Agenda packet, regular meeting, first session — Citrus Heights City Council Meetings, March 24, 2022 (part 2 of 2)

Printed on Recycled Paper

TOT has been collected in Sacramento County at a rate of 12% for a number of years before the city’s incorporation. Following incorporation, TOT collected from transient occupancies within Citrus Heights no longer went to Sacramento County but were due to Citrus Heights

2. There are
currently no owners of short -term rentals submitting Transient Occupancy Tax to the city.

Consistent with the Municipal Code, TOT should be collected from STRs but has not been collected to date. Based upon the estimated number of STRs operating in Citrus Heights, TOT revenues are anticipated to be approximately $43,000 annually.

Collection of TOT from STR operators would be consistent with what is required for hoteliers.

Requiring STRs to pay TOT would provide equitable treatment amongst business operators relative to those that offer transient stays of less than 30 days. Hoteliers are advocates of having local gove rnments collect TOT from STRs to ensure that hotel operators are not placed at a competitive disadvantage. Hotel uses are envisioned as part of future economic development efforts in City Council approved Sunrise Tomorrow Specific Plan. No action related to the collection of TOT from STRs is required or being requested of City Council. Staff intends to work with STR online platforms on agreements for future TOT payment remittance.

Background and Analysis
The city has seen a significant increase in the n umber of STRs in the city. A few years ago, less than a handful of STRs were listed on the various STR platforms (Airbnb, VRBO, etc.). Based upon recent research into STRs, there are now close to 70 STRs listed as located in Citrus Heights.

Address Identification
The first step in understanding how STRs might be impacting a community is to be able to identify the properties by address. When utilizing online platforms the actual address of the property is not published. To obtain accurate address data, the city worked with a third party vendor that researches more than 25 platforms using a variety of methods (web crawling, artificial intelligence) to identify the location of a STR. Of the nearly 70 properties listed as being in Citrus Heights, 52 of the properties were able to be verified as an STR.

Calls for Service
Once the verified addresses of STRs were received, staff worked with the Police Department to review calls for service to the specific property. T he data indicated 25% of the 52 verifi ed properties had at least one call for service over a 24 month period. Five of the properties had three or more calls with one property ha ving 11 calls for service. Below is a recap of the service calls which occurred between 1/2020 through 12/2021:

o 7 of the 52 properties had 1 call for service
o 1 of the 52 properties had 2 calls
o 4 of the 52 properties had 3 calls
o 1 of the 52 properties had 11 calls
• TOTAL: 13 of the 52 properties had calls for service

2 Ordinance 1997-04
Agenda Packet Page 232
Subject: Business License Ordinance – Short-term Rentals Date: March 24, 2022

Page 3 of 5 ends

Printed on Recycled Paper

While this shows 25% of the properties were creating service calls, not all calls were able to be verified as caused by an STR tenant. The extreme case, the property with 11 calls, was verified to be related to STR tenants. Most calls for service were initiated by neighbors due to late night noise.

The Police D epartment is often faced with challenges when responding to call s for service at a STR. Generally, they are unaware which properties are STRs so issues are resolved one response at a time – through face to face communication with a short -term tenant, not the STR operator.

Obtaining contact information for STRs through business license applications will provide the Police D epartment the ability to reach out to the responsible owner and/or manager when a property rises to an excessive level. It is not uncommon for a STR property to be managed by a management company. By requiring a business license for STRs, this will help the Police Department speak with owners and management companies versus tra nsient tenants. Direct communication with owners and management companies is likely to prove more effective than dealing with transient tenants in reducing neighborhood impacts for properties that have calls for service.

Proposed Ordinance
At the study session in September 2021, staff presented the City Council with a variety of options and ultimately the City Council directed staff to prepare an ordinance to require STRs to obtain a business license. The City Council did not express interest in more def ined regulations or the requirement of any special permits. Based upon that direction, staff has prepared an amendment to the Business License Regulations that would define an STR and require operators to obtain a General Business License.

The STR General Business License would be the same process and fee as a traditional business license. The STR application would collect information on the STR operator so contact could be made more quickly if an enforcement issue arises. The application would also have the operator acknowledge they will collect and remit the required TOT which may be accomplished through a direct submission from an online STR platform.

As mentioned, the greatest number of calls for service are related to noise from parties. To discourage STRs to be used in this manner, the ordinance does have a stated limit of two guests per bedroom plus two additional guests between the hours of 10:00 pm and 7:00 am.

The proposed ordinance will require the STR operator to obtain a business license, the same requirement imposed on all business activities in the city. The STR license will carry the same methods of revocation and enforcement as other business types and the license may be revoked for failure to remit the required TOT.

Surrounding Jurisdictions
Staff surveyed surrounding jurisdictions and found most had specific regulations and special permitting processes for STRs including owner occupancy requirements, number of allowed rental days per year, limit on guests, etc. Below is a recap of the surrounding jurisdictions and their permit requirements for STRs:

Agenda Packet Page 233
Subject: Business License Ordinance – Short-term Rentals Date: March 24, 2022

Page 4 of 5 ends

Printed on Recycled Paper

Jurisdiction Requirement
Sacramento County Business License and Short-term Rental Permit Required Roseville Business License and Short-term Rental Permit Required Rocklin Short-term Rental Permit Required
Elk Grove Special Business License Required
City of Sacramento Short-term Rental Permit Required
Folsom None
Rancho Cordova None

Transient Occupancy Tax
Current regulations require Hotel
3 operators to impose and collect a 12% Transient Occupancy Tax (TOT) on the nightly rate of each stay and remit the TOT to the city on a quarterly basis. At this time, the only TOT being remitted is from the city’s sole motel. Although there are known STRs operating in the city, there are no STRs or similar lodging facilities remitting TOT. Through data collected from a third party, it is estimated there were 304 STR stays over a three month period (11/21 through 1/22) with an estimated rent collected for the period of $90,000

4. With
applying the TOT rate of 12%, expected TOT generated for that three month period would have been $10,800, or $43,200 on an annual basis.

While currently no STRs are remitting TOT, it is likely attributed to a lack of understanding of the requirement. The licensing requirement will provide the opportunity to inform the operators of their TOT obligation. The obligation to collect and remit TOT has been in place prior to incorporation and the proposed ordinance does not change this requirement. Regardless of whether the City Council adopts the proposed business license ordinance or not, operators of short- term rentals should be collecting and remitting TOT as required under the existing ordinance.

Collection of TOT from STR operators would be consistent with what is required for hoteliers.

It should be noted that while the proposed ordinance includes amendments to Chapter 86 (Taxation), the updates are for clarification purposes only. There are no new taxes proposed with the update.

Public Outreach
A number of outreach methods were used to engage the community on proposed licensing requirement. O utreach included the creation of a dedicated webpage for short-term rentals (www.citrusheights.net/str
). The webpage provides links to the proposed ordinance, a robust list of FAQs (Attachment 2). A number of social media posts helped get the word out and an article was included in the city’s March newsletter. The bigges t outreach came from a direct mail piece sent to the property owners of identified STRs. The mailer included information on the proposed changes as well information on tonight’s hearing.

3 The term hotel is defined as structure, or part of, which is occupied for lodging or sleeping purposes. The term is applied to inns, short-term rentals, motels, etc.
4 Data collected through Granicus services included the number of verified stays at properties which were identified on one or more of STR online platforms. The total rent was a calculation of multiplying the number of stays with the min. number of nights per stay and multiplying that number by the nightly rent.

Agenda Packet Page 234
Subject: Business License Ordinance – Short-term Rentals Date: March 24, 2022

Page 5 of 5 ends

Printed on Recycled Paper

Implementation
Should the City Council adopt the proposed ordinance, the licensing requirement would become effective May 14, 2022.

The City’s Business Licensing Division is prepared to administer the STR licensing upon approval by the City Council. Business Licenses are required to be updated on an annual basis.

There are no proposed changes to the required collection of TOT. Absent the proposed changes, STR operators would still be required to remit TOT to comply with the existing TOT ordinance.

Beyond that the licensing process provide s t he City the ability to communicate and educate operators on the requirement. As currently structured, TOT remittance is on the honor system and there is no mechanism in place in which the City would be notified of when a short-term rental is occupied.

At some point in the future should the City want to take a different approach, mechanisms are available. Some online platforms will include the TOT as part of the booking process. The platform then remits the TOT collected to the respective jurisdiction. The City intends to contact online STR platforms to ensure TOT is remitted consistent with agreements that other jurisdictions have with these businesses.

Following the first year of implementation of STR license requirement, staff will have a better understanding of any impacts TOT remittance may have on staff and can reevaluate and consider a number of options including:

1. Remain “status quo” (honor system) with payments received/processed through the Finance Department

2. Subscribe to third-party vendor for the processing of payments

3. Enter into an agreement with the online platforms who would include the TOT on each booking and would periodically remit collected TOT back to the City

It may be one or a combination of these options depending on what makes sense for efficiency and flexibility for STR operators, and for staff time.

Conclusion
The proposed ordinance will require STRs to obtain a business license, similar to any other business within the city. The information gathered from the license will provide the ability to have contact information for the STR operator (not always the property owner) should enforcement issues arise at the property.

Attachments:

1. Ordinance No. 2022_____ of the City of Citrus Heights, California, adopting changes to Title 22 (Businesses) and Title 86 (Taxation) relating to licensing for short-term rentals.

2. Redline of Changes

3. City of Citrus Heights FAQ’s Related to STRs (draft) Agenda Packet Page 235
1 ORDINANCE NO. 2022-___

AN ORDINANCE OF THE CITY OF CITRUS HEIGHTS
AMENDING CHAPTER 22 (BUSINESSES) AND CHAPTER 86 (TAXATION) OF THE MUNICIPAL CODE AND ADDING SECTIONS 22-451 THROUGH 22-460 REGARDING

SHORT-TERM RENTALS

The City Council of the City of Citrus Heights does ordain as follows:

SECTION 1. Chapter 22 “Businesses” of the Citrus Heights City Municipal Code are hereby amended to read as set forth below:

Sec. 22-69. - Exemptions.

A general business license shall not be required for and the provisions of this chapter shall not be otherwise applicable to, those businesses described by this section. Unless the context dictates otherwise, the uses, activities and facilities described by this section shall be ascribed those definitions for like uses, activities and facilities contained in the city's zoning code. The following businesses are exempt from the requirement to obtain a general business license:
(1) Financial institutions. Banks, savings and loans, credit unions, loan and similar financial institutions, as defined in California Business and Professions Code § 17351. However, this exemption does not apply to "check cashers," as that term is defined in California Civil Code § 1789.31, including but not limited to, engaging in the business operation of "deferred deposits" as defined therein.
(2) Residential facilities. The following types of residential facilities, as defined by the city's zoning code:
a. Apartments, rooming houses, duplexes, and other residential facilities in which living units are rented or leased solely on a term of more than 30 days; b. Residential care homes for adults or children; and
c. Family day care homes.
(3) Meeting facilities. Meeting facilities, as defined by the city's zoning code, and activities directly conducted by the organization that use the meeting facility. (4) Agriculture. The following agricultural activities are exempt: agricultural pursuits consisting of the growing of crops, raising of livestock, and dairying, including auxiliary and ancillary uses incidental to the operation of a farm or ranch, consisting of the purchase and storage of substances, materials, supplies, animal feeds and produce, and the marketing of farm products; provided, however, that a general business license shall be required in connection with any wholesaling, processing, storage or manufacturing use which involves assembly of the products of multiple farms or ranches by a cooperative or other business enterprise for marketing distribution.

SECTION 2. Chapter 22 “Businesses” of the Citrus Heights City Municipal Code are hereby amended to add the following as set forth below:

Attachment 1
Agenda Packet Page 236
2 SHORT-TERM RENTAL BUSINESS LICENSE

Chapter 22 Article IV

Sec. 22-451 – Purpose and intent.

The intent of this article to regulate short-term rentals in an orderly fashion and protect the public’s health and safety by establishing certain licensing standards pertaining to short-term rentals within the City of Citrus Heights.

Sec. 22-452 - Definitions.

The following terms, when used in this article, shall have the following meanings:

Guest means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a home shall be deemed to be a transient until the period of thirty days has expired unless there is an agreement in writing between the host and the guest providing for a longer period of occupancy.

In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of the ordinance codified in this chapter may be considered.

Home sharing means a living arrangement in which two or more unrelated people share a housing unit for a period of more than 30 days.

Host means the owner of the property on which the short-term rental exists or the agent authorized to operate the short-term rental.

Short- term rental means any residential dwelling located within the city that is rented in whole or in part on a short-term basis. A short-term basis is thirty (30) consecutive calendar days or less to the same person or entity and counting portions of calendar days as full days.

Short- term rental business license means the same as a general business license as described in Chapter 22 Article II.

Sec. 22-453 - Eligibility.

(a) Short-term rentals shall be permitted in a legally constructed living unit approved for occupancy including single-family residences, townhomes, and condominiums. For the purposes of this Chapter, a condominium is defined as a single, individually-owned dwelling unit in a multi-unit building in which the owner holds sole title to the unit, but owns land and common property (i.e. elevators, halls, roof, stairs, etc.) jointly with other unit owners, and shares the upkeep expenses on the common- property with them. This Chapter does not grant any permission that invalidates or supersedes provisions regarding short-term rentals within Agenda Packet Page 237
3 properties subject to the rules of a homeowners or condominium association.

(b) Accessory dwelling units constructed after January 1, 2021, inclusionary housing units, or other income-restricted housing units are prohibited from being used as a short-term rental.

Sec. 22-454 - Licensing Requirements.

(a) The host is required to obtain a City of Citrus Heights Short-Term Rental Business License before renting to any guest.

(b) Short-term rental business licenses shall be applied for and processed in the same manner as a City of Citrus Heights General Business License as stipulated in Chapter 22 Article II (General Business Licenses).

Sec. 22- 455 - Short-Term Rental Regulations.

(a) Short-term rentals shall not be used by more than two guests per bedroom plus two additional guests between the hours of 10:00 p.m. and 7:00 a.m. .

(b) Short-term rentals shall not adversely affect the residential character of the neighborhood nor shall the use generate noise, vibration, glare, odors, or other effects that unreasonably interfere with any person's reasonable enjoyment of his or her residence. To this effect, the short-term rental activity shall comply with all provisions of the City of Citrus Heights Municipal Code.

(d) The host shall fully comply with all the requirements of Chapter 86 (Transient Occupancy Tax) and any successor sections.

Sec. 22-456 – Fees and Penalties.

(a) The short-term rental business license shall be the same fee as a general business license and are subject to the same additional processing fee for late applications or late renewals as the general business license.

Sec. 22-457 - Expiration and Renewal.

(a) A short-term rental business license is valid upon issuance and shall expire one year from the date of issuance, or sooner if the person to whom the license is issued ceases operational authorized by the license or the license is revoked.

(b) A short-term rental business license must be renewed yearly.

Agenda Packet Page 238
4 (c) To renew the short-term rental business license, the host must acknowledge all payments for the required transient occupancy tax associated with the short-term rental has been remitted to the City of Citrus Heights as required by Sec. 86-107.

Sec. 22-458 - Transferability.

(a) The short-term rental business license may not be transferred to another person or property and does not run with the land. The short-term rental business license shall automatically expire upon sale or transfer of the property.

Sec. 22-459 – Revocation.

(a) The short-term rental business license may be revoked for failure to remit required transient oriented tax as outlined in Sec. 86.

(b) The short-term rental business license revocation shall occur as outlined in Sec. 22- 114 (Method of Revocation).

Sec. 22-460 – Enforcement.

(a) Failure to comply with any provision of this Chapter may constitute a violation.

SECTION 3. Chapter 86 “Taxation” of the Citrus Heights City Municipal Code are hereby amended to read as set forth below:

Transient Occupancy Tax

Chapter 86 Article IV

Sec. 86-101. - Short title.

This article shall be known as the uniform transient occupancy tax of the city.

Sec. 86-102. - Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Hotel means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy for lodging or sleeping purposes. This definition includes but is not limited to any hotel, inn, tourist home or house, short -term rental unit, motel, studio hotel, bachelor hotel, lodging house, roominghouse, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof.

Occupancy means the use or possession or the right to the use or possess ion of any room, or portion thereof, in any hotel for lodging or sleeping purposes.

Operator means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee or any other capacity. Where the operator performs his or her Agenda Packet Page 239
5 functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purpose of this article and shall have the same duties and liabilities as his or her principal. Compliance with this article by either the principal or the managing agent shall, however, be considered to be compliance by both.

Person means any individual, firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate or any other group or combination acting as a unit.

Rent means the consideration charged, whether or not received, for the occupancy of space in a hotel valued in money, whether to be received in money, goods, labor or otherwise, including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever.

Tax administrator means the city manager or the city manager's designee.

Transient means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of 30 consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of 30 days has expired unless there is an agreement in writing between the operator and the occupant providing for a longer period of occupancy. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to the effective date of the ordinance from which this article is derived may be considered.

Sec. 86-103. - Imposed.
(a) F or the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of 12 percent of the rent charged by the operator. (b) The tax constitutes a debt owed by the transient to the city which is extinguished only by payment to the operator or to the city. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shal l be due upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Tax administrator may require that such tax shall be paid directly to the Tax administrator.

Sec. 86-104. - Exemptions.

(a) No tax shall be imposed upon any person as to whom, or any occupancy as to which, it is beyond the power of the city to impose the tax provided in this article. (b) No exemption shall be granted except under claim therefor made at the time rent is collected and under penalty of perjury upon a form prescribed by the Tax administrator.

Sec. 86-105. - Operator's duties.

Each operator shall collect the tax imposed by this article to the same extent and at the same time as the rent is collected from every transient. The amount of tax shall be separately stated from the amount of the rent charged, and each transient shall receive a receipt for payment from the operator. No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator or that it will not be added to the rent or that, if added, any part will be refunded, except in the manner provided in this article.

Sec. 86-106. - Registration.

Agenda Packet Page 240
6 Prior to commencing operation of a hotel or other facility that rents occupancy to transients, the operator of said hotel shall file for and obtain a General Business Lic ense. In addition to the license application form each operator shall file a Transient Occupancy Tax Registration form, provided by the Tax administrator, and maintain the information contained therein. The registration form will include such information as the number and rental rate of the rooms in the hotel, the name and contact information for the hotel management, and any other information deemed appropriate to the collection of the tax.

Sec. 86-107. - Reporting and remitting.

(a) Each operator shall, on or before the last day of the month following the close of each calendar quarter or at the close of any shorter reporting period which may be established by the Tax administrator, make a return to the Tax administrator, on forms provided by the Tax administrator, of the total rents charged and received and the amount of tax collected for transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax administrator. The Tax administrator may establish shorter reporting periods for any certificate holder if the Tax administrator deems it necessary in order to ensure collection of the tax, and the Tax administrator may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. (b) Returns filed or taxes remitted by mail shall be deemed timely filed only if the envelope or similar container enclosing the returns and taxes is addressed to the Tax administrator, has sufficient postage, and bears a United States postmark or postage meter imprint to midnight on the last day for reporting or remitting without penalty. If such an envelope or container bears a postage meter imprint as well as a United States post office cancellation mark, the latter shall govern in determining whether the filing or remittance is timely. (c) All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the city until payment thereof is made to the Tax Collector.

Sec. 86-108. - Uncollectible accounts.

Any operator is relieved from liability for the remission to the city of the tax imposed under this article insofar as the measure of the tax is represented by accounts which have been found to be worthless and charged off for income tax purposes. If the operator has previously remitted the tax, the operator may, pursuant to procedures prescribed by the Tax administrator, take as a deduction the amount of tax previously remitted for the worthless and charged -off account. If any such accounts are thereafter in whole or in part collected by the operator, the amount so collected shall be included in the first return filed after such collection and the tax on such amount paid with the return.

Sec. 86-109. - Penalties and interest.

Agenda Packet Page 241
7 (c) Fraud. If the Tax administrator determines that the nonpayment of any remittance due under this article is due to fraud, a penalty of 25 percent of the amount of the tax shall be added thereto in addition to the penalties stated in subsections (a) and (b) of this section. (d) Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this article shall pay interest at the rate of one- half of one percent per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid.
(e) Penalties merged with tax. Every penalty imposed and such interest as accrues under this section shall become a part of the tax required to be paid under this article.

Sec. 86-110. - Determination of tax; failure to collect and report.

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 administrator shall proceed in such manner as the Tax administrator may deem best to obtain facts and information on which to base his or her estimate of the tax due. As soon as the Tax administrator shall procure such facts and information as he or she is able to obtain upon which to base the assessment of any tax imposed by this article and payable by this article and payable by any operator who has failed or refused to collect the tax and to make such report and remittance, the Tax administrator shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this article. If such determination is made, the Tax administrator shall give notice of the amount so assessed by serving it personally or by depositing it in the United States mail, postage prepaid, address ed to the operator so assessed at the operator's last known place of address. Such operator may, within ten days after the serving or mailing of such notice, make application in writing to the Tax administrator for a hearing on the amount assessed. If application by the operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the Tax administrator shall become final and conclusive and immediately due and payable. If such application is made, the Tax administrator shall give not less than five days' written notice in the manner prescribed in this section to the operator to show cause at a time and place fixed in the notice why the amount specified therein should not be fixed for such tax, interest a nd penalties. At such hearing, the operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing, the Tax administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed in this section of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after 15 days unless an appeal is taken as provided in section 86-111.

Sec. 86-111. - Appeal.

Any operator aggrieved by any decision of the Tax administrator with respect to the amount of the tax imposed by this article, interest and penalties, if any, may appeal to the city council by filing a notice of appeal with the city clerk within 15 days of the serving or mailing of the determination of tax due. The city council shall fix a time and place of hearing such appeal, and the city clerk shall give notice in writing to such operator at the operator's last known place of address. The findings of the city council shall be final and conclusive and shall be served upon the appellant in the manner prescribed in section 86-110 for service of notice of a hearing. Any amount found to be due shall be immediately due and payable upon the service of notice.

Sec. 86-112. - Records.

(a) It shall be the duty of every operator liable for the collection and payment to the city of any tax imposed by this article to keep and preserve, for a period of three years after the date any such tax is Agenda Packet Page 242
8 due and payable, all records as may be necessa ry to determine the amount of such tax as he or she may have been liable for the collection of and payment to the city. Except as provided in this section, the Tax administrator shall have the right to inspect such records at all reasonable times. (b) The Tax administrator shall, whenever practicable, contact the operator prior to inspection and inform the operator of the reasons for the inspection.
(c) Where required by state or federal law, a subpoena shall be obtained prior to an inspection conducted pursuant to this article, unless written consent to conduct such inspection is granted by the operator.
(d) If the operator or a third party interferes with the inspection, the Tax administrator shall have recourse to every remedy provided by law to perform the inspection authorized by this article.

Sec. 86-113. - Refunds.

(a) Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the city under this article, it may be refunded as provided in subsections (b) and (c) of this section provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Tax administrator within three years of the date of payment. The claim shall be on forms furnished by the Tax administrator.
(b) An operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once or erroneously or illegally c ollected or received when it is established in a manner prescribed by the Tax administrator that the person from whom the tax has been collected was not a transient; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.
(c) A transient may obtain a refund of taxes overpaid or paid more than once or erroneously or illegally collected or received by the city by filing a claim in the manner provided in subsection (a) of this section, but only when the tax was paid by the transient directly to the Tax administrator, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the Tax administrator that the transient has been unable to obtain a refund from the operator who collected the tax.
(d) No refund shall be paid under this section unless the claimant establishes his or her right thereto by written records showing entitlement thereto.

Sec. 86-114. - Actions to collect.

Any tax required to be paid by any transient under this article shall be deemed a debt owed by the transient to the city. Any such tax collected by an operator which has not been paid to the city shall be deemed a debt owed by the operator to the city. Any person owing money to the city under this article shall be liable to an action brought in the name of the city for the recovery of such amount.

Sec. 86-115. - Penalty for violations.

(a) Any person violating any of the sections of this article shall be guilty of a misdemeanor and shall be punishable therefor as provided in section 1-21.
(b) Any operator or other person who fails or refuses to register as required in this arti cle or to furnish any return required to be made or who fails or refuses to furnish a supplemental return or other data required by the Tax administrator, or who renders a false or fraudulent return or claim, is guilty of a misdemeanor, and is punishable as provided in subsection (a) of this section. Any person required to Agenda Packet Page 243
9 make, render, sign or verify any report or claim who makes any false or fraudulent report or claim with intent to defeat or evade the determination of any amount due required by this arti cle to be made is guilty of a misdemeanor and is punishable as provided in subsection (a) of this section.

Secs. 86-116—86-140. - Reserved.

SECTION 4. Severability. If any section, subdivision, sentence, clause, phrase or portion of this Ordinance is for any reason held invalid or unconstitutional by any court of competent jurisdiction, such portion shall be deemed a separate, distinct and independent provision, and such holding shall not affect the validity of the remaining portions thereof.

SECTION 5. Effective Date and Notice. This ordinance shall take effect thirty (30) days after its adoption, provided it is published in full or in summary within fifteen (15) days of its adoption, in a newspaper of general circulation published and circulated in the City of Citrus Heights.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights this __day of ________, 2022, by the following vote:

AYES: Council Members:

NOES: Council Members:

ABSENT: Council Members:

ABSTAIN: Council Members:

_________________________________________
Porsche Middleton, Mayor

____________________________________
Amy Van, City Clerk
Agenda Packet Page 244
DIVISION 2. - GENERAL BUSINESS LICENSES
Sec. 22-66. - Purpose.

The purpose of a general business license is to regulate businesses in order to promote improved enforcement of city, state, federal, or otherwise applicable codes, rules, regulations or laws, at lower public cost, with a higher level of protection of the public. Licensing helps protect the public against threats to public peace, health, safety and welfare, by ensuring compliance with city ordinances, including those designed to ensure building safety and discourage public nuisances.

Sec. 22-67. - License required.
(a) Unless specifically exempt by this chapter, no person shall operate or conduct a business within the city, unless under and by the authority of a valid, unexpired and unrevoked general business license issued pursuant to this chapter.
(b) A person shall be deemed to operate or conduct an enterprise and violate this section if the person, without a required general business license in effect, supervises, inspects, directs, organizes, manages or controls or is in any way responsible for or in charge of the enterprise for which the license is required. (c) Without limiting the generality of the foregoing, this section shall apply to persons who engage in vending, as defined in section 106.80.020 of the zoning code.

Sec. 22-68. - Reserved.

Sec. 22-69. - Exemptions.

Attachment 2
Agenda Packet Page 245
(4) Agriculture. The following agricultural activities are exempt: agricultural pursuits consisting of the growing of crops, raising of livestock, and dairying, including auxiliary and ancillary uses incidental to the operation of a farm or ranch, consisting of the purchase and storage of substances, materials, supplies, animal feeds and produce, and the marketing of farm products; provided, however, that a general business license shall be required in connection with any wholesaling, processing, storage or manufacturing use which involves assembly of the products of multiple farms or ranches by a cooperative or other business enterprise for marketing distribution

Agenda Packet Page 246

SHORT-TERM RENTAL BUSINESS LICENSE

Chapter 22 Article IV (New Section)

Sec. 22-451 – Purpose and intent.

Sec. 22-452 - Definitions.

The following terms, when used in this article, shall have the following meanings:

Home sharing means a living arrangement in which two or more unrelated people share a housing unit for a period of more than 30 days.

Host means the owner of the property on which the short-term rental exists or the agent authorized to operate the short-term rental.

Short-term rental business license means the same as a general business license as described in Chapter 22 Article II.

Sec. 22-453 - Eligibility.

Agenda Packet Page 247
This Chapter does not grant any permission that invalidates or supersedes provisions regarding short-term rentals within properties subject to the rules of a homeowners or condominium association.

(b) Accessory dwelling units constructed after January 1, 2021, inclusionary housing units, or other income-restricted housing units are prohibited from being used as a short-term rental.

Sec. 22-454 - Licensing Requirements.

(a) The host is required to obtain a City of Citrus Heights Short-Term Rental Business License before renting to any guest.

Sec. 22- 455 - Short-Term Rental Regulations.

(a) Short-term rentals shall not be used by more than two guests per bedroom plus two additional guests between the hours of 10:00 p.m. and 7:00 a.m. .

(d) The host shall fully comply with all the requirements of Chapter 86 (Transient Occupancy Tax) and any successor sections.

Sec. 22-456 – Fees and Penalties.

Sec. 22-457 - Expiration and Renewal.

(b) A short-term rental business license must be renewed yearly.

Agenda Packet Page 248
(c) To renew the short-term rental business license, the host must acknowledge all payments for the required transient occupancy tax associated with the short-term rental has been remitted to the City of Citrus Heights as required by Sec. 86-107.

Sec. 22-458 - Transferability.

Sec. 22-459 – Revocation.

(a) The short-term rental business license may be revoked for failure to remit required transient oriented tax as outlined in Sec. 86.

(b) The short-term rental business license revocation shall occur as outlined in Sec. 22-114 (Method of Revocation).

Sec. 22-460 – Enforcement.

(a) Failure to comply with any provision of this Chapter may constitute a violation.

Agenda Packet Page 249

Transient Occupancy Tax

Chapter 86 Article IV (existing)

Sec. 86-101. - Short title.

This article shall be known as the uniform transient occupancy tax of the city.

Sec. 86-102. - Definitions.

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

Hotel means any structure, or any portion of any structure, which is occupied or intended or designed for occupancy for lodging or sleeping purposes. This definition includes but is not limited to any hotel, inn, tourist home or house, short-term rental unit, motel, studio hotel, bachelor hotel, lodging house, roominghouse, apartment house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof.

Occupancy means the use or possession or the right to the use or possession of any room, or portion thereof, in any hotel for lodging or sleeping purposes.

Operator means the person who is proprietor of the hotel, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee or any other capacity. Where the operator performs his or her functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purpose of this article and shall have the same duties and liabilities as his or her principal. Compliance with this article by either the principal or the managing agent shall, however, be considered to be compliance by both.

Tax administrator Tax and license collector means the city manager or the city manager's designee.

Sec. 86-103. - Imposed.
(a) For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax in the amount of 12 percent of the rent charged by the operator.

Agenda Packet Page 250
(b) The tax constitutes a debt owed by the transient to the city which is extinguished only by payment to the operator or to the city. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient's ceasing to occupy space in the hotel. If for any reason the tax due is not paid to the operator of the hotel, the Tax administrator Tax and license collector may require that such tax shall be paid directly to the Tax administrator Tax and license collector.

Sec. 86-104. - Exemptions.

Sec. 86-105. - Operator's duties.

Sec. 86-106. - Registration.

Prior to commencing operation of a hotel or other facility that rents occupancy to transients, the operator of said hotel shall file for and obtain a General Business License. In addition to the license application form each operator shall file a Transient Occupancy Tax Registration form, provided by the Tax administrator, and maintain the information contained therein. The registration form will include such information as the number and rental rate of the rooms in the hotel, the name and contact information for the hotel management, and any other information deemed appropriate to the collection of the tax.

Each operator of any hotel renting occupancy to transients shall register the hotel with the Tax and license collector and obtain from the Tax and license collector a transient occupancy registration certificate which shall be at all times posted in a conspicuous place on the premises. The certificate shall, among other things, include the following:
(1) The name of the operator.
(2) The address of the hotel.
(3) The date upon which the certificate was issued.
(4) The following statement:
"This transient occupancy registration certificate signifies that the person named on the face hereof has fulfilled the requirements of the uniform transient occupancy tax by registering with the Tax and license collector for the purpose of collecting from transients the transient occupancy tax and remitting the tax to the Tax and license collector. This certificate does not authorize any person to conduct any unlawful business or to conduct any unlawful business in an unlawful manner, nor to operate a hotel without strictly complying with all local applicable laws, including but not limited to those requiring a permit from any board, commission, department or office of this city. This certificate does not constitute a permit." Agenda Packet Page 251
Sec. 86-107. - Reporting and remitting.

(a) Each operator shall, on or before the last day of the month following the close of each calendar quarter or at the close of any shorter reporting period which may be established by the Tax administrator Tax and license collector, make a return to the Tax administrator Tax and license collector, on forms provided by the Tax administrator Tax and license collector, of the total rents charged and received and the amount of tax collected for transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax administrator Tax and license collector. The Tax administrator Tax and license collector may establish shorter reporting periods for any certificate holder if the Tax administrator Tax and license collector deems it necessary in order to ensure collection of the tax, and the Tax administrator Tax and license collector may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason.
(b) Returns filed or taxes remitted by mail shall be deemed timely filed only if the envelope or similar container enclosing the returns and taxes is addressed to the Tax administrator, has sufficient postage, and bears a United States postmark or postage meter imprint to midnight on the last day for reporting or remitting without penalty. If such an envelope or container bears a postage meter imprint as well as a United States post office cancellation mark, the latter shall govern in determining whether the filing or remittance is timely. (c) All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the city until payment thereof is made to the Tax Collector.

Each operator shall, on or before the last day of the month following the close of each calendar quarter or at the close of any shorter reporting period which may be established by the Tax and license collector, make a return to the Tax and license collector, on forms provided by the Tax and license collector, of the total rents charged and received and the amount of tax collected for transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax and license collector. The Tax and license collector may establish shorter reporting periods for any certificate holder if the Tax and license collector deems it necessary in order to ensure collection of the tax, and the Tax and license collector may require further information in the return. Returns and payments are due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to this article shall be held in trust for the account of the city until payment thereof is made to the Tax and license collector.

Sec. 86-108. - Uncollectible accounts.

Any operator is relieved from liability for the remission to the city of the tax imposed under this article insofar as the measure of the tax is represented by accounts which have been found to be worthless and charged off for income tax purposes. If the operator has previously remitted the tax, the operator may, pursuant to procedures prescribed by the Tax administrator Tax and license collector, take as a deduction the amount of tax previously remitted for the worthless and charged-off account. If any such accounts are thereafter in whole or in part collected by the operator, the amount so collected shall be included in the first return filed after such collection and the tax on such amount paid with the return.

Sec. 86-109. - Penalties and interest.

(a) Original delinquency. Any operator who fails to remit any tax imposed by this article within the time required shall pay a penalty of ten percent of the amount of the tax in addition to the amount of the tax. (b) Continued delinquency. Any operator who fails to remit any delinquent remittance on or before a period of 30 days following the date on which the remittance first became delinquent shall pay a second Agenda Packet Page 252
delinquency penalty of ten percent of the amount of the tax in addition to the amount of the tax and the ten-percent penalty first imposed.
(c) Fraud. If the Tax administrator Tax and license collector determines that the nonpayment of any remittance due under this article is due to fraud, a penalty of 25 percent of the amount of the tax shall be added thereto in addition to the penalties stated in subsections (a) and (b) of this section. (d) Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed by this article shall pay interest at the rate of one-half of one percent per month or fraction thereof on the amount of the tax, exclusive of penalties, from the date on which the remittance first became delinquent until paid.
(e) Penalties merged with tax. Every penalty imposed and such interest as accrues under this section shall become a part of the tax required to be paid under this article.

Sec. 86-110. - Determination of tax; failure to collect and report.

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 administrator Tax and license collector shall proceed in such manner as the Tax administrator Tax and license collector may deem best to obtain facts and information on which to base his or her estimate of the tax due. As soon as the Tax administrator Tax and license collector shall procure such facts and information as he or she is able to obtain upon which to base the assessment of any tax imposed by this article and payable by this article and payable by any operator who has failed or refused to collect the tax and to make such report and remittance, the Tax administrator Tax and license collector shall proceed to determine and assess against such operator the tax, interest and penalties provided for by this article. If such determination is made, the Tax administrator Tax and license collector shall give notice of the amount so assessed by serving it personally or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at the operator's last known place of address. Such operator may, within ten days after the serving or mailing of such notice, make application in writing to the Tax administrator Tax and license collector for a hearing on the amount assessed. If application by the operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the Tax administrator Tax and license collector shall become final and conclusive and immediately due and payable. If such application is made, the Tax administrator Tax and license collector shall give not less than five days' written notice in the manner prescribed in this section to the operator to show cause at a time and place fixed in the notice why the amount specified therein should not be fixed for such tax, interest and penalties. At such hearing, the operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing, the Tax administrator Tax and license collector shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed in this section of such determination and the amount of such tax, interest and penalties. The amount determined to be due shall be payable after 15 days unless an appeal is taken as provided in section 86-111.

Sec. 86-111. - Appeal.

Any operator aggrieved by any decision of the Tax administrator Tax and license collector with respect to the amount of the tax imposed by this article, interest and penalties, if any, may appeal to the city council by filing a notice of appeal with the city clerk within 15 days of the serving or mailing of the determination of tax due. The city council shall fix a time and place of hearing such appeal, and the city clerk shall give notice in writing to such operator at the operator's last known place of address. The findings of the city council shall be final and conclusive and shall be served upon the appellant in the manner prescribed in section 86-110 for service of notice of a hearing. Any amount found to be due shall be immediately due and payable upon the service of notice.

Agenda Packet Page 253
Sec. 86-112. - Records.

(a) It shall be the duty of every operator liable for the collection and payment to the city of any tax imposed by this article to keep and preserve, for a period of three years after the date any such tax is due and payable, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the city. Except as provided in this section, the Tax administrator Tax and license collector shall have the right to in spect such records at all reasonable times.
(b) The Tax administrator Tax and license collector shall, whenever practicable, contact the operator prior to inspection and inform the operator of the reasons for the inspection. (c) Where required by state or federal law, a subpoena shall be obtained prior to an inspection conducted pursuant to this article, unless written consent to conduct such inspection is granted by the operator. (d) If the operator or a third party interferes with the inspection, the Tax administrator Tax and license collector shall have recourse to every remedy provided by law to perform the inspection authorized by this article.

Sec. 86-113. - Refunds.

(a) Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the city under this article, it may be refunded as provided in subsections (b) and (c) of this section provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the Tax administrator Tax and license collector within three years of the date of payment. The claim shall be on forms furnished by the Tax administrator Tax and license collector. (b) An operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Tax administrator Tax and license collector that the person from whom the tax has been collected was not a transient; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator. (c) A transient may obtain a refund of taxes overpaid or paid more than once or erroneously or illegally collected or received by the city by filing a claim in the manner provided in subsection (a) of this section, but only when the tax was paid by the transient directly to the Tax administrator Tax and license collector, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the Tax administrator Tax and license collector that the transient has been unable to obtain a refund from the operator who collected the tax.
(d) No refund shall be paid under this section unless the c laimant establishes his or her right thereto by written records showing entitlement thereto.

Sec. 86-114. - Actions to collect.

Sec. 86-115. - Penalty for violations.

(a) Any person violating any of the sections of this article shall b e guilty of a misdemeanor and shall be punishable therefor as provided in section 1-21.

Agenda Packet Page 254
(b) Any operator or other person who fails or refuses to register as required in this article or to furnish any return required to be made or who fails or refuses to furnish a supplemental return or other data required by the Tax administrator Tax and license collector, or who renders a false or fraudulent return or claim, is guilty of a misdemeanor, and is punishable as provided in subsection (a) of this section. Any person required to make, render, sign or verify any report or claim who makes any false or fraudulent report or claim with intent to defeat or evade the determination of any amount due required by this article to be made is guilty of a misdemeanor and is punishable as provided in subsection (a) of this section.

Secs. 86-116—86-140. - Reserved.

Agenda Packet Page 255
Short-term Rental License FAQ’s
DRAFT
What is a short-term rental?
A short-term rental is the renting of a residential unit or part of a residential unit such a bedroom, on a short-term basis. A short-term basis is thirty (30) consecutive calendar days or less to the same person or entity and counting portions of calendar days as full days.

Is a license required?
Yes, effective (date tbd) 2022, property owners or person acting as the host of a short-term rental unit must obtain a short-term business license.

What is the cost of a short-term rental license?
A new license is $101.76 for the first year and must be renewed annually.

How do I obtain a short-term rental license?
Licenses are filed on-line through the city’s on-line licensing system. A link to the licensing portal can be found here: www.citrusheights.net/STR. The license is valid for one year from the date of issuance and must be renewed annually. Reminder notices will be emailed approximately 60 days prior to the license’s expiration.

What other information is important to know when obtaining a short-term rental license?  First time applicants for the short-term rental license will be required to have a home inspection. This will be coordinated when the initial license application is filed.
 Short-term rental units are limited to a maximum occupancy of no more than 2 people per bedroom and 2 additional guests.  The short term rental host must collect the required transient occupancy tax. The host is required to remit the collected tax to the city within 30 days following the end of each calendar quarter.

What is Transient Occupancy Tax?
Transient Occupancy Tax is a tax imposed on any person who stays in a short-term rental for a period of 30 consecutive days or less. No tax is imposed on day 31.

Who is responsible for the remittance of the Transient Occupancy Tax? The host of the short-term rental is responsible for the collection of the tax and the remittance of the tax to the City’s finance manager utilizing a city suppled form.

What is the City’s Transient Occupancy Tax rate?
The City’s transient occupancy tax rate is 12%.

Attachment 3
Agenda Packet Page 256

How often do I remit my Transient Occupancy Tax?
Transient occupancy tax must be remitted on or before the last day of the month following the close of each calendar quarter

What if my residence is subject to Covenants, Conditions, & Restrictions (“CC&Rs”) or Homeowner Association rules (“HOAs”)? It is the owner’s responsibly to review any applicable CC&R’s or HOA regulations to confirm you are eligible and the operation of a short-term rental is a violation. The city does not enforce CC&R’s or HOA regulations.

What if I have an accessory dwelling on my property, am I allowed to rent that structure? Depends, if the accessory dwelling (ADU) was legally constructed prior to January 1, 2020, it may be used as a short-term rental. If the ADU was constructed after January 1, 2020, it may not be used as a short-term rental. If the structure has been added to the property or remodeled it must have been done through the appropriate permitting process and qualify as living space. For specific questions, contact the Building Division at (916) 727-4760.

What other information should I know?
If the property being used as a short-term rental is not your primary home, it will also be subject to Rental Housing Inspection Program. The Program includes the payment of a yearly fee and safety inspection by code enforcement. More information on the Rental Housing Inspection Program call (916) 725-5520. If the short-term rental property is your primary place of residence, it is not subject to the Rental Housing Inspection Program.

Draft 01/31/22
Agenda Packet Page 257
Printed on Recycled Paper

CITY OF CITRUS HEIGHTS

CITY COUNCIL STAFF REPORT

MEMORANDUM
DATE
: March 24, 2022
TO: Mayor and City Council Members
Ashley J. Feeney, City Manager
FRO
M: Bill Zenoni, Interim Administrative Services Director SU
BJECT: Resolution Authorizing Payment of the Outstanding Revolving Line of Credit Balance and Amending the General Fund Budget for Fiscal Years 2021-22 and 2022-23
Summary and Recommendation
Staff recommends the City Council adopt Resolution No. 2022-___ A Resolution of the City Council of the City of Citrus Heights, California, Authorizing Payment of the Outstanding Revolving Line of Credit Balance and Amending the General Fund Budget for Fiscal Years 2021-22 and 2022-23.

Fiscal Impact
The outstanding balance on the revolving line of credit is $3,520,001. The annual interest on the outstanding balance is $158,510 ($3,048 per week). The Fiscal Year 2022-23 General Fund budget includes $2.0 million for a partial repayment of the outstanding balance with the remaining $1.5 million included in the Ten Year Financial Forecast to be paid in Fiscal Year 2023-24. The entire balance must be paid in full by September 1, 2024. By prepaying the $3.5 million outstanding balance by April 1, 2022, the City will realize savings of approximately $110,000 in avoided interest costs.

Background and Analysis
The City Council, in November 2018, authorized entering into a revolving credit agreement with Western Alliance Equipment Finance, Inc. in an amount not to exceed $12 million to finance certain capital improvements and operating expenditures. The revolving line of credit was structured as a site lease with the Citrus Heights Community Center building pledged as collateral. The financing agreement provided for the payment of interest on funds drawn from the line of credit with principal repayment in full due no later than September 1, 2024. The agreement also provided the City the option to prepay all or a portion of the outstanding balance with no prepayment penalty on or after March 1, 2021.

ITEM 15
Agenda Packet Page 258
Subject: Resolution Authorizing Payment of Outstanding Revolving Line of Credit Balance Date: March 24, 2022

Page 2 of 2 ends

Printed on Recycled Paper

Of the $12 million revolving line of credit limit, the City has drawn down $3,520,001 for the purchase of the former Sylvan Middle School property ($3,470,000) and for the costs of issuance of the line of credit financing ($50,001). At this time, it is not anticipated that further utilization of the line of credit funding will be required. The adopted budget for Fiscal Year 2022-23 includes $2.0 million for a partial payment of the outstanding balance with the remaining $1.5 million included in the Ten Year Financial Forecast for Fiscal Year 2023-24.

Based upon the General Fund’s positive operating results of $3.6 million in Fiscal Year 2021-22 and the projected revenue for Fiscal Year 2022-23, it is staff’s recommendation that payment of the outstanding balance on the revolving line of credit be re-programmed to this fiscal year to reduce the amount of interest paid. General Fund savings of approximately $110,000 could be realized by paying the outstanding balance in full now rather than over the next two fiscal years.

The attached resolution appropriates $3.5 million this fiscal year and removes the $2.0 million repayment which is currently budgeted in Fiscal Year 2022-23.

Attachment

1. Resolution Authorizing Payment of the Outstanding Revolving Line of Credit Balance and Amending the General Fund Budget for Fiscal Years 2021-22 and 2022-23

Agenda Packet Page 259
Printed on Recycled Paper
RESOLUTION NO. 2022 - ____

RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CITRUS

HEIGHTS, CALIFORNIA, AUTHORIZING PAYMENT OF THE

OUTSTANDING REVOLVING LINE OF CREDIT BALANCE AND

AMENDING THE GENERAL FUND BUDGET FOR FISCAL YEARS
2021-22 AND 2022-23

WHEREAS, on November 15, 2018, the City Council authorized a revolving line of credit by the execution and delivery of a site lease, sublease and credit agreement with Western Alliance Equipment Finance, Inc. in order to finance certain capital improvements and operating expenditures; and

WHEREAS, the City has utilized $3,520,001 of the revolving line of credit funds; and

WHEREAS, the City wishes to pay the outstanding balance on the revolving line of credit to avoid payment of additional interest costs.

NOW, THEREFORE, BE IT RESOLVED , that the City Council of the City of Citrus Heights hereby authorizes:

• Payment of the outstanding principal balance on the revolving line of credit in the amount of $3,520,001 from the Fiscal Year 2021-22 General Fund Non-Departmental Budget (account 100-12-199-53211);

• Amending the Fiscal Year 2021- 22 Adopted Budget by increa sing the General Fund Non-Departmental appropriation by $3,520,001 (account 100-12-199-53211);

• Amending the Fiscal Year 2022- 23 Adopted Budget by decreasing the General Fund Non-Departmental appropriation by $2,000,000 (account 100-12-199-53211);

• Executing any and all documents necessary to unencumber assets that secured the revolving line of credit financing.

PASSED AND ADOPTED by the City Council of the City of Citrus Heights, California, this 24
th day of March 2022, by the following vote, to wit:

AYES:

NOES:

ABSTAIN:

ABSENT:

Porsche Middleton, Mayor

Agenda Packet Page 260
Printed on Recycled Paper

ATTEST:

Amy Van, City Clerk
Agenda Packet Page 261

Citrus Heights City Council MeetingsMarch 24, 2022

Citrus Heights City Council Meetings
March 24, 2022