HomeMy WebLinkAboutOrd 729 ORDINANCE NO. 70zvl
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF CATHEDRAL CITY, AMENDING CHAPTER 3.25 TO
TITLE 3 OF THE CATHEDRAL CITY MUNICIPAL CODE
RELATING TO THE TRANSIENT OCCUPANCY TAX
SHARING PROGRAM
WHEREAS, the general welfare and material well-being of the residents of the
City of Cathedral City (the "City") depend in large measure upon the facilities and
services that are available to the public and the City's residents, which, in turn, are
dependent on tax revenues to pay the cost thereof; and
WHEREAS, it is in the best interest of the City to enhance the tourist and travel
experience for visitors to the City by providing attractive amenities to the public and
desirable visitor-serving facilities and experiences; and
WHEREAS, the City wishes to induce and encourage the opening, operation,
and renovation of new and existing hotels, thereby assisting the City in achieving its
tourism expansion goals and creating new sources of transient occupancy tax revenue
for the City's general fund which supports the public services that the City provides to its
residents; and
WHEREAS, the City's Municipal Code codifies and establishes the Transient
Occupancy Tax, which imposes on all transients, as a condition of occupancy in any
Hotel (as defined therein), the payment of a Transient Occupancy Tax per Section
3.24.030; and
WHEREAS, the City's Municipal Code currently has no mechanism for providing
incentives for the renovation of existing hotels or the construction of new hotels, which
incentives are necessary to accomplish the City's tourism expansion goals; and
WHEREAS, the City desires to incentivize development necessary to enhance
tourism in the City; and
WHEREAS, the City Council desires to incentivize the renovation of existing
hotels and the construction of new hotels by adding a Chapter to Title 3 of the City's
Municipal Code that provides for partial rebates of incremental Transient Occupancy
Tax to qualifying existing and new hotels.
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NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY
DOES ORDAIN AS FOLLOWS:
Section 1. AMEND CHAPTER 3.25 — TRANSIENT OCCUPANCY TAX
SHARING PROGRAM
Chapter 3.25 of Title 3 of the City of Cathedral City Municipal Code is amended
to read as follows:
Chapter 3.25
TRANSIENT OCCUPANCY TAX SHARING PROGRAM
Sections:
3.25.010 Purpose
3.25.020 Definitions
3.25.030 Participation Requirements
3.25.040 Transient Occupancy Tax Sharing Program
3.25.050 Operating Covenants
3.25.060 General Fund Revenues
3.25.070 Termination of Tax Sharing
3.25.080 Administrative Rules and Regulations
3.25.010 Purpose.
The purpose of this Chapter is to provide an incentive program for the operation,
maintenance, renovation and expansion of Hotel facilities which i) enhance the tourist
and travel experience for visitors to the City of Cathedral City, ii) provide attractive
amenities to the public and desirable visitor service facilities and experiences, iii) assist
the City in achieving its tourism goals, and iv) increase the Transient Occupancy Tax
revenue to the City. In the implementation of this program, the City Council finds:
(a) The general welfare and material well-being of the residents of the City depend in
substantial measure upon the growth and expansion of the tourism and travel industries
in the City.
(b) The operation, maintenance, renovation and expansion of the inventory of Hotels
in the City will create desirable visitor-serving facilities that will i) contribute to the growth
and expansion of tourism and travel opportunities in the City, ii) provide employment
opportunities for the residents of the City, iii) provide additional Transient Occupancy
Tax revenues to the City, and iv) promote and enhance the economy of the City.
(c) It is in the best interest of the City to induce and encourage the opening,
operating, expanding, renovating and maintaining of Hotel facilities that might not
otherwise be as successful, thereby creating new sources of revenues for the City's
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general fund which supports the public services the City provides its residents and
visitors.
(d) The authority granted and the purposes to be accomplished by this Chapter are
proper local governmental and public purposes for which public funds can be expended
and the opening, operating, renovating, maintaining and expanding of the inventory of
Hotels is of paramount importance to the City, its residents, and businesses.
3.25.020 Definitions.
For the purposes of this Chapter, the following definitions shall apply:
"Approved Hotel" means any Existing Hotel or New Hotel which has submitted an
application for participation in the Program and been approved by the City to participate
in the Program after a public hearing on a Transient Occupancy Tax Sharing
Agreement.
"Existing Hotel" means any property containing four (4) or more guest rooms
used by four (4) or more guests for compensation and where the guest rooms are (i)
designed and intended as transient occupancy accommodations; and (ii) that was
issued a final Certificate of Occupancy on or before August 25, 2012.
"Indemnification Agreement" means the agreement between the City and an
Operator in which the Operator agrees to indemnify and defend the City against any
claims or lawsuits that are brought against the City (and all liabilities, damages, and
costs incurred by the City in connection therewith) as a result of the application of this
Ordinance to a Hotel participating in the Incentive Program.
"New Hotel" means any property containing four (4) or more guest rooms used
by four (4) or more guests for compensation and where the guest rooms are designed
and intended as transient occupancy accommodations that is Under Construction as a
Hotel after August 25, 2012. The term "New Hotel" does not include all, or any portion
of, or addition to, an Existing Hotel.
"Operating Covenants" means the Operating Covenants to be recorded against
Hotel properties for Hotels participating in the Program, which shall include provisions
regarding continuing use of the hotel as a hotel, maintenance, and non-discrimination.
"Operator" means the person who runs and operates a Hotel, whether in the
capacity of owner, lessee, sub-lessee, mortgagee in possession, licensee, franchisee,
or any other capacity, or the assignee or designee of such person.
"Hotel" means any property containing four (4) or more guest rooms used by four
(4) or more guests for compensation and where the guest rooms are designed and
intended as Transient Occupancy accommodations.
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"Tax Sharing Report" means the report which shall be completed for any Hotel
which shall analyze the projected economic factors relating to the renovation of an
Existing Hotel, or construction of a New Hotel, and the projected impact of such
renovation or construction on the Hotel's receipt of Transient Occupancy Tax, which
shall be considered by the City Council in making its decision as to a particular Hotel,
and which the City Council may use, along with other evidence presented, in its sole
discretion, to determine whether the subject Hotel is approved to participate in the
Program, and if so, the appropriate Transient Occupancy Tax Sharing rate, the
maximum time period for Tax Sharing and the maximum dollar amount of Tax Sharing.
The Tax Sharing Report shall be prepared by staff or by a qualified consultant employed
by the City. In the case of a consultant, the cost of preparing the Tax Sharing Report
shall be paid by the Operator of the Hotel applying for participation in the Program,
unless the City, in its sole discretion, waives this requirement.
"Transient Occupancy" means a stay of no more than thirty (30) consecutive
calendar days.
"Transient Occupancy Tax" means the tax established by and paid to the City
pursuant to Chapter 3.24 of this Code.
"Transient Occupancy Tax Base" means the historical production of Transient
Occupancy Tax by an Existing Hotel as calculated in the Transient Occupancy Tax
Sharing Report. The Transient Occupancy Tax Base shall be calculated in a manner as
to take into account the then-current economic state relative to the historical
performance of the Hotel. In addition, it shall use a method determined by the preparer
of the Tax Sharing Report, for averaging production over an appropriate period adjusted
for inflation, or other similar adjustment index, it being the intent that an Approved Hotel
should receive a tax sharing arrangement which does not reward the Hotel for
improvements in transient occupancy tax arising from general economic conditions as
opposed to the improvements made by the Hotel Operator as owner.
"Transient Occupancy Tax Increment" means, on an annual basis, the difference
between the Transient Occupancy Tax Base and the amount of Transient Occupancy
Tax actually received by the City from the Approved Existing Hotel after renovation. It is
determined by reference to actual receipts by the City of Transient Occupancy Tax from
the improved Approved Hotel. With respect to New Hotels, all Transient Occupancy
Tax received shall be deemed to be Transient Occupancy Tax Increment. Under no
circumstances shall the City be liable for any reimbursement of Transient Occupancy
Tax Increment not actually received and permanently retained by the City.
"Transient Occupancy Tax Sharing" means the rebate from the City to the
Operator of an Approved Hotel of a portion of that Hotel's Transient Occupancy Tax
Increment, as determined each year for which the Agreement is valid. The payment of
the Approved Hotel's portion of the Transient Occupancy Tax Increment shall be paid to
the Approved Hotel within a reasonable time after the conclusion of each year.
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"Transient Occupancy Tax Sharing Agreement" or "Agreement" means an
agreement between the City and an Approved Hotel which provides for the rebate from
the City to the Hotel Operator of a portion of the Hotel's Transient Occupancy Tax
Increment, at a rate and for a time period as determined by the City. Said agreements
may include such provisions, restrictions, conditions or other provisions as the parties
then agree are necessary to give effect to the intent and spirit of this Chapter.
"Transient Occupancy Tax Sharing Program" or "Program" means the Transient
Occupancy Tax rebate program established by this Chapter. A Hotel's participation in
the Program extends as long as the time period provided for in a Transient Occupancy
Tax Sharing Agreement.
"Under Construction" means that all necessary discretionary entitlements have
been approved by the City, grading and building permits have been issued, inspection
approvals by the City of grading and foundations to grade level have been obtained,
and vertical construction of Hotel rooms has begun.
3.25.030 Participation Requirements.
(a) To participate in the Transient Occupancy Tax Sharing Program, the Operator of
(1) any Existing Hotel which plans a renovation to improve the Hotel facility, or (2) any
New Hotel must:
(1) Complete and submit to the City Manager an application for participation
in the Transient Occupancy Tax Sharing Program on the City's official Transient
Occupancy Tax Sharing Program application form;
(2) Allow the City to inspect the Existing Hotel, if applicable, to determine that
the improvements contemplated by the Tax Sharing Report, which are the
justification for the Transient Occupancy Tax Sharing, do not already exist, and,
upon demand of the City, provide the City with such evidence of the Approved
Business' intention and ability to proceed to construct the necessary improvements
or make the necessary purchases, as are reasonably satisfactory to the City; and
(3) Receive approval for participation in the Program from the City, after the
public hearing as provided in Section 3.25.040(e).
(4) enter into a Transient Occupancy Tax Sharing Agreement in the form
approved by the City;
(5) Execute and record against the Hotel property the Operating Covenants
provided in Section 3.25.050; and
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(6) Execute an Indemnification Agreement in a form approved by the City.
(7) Upon completion of the subject improvements or purchases and before
Transient Occupancy Tax Sharing commences, to allow the City to inspect the
Approved Business to verify that in fact the contemplated improvements and/or
purchases have been made and completed so as to enable the Business to
increase its occupancy and/or room rate.
3.25.040 Transient Occupancy Tax Sharing Program.
(a) The City Council is authorized to enter into Transient Occupancy Tax Sharing
Agreements with Hotels in accordance with this section.
(b) In order to determine the appropriate rate of Transient Occupancy Tax Sharing
for each Hotel that has submitted an application pursuant to Section 3.25.030(a)(1), the
City Council shall cause to be prepared a Tax Sharing Report, which shall analyze
factors including the following. The City Council, in its sole discretion, may consider
additional factors or require additional studies or reports, as it deems appropriate.
(1) For Existing Hotels, the existing level of Transient Occupancy Tax
generated by the facility, and the projected Transient Occupancy Tax to
be generated after a planned renovation project; and
(2) For New Hotels, the projected Transient Occupancy Tax to be generated
by the new facility; and
(3) For New and Existing Hotels, the amount of expected Transient
Occupancy Tax Increment to be generated by the renovation or
construction; and
(4) For New and Existing Hotels, the quality of the facility and services
provided by the Hotel;
(5) For New and Existing Hotels, the total projected cost to construct the New
Hotel or renovate the Existing Hotel; and
(6) The necessity for public assistance.
(c) The City Council shall hold a public hearing on all contemplated Transient
Occupancy Tax Sharing Agreements. Notice of the time and place of the hearing shall
be published in a newspaper of general circulation in the City once a week for two
consecutive weeks prior to the hearing. At this hearing, the City Council shall consider
all evidence before it, including the information contained in the Transient Occupancy
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Tax Sharing Report. This shall be the sole public hearing required with respect to the
Transient Occupancy Sharing Agreement.
(d) At or after the public hearing, after considering the Transient Occupancy Tax
Sharing Report and such other factors, studies or reports as it, in its sole discretion,
deems appropriate, including, without limiting other matters which may be considered,
the past history of the Operator in conforming to the ordinances, statutes, rules and
regulations of the City, the County of Riverside and/or the State of California, and
subject to the limitations set forth in subdivision (h), the City shall determine, in its sole
discretion: (i) whether to designate the Hotel an Approved Hotel; and, if so, (ii) the rate
of Transient Occupancy Tax Sharing to be provided to a Hotel that will be necessary or
appropriate to achieve the goals and intent of this chapter, which rate may vary over
time as determined by the City Council in its sole discretion,; and (iii) the time period
over which Transient Occupancy Tax Sharing will be necessary or appropriate to
achieve the goals and intent of this Chapter, which time limit may be subject to various
factors as determined by the City Council in its sole discretion; and (iv) the maximum
dollar amount of Transient Occupancy Tax Sharing which the Approved Business may
receive. Each of the foregoing factors affecting the total amount of Transient
Occupancy Tax Sharing may be subject to possible reduction or termination as the City
Council may determine in its sole discretion.
(e) The City shall make all Tax Sharing Reports available for public inspection
and copying, at a cost not to exceed the cost of duplication, no later than the time of
publication of the first notice of the public hearing mandated by this section.
(f) After the public hearing, the City may, at its sole discretion, by Resolution,
designate the Hotel as an Approved Hotel, and, if it does so, either: (i) approve the form
of the Transient Occupancy Tax Sharing Agreement with the Operator or owner of the
Approved Hotel as presented to the City Council during the public hearing, or (ii)
authorize City staff to negotiate and enter into a Transient Occupancy Tax Sharing
Agreement with the Operator or owner of the Approved Hotel on the terms approved by
the City Council, with the final form of the Transient Occupancy Tax Sharing Agreement
to be subject to final review and approval of both the City Manager and the City
Attorney. Subject to the limitations set forth in subdivisions (g) and (h), the Transient
Occupancy Tax Sharing Agreement may provide for the City to rebate to an Approved
Hotel an appropriate rate of Transient Occupancy Tax Increment for an appropriate time
period, at the rate and in the dollar amount for the time necessary to achieve the goals
and intent of this chapter, as determined by the City Council in its sole discretion. The
rate and time period determinations made by the City Council pursuant to this section
shall be final and conclusive.
(g) The rate of Transient Occupancy Tax Sharing determined by the City Council is
subject to the following limitations:
(1) For Existing Hotels, the amount of Transient Occupancy Tax to be rebated
shall not exceed fifty percent (50%) of the Hotel's Transient Occupancy Tax
Increment actually received and retained by the City, unless the City Council, in
its sole discretion, determines otherwise.
(2) For New Hotels, the amount of Transient Occupancy Tax to be rebated
shall not exceed seventy-five percent (75%) of the Hotel's Transient Occupancy
Tax Increment actually received and retained by the City, unless the City Council,
in its sole discretion, determines otherwise.
(h) The time period of Transient Occupancy Tax Sharing determined by the City
Council is subject to the following limitations:
(1) For Existing Hotels, the Transient Occupancy Tax Sharing Agreement
shall not exceed a time period of ten (10) years, unless City Council determines,
in its sole discretion, that a longer time period is warranted to achieve the goals
and intent of this chapter.
(2) For New Hotels, the Transient Occupancy Tax Sharing Agreement shall
not exceed a time period of ten (10) years, unless the City Council determines, in
its sole discretion, that a longer time period is warranted to achieve the goals and
intent of this chapter.
(i) The City Council, acting in its sole discretion, may set a maximum dollar amount
of Transient Occupancy Tax Sharing which the Approved Business may receive, and/or
impose other restrictions on the amount, taking into account such factors as the City
Council may determine in its sole discretion, such as success of the Business beyond
that contemplated in the Transient Occupancy Tax Report.
(j) To the extent that the City Council imposes rate limits, time limits or maximum
benefit limits upon the Approved Business, such limits shall be set forth in the Transient
Occupancy Tax Sharing Agreement. If any one of the three limits so identified is
reached, then the Transient Occupancy Tax Sharing shall immediately terminate.
3.25.050 Operating Covenants.
Each Operator of a Hotel which enters into a Transient Occupancy Tax Sharing
Agreement with the City shall record against the participating Hotel property the
following Operating Covenants, to run with the land:
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(1) Continuing Use and Operation. During the Hotel's participation in the
Transient Occupancy Tax Sharing Program, the Operator covenants and
agrees for itself, its successors, assigns or designees, to continually
operate and use the Hotel property as a Hotel. None of the rooms in the
Hotel will at any time be utilized as a non-transient residential property.
No part of the Hotel will at any time be owned by a cooperative housing
corporation. All uses conducted on the Hotel property shall conform to all
ordinances, statutes, rules and regulations of the City, the County of
Riverside and the State of California.
(2) Maintenance. During the Hotel's participation in the Transient Occupancy
Tax Sharing Program, the Operator covenants and agrees for itself, its
successors, assigns or designees, to continually maintain and repair or
cause to be maintained and repaired, the Hotel property, including but not
limited to buildings, structures, parking areas, lighting, signs, and
landscaping, to be in good condition conforming to all applicable laws,
including all applicable provisions of the City's Municipal Code and to hotel
industry standards applicable to that type of hotel, and shall keep the
Hotel property free from any accumulation of debris or waste materials.
(3) Non Discrimination. During the Hotel's participation in the Transient
Occupancy Tax Sharing Program, the Operator covenants and agrees for
itself, its successors, assigns or designees, that the Hotel and any of its
employees shall not discriminate against any person on the basis of sex,
marital status, race, color, religion, ancestry, national origin, physical
handicap, sexual orientation, or domestic partnership status.
3.25.060 General Fund Revenues.
All Transient Occupancy Tax revenues or Transient Occupancy Tax Increment
remitted to the City by an Operator of a Hotel which enters into a Transient Occupancy
Tax Sharing Agreement with the City shall be deemed general fund revenues of the City
and shall be deposited in the City's general fund.
3.25.070 Termination of Tax Sharing.
The City may terminate the Transient Occupancy Tax Sharing Agreement on ten
(10) days' notice if the Operator violates any of the Operating Covenants, provided that
such violation or violations continue to exist at the end of said ten (10) day period.
Specifically, without limiting the generality of the foregoing, a failure to pay to the City, in
a timely manner and in the correct amount, the Transient Occupancy Tax which the
Operator collects shall permit the City to terminate the Transient Occupancy Tax
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Sharing Agreement. The City shall give notice to the Operator as required by the terms
of the Transient Occupancy Tax Sharing Agreement.
3.25.080 Administrative Rules and Regulations.
Consistent with the intent and goals of this chapter, the City Manager may adopt
administrative rules and regulations for implementation and furtherance of the
requirements of this chapter.
Section 2. SEVERABILITY
The City Council declares that, should any provision, section, paragraph,
sentence or word of this Ordinance be rendered or declared invalid by any final court
action in a court of competent jurisdiction or by reason of any preemptive legislation, the
remaining provisions, sections, paragraphs, sentences or words of this Ordinance as
hereby adopted shall remain in full force and effect.
Section 3. REPEAL OF CONFLICTING PROVISIONS
All the provisions of the Cathedral City Municipal Code as heretofore adopted
that are in conflict with the provisions of this Ordinance are hereby repealed.
Section 4. EFFECTIVE DATE
This Ordinance shall take effect thirty (30) days after its second reading by the
City Council.
Section 5. POSTING
The City Clerk shall within fifteen (15) days after passage of this Ordinance,
cause it to be posted in at least three (3) designated public places; shall certify to the
adoption and posting of this Ordinance; and shall cause this Ordinance and its
certification, together with proof of posting, to be entered in the Book of Ordinances of
this City.
END OF PAGE
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Section 6. CERTIFICATION
The foregoing Ordinance was approved and adopted at a meeting of the City
Council held on the I) day of -Da1/44... , 2013, by the following vote:
Ayes: S i itos,t , 14-5•204 2-, Pans,Pio FIwhy
Noes: ¢'
Abstain: 0
Absent:
a i leen J. / osa, Mayor
ATTEST:
410116.041
Gary Howell, City Clerkr
APPROVED AS TO FORM:
I'
Charles R. Green, City Attorney
REVIEWED BY:
-414111k4e2C,
R.: ood, • e City anager
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