Meeting Date: August 7, 2012
Prepared by: Jason Stillwell, City Administrator
City Council
Agenda Item Summary
Description: For quite some time, local hotel operators have expressed an interest in creating a hospitality improvement district (HID) consisting of lodging establishments within the City that would focus on small conferences and public relations for Carmel. At its July 3, 2012 meeting, Council adopted the Resolution of
Intention to form the HID and held the first reading of the proposed Ordinance establishing the HID.
Overall Cost:
City Funds: N/ A
Grant Funds: N/A
Staff Recommendation: Conduct a Public Hearing and hold the second reading of the proposed Ordinance establishing the HID.
Important Considerations: A required public meeting was held on July 3, 2012 in advance of tonight's public hearing to consider the formation of the HID. If there is not a majority protest at the August 7 meeting, Council will hold the second reading of the Ordinance, which will take effect in 30 days, or September 7, 2012. Assessments will begin to be remitted in October 2012.
As of Tuesday, July 31 , 2012, the owners of three Carmel lodging establishments had filed written letters of protest about the formation of the HID (attached). These include: the Green Lantern Inn; Normandy Inn; and the Best Western Inn Plus Carmel Bay View Inn. This represents 11.67% of the aggregate TOT.
Decision Record: On June 12, 2012, Council first adopted Resolution 2012-35, declaring the City's intention to establish the Carmel Hospitality Improvement District (HID). That resolution was superseded by Resolution 2012-48, which was approved by Council on July 3, 2012, and which extended the time period to receive public comments.
This agenda item was reviewed by City Attorney Don Freeman.
Reviewed by:
Jason Stilwell, City Administrator Date
CITY COUNCIL
CITY OF CARMEL-BY-THE-SEA
ORDINANCE 2012-
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF CARMEL-BY-THE-SEA ESTABLISHING THE CARMEL HOSPITALITY IMPROVEMENT DISTRICT
WHEREAS, on July 3, 2012, the Carmel City Council adopted Resolution No.
2012-48 entitled, “A Resolution of the City Council of the City of Carmel-by-the-Sea
declaring its Intention to Establish the Carmel Hospitality Improvement District”;
WHEREAS, Resolution No. 2012-48 was published and copies thereof were duly
mailed and posted as required by the applicable provisions of the California Government
and Streets and Highways Codes; and
WHEREAS, pursuant to Resolution No. 2012-48, a public meeting concerning
the formation of said district was held before the City Council on July 3, 2012; and
WHEREAS, all written and oral protests were duly heard, and testimony
concerning the proposed district was received and considered; and
WHEREAS, the City Council determined that there was no majority protest
within the meaning of Streets and Highways Code Section 36525, as written protests
were not received from owners businesses in the proposed district which would pay fifty
(50%) or more of the assessments proposed to be levied; and
WHEREAS, protests are weighted based on the assessment proposed to be levied
on each lodging operation. For purposes of determining the applicable majority protest
figure for the initial formation of the district, the proposed assessment to be levied was
calculated based on the assessment rate multiplied by the most recent available data for
the lodging operations gross lodging revenues as reported to the City during fiscal year
2010-11.
NOW, THEREFORE, BE IT RESOLVEDTHAT THE CITY COUNCIL OF THE
CITY OF CARMEL-BY-THE-SEA does hereby resolve to:
Establish the Carmel Hospitality Improvement District as set forth in Exhibit “A”.
Severability. If any part of this ordinance, even as small as a word or phrase, is found to
be unenforceable such finding shall not affect the enforceability of any other part.
Effective Date. This ordinance shall become effective September 7, 2012
PASSED AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF
CARMEL-BY-THE-SEA this seventh day of August 2012 by the following roll call vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
SIGNED,
________________________
JASON BURNETT, MAYOR
ATTEST:
_____________________
Heidi Burch, City Clerk
EXHIBIT “A”
CMC ______ Establishing the Carmel Hospitality Improvement District
Section 1. Pursuant to Streets and Highways Code Sections 36500 et seq. and any
subsequent amendments, the City of Carmel-by-the-Sea Hospitality Improvement District
is hereby established in the City of Carmel-by-the-Sea and all lodging operations in the
HID established by this ordinance shall be subject to assessment as set forth herein.
Section 2. The City Council of the City of Carmel-by-the-Sea finds that lodging
operations within the HID will be benefited by the activities funded by assessments to be
levied.
Section 3. Chapter ____(Carmel Hospitality Improvement District) is hereby added to
Title __________ of the Carmel-by-the-Sea Municipal Code to read as follows:
Title
This chapter shall be known as the “City of Carmel-by-the-Sea Hospitality Improvement
District Law.”
A. “City Council” shall mean the City Council of the City of Carmel-by-the-Sea
B. “Advisory Board” shall mean the Carmel Hospitality Improvement District board
established by the Resolution of Intention to oversee the HID.
C. District or “HID” shall mean the Carmel-by-the-Sea Hospitality Improvement
District created by this chapter and as delineated in Section ____.
D. “Gross lodging revenue” shall mean the rent charged by the operator per occupied
room per night for all occupancies, plus any other non-optional ancillary charges
imposed on occupants of occupied rooms including but not limited to resort fees,
housekeeping gratuities and utility surcharges. Notwithstanding the foregoing
sentence, occupancies by federal government employees on government business
for 30 consecutive days or less shall not be included in gross lodging revenues.
Assessments levied pursuant to the District shall not be included in gross room
rental revenue for the purpose of determining the amount of the transient
occupancy tax under Chapter Three of the Carmel-by-the-Sea Municipal Code.
E. “Lodging operation” shall mean a lodging unit, as defined in Section 17.70.020 of
the Carmel-by-the-Sea Municipal Code, which pays transient occupancy tax to
the City.
F. “Law” shall mean the Parking and Business Improvement Area Law of 1989,
California Streets and Highways Code Sections 36500 et seq., as amended.
G. “Operator” shall mean the person who is the proprietor of the hotel, whether in
the capacity of owner, lessee, sublessee, mortgagee in possession, licensee or any
other capacity. Where the operator performs its functions through a managing
agent of any type or character other than an employee, the managing agent shall
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also be deemed an operator for the purposes of this and shall have the same duties
and liabilities as his/her 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.
Authorized Uses.
The purpose of forming the HID as a business improvement area under the Law is
to provide revenue to defray the costs of services, activities and programs promoting
tourism that will benefit the operators of lodging operations in the HID through the
promotion of lodging operations and the City of Carmel-by-the-Sea for small conferences
and groups. It is the intent of this chapter to provide a supplemental source of funding for
the promotion of group business in the HID and it is not intended to supplant any other
existing sources of revenue that may be used by the City of Carmel-by-the-Sea for the
promotion of tourism. The specific services, activities and programs to be provided by
the HID are as follows:
A. The general promotion of tourism with the HID shall include costs of programs
and physical improvements as specified in the business plan to be adopted
annually;
B. The marketing of conference, group, and vacation business that benefits local
tourism and the local lodging industry in the district;
C. The marketing of the HID to the travel industry in order to benefit local tourism
and the local lodging industry in the district.
Boundaries
The boundaries of the HID shall be the boundaries of the City of Carmel-by-the-
Sea.
Levy of assessment and exemptions.
A. The HID shall include all lodging operations located within the HID boundaries.
Beginning on the effective date of the ordinance adopting the HID, the assessment
shall be levied against all lodging operations, existing and future, within the
boundaries of the business improvement district with the city of Carmel-by-the-
Sea. The assessment shall be collected bimonthly, based on the gross lodging
revenues for the previous two months. New lodging operations within the
boundaries shall not be exempt from the levy of assessment.
B. Each operator shall, on or before the last day of the month following the close of
each calendar month, or at the close of any longer period which may be
established by the City Administrator, make a return to the City Administrator, on
forms provided by him/her, of the total gross lodging revenues charged and
received for occupancies in the lodging operation. The return shall be made
whether or not gross lodging revenues have been charged during the month. At
the time the return is filed, the full amount of the assessment shall be remitted to
the City Administrator. The City Administrator may establish shorter reporting
periods for a lodging operation if he/she deems it necessary in order to insure
collection of the assessment and he/she may require further information in the
return.
C. If any operator shall fail or refuse to make, within the time provided in this
chapter, any report and remittance of said assessment or any portion thereof
required by this chapter, the City Administrator shall proceed in such manner as
he/she may deem best to obtain facts and information on which to base his/her
estimate of the assessments due. As soon as the City Administrator shall procure
such facts and information as he/she is able to obtain upon which to base the
assessment imposed by this chapter and payable by any operator who has failed or
refused to make such report and remittance he/she shall proceed to determine and
assess against such operator the assessment, interest, and penalties provided for
by this chapter. In case such determination is made, the City Administrator shall
give a notice of the amount so assessed by serving notice personally or by
depositing it in the United States mail, postage prepaid, addressed to the operator
so assessed at his/her last known place of address.
D. Such operator may within ten days after the serving or mailing of such notice
make application in writing to the City Administrator for a hearing on the amount
assessed. If application by the operator for a hearing is not made within the time
prescribed, the assessment, interest and penalties, if any, determined by the City
Administrator shall become final and conclusive and immediately due and
payable. If such application is made, the City Administrator shall give not less
than five days written notice in the manner prescribed herein to the operator to
show cause at a time and place fixed in said notice why said amount specified
therein should not be fixed for such assessment, interest and penalties. At such
hearing, the operator may appear and offer evidence why such specified
assessment, interest, and penalties should not be so fixed. After such hearing the
City Administrator shall determine the proper assessment to be remitted and shall
thereafter give written notice to the person in the manner prescribed to be remitted
and shall thereafter give written notice to the person in the manner prescribed
herein of such determination and the amount of such assessment, interest and
penalties.
E. It shall be the duty of every operator liable for the collection and payment to the
city of an assessment levied by this chapter to keep and preserve, for a period of
three years, all records as may be necessary to determine the amount of such
assessment as he may have been liable for the collection of and payment to the
city, which records the City Administrator shall have the right to inspect at all
reasonable times. To conduct such inspections, the City Administrator may utilize
the services of City employees or of outside firms or persons such as certified
public accountants or auditors, each of whom shall possess full city authority to
conduct said inspections.
Annual review of assessment
All of the assessments imposed pursuant to this chapter shall be reviewed by the
Carmel City Council annually in April of each year, based upon the annual report
prepared by the Advisory Board. The Advisory Board shall complete its report not later
than the last day of March each year. After approval of the annual report, the Carmel City
Council shall conduct a public hearing to levy assessment for the ensuing fiscal year. If at
the conclusion of the public hearing, there are written protests by the owners of the
lodging operations within the HID that would pay fifty percent (50%) or more of the total
assessments of the entire HID, there will be no assessed levy in the ensuing fiscal year.
Imposition of initial assessment.
The Carmel City Council hereby levies and imposes and orders the collection of
the initial assessment to be imposed upon lodging operations in the HID described above,
which shall be calculated based upon $1 per occupied room per night. Such levy shall
begin on the effective date of the ordinance adopting the HID.
Use of revenue
The activities to be provided by the HID will be funded by the levy of the
assessments. The total revenue from the levy of assessments with the HID shall not be
used to provide improvement or activities outside the HID or for any purpose other than
the purpose specified in the resolution of intention. The proceeds of the assessment shall
be spent to administer marketing and visitor programs to promote the City of Carmel as a
tourism destination. All funds shall be expended consistent with the purpose of the Law.
HID assessment revenues remaining at the end of any fiscal year may be use in
subsequent years in which HID assessments are levied as long as they are used consistent
with the requirement of this Section. The Carmel City Council shall consider
recommendations made by the Advisory Board as to the use of assessment revenues.
Delinquency, penalty and interest
A. Any lodging operation that fails to remit any assessment imposed by this
ordinance within the time required shall pay a penalty of ten (10%) percent of the
assessment amount in addition to the assessment. Any operator who fails to remit
any delinquent remittance on or before a period of thirty days following the date
on which the remittance first became delinquent shall pay a second delinquency
penalty of ten percent of the amount of the assessment in addition to the amount
of the assessment and the ten percent penalty first imposed.
B. In addition to the penalties imposed in this chapter, any operator who fails to
remit any assessment imposed by this chapter shall pay interest at the rate of onehalf
of one percent per month or fraction thereof on the amount of the assessment,
exclusive of penalties, from the date on which the remittance first became
delinquent until paid. Any and all remedies available to the City of Carmel-bythe-
Sea for other non-payment of assessments shall be applicable in the event of
non-payment of an assessment under this chapter. Any penalty and interest fees
collected from a lodging operation due to delinquency shall be remitted to the
City of Carmel-by-the-Sea for any lawful purpose.
C. Any assessment required to be paid by any lodging operation under the provisions
of this chapter shall be deemed a debt owed by the lodging operation to the City.
Any person owing money to the City under provisions of this chapter shall be
liable to an action brought in the name of the city for the recovery of such
amount.
Advisory board.
The Advisory Board shall review the implementation of this chapter, the
implementation of programs and activities funded through this chapter, and advise the
City Council on the amount of the district’s assessments and on the services, programs,
and activities to be funded by the assessments, and shall perform such other duties as
required by the Law, including preparing the Annual Report. The Annual Report shall be
submitted to the City Council no later than the last day of March each year. The City
Council shall ensure that the Advisory Board has timely access to all public information
regarding collection, disbursement, and uses of the funds collected under the terms of this
ordinance.
Modification or disestablishment.
The City Council may modify the provisions of this chapter or may disestablish
the HID or parts of the HID after adopting a resolution of intention to such effect, and
after adoption of an ordinance in compliance with the Law.
Criminal penalties
In addition to the civil penalties and action set forth in this chapter for failing to
comply with the provisions of this chapter, the following criminal sanctions may be
utilized at the discretion of the City, either together with or completely separate from the
civil remedies:
A. Any person violating any of the provisions of this chapter shall be guilty of an
infraction and shall be punishable therefore by a fine of not more than five
hundred dollars per occurrence.
B. Any operator or other person who fails or refuses to furnish on time any return
required to be made, or who fails or refuses to furnish a supplemental return or
other data required by the City Administrator, or who renders a false or fraudulent
return or claim, is guilty of an infraction, and is punishable as set out in this
section.
C. Any person required to make, render, sign, or certify any report or claim who
makes any false or fraudulent report or claim with the intent to defeat or evade the
determination of any amount due required by this chapter to be made, is guilty of
an infraction and is punishable as set out in this section.
Section 5.
This ordinance shall not be interpreted in any manner to conflict with controlling
provisions of state law, including, without limitation, the Constitution of the State of
California. If any section, subsection or clause of this ordinance shall be deemed to be
unconstitutional or otherwise invalid, the validity of the remaining sections subsections
and clauses shall not be affected thereby. If this ordinance, or any section, subsection or
clause of this ordinance shall be deemed unconstitutional or invalid as applied to a
particular appeal, the validity of this ordinance and its sections, subsections and clauses
in regards to other contracts, shall not be affected.
Section 6.
This ordinance shall become effective on September 7, 2012.
Section 7.
The City Clerk shall certify to the passage and adoption of this Ordinance, shall
enter the same in the book of original ordinances of the City and shall make a minute of
the passage and adoption thereof in the records of the meeting at which the same is
passed and adopted. Before the expiration of 30 days after passage of this ordinance, the
City Clerk shall cause the same to be posted in three public places within the City of
Carmel-by-the-Sea.
NORMANDY INN
Post Office Box 1706
Carmel-By-The-Sea, California 93921
(831) 624-3825
June 27, 2012
City of Carmel-by-the Sea
City Council
Post Office Box CC
Carmel-by-the Sea, CA 93921
RE: Proposed Hospitality Improvement District
Dear Council Members:
As the owner ofthe Normandy Inn (48 rooms) and the Best Western PLUS Carmel Bay
View Inn (56 rooms) I protest the above proposed improvement district. By way of
background I have been in the hotel business for over 40 years and own the Best Western
PLUS Monterey Inn, the Governor's Inn in Sacramento and the Truckee Donner Lodge
in Truckee, California. For many years I was also co-owner of 1,300 rooms at three
hotels in Reno and South Lake Tahoe.
In my opinion we do not need another small bureaucracy, the staffing and expenses of
which would consume a good part if not the greater portion of the expected funds.
Specific comments as follows:
1. Carmel is a leisure market destination and is apparent to me as both of my
properties in Carmel are 99% vacation guests.
2. Carmel has never been attractive to business or meeting groups simply because
Carmel limited conference facilities.
3. There are but just a few properties in Carmel that have meeting rooms.
4. I do not believe that there is a large market for attendants of conferences in
San Francisco that would travel over 100 miles for a pre or post trip.
5. We have found that internet marketing is by far the best method in attracting new
guests to our properties.
6. The best method of marketing is for the hotels to improve their products therefore
gaining repeat guests and referrals from satisfied customers.
7. The proposed expenditure and results will not be testable as there is no way to
determine how much if any business will be promoted by the program.
Sincerely,
Max Roseit
GREEN LANTERN INN
Post Office Box 114
Carmel, Ca. 93921
Subject Matter: Protest of the Hospitality Improvement District
(i) This letter is a statement of protest against the formation of the HID.
(ii) The Green lantern Inn is owned by Tradewinds Investors, a California limited Partnership. J Herbert
Johnson is the sole general partner.
(iii) The Green lantern Inn is located at the corner of 7th and Casanova.
(iv) There are 171odging units at the Green lantern Inn.
(v) The general partner, J. Herbert Johnson, is submitting and signing the protest.
