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HomeMy WebLinkAbout04 - Complimentary Hotel Rooms�EW�oR> CITY OF °� e= NEWPORT BEACH C9C /F00.NP City Council Staff Report Agenda Item No. 4 August 14, 2012 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL FROM: Finance Department Dan Matusiewicz, Deputy Director 949 - 644 -3126, danm @newportbeachca.gov PREPARED BY: Evelyn Tseng, Revenue Manager APPROVED: 7)� p," TITLE: Second Reading - Ordinance No. 2012 -18 Exempting Complimentary Hotel Rooms from Transient Occupancy Tax and Visitor's Service Fee and General Terminology Clean Up ABSTRACT: On July 24, 2012, Ordinance No. 2012 -18 (Attachment A) was introduced and approved by City Council, amending the Newport Beach Municipal Code ( "NBMC ") to exempt complimentary hotel rooms from Transient Occupancy Tax ( "TOT ") and the Visitor's Service Fee ( "VSF "); and to update the terminology from "Administrative Services Director" to "Finance Director." RECOMMENDATION: Conduct second reading and adopt Ordinance No. 2012 -18, amending NBMC Sections 3.16.040 and 3.28.035 to exempt complimentary hotel rooms from TOT and VSF; and amending Sections 3.16.020, 3.16.030, 3.16.040, 3.16.050, 3.16.060, 3.16.070, 3.16.075, 3.16.085, 3.16.090, 3.16.110, 3.16.120, 3.16.140, 3.28.010, 3.28.035, 3.28.050, 3.28.055, 3.28.060, 3.28.070 and 3.28.085 to reflect the terminology change from "Administrative Services Director" to "Finance Director." FUNDING REQUIREMENTS: There are no funding requirements related to this item, but there may be some fiscal impact. TOT revenues may decrease in an undetermined amount. Second Reading - Ordinance No. 2012 -18 Exempting Complimentary Hotel Rooms from Transient Occupancy Tax and Visitor's Service Fee and General Terminology Clean Up August 14, 2012 Page 2 DISCUSSION: Ordinance No. 2012 -18 was considered and introduced at the July 24, 2012, City Council meeting. If it is the Council's desire, it will be appropriate to adopt the Ordinance at the August 14, 2012, meeting. ENVIRONMENTAL REVIEW: Staff recommends the City Council find this action is not subject to the California Environmental Quality Act ( "CEQK) pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. NOTICING: 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). Submitted by: Dan Matusiewicz Deputy Director Attachments: A. Ordinance 2012 -18 ORDINANCE NO. 2012 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF NEWPORT BEACH, CALIFORNIA AMENDING CHAPTERS 3.16 AND 3.28 OF THE NEWPORT BEACH MUNICIPAL CODE PERTAINING TO TAXES AND FEES LEVIED ON COMPLIMENTARY HOTEL ROOMS AND GENERAL TERMINOLOGY CLEAN UP WHEREAS, the City of Newport Beach ( "City') is a tourist destination that welcomes guests both from around the world and domestically; and WHEREAS, many of the guests that visit the City stay in one of the world class hotels located within the City; and WHEREAS, the City places a small transient occupancy tax and visitor's fee on hotel rooms to help fund marketing efforts on behalf of the City and the hotels, to encourage more tourism to the City; and WHEREAS, hotel operators occasionally provide complimentary rooms to guests to encourage and promote, among other things, trade shows, conferences, community service, or volunteer opportunities within the City; and WHEREAS, the City Council desires to encourage and promote business activities by removing regulations that may burden local businesses; and WHEREAS, the City Council recently amended Newport Beach Municipal Code ( "Code ") Section 2.12.040 to change the name of the Administrative Services Director to the Finance Director and the City has been revising terminology within the Code to be consistent on a chapter -by- chapter basis. NOW THEREFORE, the City Council of the City of Newport Beach ordains as follows: Section 1: Section 3.16.020 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.020 Definitions. Except where the context otherwise requires, the definitions in this section shall govern the interpretation and construction of the terms of this chapter: Finance Director. The term "Finance Director" shall mean the Finance Director of the City of Newport Beach or his /her designated representative. City. The term "City" shall mean the City of Newport Beach. Hotel. The term "hotel" shall mean any structure, or any portion of any structure or the air space within any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes for periods of thirty (30) days or less. The term hotel includes any inn, residential dwelling unit, motel, group residential or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental unit, public or private residential club, mobile home, time -share project, house trailer at a fixed location, or other structure or portion of a structure. The term "hotel" shall also include a space, campsite or similar facility which is occupied, or intended or designed for occupancy, by a recreational vehicle, camper, van, trailer, motor home or similar vehicle used, or intended for use as a dwelling, lodging or for sleeping purposes. Including. The term "including" shall mean "including, without limitation" and "including, but not limited to" and shall not be interpreted to imply any limitation on the more general preceding provision unless otherwise expressly stated. Individual. The term "individual" shall mean any natural person. Occupancy. The term "occupancy" shall mean the use or possession, or the right to use or possession of a specific campsite, space, area, room or rooms in any hotel for the purpose of dwelling, lodging or sleeping. Operator. The term "operator" shall mean the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time -share project owner's association or any other capacity. Where the operator 2 performs his functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both. Person. The term "person" shall mean any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit. Qualifying Rental Agreement. The term "Qualifying Rental Agreement' shall mean a written leasehold agreement signed by both the operator and transient obligating the transient to pay rent for use and possession of a room or space in a hotel for a period of not less than thirty -one (31) consecutive days. The Qualifying Rental Agreement shall be legally enforceable by both the operator and transient and shall include in its terms both the right to occupy and the obligation to pay for a room or rooms for thirty -one (31) days or more. "Qualifying Rental Agreement' expressly excludes: A. Any agreement, regardless of the rental term, which is terminated for any reason, by either party, or by mutual consent, prior to the thirty -first (31 st) consecutive day of occupancy; or, B. Any agreement that would be unlawful or constitute a violation of law. Rent. The term "rent' shall mean the consideration charged, whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits, and property and services of any kind or nature, without any deduction. Rent shall include the consideration charged by an operator for accommodations, including any (1) un- refunded advance rental deposits or (2) separate charges levied for items or services which are part of such accommodations including, but not limited to, furniture, fixtures, appliances, linens, towels, non - coin - operated safes, utilities (such as energy surcharges) and maid service. 3 Time -share Interest. The term "Time -share Interest' shall mean either a time -share estate or a time -share use (as those terms are defined in Section 11003.5 of the Business and Professions Code) and any similar form of ownership involving a right in perpetuity, for life, or for a term of years, to occupy any room, space or area in a time -share project. Time -share Owner. The term "Time -share Owner" shall mean any person or entity that owns a time -share interest. Time -share Project. The term "Time -share Project' shall mean a structure or real property (including airspace) in which a time -share interest has been sold. Transient. The term "transient' shall mean any individual who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty (30) consecutive calendar days or less, counting portions of calendar days as full days. Any individual occupying space in a hotel shall be deemed to be a transient until the period of thirty (30) days has expired, and the tax imposed by this chapter shall be due upon all rent collected or accruing prior to the thirty - first (31st) consecutive day of occupancy unless occupancy extends to the thirty -first (31 st) day or thereafter. The term transient shall not include any person who occupies any room, space or area in a time -share project pursuant to a time -share interest and without paying rent including: (a) a time -share owner; (b) a member of the family or guest of the time -share owner; (c) any person who is entitled to occupancy pursuant to any time -share exchange program, or any similar program; and (d) any person entitled to occupancy pursuant to any exchange or incentive program involving or sponsored by the operator of the time -share project. Section 2: Section 3.16.030 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.030 Tax Imposed. For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of nine percent (9 %) of the rent charged by the operator. The tax constitutes a debt owed by the transient to the City, which is extinguished only by payment 0 to the operator or to the City. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Finance Director may require that such tax shall be paid directly to the Finance Director. Section 3: Section 3.16.040 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.040 Exemptions. No tax shall be imposed upon: A. Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the tax specified in this chapter, and only when in the performance of official duties thereof; B. Any officer or employee of a foreign government who is exempt by reason of express provision of Federal Law or international treaty; C. A transient occupying a hotel pursuant to a Qualifying Rental Agreement entered into prior to the first (1 st) day of occupancy; D. An employee of an airline company who is occupying a hotel room in the course of his or her employment, but only when the room is rented by the airline employer pursuant to a Qualifying Rental Agreement, that has been pre- approved by the Finance Director; E. Any person or transient occupying a hotel room provided without rent charged (complimentary) to the person or transient by the operator, including but not limited to: 1. Rooms provided to charitable organizations; 2. Rooms provided to meeting planners who may book future hotel rooms and provide business and conferencing opportunities for the economic benefit of the City; 3. Rooms provided to displeased guests; and /or I.7 4. Rooms provided to hotel employees. F. No exemption shall be granted except pursuant to an application filed when the rent is collected and under penalty of perjury upon a form prescribed by the Finance Director. It is the transient's responsibility to provide necessary proof of the exemption. Section 4: Section 3.16.050 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.050 Operator's Collection Duties. A. Each operator shall collect the tax imposed by this chapter to the same extent and at the same time as the rent is collected from every transient. The amount of tax shall be separately stated from the amount of the rent charged, and each transient shall receive a receipt for payment from the operator. No operator of hotel shall advertise or state in any manner, directly or indirectly, that all or a portion of the tax will be assumed, waived, absorbed or refunded by the operator. B. Notwithstanding the provisions of subsection A, the operator shall not be required to separately state the rent and the tax on receipts and books of record, when room accommodations constitute only a portion of a collective group of services, privileges, entitlement or benefits ( "benefits ") that include, at a minimum, room accommodations and food and beverage services or room accommodations and at least one other benefit having an ascertainable fair market value ( "special package ") offered for one fixed charge ( "special package rate'), provided the operator complies with subsection 3.16.050(C). C.1. The operator shall file with the Finance Director a statement of each special package on a form ( "special package application ") provided by the Finance Director. The special package application shall detail the benefits of the special package and an itemization of that portion of the special package that is rent and tax and each of the benefits. The operator shall provide written evidence to establish the claimed fair market value of each benefit other than rent and tax. The Finance Director shall mark the date of receipt on the special package application and review the submitted 1.9 information to determine if sufficient information is provided to verify that the value of the benefits, rent and tax. The operator shall designate a specific name or number to the special package as part of the special package application. The special package application shall not be accepted unless accompanied by a fee for processing that has been established by resolution of the City Council. 2. The name or number designated on the special package application shall appear on all receipts and books of record whenever the special package is sold. 3. If the special package application is deemed incomplete, the Finance Director will advise the operator of any required changes within fourteen (14) City business days. The operator must either make the required changes and resubmit the special package application or comply with subsection 3.16.050(A). 4. The Finance Director shall approve, conditionally approve or disapprove the special package within fourteen (14) days of receipt of a complete special package application. In the event of disapproval the Finance Director shall give the operator written notice of the reasons for disapproval. The effective date of the special package rate shall be the date on which the Finance Director receives a complete special package application that is approved. A new special package application shall be submitted whenever the operator changes the rent or benefits of any previously approved special package. D. The tax shall apply only to the amount of rent identified in the special package that has been approved by the Finance Director. E. If an operator fails to comply with subsection 3.16.050(A) and also fails to obtain approval of a special package rate pursuant to subsection 3.16.050(C), the tax ( "imputed rate ") shall be the lesser of (i) the amount collected for the total special package or (ii) an amount equal to the median average double occupancy room rate for the accommodations as posted in the room pursuant to the requirements of Section 1863 of the Civil Code (or any successor section). F. Notwithstanding subsections 3.16.050(C) and 3.16.050(D), if any audit reveals that the gross income to the operator attributable 7 to the rent portion of special package ( "audited rate ") is more than ten percent (10 %) greater than the rent specified in the special package rate, the rent for purposes of calculating the tax shall be the audited rate. In the event subsection 3.16.050(E) applies and the audited rate is greater than the imputed rate, the rent for tax purposes shall be the audited rate. The audited rate shall be determined by an audit of a sample of the special packages sold by the operator within each special package category. The audited rate shall be the amount of the special package rate remaining after deducting the fair market value of each of the benefits included in the special package rate other than room accommodations and tax. Where more than one type of special package is offered within the audit period, each special package shall be audited separately for purposes of determining the applicable audited rate. Credits or offsets shall not be allowed between different special packages. Section 5: Section 3.16.060 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.060 Registration of Hotel. Within thirty (30) days after commencing business each operator of any hotel renting occupancy to transients shall register the hotel with the Finance Director and obtain a "transient occupancy registration certificate" to be at all times posted in a conspicuous place on the premises. The certificate shall, among other things, state the following: A. The name of the operator; B. The address of the hotel; C. The date upon which the certificate was issued; D. The following statement: "This transient occupancy registration certificate signifies that the person named on the certificate has fulfilled the requirements of the Uniform Transient Occupancy Tax Ordinance (Chapter 3.16 of the Newport Beach Municipal Code) by registering with the Finance Director for the purpose of collecting the tax from transients and remitting the tax to the Finance Director. This certificate does not authorize any person to conduct any unlawful business, to conduct any lawful business in an unlawful manner or to operate a hotel without strictly complying with all local laws, including those requiring a permit from any board, commission, department or office of the City. This certificate does not constitute a permit." Section 6: Section 3.16.070 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.070 Reporting and Remitting. A. Each operator shall, on a form provided by the City, make a return to the Finance Director of the total rents charged and received, the amount of tax collected for transient occupancies, the number of rental units available on the premises, and such other information as the Finance Director may reasonably require. The return shall be made on or before the last day of the month following the close of each calendar quarter or on the day specified by the Finance Director if a different reporting period has been established. Returns are considered made and taxes paid only upon receipt of the tax return and the tax by the City. At the time the return is filed, the full amount of the tax collected shall be remitted to the Finance Director. The Finance Director may establish either shorter or longer reporting periods for any individual certificate holder or category of certificate holders if the Finance Director deems it necessary or desirable in order to insure collection of the tax or to increase the efficiency of its administration. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the City until payment is made to the Finance Director. B. The filing of a return shall not preclude the City from collecting by appropriate action any tax actually due and payable pursuant to this chapter or taking any other action to enforce the provisions of this chapter. Each return shall be subject to audit and verification by the Finance Director or authorized agents of the City, who are authorized to examine, audit and inspect such books and records of any operator as may be necessary in their judgment to verify or ascertain the amount of tax due. The Finance Director or agent of the City shall not have right of access to, nor examine records that are not pertinent to ascertaining the amount of tax due unless the operator fails to provide City with the means of verifying information relevant to the obligations imposed by this chapter. M Section 7: Section 3.16.075 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.075 Duty of Successor of Operator. A. If an operator who is liable for any tax or penalties under this chapter sells or otherwise disposes of the hotel operation, his /her successor shall notify the Finance Director of the date of sale at least thirty (30) days before the date of sale, or if the decision to sell was made less than thirty (30) days prior to the actual sale, then immediately and shall upon withhold a sufficient portion of the purchase price to equal the amount of any unpaid taxes or penalty until the selling operator produces a receipt from the Finance Director showing that the tax or penalty has been paid or a tax clearance certificate from the Finance Director stating that no tax or penalty is due. If the seller does not present a receipt or tax clearance certificate within thirty (30) days after such successor commences to conduct business, the successor shall deposit the withheld amount with the Finance Director pending settlement of the account of the seller. B. If the successor operator to the hotel operation fails to withhold a portion of the purchase price as required in subsection 3.16.075(A). The successor operator shall be liable to the City for the payment of the amount required to be withheld. Within thirty (30) days after receiving a written request from the successor for a tax clearance certificate stating that no tax or penalty is due, the City collector shall either issue the certificate or mail notice to the successor at its address as it appears on the records of the City collector of the estimated amount of the tax and penalty that must be paid as a condition of issuing the certificate. Section 8: Section 3.16.085 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.085 False and Fraudulent Reports; Penalties. A. It shall be unlawful for any operator or person to willfully make, render, sign or verify any false or fraudulent report required by this chapter with intent to defeat or evade the determination of any amount required to be paid under this chapter. 10 B. If the Finance Director determines that the nonpayment of any remittance (tax and /or penalty) due under this chapter is due to fraud, a penalty of twenty -five percent (25 %) of the amount of the tax shall be added thereto in addition to any penalties stated in Section 3.16.080. Section 9: Section 3.16.090 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.090 Enforcement Proceedings; Appeal. A. If any operator shall fail or refuse to collect the tax or to make, within the time provided in this chapter, any report and remittance of the full amount of the tax required by this chapter, the Finance Director shall use his /her best efforts to obtain information on which to base an estimate of the tax due. The Finance Director shall, upon making a determination of the estimated tax or other violation, provide the operator with written notice of the determination and the factual basis for the estimated tax or other violation. The written notice of determination shall be served on the operator personally or by deposit in the United States mail, postage prepaid, addressed to the operator at the last known place of address. The operator may, within ten (10) days after service of written notice of determination, appeal the determination by filing a written appeal with the Finance Director specifying the basis of the appeal and amount of tax or nature of violation contested. B. If the operator fails to timely appeal a determination by the Finance Director the determination shall be final and conclusive and the tax, interest and penalties shall become immediately due and payable and /or the violation shall be deemed established. C. If the operator files a timely appeal of the determination, the Finance Director shall appoint a hearing officer and give the operator not less than fifteen (15) days written notice of the hearing on the appeal. The operator shall have the right to present evidence relevant to the determination and the hearing shall be conducted in accordance with the general rules applicable to any administrative hearing. The hearing officer shall submit to the City Manager a transcript of the hearing together with recommended findings of fact and conclusions of law. The City Manager shall consider the material submitted by the hearing officer and render a 11 decision within fifteen (15) days after submission. The decision of the City Manager shall be final. Section 10: Section 3.16.110 of the Newport Beach Municipal Code is hereby amended to read as follows: K�i[difiUl:TT3 It shall be the duty of every operator liable for the collection and payment to the City of any tax imposed by this chapter to keep and preserve, for a period of not less than four years, all records necessary to determine the amount of tax the operator was required to collect and pay to the City. All retained records shall be subject to audit as provided in Section 3.16.070. The Finance Director shall have the right to inspect and /or audit these records at any time during normal business hours on twenty -four (24) hours written notice. The records shall be maintained at the operator's premises or at a location convenient to the Finance Director. The records shall include at least the following: A. Daily summaries of room occupancies; B. A record of each occupancy charge for which exemption is claimed, the City provided form of exemption, if applicable, including the name of the individual occupying the room, dates of occupancy and reasons for exemption; C. All qualifying rental agreements. Section 11: Section 3.16.120 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.120 Refunds. A. Claim Required. Whenever the amount of any tax, interest or penalty has been overpaid, paid more than once or has been erroneously or illegally collected or received by the City, the tax may be refunded as provided in subsections 3.16.120(B) and (C) provided that a written claim for refund is filed with the Finance Director. The claim for refund must be filed within three years of the date of payment, be made on forms furnished by the Finance Director and be signed by the operator under penalty of perjury. 12 B. Claim by Operator. An operator may claim a refund, or take as credit against taxes collected and remitted, the amount overpaid, paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Finance Director that the person from whom the tax has been collected was not a transient. However, neither a refund nor a credit shall be allowed unless the amount of the tax collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator. C. Claim by Transient. A transient may obtain a refund of taxes overpaid or paid more than once or erroneously or illegally collected or received by the City by filing a claim in the manner provided in subsection 3.16.120(A), but only when the tax was paid by the transient directly to the Finance Director, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the Finance Director that the transient has been unable to obtain a refund from the operator who collected the tax. D. Evidence. No refund shall be paid under the provisions of this section unless the claimant establishes his /her right by written evidence and to the satisfaction of the Finance Director. Section 12: Section 3.16.140 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.16.140 Penalty for Violations. Any operator or other person who willfully (i) fails or refuses to register as required by this chapter; (ii) fails to make any return required to by this chapter; (iii) fails or refuses to furnish a supplemental return or other data required by the Finance Director; or (iv) makes a false or fraudulent return or claim, is guilty of a misdemeanor and is punishable as provided in Section 1.04.010 of this Code. Section 13: Section 3.28.010 of the Newport Beach Municipal Code is hereby amended to read as follows: 14W1411 PI enflT 9- T3 Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: 13 Finance Director. The term "Finance Director" shall mean the Finance Director of the City of Newport Beach or his or her designated representative. Guest. The term "guest" shall mean any individual who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty (30) consecutive calendar days or less, counting portions of calendar days as full days. Any individual occupying space in a hotel shall be deemed to be a guest until the period of thirty (30) days has expired, unless there is a qualifying rental agreement between the operator and the guest providing for a longer period of occupancy. Hotel. The term "hotel" shall mean any structure or any portion of any structure or the air space within any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging or sleeping purposes for periods of thirty (30) days or less. The term hotel includes any inn, residential dwelling unit, motel, group residential or lodging house, bed and breakfast inn, single room occupancy hotel, hostel, rental unit, public or private residential club, mobile home, time -share project, house trailer at a fixed location, or other structure or portion of a structure. Individual. The term "individual" shall mean any natural person. Occupancy. The term "occupancy" shall mean the use or possession, or the right to use or possession of a specific room or rooms or portion thereof, in any hotel for dwelling, lodging or sleeping purposes. Operator. The term "operator" shall mean the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time -share project owner's association or any other capacity. Where the operator performs his functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this chapter and shall have the same duties and liabilities as his principal. Compliance with the provisions of this chapter by either the principal or the managing agent shall, however, be considered to be compliance by both. 14 Person. Except as used in the term "guest," the term "person" shall mean any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit. Qualifying Rental Agreement. The term "qualifying rental agreement' shall mean a written leasehold agreement signed by both the operator and guest obligating the guest to pay rent for use and possession of a room or space in a hotel for a period of not less than thirty-one (31) consecutive days. The "qualifying rental agreement' shall be legally enforceable by both the operator and guest and shall include in its terms both the right to occupy and the obligation to pay for a room and /or rooms for thirty -one (31) days or more. "Qualifying rental agreement' expressly excludes: 1. Any agreement, regardless of the rental term, which is terminated for any reason, by either party, or by mutual consent, prior to the thirty -first (31 st) consecutive day of occupancy; or, 2. Any agreement that would be unlawful or constitute a violation of law. Rent. The term "rent' shall mean the consideration charged, whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction. Time -share Interest. The term "time -share interest' shall mean either a time -share estate or a time -share use (as those terms are defined in Section 11003.5 of the Business and Professions Code) and any similar form of ownership involving a right in perpetuity, for life, or for a term of years, to occupy any room, space or area in a time -share project. Time -share Project. The term "time -share project' shall mean a structure or real property (including airspace) in which a time -share interest has been sold. 15 Section 14: Section 3.28.035 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.28.035 Exemptions. No fee shall be imposed upon: A. Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the fee specified in this chapter, and only when in the performance of official duties thereof; B. Any officer or employee of a foreign government who is exempt by reason of express provision of Federal Law or international treaty; C. A transient occupying a hotel pursuant to a qualifying rental agreement entered into prior to the first (1 st) day of occupancy; D. An employee of an airline company who is occupying a hotel room in the course of his or her employment, but only when the room is rented by the airline employer pursuant to a qualifying rental agreement, that has been pre- approved by the Finance Director; E. Any person or guest occupying a hotel room provided without rent charged (complimentary) to the person or guest by the operator, including but not limited to: 1. Rooms provided to charitable organizations; 2. Rooms provided to meeting planners who may book future hotel rooms and provide business and conferencing opportunities for the economic benefit of the City; 3. Rooms provided to displeased guests; and /or 4. Rooms provided to hotel employees. F. No exemption shall be granted except pursuant to an application filed when the rent is collected and under penalty of perjury upon a form prescribed by the Finance Director. It is the guest's responsibility to provide necessary proof of the exemption. 16 Section 15: Section 3.28.050 of the Newport Beach Municipal Code is hereby amended to read as follows: It shall be the duty of every operator liable for the collection and payment to the City of any fee imposed by this chapter to keep and preserve, for a period of not less than four years, all records necessary to determine the amount of fees the operator was required to collect and pay to the City. All retained records shall be subject to audit as provided in Section 3.16.070. The Finance Director shall have the right to inspect and /or audit these records at any time during normal business hours on twenty -four (24) hours written notice. The records shall be maintained at the operator's premises or at a location convenient to the Finance Director. The records shall include at least the following: A. Daily summaries of room occupancies; B. A record of each occupancy charge for which exemption is claimed, the City provided exemption form, if applicable, including the name of the individual occupying the room, dates form occupancy and reasons for exemption; and C. All qualifying rental agreements. Section 16: Section 3.28.055 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.28.055 Enforcement Procedures, Appeal. The Finance Director shall enforce any failure or refusal of any operator to collect the fee, or make any report or remittance of the fee, required by this chapter in the same manner and subject to the same conditions and procedures as provided in Section 3.16.090. Section 17: Section 3.28.060 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.28.060 Duty of Successor of Operator. A. If an operator who is liable for any fee or penalties under this chapter sells or otherwise disposes of the hotel operation, his /her successor shall notify the Finance Director of the date of sale at 17 least thirty (30) days before the date of sale, or if the decision to sell was made less than thirty (30) days prior to the actual sale, then immediately and shall upon withhold a sufficient portion of the purchase price to equal the amount of any unpaid fees or penalty until the selling operator produces a receipt from the Finance Director showing that the fee or penalty has been paid or a clearance certificate from the Finance Director stating that no fee or penalty is due. If the seller does not present a receipt or clearance certificate within thirty (30) days after such successor commences to conduct business, the successor shall deposit the withheld amount with the Finance Director pending settlement of the account of the seller. B. If the successor operator fails to withhold a portion of the purchase price as required in subsection (A) of this section, the successor operator shall be liable to the City for the payment of the amount required to be withheld. Within thirty (30) days after receiving a written request from the successor for a clearance certificate stating that no fee or penalty is due, the City collector shall either issue the certificate or mail notice to the successor at its address as it appears on the records of the City collector of the estimated amount of the fee and penalty that must be paid as a condition of issuing the certificate. Section 18: Section 3.28.070 of the Newport Beach Municipal Code is hereby amended to read as follows: [cam {:111H111:;mrrr o" A. Claim Required. Whenever the amount of any fee, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the City under this chapter, it may be refunded as provided in subsections (B) and (C) of this section; provided, that a claim in writing therefore, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Finance Director within three years of the date of payment. The claim shall be on forms furnished by the Finance Director. B. Claim by Operator. An operator may claim a refund, or take as credit against visitor service fees collected and remitted, the amount overpaid, paid more than once or erroneously or illegally IN collected or received when it is established in a manner prescribed by the Finance Director that the person from whom the fee has been collected was not a guest; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the fee so collected has either been refunded to the guest or credited to rent subsequently payable by the guest to the operator. C. Claim by Guest. A guest may obtain a refund of visitor service fees overpaid or paid more than once or erroneously or illegally collected or received by the City by filing a claim in the manner provided in subsection (A) of this section, but only when the fee was paid by the guest directly to the Finance Director, or when the guest, having paid the fee to the operator, establishes to the satisfaction of the Finance Director that the guest has been unable to obtain a refund from the operator who collected the fee. D. Evidence. No refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records showing entitlement thereto. Section 19: Section 3.28.085 of the Newport Beach Municipal Code is hereby amended to read as follows: 3.28.085 Penalty for Violations. Any operator or other person who willfully (i) fails or refuses to register as required by this chapter; (ii) fails to make any return required to by this chapter; (iii) fails or refuses to furnish a supplemental return or other data required by the Finance Director; or (iv) makes a false or fraudulent return or claim, is guilty of a misdemeanor and is punishable as provided in Section 1.04.010. Section 20: If any section, subsection, sentence, clause or phrase of this ordinance is, for any reason, held to be invalid or unconstitutional, such decision shall not affect the validity or constitutionality of the remaining portions of this ordinance. The City Council hereby declares that it would have passed this ordinance, and each section, subsection, clause or phrase hereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses and phrases be declared unconstitutional. Section 21: The City Council finds that this ordinance is not subject to the California Environmental Quality Act ( "CEQA ") pursuant to Sections 15060(c)(2) (the 19 activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no potential for resulting in physical change to the environment, directly or indirectly. Section 22: 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. This ordinance was introduced at a regular meeting of the City Council of the City of Newport Beach, held on the 24 day of July, 2012, and adopted on the 14 day of August, 2012, by the following vote, to wit: AYES, COUNCILMEMBERS; NOES, COUNCILMEMBERS ABSENT COUNCILMEMBERS NANCY GARDNER, MAYOR APPROVED AS TO FORM: THE CITY ATTOKWY'S OFFICE AARON C-. -HXRP, CITY ATTORNEY ATTEST: LEILANI BROWN, CITY CLERK 20