Greetings:

I wanted to run these circumstances and possible solutions past this learned group.

Background:  A cottage industry of sorts has developed in my municipality, commonly referenced as "crash pads."  These are largely residences in which rooms are rented to U.S. government employees on a daily basis ... usually TDY ... and usually for more than 30 days, with an average stay of 4 mos.  The rental rate is typically identical to the federal TDY rate.  The residences rented are typically 3 bedroom, 2 bath, 2 car garage structures with a dining area, a kitchen and living area (i.e. at least 5 rooms, some for communal use).

The municipal code defines a hotel as:

"[...] any building or buildings, structures, trailers or other facilities in which the public may, for consideration, obtain sleeping accommodations in which five (5) or more rooms are used for the accommodation of such guests whether such rooms are in one or several structures. The term shall include hotels, apartment hotels, motels, tourist homes, houses or courts, lodging houses, inns, rooming houses, trailer houses, trailer motels where bed space is rented to individuals or groups, apartments not occupied by 'permanent residents,' and all other facilities where rooms or sleeping facilities or space are furnished for a consideration. The term shall not include hospitals, sanitariums or nursing homes."

The municipal code defines permanent resident as "any occupant who has or shall have the right of occupancy of any room or rooms in a hotel for at least thirty (30) consecutive days during the current calendar year or preceding year."

A Task Force was developed to make recommendations as to permitting and regulation of these "crash pads" that have been in existence and use for years.  The Task Force is recommending a "service fee" of 6% of the daily rental rate.

My initial thoughts were merely to assess the hotel tax to the crash pads.  However, it is my understanding that federal employees under these circumstances are exempt from a hotel tax.

Under the municipal code the "operator shall be responsible for the collection of the tax from the occupant and shall liable to the city for the tax."

My second thought was to assess a fee equal to the desired 6% directly to the property owner based upon the owners voluntary decision to utilize the residence as a crash pad.  No such fee would be assessed or collected in the event that residence ceases to be used as a crash pad.

I am aware that generally speaking a tax is a compulsory payment levied by the government on its citizens and various business firms and a fee is a voluntary payment to the government for the special services rendered by it in the public interest.

I am also aware that Title 68 O.S. section 2701, et seq., particularly section 2705 require voter approval for a taxing ordinance.

Questions:

1.   Can the fee as proposed be levied absent a vote?
   

2.   Is any such fee in actuality a tax, or will be viewed by the Courts as a tax?
   

3.   Does a crash pad not meet the current definition of a hotel under the municipal code definition?
   

4.   If federal employees are exempt from such tax will terminology as a service fee be sufficient to avoid he exemption (I am told that U.S. government personnel assert that it is)?  If not, do I need something more?
   

Thank you all very much.

Michael T. Beason, OBA #18535
City Attorney - Altus
509 S. Main St.
Altus, Oklahoma 73521

Fees are voluntary in that they are exchanged for  a service  and no one is compelled to apply for that service. So, if this is to be a fee, what did your city do to earn it? Also fees are to essentially compensate the city on a break even" basis. If you are making a profit, it is not a fee. 1)Therefore, and as described, I would say no vote, then no fee. 2) I think the courts would consider it a tax. 3) if you have defined a permanent resident as one who is present or has the right to be present for 30 days, and the Crash pads are normally 120 day rentals, your definition just killed your argument. Granted, you may want to amend your ordinance - if there is the political will to do so

4. I am not in a position to address this last question.

Mike Vanderburg
Ponca City

From: Oama [mailto:oama-bounces@lists.imla.org] On Behalf Of Michael Beason
Sent: Monday, February 24, 2020 4:02 PM
To: oama@lists.imla.org
Subject: [Oama] A Tax, a Fee and Levying by Ordinance

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Greetings:

I wanted to run these circumstances and possible solutions past this learned group.

Background:  A cottage industry of sorts has developed in my municipality, commonly referenced as "crash pads."  These are largely residences in which rooms are rented to U.S. government employees on a daily basis ... usually TDY ... and usually for more than 30 days, with an average stay of 4 mos.  The rental rate is typically identical to the federal TDY rate.  The residences rented are typically 3 bedroom, 2 bath, 2 car garage structures with a dining area, a kitchen and living area (i.e. at least 5 rooms, some for communal use).

The municipal code defines a hotel as:

"[...] any building or buildings, structures, trailers or other facilities in which the public may, for consideration, obtain sleeping accommodations in which five (5) or more rooms are used for the accommodation of such guests whether such rooms are in one or several structures. The term shall include hotels, apartment hotels, motels, tourist homes, houses or courts, lodging houses, inns, rooming houses, trailer houses, trailer motels where bed space is rented to individuals or groups, apartments not occupied by 'permanent residents,' and all other facilities where rooms or sleeping facilities or space are furnished for a consideration. The term shall not include hospitals, sanitariums or nursing homes."

The municipal code defines permanent resident as "any occupant who has or shall have the right of occupancy of any room or rooms in a hotel for at least thirty (30) consecutive days during the current calendar year or preceding year."

A Task Force was developed to make recommendations as to permitting and regulation of these "crash pads" that have been in existence and use for years.  The Task Force is recommending a "service fee" of 6% of the daily rental rate.

My initial thoughts were merely to assess the hotel tax to the crash pads.  However, it is my understanding that federal employees under these circumstances are exempt from a hotel tax.

Under the municipal code the "operator shall be responsible for the collection of the tax from the occupant and shall liable to the city for the tax."

My second thought was to assess a fee equal to the desired 6% directly to the property owner based upon the owners voluntary decision to utilize the residence as a crash pad.  No such fee would be assessed or collected in the event that residence ceases to be used as a crash pad.

I am aware that generally speaking a tax is a compulsory payment levied by the government on its citizens and various business firms and a fee is a voluntary payment to the government for the special services rendered by it in the public interest.

I am also aware that Title 68 O.S. section 2701, et seq., particularly section 2705 require voter approval for a taxing ordinance.

Questions:

1.   Can the fee as proposed be levied absent a vote?
   

2.   Is any such fee in actuality a tax, or will be viewed by the Courts as a tax?
   

3.   Does a crash pad not meet the current definition of a hotel under the municipal code definition?
   

4.   If federal employees are exempt from such tax will terminology as a service fee be sufficient to avoid he exemption (I am told that U.S. government personnel assert that it is)?  If not, do I need something more?
   

Thank you all very much.

Michael T. Beason, OBA #18535
City Attorney - Altus
509 S. Main St.
Altus, Oklahoma 73521