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1 RiversideCA.gov
1 RiversideCA.gov
ADMINISTRATIVE APPEAL: MARRIOTT
RIVERSIDE AT THE CONVENTION CENTER
Financial Performance and Budget Committee
January 10, 2024
FINANCE DEPARTMENT
RiversideCA.gov
2 LEGISLATIVE HISTORY
• RMC Chapter 5.32 governs Transient Occupancy Tax (TOT) application in Riverside
– “For the privilege of occupancy in any hotel, each transient is subject to and shall pay a tax… ”
• RMC Section 5.32.010 – Definitions
– Occupancy means the use or possession, or the right or entitlement to the use or possession, of any room or rooms or portion thereof, in any hotel for dwelling, lodging or sleeping purposes.
– Rent means the amount of the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space, valued in money whether received in money, labor or otherwise, including the full value of receipts, cash, credits, property or services of any kind or nature, without any deduction whatsoever. 1 2
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3 • Transient Occupancy Tax (TOT) Audit
– Requested by the City of Riverside
– Conducted by HdL Companies
– Audit period January 2019 – December 2021
– Ten hotels audited, including Marriott Riverside at the Convention Center – Completed in August 2022
• Key Findings
1. Discrepancies Identified:
• Miscellaneous revenue and comped rooms.
2. Complications Addressed:
• Comped rooms lacked values on Daily Revenue Report
• Solution: Utilized Average Daily Rate (ADR) for computation
BACKGROUND
RiversideCA.gov
4 1. Complimentary Rooms Definition:
• Rooms provided at no cost, often termed as “comped or complimentary rooms.” • Offered for guest loyalty, barter, or employee retention.
2. Operator’s Perspective:
• Reasons for Offering:
– Maintain guest loyalty
– Barter for other services
– Employee retention
3. City’s Position (RMC 5.32.010):
• Comped rooms considered taxable rent per definition of rent:
– RMC Section 5.32.010: “…valued in money whethe r received in money, labor or otherwise…” • Value attributed to guest loyalty, barter or employee retention.
TAX OF COMPLIMENTARY ROOMS
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5 • RMC Chapter 5.32.110 – Failure to collect and report tax – Determination of tax by Tax Administrator.
– Tax Administrator (CFO) conversations with Azul Hospitality representatives – City proposed a $10,000 settlement for all audit findings. • RMC Chapter 5.32.120 – Administrative Appeal
– Azul Hospitality elected their right to appeal to the Financial Performance and Budget Committee.
– Requested on November 09, 2023, addressing the taxability of complimentary rooms. • Marriott Riverside assertions:
– Ordinance is ambiguous on whether complimentary room are taxable. – Previous tax audit did not identify complimentary room as taxable. – Disagreement with the calculation method employed by HdL.
MARRIOTT RIVERSIDE APPEAL
RiversideCA.gov
6 Strategic Priority 5: High Performing Government
Goal 5.3: to Enhance communication and collaboration with community members to improve transparency, build public trust, and encourage shared decision-making.
Cross-Cutting Threads
STRATEGIC PLAN ALIGNMENT
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7 That the Financial Performance and Budget Committee deny the appeal from Monyvann Keo of Azul Hospitality and uphold the findings of the transient occupancy tax audit of the Riverside Marriott at the Convention Center that
complementary rooms are taxable and that the unpaid
amount for taxable comped rooms is due and payable,
including total tax, penalties, and interest.
RECOMMENDATIONS
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