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City Council Balks on Occupancy Tax for RV Park

July 22, 2011 by   - () Leave a Comment

Whether Durango RV Resort will pay transient occupancy tax (TOT) to Red Bluff, Calif., is still undecided after the city council Tuesday (July 19) voted to table a decision to amend the TOT ordinance to explicitly include recreational vehicle parks and campgrounds, the Red Bluff Daily News reported.

The council voted 3-1-1 to table the decision as recommended by Councilman Rob Schmid. Councilwoman Daniele Jackson voted no, and councilman Wayne Brown was absent.

Durango owner Gary Breen questioned the council’s legal ability to approve the amendment, which would change and expand the existing tax base.

Proposition 218, passed by California voters in 1996, requires local governments to allow those who would be affected to vote on proposed taxes.

The law does not apply in this case, as this is not a new tax, City Attorney Richard Crabtree said. The city has never wavered on its position that the ordinance already includes RV parks and campgrounds.

“We don’t view this as an expansion of the tax base, so Prop 218 does not prohibit adoption of the ordinance before you,” Crabtree told the council.

Schmid stopped short of giving his own interpretation as to whether the ordinance already includes RVs, but said if the city is looking at rewriting the ordinance to clarify it, then it means the ordinance is open to interpretation and subjected to becoming matter for litigation. He wanted a second opinion on whether approval of the amendment would conflict with the law under Proposition 218.

The Red Bluff-Tehama County Chamber of Commerce supports the proposed amendment because it would create an ordinance that would leave no doubt, supposition or room for interpretation as to whether RV parks and campgrounds are covered in the TOT ordinance, said Chairman Greg Stevens, who spoke on behalf of the Chamber Executive Committee.

However, the chamber does not agree with the city’s interpretation that RV parks and campgrounds are already included in the ordinance as it is written, nor does it support the city wanting to collect retroactive taxes from Durango, especially considering that some hotels were forgiven following a 2009 audit that showed they had not been in compliance with the ordinance but promised to comply going forward, Stevens said.

“It’s not Durango’s fault it took the city a year to change the ordinance,” he said.

A handful of speakers representing downtown businesses and Durango employees and guests spoke on behalf of the RV park pointing out the many benefits and contributions it has provided to the city and community. They cautioned the city about the message it was sending in trying to single out Durango.

“It’s sad that the city would go after the best thing that’s happened to Red Bluff in a long time,” said Irene Fuller.

The dispute between the city and Durango over TOT has been ongoing since Durango opened in 2008.

There have been ongoing efforts since 2009 to get Durango to voluntarily comply, Crabtree said.

The city estimates Durango owes about $42,000 in TOT going back to June 2010.

Breen said toward the end of his first month of operation, on Aug. 28, 2008, he tried to pay TOT but a city worker refused to accept his check, saying RV parks were not covered under the city’s ordinance.

After reviewing the ordinance with his own legal council, Breen elected not to charge his guests TOT.

“There’s nothing in that ordinance, nothing that states RV parks,” Breen said.

He supports TOT because he knows the city needs revenue, but TOT needs to be implemented correctly and legally, Breen said. He wants to work with the city and county to develop a fair and equitable ordinance that would create a level playing field for all RV parks. He did not think it fair that Durango was the only RV park that would be subject to TOT, while others in the county did not have to collect and pay TOT. He would like the city to consider a phase-in TOT that would allow him to slowly increase his rates without negatively impacting his business.

Breen said he has tried to work with the city, but after three years of going back and forth in this ridiculous process he has turned negative because “all I get is this personal vendetta about this big, bad RV park that’s not paying their TOT when it’s not even written right.”

He mentioned a number of problems he has with the city, including the city’s refusal to allow him to put up a sign that would direct visitors to his resort without having to drive through the Food Maxx parking lot and the lack of appreciation for the land he donated to the city. The city cannot even maintain the area and has instead allowed it to become a refuge for the homeless, he said.

Schmid and Councilman Forrest Flynn said there are a lot of unresolved issues between the city and Durango, but they could not be addressed Tuesday, as the council was only there to discuss the verbiage of the ordinance.

Hotel owner Barry Jesrani said TOT issues go beyond the rift between Durango and the city. In fact, the city’s entire TOT policy needs to be re-examined and made clear. There are hotel owners who are still confused about how to collect TOT and from whom to collect it.

“The city needs to provide hotels with a uniform procedure on how to collect TOT,” Jesrani said.

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