BACKGROUND:
On August 17, 2022, the Planning Commission approved an amendment (96-220A) to Conditional Use Permit No. 96-220 to convert the existing 44-unit hotel (CCBC Resort Hotel) into a timeshare use. As a condition of approval, the property owner is required to enter into an agreement with the City for payment of in-lieu fees for the Transient Occupancy Tax (TOT) that is generated by the current hotel use.
DISCUSSION:
Under Chapter 3.24 (Transient Occupancy Tax), only the time-share units rented to non- owner transients would be subject to TOT, which would result in a loss of revenue to the City. The proposed Agreement would ensure that the City receives in-lieu fees equivalent to the TOT that would be received by the current hotel use and includes the following provisions:
1. Upon the approval of the Department of Real Estate and the sale of fifty percent (50% or seven (7)) of the available timeshare interests (14 of the existing 44 units), the owner shall remit a monthly payment of $4,330.54 to the City.
2. The monthly payment shall be subject to an adjustment, increasing or decreasing as applicable, effective at the beginning of the City’s fiscal year, which begins on July 1 of each year of this Agreement, and shall be adjusted annually by the Consumer Price Index for All Urban Consumers (CPI).
3. There shall be a ten percent (10%) late fee if the monthly payment is not received/postmarked by the tenth (10th) day of the month.
4. The agreement shall be updated to mutually determine the adjustment to the in-lieu fee when there is either subsequent conversion of hotel units to timeshare units and/or the twenty (20) additional timeshare units are built.
5. The covenants of the Agreement shall run with the land and be binding upon owner and each subsequent owner of the property and their successors and assigns.
In analyzing the average TOT received over the past four years, discounting the most severe year of the COVID-19 pandemic, the in-lieu fee was calculated using a 14/44 ratio of the average TOT.
FISCAL IMPACT:
There is no fiscal impact as the Agreement requires the owner to pay in-lieu fees in the amount of Transient Occupancy Tax the City would otherwise receive for use of the timeshare project as a hotel.