HomeMy WebLinkAboutMinutes 2010-01-061VIINUT~S
~u ~~;. SPACIAL MBE T ~ NG
T
,~, , ~ mt .~ CITY CO ~~1CIL.
~~ OF THE
c'~LIFORI`l~ CITY OF SOUTH SAN FRANCISCO
CITY HALL CONFERENCE ROOiv1
400 GRAND AVENUE
SOUTH SAN FRANCISCO
WEDNESDAY, JANUARY 6, 2C 10
CALL TO ORDER 3:30 P.M.
ROLL CALL Present: Councilmembers Garbarino, Gonzalez
and Matsumoto, Vice Mayor Mullin,
and Mayor Addiego.
Absent: None.
1. Public Comments -comments were limited to items on the Special Meeting Agenda.
None.
2. Resolution No. 1-2010 Ratifying Tax Administrator's Administrative Interpretation of
Chapter 4.20 of the South San Francisco Municipal Code Related to Language
Approved as Part of Measure O.
City Attorney Mattas presented the staff report advising that Council was being presented with
a Resolution ratifying a determination pertaining to Measure O that Finance Director Steele
had made as Tax Administrator. He explained the Finance Director was authorized by the
Municipal Code to issue a tax interpretation and in this instance he had done so. The issue
presented in this interpretation pertained to the collection of taxes as dependent upon the
medium in which a hotel reservation was made. When online brokers are utilized to book a
hotel reservation the entire charge is made up of several components, including the net rate, a
facilitation fee and sometimes a website booking fee set by the broker. Online brokers treat
the extraneous fees as separate from the room rate and argue that the TOT does not apply to
the additional fees.
Despite the online brokers' interpretation, the City of Anaheim, California was involved in
extensive litigation with the online industry and had secured an administrative decision in its
favor permitting TOT to be collected on the total amount of the online fee. The online
industry was challenging the decision and a determination was pending.
When South San Francisco voters passed Measure O, they approved language establishing
that the TOT in South San Francisco would be applied to the total amount of the online
transaction, including facilitation and other fees. At present this was unique within San Mateo
County, as the majority of other cities applied the TOT only to the room rate charge and not
the online broker's additional fees. The interpretation provided by Finance Director Steele as
tax administrator clarified tr.at for now-, the City wo~~ld apply the tax only to the net room rate,
which would maintain consistency with other San Mateo County cities. Since Measure O
explicitly authorized Council to make changes as long as such changes didn't increase tax
rates, acceptance of the opinion ~*~as appropriate if Council sa~% f t. Staff recommended
prospective application of the ir~terpretatior.. However, when and if circumstances changed,
Council could consider modifying the interprets±ion to apply TOT to the entire online booking
amount if it so desired.
Councilwoman Matsumoto questioned whether the TOT applied to the 2.~0 Conference
Center fee. She also asked who set the additional fees collected by the online brokers.
Finance Director Steele advised the Conference Center fee was separate. He further noted that
the additional online fees were imposed by the online brokers and there was not a standard
amongst them.
Councilman Mullin questioned whether the online entities had removed Anaheim hotels from
their sites as they had done to South San Francisco Hotels.
City Attorney Mattas advised that the online entities had not frozen out Anaheim hotels due to
the size of the market, which included high quantities of hotel rooms based on the Disneyland
attraction.
Mayor Addiego questioned whether the City would be giving up revenue if it applied this
interpretation prospectively.
City Attorney Mattas explained the ability to collect on the entire online booking fee accrued
upon the effective date of Measure O, or January 1, 2010. In short, the City would be giving
up the difference between the entire online booking fee and the room rate from the time the
proposed Resolution is adopted until such date, if any, that Council changed the interpretation
to include collection of TOT on the separate fees charged by online brokers.
Councilman Gonzalez questioned how long it would take the online brokers to reinstate South
San Francisco hotels in their inventories if Council ratified the interpretation.
City Attorney Mattas advised he had been told that reinstatement of South San Francisco
hotels would take anywhere from a few hours, to at most a day.
Mayor Addiego questioned South San Francisco Hoteliers that were present at the meeting as
to the losses they faced as a result of being excluded from the sites since December 31, 2010.
General Manager of the Grosvenor and South San Francisco Conference Board Member Jim
McGuire advice the Grosvenor had lost a good deal of business. He explained bookings
through online brokers constitute 46% of his hotel's business on an annual basis. He noted,
however, that this percentage could vary amongst local hotels.
Executive Director of the South San Francisco Conference Center O'Toole advised that 6
local hotels average roughly 4400 rooms per month booked through online brokers.
SPECIAL CITY COUNCIL MEETING JANUARY 6, 2010
MINUTES PAGE 2
~`/lotior~- Councili~~un Garbarii~o/Second- Counciimun ~'onzalez: to approve Resolution No.
1-2010. Unanimously approved by voice vote.
3. ADJQU~~- Y~ENT
Being no further business, T~layor Addiego adjourned the meeting at 3:50 P.T/1.
Submitted by:
.._.....
Krista~(~11' rson,
Cit-y`Clerk, 'y of Sout San Frar_:,isco
Approved by:
N. Addi~goy
~ City of South San F Cisco
SPECIAL CITY COUNCIL MEETING
MINUTES
JANUARY 6, 2010
PAGE 3