov SUBJECT: TRANSIENT OCCUPANCY TAXI VISITOR SERVICE FEE ORDINANCE UPDATE RE: THE PAYMENT OF TAX AND FEES PRIOR TO SEEKING JUDICIAL REVIEW ISSUE: Should the City update the Uniform Transient Occupancy Tax ( "UTOT ") and Visitor Service Fee ( "VSF ") Ordinances such that the payment of those taxes and fees are a condition precedent to judicial review? RECOMMENDATION: Staff recommends Council introduce the attached proposed ordinance amending Chapters 3.16 and 3.28 of the Newport Beach Municipal Code relating to the payment of UTOTs and VSFs prior to seeking judicial review, and pass to second reading. DISCUSSION: Background: UTOTs and VSFs produce the third largest General Fund revenue source, totaling nearly $12 million annually. The UTOT has been imposed by the City since 1965 and the provisions for its application are established in Newport Beach Municipal Code Chapter 3.16. The rate is 9 %. In 1993, the City established a one percent (1 %) Visitor Service Fee (Chapter 3.28). Chapter 3.28 provides that the incidence and application of VSF is the same as UTOT. UTOT and VSF are owed by hotel guests. Guests satisfy their obligations by paying the hotel operator, who is required by the UTOT and VSF ordinances to collect the combined rate of 10% on the amount paid by the guest to occupy the hotel room. UTOTNSF Ordinance Update August 11, 2009 Page 2 Newport Beach Municipal Code Sections 3.16.090 and 3.28.055 establish the assessment appeals processes for unpaid LITOT and VSF, respectively. Assessment appeals are heard by a hearing officer, who reports findings of fact and conclusions of law to the City Manager. The City Manager considers the hearing officer's information and must render a decision within fifteen days. The Municipal Code provides that the City Managers decision is final. California law, however, provides that the City Managers decision may be appealed to the Superior Court. California Constitution (§ 32 of Article XIII) provides that an appellant shall "pay first and litigate later" ( "PFLL "): "No legal or equitable process shall issue in any proceeding in any court against this State or any officer thereof to prevent or enjoin the collection of any tax. After payment of a tax claimed to be illegal, an action may be maintained to recover the tax paid, with interest, in such manner as may be provided by the Legislature." While this section applies to the State, arguments have been raised that this section does not apply to municipalities. While City staff considers this section of the California Constitution to apply to the City, to ensure that PFLL applies to the UTOT and VSF City staff is suggesting that the City Council adopt the attached proposed ordinance which would add sections 3.16.100 and 3.28.057 to the Newport Beach Municipal Code. Environmental Review: Not applicable. Public Notice: The agenda item has been noticed according to the Brown Act (72 hours in advance of the meeting at which the City Council considers the item). Prepared by: Glen Everroad Revenue Manager Attachments: Proposed Ordinance Submitted by: 4 ) z2�� Dennis C. Danner Administrative Services Director ORDINANCE NO.2009- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH ADDING SECTIONS 3.16.100 AND 3.28.057 TO THE NEWPORT BEACH MUNICIPAL CODE REGARDING THE PAYMENT OF UNIFORM TRANSIENT OCCUPANCY TAX AND VISITOR SERVICE FEE ASSESSMENTS PRIOR TO SEEKING JUDICIAL REVIEW. WHEREAS, Chapter 3.16 of the Newport Beach Municipal Code establishes a Uniform Transient Occupancy Tax (UTOT) rate of 9% and sets for the application of the UTOT, including assessments and appeals; and WHEREAS, Chapter 3.28 of the Newport Beach Municipal Code establishes a Visitor Service Fee (VSF) rate of 1% and sets for the application of the VSF, including assessments and appeals; and WHEREAS, the UTOT and VSF revenues represent the third largest General fund revenue source; and WHEREAS, California Constitution provides that tax assessment appellants shall pay the tax assessment prior to filing an appeal of assessments With the Courts; and WHEREAS, the City Council of the City of Newport Beach desires to clarify in Chapters 3.16 and 3.28 that appellants are obligated to pay UTOT and VSF assessments prior to filing an Court appeal of such assessments. NOW, THEREFORE, the City Council of the City of Newport Beach ordains as follows: SECTION 1: Section 3.16.100 of the Newport Beach Municipal Code shall be added to read: 3.16.100 Payment Required. No injunction, 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 chapter. Payment of all tax, interest and penalties is a required condition precedent to seeking judicial review of any tax liability. SECTION 2: Section 3.28.057 of the Newport Beach Municipal Code shall be added to read: 3.28.057 Payment Required. No injunction, 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 fees sought to be collected pursuant to this chapter. Payment of all fees, interest and penalties is a required condition precedent to seeking judicial review of any fee liability. SECTION 3: The Mayor shall sign and the City Clerk shall attest to the passage of this ordinance. The City Clerk shall cause the same to be published once in the official newspaper of the City, and it shall be effective thirty (30) days after its adoption. SECTION 4: This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the 11th day of August, 2009, and adopted on the _ day of 2009, by the following vote, to wit: AYES, COUNCIL MEMBERS NOES, COUNCIL MEMBERS ABSENT COUNCIL MEMBERS MAYOR ATTEST: CITY CLERK APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY: By: A 44-N- C - 4 , David R. Hunt, City Attorney Account Information � Phone N: (949)644 -3005 Name: CITY OF NEWPORT BEACH AG 12622 Address: 3300 Newport Blvd. Newport Beach. CA Acct M: 296271603 .bra J Jr CLASSIFIED Daily Pilot ADVERTISING Ad 032821871 Printed by 9%2 Susan Channels H.B.I. Salesperson. Phone: Account Information � Phone N: (949)644 -3005 Name: CITY OF NEWPORT BEACH AG 12622 Address: 3300 Newport Blvd. Newport Beach. CA Acct M: 296271603 .bra J Jr Daily Pilot Sep 10.2009.317 pm H.B.I. Ad 032821871 .. Ad Information . „.., w......T ...... Start date 09 -12 -09 Size 2x86.770 Stop date 09.12 -09 Billedsize 6.50TCNInch Insertions t Keyword Rate code &Legal Newport Beach Adtype Liner 92663 Takenby 9962 Susan Channels Client: CITY CLERK_SOFFICE- CITYOF NEWPORT Placed by: Fax R: Classification 13000 -Legal Notices Publications TCNDaiyPilot Ad Copy: 011111110(1 110.2009-17 AN ORDIM01 OF THE OTT (011lIOT OF THE OTY OF NEWPORT KM ADDING SIMS 3.16.100 AND 3.29.051 TO 111E NEWPW KAOI MUNN3PAE (ODE REGARDING 1HE PAYMENT Of WORM TRAN9E111 O((IIPANI7 TAX AND VISITOR SOW FEE ASSESSMENTS PRIOt 10 SEEDNG JIDIOAE RM. WHEREAS, Chapter 316 of the Newport Beach Municipal Code eStablishes a Uniform Transient Occupancy Ta. (UTO7) rate of 9% and sets to, the application of the U701. including assessments and appeals, and WHEREAS, Chaplet 3.28 of the Newpwt Beach Municpal Code establishes a Visitor Service Fee (VSF) rate of I% and sels lot the apphcalion or Me VSF, including assessments and appeals. and WHEREAS, the UTOT and VSF revenues represent the third largest General fund revenue Source. and WHEREAS, California Constitution provides that tai assessment appellants shall pay Ine la- assessment prior to filing an appeal of asSe Ssmen is with the COur t5. and WHEREAS, the City Council of the City of Newport Beach desnes to clarify in Chapters 3 16 and 318 that appellants are obligated to pay U707 and VSF assessments pry, to films an Court appeal of Such assessments NOW, THEREFORE, the City Council of the City of Newport Beach ordains as lolbws SECTION 1. Section 3.16100 of the Newpo,l Beach MumcipalCode shall D added 10 read 3 16 100 ►ryawnt Required. No mlunc Hon, now of mandate or other legal or equitable process Shan issue in any suit. action or proceeding in any Court against the city or an officer thereof, to prevent or enjoin the Collection of laves sought to be collected pursnanl to this chapter Payment of all la.. interest and penalles is a required condition precedenl 10 seeking judicial re,. Of any la. liability SECTION 2: Section 328051 or the Newport Beach Municipal Code shall be added to lead 3.28.057 pttyslwet Required. No injunction, wnl of mandate or other legal Or equitable pl OtlSs shall issue on any Suit, action or proceeding on any court against the City or an officer thereof, to prevent or enter" Ine collection of lees Sought IO be Collected pursuant 10 this Chapter Payment of all lees. Interest and penallles is a required Condition precedent to seeking judKwl leview of any lee ,ability SECTION 3- The Mayor shall Sign and We City Clerk shall attest to the passage of this prdinance The City Cllrk Shall C303e the same to be published once in the OflKyl newspaper ... ad proof pg I -A 3 I Ihe'211r -5rid Yr shairli erfeil:ve thirty (30) aysafle, Osadoption ECTION e: This ordinance was mil Oduced at a egvtar meeting of the City CoilrKd of the CdY of Iewpotl Beach. hey on the I Ith day of Autusl. 009, and adopted on the 81h day of September. 009. by the following vote. to wit ,YES. COUNCIL MEMBERS. Henn, Curly. Webb. SENT COUNCIL MEMBERS Rosansky ,YOR toward SelKh TEST Leilanit Brown YCLERK PROVED AS TO FORM FICE OF TIIE CITY ATTORNE Y' DawdR Hunt. City Attorney bikshed Newport BeaCh /Costa Mesa