HomeMy WebLinkAboutOrdinance 626 Morro Bay TBID and Vacation Rentals Ordinance Amendment (110419)ORDINANCE NO. 626
ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
MORRO BAY, CALIFORNIA TO INCLUDE VACATION RENTAL
BUSINESSES IN ANNUAL MORRO BAY TOURISM BUSINESS
IMPROVEMENT DISTRICT ASSESSMENT BY AMENDING
CHAPTER 3.60 (TOURISM BUSINESS IMPROVEMENT
DISTRICT LAW) OF TITLE 3 (REVENUE AND FINANCE) OF
THE MORRO BAY MUNICIPAL CODE
WHEREAS, the Parking and Business Improvement Area Law of 1989, section 36500 et
seq., of the California Streets and Highway Code, authorizes cities to establish and review
business improvement areas for the purpose of promoting tourism; and
WHEREAS, on April 13, 2009, City Council held a public hearing for the introduction and
first reading of Ordinance 546 amending the Morro Bay Municipal Code (MBMC) to add a new
Chapter 3.60 to establish the Morro Bay Tourism Business Improvement District ("MBTBID"
and/or "TBID"), and adopted Ordinance 546 at its April 27, 2009 meeting, which set the
MBTBID assessments at 3% from June 1, 2009 to May 31, 2010, and 2% from June 1, 2010
and thereafter; and
WHEREAS, on June 1, 2010, the MBTBID assessments returned to the 2% level, as
established by Ordinance 546; and
WHEREAS, on September 13, 2010, the City Council held a public hearing and first
reading of Ordinance 562 to amend MBMC section 3.60:050, changing the assessment
percentage to 3%, and adopted Ordinance 562 at its September 27, 2010, meeting; and
WHEREAS, on May 16, 2019, at a duly noticed public meeting, the MBTBID advisory
board, formed pursuant to MBMC, section 3.60.100, recommended the renewal of the MBTBID
for Fiscal Year (FY) 2019-20 to continue its activities, and the City Council has approved that
renewal for the past eight years; and
WHEREAS, all other findings of Ordinances 546 and 562 remain unchanged except as
provided herein; and
WHEREAS, on May 28, 2019, City Council conducted a public meeting where staff
presented the annual assessment report, which provided a full and detailed description of
activities to be provided during the FY 2019-20, as provided in the proposed budget for that
Fiscal Year, and available for review in the City Clerk's office, and the City Council approved
that Annual Assessment Report and declared its intention to renew the Morro Bay Tourism
Business Improvement District for the 2019/20 Fiscal Year, and to levy and collect 3%
assessments from hoteliers calculated in the manner set forth in MBMC, section 3.60.050, and
that budget generally described the funded activities to be marketed, which attract and extend
overnight stays in Morro Bay hotels, and are consistent with the authorized uses for the
assessment revenue set forth in MBMC, section 3.60.030, and it was the intention of the City
Council to levy and collect 3% assessments from the hoteliers within the TBID for the FY 2019-
20; and
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WHEREAS, at the public meeting held on May 28, 2019, City Council additionally set a
public hearing, for the intent to levy the MBTBID assessment for Fiscal Year 2019/20, to be held
at the Morro Bay Veterans Memorial Hall located at 209 Surf Street, Morro Bay, California, in
accordance with the California Streets and Highway Code, sections 36534 and 36535; and
WHEREAS, that public hearing to adopt a resolution to reaffirm the MBTBID, and levy
and collect the 3% assessments from hoteliers, was held on Tuesday, June 11, 2019. Before or
at that public hearing written protests to the continuation of the MBTBID and the levy of the
assessment were considered, consistent with the requirements of Streets & Highways Code,
sections 36524 and 36525 and MBMC, section 3,60.060, and written protests were not received
from hoteliers which pay 50% of more of the proposed continued assessment, and as such the
annual assessment was continued for FY 2019-20; and
WHEREAS, on September 19, 2019, at a duly noticed public meeting, the TBID advisory
board, formed pursuant to MBMC, section 3,60.100, pursuant to the request of the City Council
at its August 27, 2019 regular meeting, considered the addition of vacation rentals ("VRs") to the
existing MBTBID at the existing TBID assessment rate of 3% levied on hotels, and at that
September 19, 2019 meeting, the TBID Board conducted a supplemental review of its Annual
Report for FY 2019-20 (required by Section 3,60.060 of the Morro Bay Municipal Code and
Streets & Highways Code section 36533 ("Section 36533")), which was initially approved by the
TBID Board on May 7, 2019, and then subsequently approved by the City Council on May 28,
2019; and
WHEREAS, the Annual Report pursuant to Streets &Highways Code Section 36533(a)
provides that the TBID Board "shall cause to be prepared a report for each fiscal year for which
assessments are to be levied and collected to pay the costs of the improvements and activities
described in the report." Subsection (b)(1-6) of Streets & Highways Code Section 36533
provides the Annual Report "shall contain" six elements. All six elements were addressed in the
prior report submitted to, and approved by City Council, on May 28, 2019. Section 36533 also
provides in subsection (a) that the TBID Board Annual Report submitted to the City Council
may propose changes, including, but not limited to, the boundaries of the parking and business
improvement area or any benefit zones within the area, the basis and method of levying the
assessments, and any changes in the classification of businesses."; and
WHEREAS, pursuant to the request from City Council to add VRs to the TBID, the TBID
Board recommended at its September 19, 2019 meeting the Council should approve a
Supplemental Annual Report for FY 2019-20. This supplemental report both provided a
supplemental recommendation on changes to "the basis and method of levying the
assessments, and any changes in the classification of businesses," so as to add VRs to the
TBID at the existing assessment rate of 3%, and further addressed the effect of those proposed
changes through a supplemental recommendation concerning the six required elements of an
annual report; and
WHEREAS, the City timely mailed to all businesses subject to the existing and proposed
TBID assessment a joint notice of both an upcoming public meeting on October 22, 2019 for the
City Council to allow public testimony regarding the addition of VRs in the TBID, and an
upcoming public hearing concerning the addition of VRs in the TBID to determine if written
protests are received from the owners of all businesses in the current and proposed TBID which
will pay 50 percent or more of the current and proposed assessments; and
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WHEREAS, on October 8, 2019, City Council conducted a public meeting where staff
presented the Supplemental Annual Report for FY 2019-20, available for review in the City
Clerk's office, and the budget generally described the funded activities to be marketed, which
attract and extend overnight stays in Morro Bay hotels and vacation rentals, and are consistent
with the authorized uses for the assessment revenue set forth in MBMC, section 3.60.030, and
City Council approved the Supplemental Annual Report for FY 2019-20 and declared its intent
to continue the levy and collection of 3% assessments from the hoteliers within the TBID for the
FY 2019-20, and to levy and collect 3% assessments from vacation rental businesses (as that
term is defined in Chapter 5.47 (Short -Term Vacation Rental Permit) of the Morro Bay Municipal
Code) within the TBID for the remainder of FY 2019-20 consistent with the effective date of an
amendment of Chapter 3.60 (Tourism Business Improvement District Law) of the Morro Bay
Municipal Code, so as to add vacation rental businesses to the TBID at the existing assessment
rate of 3% and consistent with MBMC section 3.60,050; and
WHEREAS, on October 8, 2019, City Council also set a date of October 22, 2019 for a
public meeting on the addition of vacation rentals businesses to the Morro Bay Tourism
Business Improvement District, to solicit and allow public testimony regarding the addition of
vacation rental businesses to the Morro Bay Tourism Business Improvement District so as to
levy an annual assessment on vacation rental businesses (as that term is defined in Chapter
5.47 (Short -Term Vacation Rental Permit) of the Morro Bay Municipal Code) at the existing
TBID rate of 3% calculated in the manner set forth in MBMC, section 3.60.050;
WHEREAS, on October 8, 2019, City Council also set a date of Tuesday, November 12,
2019 for a public hearing to adopt a Resolution to reaffirm the MBTBID, and to affirm the
renewal of the Morro Bay Tourism Business Improvement District for the 2019/20 Fiscal Year,
to continue the levy and collection of 3% assessments from hoteliers calculated in the manner
set forth in MBMC, section 3.60.050, and to levy and collect 3% assessments from vacation
rental businesses (as that term is defined in Chapter 5.47 (Short -Term Vacation Rental Permit)
of the Morro Bay Municipal Code) for the remainder of FY 2019-20 consistent with the effective
date of amendment of Chapter 3.60 (Tourism Business Improvement District Law) of the Morro
Bay Municipal Code so as to add vacation rental businesses to the TBID at the existing
assessment rate of 3%, calculated in the manner set forth in MBMC, section 3.60.050; and
WHEREAS, the City timely mailed to all businesses subject to the existing and proposed
TBID assessment the resolution adopted on October 8, 2019 concerning the continuation of the
levy of the annual TBID assessment, the intention to add vacation rental businesses to the
TBID, and confirming the date and time for a public meeting on October 22, 2019 and a public
hearing on November 12, 2019 concerning the addition of vacation rental businesses to the
TBID; and
WHEREAS, on October 22, 20197 City Council at a public meeting solicited and allowed
public testimony regarding the addition of vacation rental businesses to the Morro Bay Tourism
Business Improvement District so as to levy an annual assessment on vacation rental
businesses (as that term is defined in Chapter 5.47 (Short -Term Vacation Rental Permit) of the
Morro Bay Municipal Code) at the existing TBID rate of 3% calculated in the manner set forth in
MBMC, section 3,60.050; and
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WHEREAS, the City timely published in a newspaper of general circulation in the City
the resolution adopted on October 8, 2019 concerning the continuation of the levy of the annual
TBID assessment, the intention to add vacation rental businesses to the TBID, and confirming
the date and time for a public meeting on October 22, 2019 and a public hearing on November
121 2019 concerning the addition of vacation rental businesses to the TBID; and
WHEREAS, before or at the public hearing held on November 12, 2019, the City Council
considered written and oral protests, from owners of businesses in the current and proposed
assessment area, to the continuation of the MBTBID and the levy of the continued and
proposed assessments, consistent with the requirements of Streets & Highways Code, sections
36524 and 36525 and MBMC, section 3.60.060, and such written protests were not received
from the owners of businesses which will pay 50 percent or more of the existing and proposed
assessments to be levied, and as such the annual assessment for FY 2019-20 was reaffirmed
as continued; and
WHEREAS, the City Council having on October 8, 2019 affirmed and approved the
Supplemental Annual Report for FY 2019-20 and declared its intent to continue the levy and
collection of 3% assessments from the hoteliers within the TBID for the FY 2019-20, and to levy
and collect 3% assessments from vacation rental businesses within the TBID for the remainder
of FY 2019-20 consistent with the effective date of an amendment of Chapter 3.60 the MBMC,
so as to add vacation rental businesses to the TBID at the existing assessment rate of 3% and
consistent with MBMC section 3.60.050, and having on October 22, 2019 held a public meeting
on such addition of vacation rentals businesses to the MBTBID, and on November 12, 2019
held a public hearing wherein written protests were not received from the owners of businesses
which will pay 50 percent or more of the existing and proposed assessments to be levied, now
desires pursuant to the authority provided by the Parking and Business Improvement Area Law
of 1989, section 36500 et seq., of the California Streets and Highway Code, to amend Chapter
3.60 (Tourism Business Improvement District Law) of Title 3 (Revenue and Finance) of the
Morro Bay Municipal Code, so as to add vacation rental businesses to the Morro Bay Tourism
Business Improvement District so as to levy an annual assessment on vacation rental
businesses (as that term is defined in Chapter 5.47 (Short -Term Vacation Rental Permit) of the
Morro Bay Municipal Code) at the existing TBID rate of 3% of the rent charged by the operator
of the vacation rental for all transient occupancies; and
WHEREAS, the City Council further recognizes that contracts for vacation rental
tenancies may have been entered into before the effective date of the inclusion of vacation
rentals in the MBTBID assessment, and thus in the interests of equity the City Council desires
that contracts executed, between owners/managers of vacation rental businesses and their
customers, prior to the effective date of the inclusion of vacation rentals in the MBTBID as an
operation of law, for tenancies up to and including June 30, 2020, be provided a limited
exemption from the assessment; and
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORRO BAY,
CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1. CHAPTER
TITLE 3 (REVENUE AND
AS FOLLOWS (WITH
CTCILlCT4ID(11 1�_4!)
1181.0001/613256.5
3.60 (TOURISM BUSINESS IMPROVEMENT DISTRICT LAW) OF
FINANCE) OF THE MORRO BAY MUNICIPAL CODE IS TO READ
NEW TEXT IN BOLD ITALICS AND DELETED TEXT IN
Ordinance No. 626
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CHAPTER 3.60 - TOURISM BUSINESS IMPROVEMENT DISTRICT LAW
Sections:
3.60.010 -Title.
This chapter shall be known as the "City of Morro Bay Tourism Business Improvement District
Law."
3.60.020 =Definitions.
"City Council" means the City Council of the City of Morro Bay.
"City Advisory Board" means the advisory body appointed by the City Council, pursuant to this
chapter.
"District" means the City of Morro Bay Tourism Business Improvement District (or "MBTBID")
created by this chapter and as delineated in Section 3,60.040.
"Hotel" means any structure, or any portion of any structure, which is occupied or intended or
designed for occupancy by transients for dwelling, lodging or sleeping purposes, and includes
any hotel, motel, vacation rental, or bed and breakfast that pays transient occupancy tax. For
purposes of this chapter the definition of "hotel" shall include vacation rentals. For
purposes of this chapter the definition of "hotel" shall not include RV parks and vaGation rentals.
"Law" means the Parking and Business Improvement Area Law of 1989, California Streets and
Highways Code Sections 36500 et seq., as amended.
"Operator" means 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 his/her 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/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.
"Transient" means any person who exercises occupancy or who is entitled to occupancy, by
reason of concession, permit, right of access, license, or other agreement for a period of thirty
consecutive calendar days or less, counting portions of calendar days as full days.
"Vacation rental" shall have the same meaning as the term "Short-term vacation rental"
has as that term is defined in Chapter 5.47 (Short -Term Vacation Rental Permit) of the
Morro Bay Municipal Code.
3.60.030 -Authorized uses.
This chapter is made and enacted pursuant to the provisions of the Parking and Business
Improvement Area Law of 1989 (Sections 36500, et seq., of the Streets and Highways Code)
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the "law"). The purpose of forming the district as a business improvement area under the
Parking and Business Improvement Area Law of 1989 is to provide revenue to defray the costs
of services, activities and programs promoting tourism which will benefit the operators of hotels
in the district through the promotion of scenic, recreational, cultural and other attractions in the
district as a tourist destination. It is the intent of this chapter to provide a supplemental source of
funding for the promotion of tourism in the district. The specific services, activities and programs
to be provided by the district are as follows:
A. The general promotion of tourism within the district is to include costs as specified in the
business plan to be adopted annually;
B. The marketing of conference, group, and film business that benefits local tourism and
the local hotel industry in the district; and
C. The marketing of the district to the travel industry in order to benefit local tourism and the
local hotel industry in the district.
3.60.040 -Boundaries.
The boundaries of the MBTBID shall be the boundaries of the City of Morro Bay.
3.60.050 -Levy of assessment and exemptions.
The MBTBID shall include all hotel businesses located within the MBTBID boundaries. The
assessment to be levied on all hotel businesses within the MBTBID boundaries shall be based
upon three percent of the rent charged by the operator per occupied room per night for all
transient occupancies. The assessment shall be collected monthly, based on percent of the rent
charged by the operator per occupied room per night in revenues for the previous month. New
hotel businesses within the boundaries shall not be exempt from the levy of assessment
authorized by Section 36531 of the law. Assessments pursuant to the MBTBID shall not be
included in gross room rental revenue for purpose of determining the amount of the transient
occupancy tax. The value of extended stays of more than thirty consecutive calendar days shall
be exempt from the levy of assessment. Any other exclusion shall be based on benefit and the
policies and ordinances of the collecting agency.
3.60.060 -Annual review of assessment.
All of the assessments imposed pursuant to this chapter shall be reviewed by the Morro Bay
City Council annually, based upon the annual report prepared by the advisory board appointed
pursuant to this chapter and Sections 36530 and 36533 of the law. After approval of the annual
report, the Morro Bay City Council shall follow the hearing process as outlined in Section 36534
of the law. At the public hearing the Morro Bay City Council shall hear and consider all protests.
If written protests are received from hotel businesses in the district paying fifty percent or more
of the annual assessment, no further proceedings to continue the levy of assessments shall
take place. The protests shall be weighted based upon the annual assessment for the prior year
by each hotel business.
3.60.070 -Imposition of assessment.
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Ordinance No. 626
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The Morro Bay City Council hereby levies and imposes and orders the collection of an
additional assessment to be imposed upon hotel businesses in the district described above,
which shall be calculated pursuant to Section 3.60.050 above. Such levy shall begin on June 1,
2009. Vacation rental businesses are subject to such assessment upon the effective date
of the inclusion of vacation rental businesses in the MBTBID as an operation of law. Rent
charged by vacation rental businesses, for tenancies through June 30, 2020, that are
pursuant to contracts entered into between the business and a tenant prior to the
effective date of the inclusion of vacation rental businesses in the MBTBID as an
operation of law, shall not be subject to the assessment.
3.60.080 -Use of revenue.
The activities to be provided by the MBTBID will be funded by the levy of the assessments and
any voluntary contributions. The total revenue from the levy of assessments and any other
voluntary contributions within the MBTBID shall not be used to provide improvements or
activities outside the MBTBID or for any purpose other than the purposes specified in the
resolution of intention. The proceeds of the hotel business assessment and any other voluntary
contributions shall be spent to administer marketing and visitor programs to promote the City of
Morro Bay as a tourism visitor destination. All funds shall be expended consistent with the
purposes of this section. Funds remaining at the end of any MBTBID term may be used in
subsequent years in which MBTBID assessments are levied as long as they are used consistent
with the requirements of this section. The Morro Bay City Council shall consider
recommendations made by the advisory board created by Section 3.60.100 of this chapter as to
the use of assessment revenue.
3.60.090 -Delinquency, penalty and interest.
Any hotel business that fails to remit any assessment imposed by this chapter within the time
required shall pay a penalty of ten percent of the assessment amount in addition to the
assessment. Any and all remedies available to the City of Morro Bay for non-payment of
assessment or taxes shall be applicable in the event of non-payment of an assessment under
this chapter. Any penalty and interest fees collected from a hotel business due to delinquency
shall go to the City of Morro Bay.
3.60.100 -Advisory board.
The City Council shall appoint an advisory board pursuant to Section 36530 of the California
Streets and Highways Code in order to make recommendations to the City Council on the
expenditure of revenues derived from the levy of assessments; on proposed improvements and
activities, and on the method and basis of levy assessments. The City Council may, by
resolution, adopt bylaws governing the membership and operations of the advisory board.
3.60.110 - Severability.
If any section, subsection, sentence, clause or phrase of this chapter is for any reason held to
be invalid or unconstitutional by the decision of any court of competent jurisdiction, such
decision shall not affect the validity of the remaining portions of the chapter. The Morro Bay City
Council hereby declares that it would have passed the ordinance codified in this chapter and
each section, subsection, sentence, clause and phrase hereof, irrespective of the fact that any
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Ordinance No. 626
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one or more of the sections, subsections, sentences, clauses or phrases hereof be declared
invalid or unconstitutional.
3.60.120 -Modification or disestablishment.
The City of Morro Bay, by ordinance, may modify the provisions of this chapter and may
disestablish the district or parts of the district, after adopting a resolution of intention to such
effect. Such resolution shall describe the proposed change or changes, or indicate that it is
proposed to disestablish the district, and shall state the time and place of a hearing to be held
by the Morro Bay City Council to consider the proposed action. If the operators of hotels which
pay fifty percent or more of the assessments in the district file a petition with the City Clerk of
the City of Morro Bay requesting the Morro Bay City Council to adopt a resolution of intention to
modify or disestablish the district, the Morro Bay City Council shall adopt such resolution and
act upon it as required by law. Signatures on such petition shall be those of a duly authorized
representative of the operators of hotels in the district. In the event the resolution proposes to
modify any of the provisions of this chapter, including changes in the existing assessments or in
the existing boundaries of the district, such proceedings shall terminate if protest is made by the
operators of hotels which pay fifty percent or more of the assessments in the district, or in the
district as it is proposed to be enlarged.
In the event the resolution proposes disestablishment of the district, the Morro Bay City Council
shall disestablish the district, unless at such hearing protest against disestablishment is made
by the operators of hotels paying fifty percent or more of the assessments in the district.
3.60.130 -Effective date.
The City Clerk of the City of Morro Bay shall certify to the passage of this chapter by the Morro
Bay City Council and cause it to be posted in three conspicuous places in the City of Morro Bay
and it shall take effect on the thirty-first day after it is approved by the Morro Bay City Council.
SECTION 2. SEVERABILITY. If any section, subsection, sentence, clause, phrase, or
portion of this ordinance is, for any reason, held to be invalid or unconstitutional by the decision
of any court of competent jurisdiction, such decision shall not affect the validity of the remaining
portions of this ordinance. The City Council hereby declares that it would have adopted this
ordinance and each section, subsection, sentence, clause, phrase, or portion thereof,
irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases,
or portions thereof may be declared invalid or unconstitutional.
SECTION 3. EFFECTIVE DATE. This ordinance shall be in full force and effect thirty
(30) days after its passage.
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SECTION 4. CERTIFICATION. The City Clerk shall certify to the adoption of this
ordinance, and shall cause the same to be posted and codified in the manner required by law.
INTRODUCED at a regular meeting of the City Council held on the 12th day of November
2019, by motion of Council Member McPherson and seconded by Council Member Davis.
PASSED AND ADOPTED on the 10th day of December, 2019, by the following vote:
AYES:
NOES:
ABSENT
ATTEST:
Headding, Addis,
None
None
AMA 6N
DA A SWANSON, City Clerk
APPROVED AS TO FORM:
Davis, Heller, McPherson
NEUMEYER, City Attor
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STATE OF CALIFORNIA )
COUNTY OF SAN LUIS OBISPO )
CITY OF MORRO BAY )
I, Dana Swanson, CITY CLERK OF THE CITY OF MORRO BAY, DO HEREBY
CERTIFY that the foregoing Ordinance Number 626 was duly adopted by the City
Council of the City of Morro Bay at a regular meeting of said Council on the 10th day of
December, 2019, and that it was so adopted by the following vote:
AYES: Headding, Addis, Davis, Heller, McPherson
NOES: None
ABSENT: None
IN WITNESS WHEREOF I have hereunto set my hand and affixed the official
seal of the City of Morro Bay, California, this JqM day of ,�. 201 I .
01181.0001/613256.5
SWANSON, City Clerk
Ordinance No. 626
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