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HomeMy WebLinkAboutRPT 4 TRANSIENT OCCUP 07-17-89DATE: ,.lULl 17, 1989 TO: WILLIAM HUSTON, CITY MANAGER FROM: COMMUNITY DEVELOPMENT DEPARTMENT SUBJECT: TRANSIENT OCCUPANCY STUDY RECOMMENDATION The pleasure of the Council. BACKGROUND ii i i iiiiii At the request of Mayor Kennedy, Community Development Staff have investigated the issues associated wi th motels in the City being used for long term occupancy, like apartments. Because of the numerous issues related to motel occupancy, staff also consulted the Police and Finance Departments for their input. In addition, Orange County cities were surveyed on methods for regulating transient occupancy. Issues-related to long term motel occupancy and survey resul ts are discussed below. 1. Planning_Related an_d Housing Cost Issues The primary planning issue associated with motels being utilized for long term occupancy relates to the fact that the majority of hotels/motels are not designed for permanent occupancy. Generally, they are single rooms without kitchen facilities and very little open space is provided. Hotels and motels are also only required to provide 1 parking space for each guest unit whereas residential units are normally required to provide 2 parking spaces per unit. In these cases where occupants or families might utilize motels as semi-permanent or permanent housing, there is the potential for there to be more parking demand than a particular site was designed to handle. The trend toward permanent occupancy in hotel s/motel s is al so the result of high rental prices throughout the region. By living in a hotel/motel, housing can be provided without the burden of paying large security deposits and/or the first and last month rent. For this reason, motel occupancy as an alternative to conventional housing seems attractive to some, al though the weekly rates may be somewhat high. · Revenue Related Issues Hotels and motels are currently permitted under the City's Transient Occupancy Tax Ordinance to deduct from the Transient Occupancy Tax calculation gross rents for permanent resident occupancies (occupancies longer than 30 days}· Accordingly, the three motels in Tustin (Sixpence Inn with 177 rooms, Bel Aire Motel with 14 rooms and Tustin Motor Lodge City Council Report July 17, 1989 Page two with 50 rooms) have collectively claimed that $379,000 in gross rents was associated with permanent occupancy during the past fiscal year. Since the City's Transient Occupancy Tax is 6% of gross rents, current exemptions translated into approximately $22,740 of revenue loss to the City during the last fiscal year. This also indicates that there are a significant number of permanent occupancies in motels in the City. With the use of a Transient Occupancy Ordinance that would limit the length of stay in hotel/motels, some of these tax dollars could be realized in the future. e Enforcement Issues ...... From a law enforcement standpoint, there are 2 issues to be addressed. First, without a minimum length of stay for a motel or hotel established by ordinance (i.e. 24 hour minimum and 30 day maximum), prostitution, and drug activity is difficult to enforce. Secondly, is the issue of non-paying guests. From time to time, the Tustin Police Department receives requests from hotel management to' provide assistance in removing non-paying occupants. Upon investigation of these requests, it has been determined that an innkeeper/guest relationship had not been maintained but rather that of landlord and tenant. Accordingly, the Tustin Police cannot make an arrest because it is not in violation of the Penal Code. Landlord/tenant relations are governed by the Civil Code, therefore the eviction of a non-paying tenant may only be achieved by court order. For these reasons, the City Attorney's office has developed the following criteria to be utilized by the Police Department when required to ascertain whether a relationship is that of innkeeper/guest or landlord/tenant: (1) An innkeeper/guest relationship shall exist when the guest is required to pay fees to the hotel management on a daily basis; and, (2) When the hotel management refuses to accept fees for a period exceeding seven days, an innkeeper/guest relationship exists. In the event fees are accepted by the management for periods exceeding seven days, the relationship shall be that of landlord/tenant. (3) The management of said hotel shall provide to the Police Department full and complete records indicating payment made by the occupants residing in its rooms, so that the Police can ascertain the payment schedule the management has adopted with regard to a particular occupant. 4. S. urvey Resul ts Orange County cities were surveyed on methods for regulating transient occupancy and the following results were confirmed. Many of the communities utilize a fairly standard Transient Occupancy Tax Ordinance (TOT) including; Anaheim, Costa Mesa, Fountain Valley, Huntington Beach and Corn rnunity Developmen~ Depar~rnem City Council Report July 17, 1989 Page three Irvine. A TOT ordinance establishes a definition of transient to mean 30 consecutive calendar days or less. In other words, any occupancy by reason of concession, permit, license or other agreement shall be deemed a transient until the period of 30 days has expired, unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. This method does not limit the length of stay, but rather permits hotel operators to deduct the rents collected for occupants over 30 days from their taxable gross rent. On the other hand, cities such as Fullerton, Laguna Beach and Buena Park regulate through definitions in the Zoning Code. Under this method, the 30 consecutive calendar day period is part of the definition of "hotel or motel". The advantage to this approach is that a hotel or motel is defined for "Transient" use and no motel or hotel on the basis of zoning restrictions could technically be eligible for exemptions under the City's Transient Occupancy Tax ordinances. The zoning approach also offers the ability to regulate minimum length of stay in a motel or hotel so that prostitution and drug enforcement issues are addressed. CONCLUSION -- Based on Council discussion, there are several alternatives available: 1. Continue to utilize ~he Uniform Transient Occupancy Tax Ordinance as outlined above and closely monitor the situation, or; Instruct staff to develop an ordinance which expressly prohibits transient occupancy for over 30 consecutive calendar days, as well as placing a minimum length on renting motel/hotels rooms to a 24 hour period, or; 3. Any other approach suggested by Council. Beth Schoemann Associate Planner Christine A. Shing~ton Director of CommufFity Development CAS:BH :dh:jk Corn rnunity Developmen~ Departrnen~