Ojai City Council Special Meeting

public comment, which is a little different than our last public hearing. And then following public comment, we will allow the City to provide rebuttal arguments, the appellant to make their rebuttal arguments, and then we'll open it up for Council questions before we close the public hearing. I would say that while our procedures contemplate questions will occur after the end of the presentations, if the presenters are comfortable taking questions during the presentation, I also don't object to that.

But I do want to be mindful of the fact that if they have a prepared presentation, that it can be helpful to let them get through that before we open it up for questions. And then following council questions, we'll close the public hearing and then move into council discussion and deliberation before closing out each matter. And there will be two separate hearings.

The first one on the agenda is for the Sunido Inn, and then the second one is for Casa Ojai Inn. Are there any questions about that? Go ahead.

If there is similar content either from the city or the appellant in principle, not in detail, that is the same for both hearings, might we be able to offer either the city or the appellant to say there's no need to repeat yourself if something that's clear and understood?

I would say that's fair. I think instead of presenting the exact same information again, that it would be appropriate for them to refer to their previous presentation.

Thank you.

That will move to ex parte disclosures.

I have something funny, which is in 2012, I designed a website for Mr. Jeffrey Welts, who is here in the piece. So that was a long time ago, feels like ancient history, but there it is.

And one other thing I will disclose on behalf of all of Council is that all of Council did receive some communications from the appellant. I think he's aware that those would need to be disclosed as ex parte communications. We did share those with OMLO for purposes of ensuring that there's fair due process on both sides.

And we did receive all, I received that. I assume everybody did. Any other ex parte communications?

When this first came up, I think in September of last year, I did get an email from Mr. Larner. I do not remember what it said other than, we have a problem here. And I did not respond and or have any communication from them because one of the properties is in my district.

Okay, so then shall we open with the city staff presentation? And I would ask Mr. Montgomery to use the timer. Yes, 30 minutes. Okay. Thank you.

Would it be preferred for me to sit here and speak?

Whatever is easier for you, I think.

I think where you're sitting is fine.

Yes. Yeah.

Good evening, Mayor, Mayor Pro Tem, and Council Members. My name is Chelsea Ballot with Olivares-Madruga Law Organization. Together with my colleague Shelly Preissler, we are presenting City Staff's argument that the tax collector's determination dated April 8th of 2025 should be upheld, assessing $11,423.37 in tax and penalties against Cameron Lardner, the appellant and operator of the Sioux Nido Inn, Located at 301 North Montgomery Street in the City of Ojai, a copy of the tax collector's determination is included in the administrative report as attachment I.

This argument begins with a history of the City's transient occupancy tax. I'll then provide a factual background leading up to this appeal, and then finally an assessment of the appellant's arguments. The City is authorized under California Revenue and Taxation Code Section 7280 to impose and enforce a transient occupancy tax on hotels located within the City.

The City's uniform transient occupancy tax codified in Title 8, Chapter 1, Article 4, and the Ojai Municipal Code was first adopted and imposed in 1971 at a rate of 10%. In March 2020, City voters elected under Measure C to increase the tax to 15%, And to expressly confirm that the definition of rent shall include resort fees, cancellation fees, and parking fees, and other fees tied to occupancy consistent with the City's longstanding interpretation of rent and tax assessment methodology.

As amended by Measure C and reflected in Ojai Municipal Code Section 8-1.407, the City's definition of rent is, in part, the consideration charged, whether or not received, for the occupancy of space in a hotel, inclusive of resort fees, cancellation fees, parking fees, and other fees tied to occupancy of a space in a hotel. I would like to quickly mention that any code section I refer to is a reference to Title 8, Chapter 1, Article 4 of the Ojai Municipal Code, a copy of which is included in the Administrative Report as Attachment O.

A copy of the March 2020 election results and the certifying resolution adopted April 14th of 2020 is also included with the report as Attachment A. The Sunido Inn is a hotel as that term is defined in Section 404. The appellant is a hotel operator as that term is defined in Section 408. Pursuant to sections 410 through 419, the appellant is responsible for collecting 15% tax on all rent-charged transient guests, holding the collected tax in trust for the City, and reporting and remitting these taxes to the City on a quarterly basis.

The TOT is a significant portion of the City's revenue and failure to collect required tax undermines the City's financial stability and hampers the City's ability to achieve strategic goals. The City's Finance Department is responsible for monitoring and enforcing the City's Uniform Transient Occupancy Tax. The Signorio Inn was randomly selected in 2024 for a compliance audit for its TOT payments from January 1st of 2021 to March 31st of 2024. HDL, the city's auditor, issued the audit findings on October 17th, 2024, finding the appellant owed $1,650.26 in TOT, Because approximately $11,000 in deposit forfeiture fees were charged to guests but were not taxed.

A copy of these audit findings is included in the report as attachment B. Due to Sunido's failure to collect and pay tax on deposit forfeiture fees, the audit found that Sunido owed an additional $330.05 in penalties. and $103.83 in interest pursuant to the city's penalties and interest sections at 420, 421, and 423. The audit findings made several findings, but the appellant only disputed the first and second finding. The first finding identified a discrepancy between the appellant's reported taxable rent and overall rental revenue and the appellant's accounting systems and or third-party revenue reports. The second finding identified deposit forfeiture fees that were omitted from taxation despite Qualifying as rent.

The appellant provided HDL additional information to address the discrepancies under Finding 1, but disputed and asserted his right to appeal Finding 2, arguing that deposit forfeiture fees are not rent and are therefore not taxable. On January 14th, 2025, HDL sent a revised audit findings incorporating the information the appellant provided to resolve the discrepancies under Finding 1, Reducing the amount of uncollected taxes to $1,450.56, $301 in penalties, and $325 in interest. A copy of the revised audit findings is included with the report as attachment D.

On January 29, 2025, the appellant emailed HDL to dispute Finding 2, arguing that deposit forfeiture fees are not taxable rent, requesting a hearing, and attaching a statement describing why the appellant believed the identified transactions were not taxable. The email and statement are in the report as attachments, E and F, respectively. A hearing was scheduled for February 27th of 2025, at which the appellant appeared in person, presented in support of himself for over two hours, and entered 11 multi-page exhibits, which are attached to the Administrative Report as Attachment H.

These exhibits overlap with the appeal hearing for the Casa Ojai Inn, which the appellant also operates. Please be aware that appellants' exhibits in Attachment 8, Exhibit Numbers 1, 2, 3, 4, and 6 include incomplete or incorrect quotes of the Ojai Municipal Code Sections 407, 410, 411, and 412, and or include amalgamations of law. On April 8th of 2025, the tax collector issued a determination upholding the revised TOT audit findings and $1,630.67 in tax and penalties, $549 of which the appellant agreed to pay for finding one regarding the discrepancy.

The tax collector waived all penalties and interest assessed for Finding 1, but only waived the interest assessed on the unpaid balance for Finding 2. Again, the tax collector's determination is included with the administrative report as attachment I. The appellant requested City Council review for the determination on April 23rd within the 15-day appeal window under Section 429, seeking to appeal both the tax collector determination and perceived procedural and due process issues leading up to and during the February hearing, and a hearing was thereafter scheduled for September 16, 2025, at the appellant's request. Copies of the appellant's appeal request and the due process complaints are included as attachments J and K.

Although Section 430 only requires five days notice, notice for the September 16, 2025 hearing was sent to the appellant 12 days in advance of this hearing, and it directed the appellant to submit any supporting materials for council consideration on September 10. However, the appellant did not submit any documents until the afternoon on September 16. Hours before the hearing was scheduled to begin, citing the inability to review the documents and seeking to adopt citywide hearing procedures, the City Council voted to continue the hearing.

After adopting hearing procedures on April 14th of 2026, the City scheduled this appeal hearing for today's date. The appellant's challenge to the tax collector's determination consists of three main arguments, each of which fundamentally misinterpret the City's Uniform Transient Occupancy Tax Code and complicates the audit process. First, the appellant argues that deposit forfeiture fees do not fall within the City's definition of rent.

Second, the appellant argues that the city has no authority to collect uncollected taxes from a hotel operator. And third, the appellant argues that the audit should have been based on transaction level records. I would like to note that the appellant previously argued against the hearing procedures and due process requirements leading up to and during the February 27, 2025 hearing and leading up to the September 20, 2025 hearing. However, the appellant does not raise this argument in the briefs and evidence submitted for today's hearing.

Appellant's first argument that deposit forfeiture fees do not qualify as rent ignores the definition of rent approved by voters pursuant to Measure C and relies on incorrect interpretations of the definitions set forth in the City's Uniform Transient Occupancy Tax Code. The term rent is defined in Section 7 to mean, in part, this consideration charged, whether or not received, for the occupancy of space in a hotel, inclusive of resort fees, cancellation fees, parking fees, and other fees tied to occupancy of a space in a hotel.

Cancellation fees are explicitly included in the definition of rent under Section 407, which are imposed when a transient cancels their reservation or does not show up, forfeiting their right to occupy a room at the hotel. Upon cancellation, any entitlement or right to occupy is revoked and the transient must pay a fee to the hotel operator. Similarly, when a transient makes a deposit and prepays for part or all of their future occupancy but does not follow through with a reservation, any right to occupancy is revoked and the deposit is forfeited to the hotel operator.

Cancellation fees and deposit forfeiture fees are both taxable rent because they are related to the right to occupy a room. Both are imposed when a right to occupancy is revoked and are therefore tied to occupancy and within the definition of rent. Therefore, the plain language of the OMC clearly contemplates deposit forfeiture fees as rent refuting the appellant's argument.

The appellant also argues that including deposit forfeiture fees as rent unlawfully expands the definition of occupancy. However, the definition of occupancy includes not only the actual use or possession of a room, but also the right to the use or possession of a room. Regardless of whether reserved rooms are later occupied, a forfeited deposit falls within the definition of rent and is subject to the TOT because a deposit grants an entitlement to occupy and is therefore tied to occupancy.

Appellant's second argument, that the city cannot collect taxes from hotel operators who fail to collect taxes, ignores the express responsibilities of operators under multiple TOT OMC sections, including section 412, which states that each operator shall collect the tax imposed by the provisions of this article to the same extent and at the same time as the rent is collected from every transient.

And section 425, which states that if any operator shall fail or refuse to collect the tax and to make within the time provided in this article any report and remittance of the tax or any portion thereof required by this article, the tax collector shall proceed in such a manner as he or she may deem best to obtain facts and information upon which to base his or her estimate of the tax due.

The OMC is clear that hotel operators must collect the tax from each transient and are subject to enforcement should they fail or refuse to do so. Furthermore, the OMC does not require the City to pursue payment from transients or prevent the City from pursuing the operator for taxes owed as provided in Section 411. Adopting the appellant's interpretation would ignore the plain meaning of the Ojai Municipal Code and would make the audit findings unenforceable, overlooking the City's duty to enforce its own laws.

Lastly, appellant's third argument is that the audit should have been based on transaction level records, otherwise known as folios. To be clear, the appellant is not arguing that he paid taxes on deposit forfeiture fees. Therefore, this argument is irrelevant, absent evidence that the audit overlooked the payment of TOT on these fees. Notwithstanding this statement, I invite the City Council to review the series of events detailed in the summary for finding one in the audit dated October 17, 2024, included with the agenda report as attachment B.

In the summary, HDL explains that it discovered a discrepancy between reported taxable rent and rental revenue in a trial balance the appellant provided for the audit. The summary goes on to say that, quote, the auditors gave the hotel ample opportunity to provide evidence to show the discrepancy was incorrect, but the hotel was unable to provide such evidence.

But after receiving the October 17, 2024 audit findings, the appellant did provide additional records which informed the revised audit findings dated January 14, 2025. The email included as attachment C details this exchange between the appellant and HDL. Based on this summary and the email exchange provided in Attachment C, the appellant was clearly afforded the opportunity to provide records to HDL to inform the audit, and HDL did request and was provided individual folios, which provide a detailed ledger of charges and payments during guest stays.

If the appellant remained unsatisfied with the audit findings, he had ample opportunity to provide the transaction-level records he now argues was required for the audit. For this reason and because the appellant did not raise this as an issue at the February 27, 2025 hearing, appellant's argument that the audit required transaction-level records or that he can now provide those records cannot stand.

Please be aware that Keri Calloway, Audit Manager with HDL, is available to answer any questions the City Council may have regarding the audit process and methodology. At this time, City staff recommends that the City Council independently review, consider, and analyze the administrative report, the information presented, oral and written testimony by all parties and their witnesses, and the record, and make a decision to uphold the tax collector's determination dated April 8, 2025, which held the TOT and penalties from the revised audit findings dated January 14, 2025, were properly assessed against the appellant.

I reserve the remainder of this time allotted to answer any questions from the Council or for Council to ask any questions to HDL with Carrie Calloway regarding the audit process or methodology. Thank you.

I do have a question, and maybe this is the right time or the wrong time. So when we look at, I'm looking at, this is page 7 of the large packet, but this is the section 8-1-407 where the language which you read, inclusive of resort fees, cancellation fees, parking fees, and other fees tied to occupancy of the space in the hotel. I'm asking a comparative question, so if it's inappropriate, let me know. Do other hotels question this kind of charge on these sort of items, other hotels that you also in the area work with?

Does that make sense, what I'm asking?

Yes, it does. So we have not done another TOT hearing for any other hotels in the area.

I guess I'm asking if they pay them. That's what I'm sort of asking. In other words, if we're talking about like a cancellation fee, the way we're talking about right now, do other hotels pay those fees?

That might be a question for Brenda. Yeah. Yes,

those are paid through, those items are taxed.

Right, so other hotels are paying them is what I'm asking and you're saying yes.

Yes.

Okay, thank you. Any other questions? Thank you. That was clear. OK. We'll move on to the appellant presentation. Mr. Larner, if you'd like to come up. Thank you.

Hello. Thank you for allowing me this chance to speak. I'd like to start with a procedural objection that I'd like to read into the record. Dear Mayor and Council Members, before I proceed on the merits, I need to preserve a threshold procedural objection. I submitted written procedural materials challenging whether the tax collector determinations are properly before the Council at all.

I understand those materials were not provided to Council. and may not be considered because the City Attorney has characterized them as late submissions. I object to that exclusion. These materials are not mere late merits evidence. They are threshold objections concerning notice, finality, hearing access, due process, and whether the tax collector process complied with the OMC.

The core procedural problem is this. I first requested review of the CASA audit findings in December 2023, and then expressly confirmed my hearing request under OMC 8-1427. Yet the City did not promptly provide the tax collector hearing. Instead, City officials later delayed or conditioned hearing access by telling me I needed to file a City form. and remit the assessed amount on my audit findings before a hearing would be scheduled.

That requirement does not appear in the OMC Sections 8-1427 or 8-1428, which are the governing sections for hearings, tax collector hearings. Those sections provide that an operator may apply in writing for a hearing. That is all. That the tax collector shall give notice of the hearing and that the amount is not payable until after the tax collector hearing determination, unless an appeal is taken.

So, before Council reaches the tax merits, I ask Council to address whether this first-tier tax collector process was procedurally reliable enough to affirm a hearing right is not a meaningful right if access to the hearing is delayed or conditioned on non-OMC requirements. By OMC, I refer to the Ojai Municipal Code for Transient Occupancy Tax, especially payment of the very assessment being disputed.

I therefore request that Council either receive and consider my written procedural submissions before proceeding to the merits, continue the hearing long enough for Council to review them, or state on the record that Council is declining to consider them and identify the authority for doing so. I also object to being required to use my limited merits presentation time to orally reconstruct a written procedural motion that staff or council decline to provide to the decision maker, the council.

With that objection preserved, I ask for a ruling before I proceed.

Question, are you speaking about the interaction with Mr. James Vega in 2019?

I am speaking of the pre-hearing motion that I submitted to Council via the City, Ms. Burgess and City Clerk. This is a multi-page, 40-plus points of procedural defects, due process violations, or due process issues, and fair notice concerns.

I would love to hear from my colleagues. I'm not seeing the due process problem and would like to proceed, but I'm willing to hear your thoughts.

I think we should hear from the attorney as to whether it's appropriate for us to receive those materials.

So, pursuant to your hearing policies, quasi-judicial hearing policies that were adopted in March or early April, The requirement is that if an appellant is going to submit written evidence as part of their appeal, that that needs to be submitted in advance. And so where notice of a hearing is provided, I believe it's at least 14 days in advance, then the written materials are generally required to be submitted at least 10 days in advance of the hearing.

In this case, we did allow a shortened time period to produce those because 10 days before the hearing fell on a Saturday. So, Mr. Lerner had inquired about this deadline in advance of that deadline, and we let him know that we would allow him until noon on Monday. which I believe was May 4th, to submit those written materials. And then we actually ended up, because there were some technical difficulties, I believe his submittals came in shortly thereafter.

And we did advise him that materials that were submitted after that deadline would not be presented to council for consideration. So, whenever he did submit additional documents after that deadline, I did inform him that, you know, we would not be forwarding those on to Council with the rest of his submissions, but that he would have an opportunity to raise these objections in the meeting, and so I think for purposes of You know, this objection, your procedures do not require you to rule on evidentiary objections. You can hear them and proceed with the hearing. You don't have to necessarily rule on those objections. But if you feel that you need additional information, you know, above and beyond the information that was submitted as part of the proceeding, you always have the opportunity to continue the hearing to a future date.

If I recall the last time when you were here when we were going to do this and it was brought to your attention and ours that you were turning in information past the deadline, so it's something that you were aware of. And so I don't understand why, if you knew the last time, why you're trying to put it in this time when you know that there's a time frame.

I'd be happy to explain. Please. So, first and foremost, the information that I'm submitting is above and beyond the hearing apparatus and the question of the taxpayer determination. What it is is related to the tax determination and the tax collector hearing, but it is an account of the procedural defects from the moment that I got my business license through the hearing process.

And that whole scenario, all of the different elements, like not having a top certificate, not getting a hearing when requested. I mean, I can read them to you formally so that you have them on the record. I prepared a statement like this subsequent to my tax collector hearing. After I received the determination, I wrote a brief and a complaint, and I addressed it to the Council.

I did not send it directly to the Council for the City's instruction. I sent it to the City, I sent it to the City Manager, the City Assistant Manager, the City Clerk, and I requested that it be submitted to the Council for reading. Later, I learned when I had some ex parte communications with council members that they had never received that at the beginning of my hearing.

Without any, I had no time to, I came into the hearing thinking that that will have already been processed, read, understood, and yet I came to the hearing to learn that it was never received. I submitted it to the council. That is a devastating procedural defect and a due process issue that needs to be addressed before we can entertain an evaluation of the merits of the tax collector hearing of which I was complaining the process, for which I was complaining the process. So it's a chicken and egg issue.

So I'm curious how that information was different than some of, because you included in your documents, emails, some of your concerns. And I did actually read every page of those. And there were several emails that you were, between Mr. Vega, between different James, between different members of the team, that where you expressed Thank you all for joining us.

There were questions about the nature of the hearing, procedural guidelines. There was a new resolution that I had to process. I had questions about the resolution. I went back and forth with the City Attorney to iron out those questions, and then that alone took several days. Meanwhile, I'm trying to compose all of my materials and information so that I can make an organized casework presentation on the merits, and then once I had submitted those, I didn't want to I didn't want to use my time to work on my procedural defect, because I had already submitted that.

And I wanted to get my merits in, because if I didn't get my merits in, then I would be in a very bad situation here before you. So I barely was able to reach the deadline. And then once I did that, then I sought to work on my procedural defect motion. So it was just the natural and only You know, course of action that I had to provide these, you know, consider I had already sent the complaint for procedural defects. It was never heard. I don't know if you even after I complained about that, if you ever received it. Maybe you can tell me if you received that initial.

It would have been in April, May of 2025.

I'm having the feeling that we have enough information to proceed.

Yes, please. I have a procedural

question.

So he's about eight minutes into his presentation, and I'm just wondering if this is part of his 30 minutes, or if this is all kind of, you know, a prelude argument where we, I mean, I'm not sure exactly how long his argument on the merits is going to take.

I would like the full time and I would not want this to be subtracted from that.

So we did advise Mr. Larner that any procedural objections he would like to raise that he could raise as part of his 30-minute time period. I will say that in council's discretion, if you would like to provide him, I think we've spent roughly eight, not quite eight minutes talking about this. If you wish to provide him with some extra minutes, you can. You would need to offer the same thing to the OMLO team.

Since they've completed their initial presentation, I think we would, You know, just ask if they have any additional remarks before we move to public comment. But that's in the discretion of City Council.

Did you have a thought, Mr. Whitman? In other words, if we were to proceed now with the merits of the case to start it at 30 minutes and go forward?

Well,

I'm

thinking about the idea that our city attorney says that Mr. Larner was informed that the 30 minutes would be inclusive of procedural arguments. I just wanted to make sure that that wasn't going to become an issue. If that's what our rules are, then I think we should follow them.

If there's not a procedural objection that we want to dig into, then I would suggest that you go into the merits of the case, but I'm happy to hear from my colleagues if there is. Then I, oh please, go ahead.

I'm inclined to separate the due process issue from the merits, although I do understand that that was explained prior. But I think that due process is different than merit, and I think that it is reasonable to raise a due process issue. So for that reason, I would not have a problem and would be in favor of returning the seven minutes, understanding that I don't mean to overrule our city attorney. It just seems to me that they are two different things and I would like to afford.

As far as I can, that having been said, that is simply my sort of take on it. Seven and a half minutes is seven and a half minutes. It's not, and I certainly agree that we would have to accommodate opposing. I would

happily offer the seven and a half minutes and that we proceed. Any objections to that? Okay.

Okay, thank you.

Please proceed.

Okay, just to be clear.

Now your time is running.

Okay. Okay. Well, I understand and I object to that this forces me, you extended me the time and I appreciate that, but I have not had a chance to read a summary of my motion for pre-hearing threshold. Evaluation, and thus I haven't been able to put the core procedural defects in the record, which I will do so now really quickly. Delayed access to hearing, I'm sorry, delayed access to the tax collector hearing, combined tax collector hearing officer role, pre-hearing recommendation of liability, inadequate notice of adversarial format, no reason determination, premature enforcement and portal barriers, The Resolution 2026-9 does not retroactively cure the February 2025 tax collector hearing or the September 2025 appeal process. It is a step toward clearer procedures going forward, but any remanded hearing should be governed by Resolution 2026-9 and any necessary supplemental procedures provided far enough advance For the operator to meaningfully comply, including participant disclosures, burden of proof, exhibit rules, witness procedures, time limits, and any deviations from the resolution.

I do request that you address the threshold procedure objection before the hearing that you have declined. If you decide to proceed with the merits, I preserve the procedural objections and issue a written If council proceeds to the merits review, I ask that you preserve the procedural objections and issue a written decision explaining how each threshold objection was resolved. Hold open or supplement the record as necessary for material CPRA records and missing record evidence relevant to the consistency, fair notice, and audit methodology.

I also have a question based on your interactions before the hearing.

Again,

I didn't quite understand when witnesses would be allocated or called. I did not recall that in your report.

I believe the letter that we sent a couple of weeks ago did provide that witnesses could be called during your 30-minute.

Okay, so it's during my 30 minutes. All right, thank you. All right, so I'll proceed with the merits. I respectfully submit this forward to orient you, orient your evaluation of the briefs, analysis, and evidence filed in connection with my appeal. To the tax collectors' determinations for Casa Ojai and Sunido Inn, I am combining the two here for expediency. The pages that follow present detailed legal and evidentiary arguments. This forward summarizes the core issues so that Council may evaluate those agreements with a clear framework in mind.

Do I understand that the Council did receive my casework and has process read the casework? I do not come before you to deny that TOT is owed on room rent, nor to challenge the City's authority to conduct audits. I conceded a specific identified reporting error for Sunido, and I paid for it. What I contest is whether the methodology used by the tax collector to assess the disputed amounts reflected To assess the disputed amounts reflects the law as written, whether the audit findings evidence meets the standard that the law requires, and whether the enforcement process afforded the basic fairness that any administrative proceeding demands.

Dear Mayor and Council Members, Before I address the specific audit findings, I want to be clear about why I am here. This appeal is not about avoiding the roughly $13,000, $14,000. I have spent far more time, energy, and business attention to this matter that would make sense if this were merely about avoiding a payment. I am not here because I object to fulfilling my duties as a hotel operator. I understand that operator obligations under the City's Transit Occupancy Tax Coordinate, and I have always tried to comply with those obligations in good faith.

I am here because this has become a matter of principle, process, and the rule of law. The City is asking operators to comply strictly to its taut rule. While the City itself has not consistently followed, explained, or demonstrated command of those rules, the City has imposed harsh retroactive consequences based on interpretations that were not clearly stated in the ordinance, not published in guidelines, and not consistently communicated to operators.

That is deeply troubling. The Ojai Municipal Code imposes the tax for the privilege of occupancy. Rent is the measure used to convert that occupancy into a monetary tax base upon which tax can be computed, 15%. But rent cannot be interpreted so broadly that occupancy becomes meaningless. Nor should the City impose penalties on an operator for failing to follow an interpretive methodology that was not clearly set out in the Code and was not provided through clear, prospective guidance.

It's also deeply troubling to me to be asked to pay tax debt that the Code identifies as the debt of the transient. particularly where the tax was never collected from the train. And particularly because the city requires the operator's duty and entrusts in the operator interpretive, implicit interpretive role in determining how to apply the tax. And that's especially true when the city has not provided guideline per se.

The code distinguishes between tax owed by a transient and tax collected by an operator but not remitted. And I want to emphasize that. There is a distinction in the code that is very clear between tax owed by the transient and tax collected by the operator but not remitted. I do not believe the City can simply collapse that distinction after the fact and treat uncollected guest tax as operator debt. After all, I think it's Section 410 essentially says that the transient's debt can only be extinguished by payment to the operator. It does not give the City the right to extinguish the transient's debt by collecting it from the operator.

The only time it has that right is if the operator elected the tax and didn't remit it. And that's why Section 438 specifically says the tax is the debt of the transient, and collected tax is the debt of the operator. Collected unremitted tax is the debt of the operator. So, the question before Council is not merely whether it is administratively convenient to uphold the tax collector's determination. The question is whether the City will apply its own ordinance as written, follow a fair process, and require evidence before imposing tax penalties and interest. If the City believes its ordinance should tax broader categories of hotel-related charges, it can clarify that ordinance prospectively.

My predecessor, Jeff Wells from OHG, said exactly this to the Council in 2019, and yet no prospective guidelines, no change to the definition of occupancy. But operators should not be punished retroactively for the City's failure to provide clear rules, fair notice, and consistent methodology. What I'm asking for is not special treatment. I'm asking for the City's top procedures and interpretations to align with the Ordinance's due process, fair notice, and basic evidentiary fairness. Council now has a choice. It can uphold the tax collector's determination as a practical matter, despite these defects, or it can insist that the City follow its own rules before enforcing them against others.

I respectfully ask Council to choose the rule of law. Now I'll proceed to the foreword that I did submit to Council, although one day late, which summarizes my overall brief, because there's no way I could read through all of that brief, and I'm hoping and relying on the fact that you have read through it, or at least familiarized yourself with it. The ordinance taxes occupancy, not hotel revenue generally.

The Ojai Municipal Code imposes this taut on the privilege of occupancy. The use, possession, or right to use or possess a hotel room for dwelling, lodging, or sleeping. Not a freestanding tax base. This structure matters because it means not every charge in a hotel imposed on a guest is automatically taxable. Only those that constitute consideration for occupancy of space in a hotel for lodging purposes. That's the definition.

The City's audit methodology, as reflected in Auditor Communications, preceded in the opposite direction. It defined revenue categories from trial balance summaries and treated them as taxable rent. It assumed that gross revenue reported on trial balances should be taxed in its entirety, assuming that gross revenue is equal to rent revenue. It then took any deviance between those two balances and considered that amount taxable, regardless, without investigating the actual underlying data that resulted in that The correct approach under the OMC is to begin with occupancy, identify a specific transaction in which a transient paid for the right to use a room, and then determine whether the disputed charge was consideration for that occupancy.

The auditors applied informal tests not found in the ordinance. Anything room related, mandatory, cannot opt out, pass through charges, these were all identified by HDL auditors as their tests and their rules for determining whether a summary category would fall under tax. None of these appear in the OMC. All our charges are rent unless exempted presumptions.

When the operator, myself, directly asked what ordinance text supported those tests, no citation was provided. An assessment cannot stand on standards the ordinance does not contain. Measure C. Confirmed pre-existing methodology. Measure C, as the City stated earlier, does not expand the definition of the ordinance or the definition of rent. It clarifies and confirms the definition as the pre-existing tax methodology of the City.

Measure C amended the definition of rent to expressly include cancellation fees, resort fees, parking, and other fees tied to occupancy. The City now relies on this amended language To justify the disputed assessment. However, Ordinance 907, the ordinance that enacted Measure C, contains a dispositive preamble recital that constrains the reading. It says, whereas this ordinance clarifies the term rent and its definition consistent with the City's existing interpretation and method of assessment, and thereby confirms the existing applicable definition of rent. So in other words, the definition of rent didn't change.

They just added some clarifying details to it. So if an operator was doing his job, he could assume that the interpretive framework that he was using to determine whether something was taxable would be the same before and after Measure C, because according to this, it's the same meaning. And to continue and therefore confirms existing application of rent in a matter that is declaratory of existing law and the City's existing tax policy.

A declaratory confirmation amended does not change the law, it restates it. The City, therefore, cannot simultaneously argue that Measure C merely confirmed pre-existing methodology and use the amended language to assess charges that were not taxed under pre-existing methodology. Both cannot be true. And as I've provided to you in evidence, My predecessor, OHG, under Jeff Wells, did not tax for these items. We have folio data that I've provided to you demonstrating that cited charges or categories that were Thank you. Thank you, Mr. Chairman.

Numerous operators undergoing audits being assessed for these tax categories indicating that they believed that they were not taxable and that only after Measure C, after the audit, retroactively, were they being enforced, which is a due process issue. The pre-2019 and 2020 evidence is directly relevant here. Pre-Measure C hotel property management records show that pet fees, crib fees, cleaning fees, roll-away beds, and deposit forfeitures were not subject to TOT. That is evidence in your possession.

The prior operator, Jeff Wells, testified that he did not tax those categories because he did not interpret them as rent under the then-existing code, and his understanding was consistent with the City communications at the time, which I've provided to you, which focused the Measure C discussion on resort and amenity fees. Resort and amenity fees are not among the fees for which I have been assessed.

Not the ancillary categories now in dispute. In those categories, if those categories were not taxed before Measure C, they were not part of the existing methodology as stated in the ordinance and in Measure C ballot. Taxing them now using Measure C language is not confirmation, it's expansion. And if it is expansion, it must be evaluated as such, narrowly with ambiguity resolved against the taxing authority as deemed per law, and without retroactive penalties imposed on operators who acted consistently with prior practice.