CITY OF DANA POINT AGENDA REPORT
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1 06/04/13 Page 1 Item #12 CITY OF DANA POINT AGENDA REPORT Reviewed By: DH X CM X CA X DATE: JUNE 4, 2013 TO: FROM: SUBJECT: CITY MANAGER/CITY COUNCIL MIKE KILLEBREW, ASSISTANT CITY MANAGER SECOND READING AND ADOPTION OF ORDINANCE TO ALLOW QUARTERLY REPORTING AND REMITTING OF TRANSIENT OCCUPANCY TAX FOR SHORT TERM RENTALS RECOMMENDED ACTION: That the City Council hold a second reading and adopt an Ordinance (Action Document A) entitled: BACKGROUND: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DANA POINT, CALIFORNIA, AMENDING CHAPTER 3.25 RELATING TO THE COLLECTION OF TRANSIENT OCCUPANCY TAX At its April 2, 2013 meeting, the City Council adopted an ordinance to allow short term rentals in all residential zones if the property owner secures a Short Term Rental Permit. The Municipal Code defines a transient renter as any person who pays to occupy space for a period of thirty (30) days or less. All transient renters, whether staying in a hotel or in a residence have, since the City s incorporation, been required to pay Transient Occupancy Tax ( TOT ) as specified in the City s Municipal Code. Currently the Municipal Code requires that TOT be remitted to the City monthly. In order to allow Short Term Rental owners and property managers to more efficiently make TOT payments, and to aid Staff in processing these payments, it is recommended that quarterly TOT payments be allowed for those holding Short Term Rental Permits. DISCUSSION: The City Council introduced and held the first reading of this proposed Ordinance at its May 21, 2013 meeting. This is the proposed second and final reading. The ordinance shall become effective 30 days after the date of its passage; however, it will not be implemented (i.e., enforced) until January 15, 2014, in order to allow the City time to process the
2 06/04/13 Page 2 Item #12 required zoning code and local coastal program amendments, and to allow the owners of short term rentals sufficient time to comply with the requirements of the ordinance. Short term rentals are residences which are rented for 30 consecutive days or less, typically for one-week intervals or weekend stays. Residences rented for one month or longer are not considered short term rentals if a written agreement is in place prior to the first day of the rental period. It is estimated that there are approximately 250 short term rental businesses operating in town. TOT is paid by visitors at the time of room payment. TOT is paid by the visitor to the property owner or to the property owner s agent, and remitted to the City. In Dana Point. The TOT rate is 10% of the total rental costs. The proposed Ordinance provide that operators of short-term rentals file their TOT return and remit the full amount of tax collected to the City on a quarterly basis, not later than twenty (20) days after the last day of the quarter, with the first quarter beginning on January 1st of each calendar year and ending on March 31st of that same calendar year, unless otherwise determined by the City. CONCLUSION: For short term rental property owners, the proposed Ordinance amends the current requirement from monthly to quarterly reporting and remitting of transient occupancy tax. STRATEGIC PLAN IMPLEMENTATION: Strategic Plan Initiative VIII. states: Achieve total excellence in municipal services and City administration/planning with excellent customer service and cost-effectiveness, including the specific goal to Ensure integrity of financial operations. The recommended actions are consistent with these Strategic Plan Initiatives. FISCAL IMPACT: There is no anticipated fiscal impact that will result from this proposed action. ACTION DOCUMENT: Page No. A. Short Term Rentals Transient Occupancy Tax Quarterly Remittance Ord.3
3 06/04/13 Page 3 Item #12 ACTION DOCUMENT A ACTION DOCUMENT A ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF DANA POINT, CALIFORNIA, AMENDING CHAPTER 3.25 RELATING TO THE COLLECTION OF TRANSIENT OCCUPANCY TAX WHEREAS, the City of Dana Point (the City ) City Council passed an ordinance adding Chapter 38 to Title 5 relating to short-term rentals permits on April 2, 2013 ( Short-Term Rentals Permit Ordinance ); and WHEREAS, the purpose of the Short-Term Rentals Permit Ordinance is to require owners of short-term rentals to secure a permit from the City; and WHEREAS, Section (F) explicitly states short-term rentals have historically been included in the definition of hotel for the purposes of collecting transient occupancy tax pursuant to Chapter 3.25 of the City s Municipal Code (the Code ); and WHEREAS, Section (D) of the Short-Term Rentals Permit Ordinance requires the owner of a short-term rental to maintain a valid transient occupancy tax registration certificate and collect and remit transient occupancy tax as required by Chapter 3.25 of the Code; and WHEREAS, Section of the Code requires transient occupancy tax to be reported and payment remitted at the end of each month; and WHEREAS, the City instead desires to collect transient occupancy tax from short-term rental owners on a quarterly basis. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF DANA POINT HEREBY ORDAINS AS FOLLOWS: SECTION 1. Section of Dana Point Municipal Code entitled Reporting and Remitting is hereby amended to read as follows: Reporting and Remitting. (a) Each operator shall, not later than twenty (20) days after the last day of each month, file a return with the Tax Administrator, on forms provided by the Tax Administrator, of the total rents charged and received and the amount of tax collected for transient occupancies during the preceding month. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. Any return and/or tax not received by the Tax Administrator by the twentieth day after the last day of
4 06/04/13 Page 4 Item #12 the month to which such return relates, or during which such tax was collected, shall be deemed delinquent pursuant to Section hereof. The Tax Administrator may establish shorter reporting periods for any certificate holder if it is deemed necessary to ensure collection of the tax, and may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this Chapter are held in trust for the account of the City until payment thereof is made to the Tax Administrator. (b) Notwithstanding Section (a), operators of short-term rentals must file a return and remit the full amount of tax collected from the shortterm rental(s) to the Tax Administrator on a quarterly basis, not later than twenty (20) days after the last day of the quarter with the first quarter beginning on January 1st of each calendar year and ending on March 31st of that same calendar year, unless otherwise determined by the Tax Administrator. Aside from the quarterly reporting and remitting requirements, all the other provisions and requirements in Section (a) remains applicable to short-term rentals. SECTION 2. Severability. If any section, subsection, subdivision, paragraph, sentence, clause, phrase or portion of this Ordinance is, for any reason, held to be invalid or unconstitutional by any court of competent jurisdiction, such decision shall not affect the validity or effectiveness of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance, and each section, subsection, subdivision, paragraph, sentence, clause, phrase and portion of this Ordinance, irrespective of the fact that one or more sections, subsections, subdivisions, paragraphs, sentences, clauses, phrases or portions thereof may be declared invalid or unconstitutional. To this end, the provisions of this Ordinance are declared severable. SECTION 3. Effective Date. This Ordinance shall become effective thirty (30) days after its passage and adoption. Within fifteen (15) days of the date of adoption of this Ordinance, the City Clerk shall post a copy of said Ordinance in places designated for such posting and shall certify to the same. The City Clerk shall certify the passage of this Ordinance and shall cause the same to be published as required by law. PASSED, APPROVED and ADOPTED this 4 th day of June, STEVE WEINBERG, Mayor
5 06/04/13 Page 5 Item #12 ATTEST: KATHY M. WARD, City Clerk STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss. CITY OF DANA POINT ) I, Kathy M. Ward, City Clerk of the City of Dana Point, do hereby certify that the foregoing Ordinance No. was introduced at a regular meeting of the City Council of the City of Dana Point held on the 21 st day of May, 2013 and was thereafter duly and regularly passed and adopted by the Council of the City of Dana Point at its regular meeting held on the 4th day of June, 2013, by the following vote: AYES: NOES: ABSENT: ABSTAIN: Said Ordinance has been published or posted pursuant to law. Witness my hand and official seal of the City of Dana Point this 4 th day of June, KATHY M. WARD, City Clerk
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