When should government step in to assist citizens and not worry about setting a precedent? That’s what the Mono County Board of Supervisors grappled with on Tuesday when business owners Kim and Tim Traynor came before the Board asking for help.
The Traynors own and operate the Yosemite Gateway Motel. Due to the effects of the Rim Fire on local economy, the Traynors had asked the County for some relief, specifically on their third and fourth quarter Transient Occupancy Tax (TOT) payments. They requested that they be allowed to make these payments in chunks, charging interest only and waiving penalties for late payment.
In a letter written to the Board on Sept. 24, the Traynors said, “The losses that we incurred due to the closure of the Tioga Road this month were absolutely devastating for us, and we are now forced into a position of desperately trying to find ways to come out of it without losing everything. We have been responsible, tax paying owners of a thriving business in Mono County for almost 25 years. We have pulled ourselves up from all kinds of hard situations. This is not an easy letter to write.”
The Traynors requested that the Board not only look at helping them, but all lodging businesses in the County suffering from a downed economy due to the Rim Fire, the historic fire which has burned more than 257,000 acres, some within Yosemite National Park, since it began in August.
Mono County Finance Director Leslie Chapman came before the Board on Tuesday to explain things from staff’s perspective.
“I don’t know how many people would want to take advantage of this,” Chapman said. “ But it would set a precedent we don’t have now. It would be approving a loan to private citizens.”
Chapman said her greatest concern for the County, depending on how many people came forward, would be cash flows, as this is the time of year when the County awaits property tax dollars.
The Traynors explained that they had applied for an SBA (U.S. Small Business Administration) loan, but that it could take months. SBA announced at the end of September that it would offer low-interest working capital federal disaster loans to small businesses economically impacted by the Rim Fire.
“We’ve always paid our taxes and we’re going to pay, we just want the penalties waived while we gather the funds,” Tim Traynor said.
“We’re trying to approach all avenues to make it through the winter,” Kim Traynor added. “We’re just desperate and we didn’t know what else to ask for. Maybe you can think of something to help everyone now, and in the future.”
Mono County Counsel Marshall Rudolph explained that this was the first time a request of this nature had come forward. He clarified that TOT is a tax that’s imposed on a person who stays at the hotel.
“It’s a pass through tax, the operator just collects it,” Rudolph said.
Supervisor Tim Alpers felt that the Traynors needed to make an appeal.
“I’m for giving relief but it has to be done fairly and we can’t set a precedent,” Alpers said. “I can’t support a loan program.”
Tim Traynor asked about the process the County had used to provide $100,000 to June Lake last year.
“The Board has to make findings, and findings could be different for each area [of the County],” Alpers said.
“We were spending County money,” Rudolph added.
Supervisor Larry Johnston then stepped into the conversation.
“I think we should set a precedent for helping people who pay the taxes when there’s an emergency,” Johnston said. “If the SBA is coming in, there’s an emergency. There’s good cause here and I think we should postpone payment without penalty but with interest.”
The penalty for a late TOT payment is 15 percent of the amount of the tax in addition to the amount of the tax, according to the County’s ordinance. For the Traynors, this amounts to approximately $30,000-$35,000 for their third quarter payment.
“For the government not to be able to help bugs me,” Johnston added. “We should have a way to do this. The County doesn’t lose anything in the long run.”
“There’s a process in place and that’s the bill process,” said Supervisor Tim Fesko, who was not in favor of setting a precedent either. “Follow the bill appeal process.”
“I admire that you came forward proactively,” Chapman told the Traynors. She asked staff if they had to wait until they were delinquent to appeal.
According to Mono County Tax Collector Rosemary Glazier, business owners such as the Traynors can write a letter 15 days before the due date of the taxes to start the appeal process. The third quarter payments are due at the end of October, so as long as the Traynors filed a letter by Wednesday, Oct. 16, they would still be within the appeal timeline. Once the letter is submitted, both the payment of the tax and the penalties are frozen until the Board determines whether or not to grant the appeal. If the Board denies the appeal, then the tax and penalties become due.
The Traynors agreed to this course of action.
“There are two trains here that we are following,” said Supervisor Fred Stump. “First is the Traynors themselves, and second, the Board needs the flexibility to help. We have a symbiotic relationship so we should support each other but we need a more formal process to do so.”
“We need a precedent for unprecedented things,” Johnston added. “I’m glad the [appeal] mechanism is in place. It may spur us to review the code.”