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Transient Occupancy Tax violators start to get a clue

With the Transient Occupancy Tax (TOT) Enforcement Program in place for five months now, it was time to check in and evaluate the process. Town of Mammoth Lakes’ staff led Mammoth’s Town Council through a workshop at its regular meeting on Wednesday night to reinforce the importance of the program, report progress, and review the process.

In five months, the Town has dealt with 85 cases where parties are suspected of renting their property but not paying TOT, according to Community Development Director Mark Wardlaw. The cases came from tips at the Town’s anonymous hotline, as well as from online research.

“Our targets are those that are renting on a more than casual basis,” Wardlaw explained. “Advertisements [online] make it easy for the Town to say ‘I see you.’”

Of those 85 cases, 26 have been closed due to current business certificates or the offending parties no longer renting on a transient basis. The remaining 59 are at various stages of the process.

Once the Community Development Department has identified violators, the case is turned over to the Town’s Finance Department. According to Finance Manager Cyndi Myrold, the process is currently set up to work in the following manner: first, a letter is sent to the offending party to let them know that they have been identified as being in violation.

“The violator then has 10 days to request a hearing and present their case,” she continued.

The Town then takes the information presented to it at the hearing and reviews it.

“A decision is not made at the hearing,” Myrold explained. “We take out time making an determination and then we send a notice of determination to the party.”

If the party is unhappy with the determination, they can come before Council, which would make the final decision. If it is determined by Council that they must pay the tax and they still do not, the Town is exploring being able to then put a lien on the property.

“We are still working through the last piece of putting the lien on the property, but we wanted to see if Council agreed with the process so far,” Myrold said.

1849 Condo Manager Cheryl Witherill spoke to the progress the program is making.

“The efforts are paying off,” Witherill said. “People are becoming more aware.” Witherill claimed she had several guests renting her four-bedroom units this year rather than illegally renting homes.

Councilmember Rick Wood agreed. “I know people who own units at the Westin who simply didn’t know that they had to pay TOT. Now that they’ve figured it out they are paying, and once they start having to pay, they want others [in the same boat] to pay.”

“Shutting down single family home rentals isn’t going to make people go somewhere else as many fear,” added Snowcreek’s Director of Operations John Morris.

Councilmember Skip Harvey was pleased with the process and pointed out that by continuing to push people to rent legal units the town will see higher occupancy rates, which would attract more business to Mammoth.

Council came to consensus to have staff continue the process.

Briefly

The Town received a counter back from Mammoth Lakes Land Acquisition last month. A closed session meeting is scheduled for Jan. 10 for Council to discuss its counter back to MLLA. This will be the Town’s second counter so far.

Myrold pointed out that business tax renewals were sent out late. “Even though it says due by Jan. 1, 2012, there is fine print at the bottom that says your renewal is not delinquent as long as it is postmarked by Jan. 31, 2012,” she said.”

Recreation Manager Stuart Brown announced that Mammoth High School’s soccer team will play in town this Friday, Jan. 6 at Gault Field.

Town enforces T.O.T.

Town staff is moving into the next phase of  the Transient Occupancy Tax (TOT) enforcement  program. We are now contacting property owners who are renting their units illegally or renting without paying TOT. A business tax certificate and transient occupancy tax certificate are both required to rent a unit within a permitted zone. If a unit is in a non-permitted zone, transient rental is not permitted, however, TOT is still due on rentals that have occurred illegally in the past.

Since mailing of the Sept. 8 “Rental Enforcement Notice,” we have been receiving about 25 calls from concerned citizens each week through emails and our anonymous tip line (760.934.8989 ext. 275). We are also conducting online research and have established a number of enforcement cases through this research. Town staff are following up on these cases at this time.

The Town values visitors’ experiences and wants to make sure they are accommodated if existing rentals are cancelled. The Mammoth Lakes Tourism website www.visitmammoth.com includes a section on accommodations within Mammoth and will allow guests to secure another location within town for their vacation.

If you have questions about TOT contact the Finance Department at 760.934.8989 ext. 273. If you have zoning questions or would like to know if it is legal to rent your home, contact the Community Development Department at 760.934.8989 ext. 275. -TOML

Broken wind – Firms pull apps

Two firms investigating potential wind energy in eastern California have withdrawn their requests to install monitoring towers on public lands. The firms proposed to install 200-foot-tall wind monitoring towers for three-year testing periods to collect wind speed and direction data and other weather information.

The Bureau of Land Management’s Bishop Field Office this week approved requests from ENEL (Padoma) and EWind Farms to withdraw their proposed wind energy type II monitoring right-of-way applications for the Adobe Valley and Granite Mountain public land areas. These cases have been closed.

“We appreciate the time and energy spent by people interested in these proposals through written comments, attending public meetings, and participating in the field exam,” said Bernadette Lovato, BLM Bishop Field Office manager.

Info: contact Larry Primosch, Bishop Field Office, 760.872.5031. –BLM

Cluster box controversy

The Inyo County Board of Supervisors had a bone to pick with the U.S. Postal Service at Tuesday’s meeting in Independence. The Board took issue with how the USPS had handled installing cluster boxes in Darwin to allow the town residents to continue receiving mail after their post office is closed. This year the USPS announced that, due to lack of revenue, it would be closing as many as 3,700 post offices around the country, many in rural areas. In Inyo County, Darwin is the first community to suffer a closure.

“They wanted to install the boxes [on county property] right away,” explained Public Works Director Doug Wilson, who was present at Tuesday’s meeting to provide the Board with an update. “The county process is that you must get an encroachment permit first, which allows you to encroach on the county right-of-way.” With that encroachment permit comes the stipulation that “whoever is encroaching on the right-of-way has to take on the risk.” However, according the Wilson, originally the USPS was not planning on getting the encroachment permit, nor was it willing to indemnify the county.

In fact, said District 5 Supervisor Richard Cervantes, the USPS “sent somebody out there to pour the concrete base for the mailboxes” before the USPS had either applied for a permit or agreed to indemnify. “People ran them off,” Cervantes said.

Public Works Director Wilson reported that the USPS has now come around to the permit, and had submitted an email with proposed indemnification language to the county on Monday. The Board agreed to review the language. If it was adequate, the cluster boxes could be installed at Darwin. If the language is found inadequate, the issue will go back to the Board.

“People need their mail,” said District 1 Supervisor Linda Arcularius, “so hopefully we can figure this out.” –Vane

Age-old T.O.T. collection issue revisited

Using your finger to plug a leak will generally only work for so long. While the finger-in-the-dike approach is a popular problem-solving technique within local government circles, The Town of Mammoth Lakes recognizes it’s foregoing a significant amount of Transient Occupancy Tax revenue by not adequately policing property owners who rent out their places without paying tax.

In order to help truly fix the crack in the system rather than just add more stopgaps, a TOT Committee was formed in the summer of 2010, at the request of the Mammoth Lakes Town Council. The group, consisting of Mammoth Lakes Tourism Executive Director John Urdi, MMSA’s Tom Smith, Recreation Commissioner and lodging property owner Teri Stehlik, and lodging property owner Cheryl Witherill presented its findings to Council during a workshop on Wednesday.

Though an ordinance is already in place that states owners of rental properties must collect TOT and pay a portion of it to the Town, scant enforcement of this ordinance has made it easy for those wishing to avoid payment to do so. So easy in fact, that offenders blatantly advertise their properties online without a worry of getting caught.

“The Town has not enforced what’s on the books,” admitted Councilmember John Eastman.

Currently in Mammoth, the Town taxes room rentals at 13%. According to information on the Town’s website, “transient rental or occupancy in defined as rental or occupancy of a structure

for sleeping or lodging for 30 consecutive days or less, in exchange for a fee or other similar consideration. Renting a property for transient use requires a Town of Mammoth Lakes business license and registration and remittance of Transient Occupancy Tax.”

The town is also specifically zoned to allow transient rental in certain areas but not in others.

Lodging owners and operators, however, claim these rules aren’t always being followed; an oversight that is costing the Town a minimum of $400,000 in TOT revenues in the winter months alone.

In 2009, the Mammoth Lakes Lodging Assn. estimated that there was a total of $800,000 in unreported income during the winter season due to owners renting illegally.

Just two years later, the Lodging Assn. has revised that number dramatically upward, to $3.1 million during the winter months alone. 13% of $3.1 million would equate to nearly $400,000 in lost tax revenue.

When asked why this number has leapt so dramatically, Stehlik said “The number increases tenfold daily because of the ease of the internet [in listing and booking].”

Note that these numbers are just for condominium TOT. They do not include the single family homes that are also being rented illegally in town. However, the Committee requested that the homes be dealt with on a separate track after condo compliance was under control.

The Committee’s game plan is to amend the Town’s current ordinance in several ways and then fully enforce it. If the Committee gets what it wants, the current section of the code that forgives those earning less than $5,000/year to require a license would be amended, a mandatory form would be posted in all units that includes a copy of the business license and rental rate, all units would have a local 24/7 contact who also has a business license, businesses would have to begin reporting occupancy monthly rather than quarterly, and more.

The Committee also requested that a letter, which was first drafted in March 2009 when the Lodging Association first brought TOT issues to light, but never made it to Council for approval, be sent out to all property owners. The letter combined a soft letter that the Town had been using for property owners and a firmer letter that it had been sending out to business owners.

“We put the two letters together to give all property owners a better understanding of what TOT is and what it is used for,” Witherill explained. “The letter also explained that the Town was moving forward with stronger enforcement of penalties for those who did not comply.”

The letter seems to have stopped at the Finance Department and never made it to Council for review.

“It’s our assumption that it sat on Brad Koehn’s desk,” Witherill told The Sheet. Apparently it had been the Town’s practice to send out the two original letters every five years or so.

Finally, the Committee requested that penalties be raised to the maximum and that the Town hire full time employees for enforcement of these penalties.

Local community member and property owner John Vereuck pointed out that there would need to be incentive for enforcement to make it work.

“I continue to be embarrassed that we have not been able to get our arms around this,” stated Council member Rick Wood, who applauded the Committee’s work and said that going forward he was supportive of not giving people the benefit of the doubt.

Mayor Skip Harvey was also embarrassed that the letter drafted in 2009 never made it to the Council level and was never distributed. He was in favor of getting the updated ordinance in place with enforcement on a parallel track by the end of the summer so the process would be updated and ready for the 2011/12 winter season. He suggested hiring an outside source for enforcement, which would receive a percentage of the revenue collected.

Council encouraged the TOT Committee to continue moving forward and to work with the Town Attorney, Andrew Morris to determine what can and cannot be done in terms of amending the ordinance and enforcing stronger penalties.