Thursday, April 29, 2010
Appeals Court: San Francisco Can Apply Hotel Tax to Parking
By STEVEN M. ELLIS, Staff Writer
The First District Court of Appeal yesterday rejected a challenge to San Francisco’s application of its hotel tax to charges for guests’ parking.
Div. Two said the city and county’s tax collector did not overstep its authority when it issued guidelines advising hoteliers that the city’s 14 percent levy on rent paid to a hotel applied to parking and other services.
San Mateo County resident Angel Batt filed suit in 2006, arguing the tax collector had gone too far because the ordinance authorized a tax on “the rent for every occupancy of a guest room in a hotel,” not on parking.
Div. Two in 2007 denied Batt’s bid to maintain a class action for refund of taxes collected on parking, ruling in Batt v. City and County of San Francisco 155 Cal.App.4th 65 that she needed statutory authorization to do so. However, the court allowed her to prosecute an action for tax imposed on the $55 she was charged to park her car overnight at the Ritz-Carlton Hotel in the city.
The tax is authorized by an ordinance the city adopted in 1961. It defines “occupancy” as “use or possession, or the right to the use or possession of any room or apartment in a hotel or the right to the use or possession of the furnishings or to the services and accommodations accompanying the use and possession of the room.”
The City of Los Angeles imposes a similar 14 percent tax on “rent” paid to a hotel by an occupant, but defines the term as “the consideration charged…for the occupancy of space in a hotel valued in money…including all receipts, cash, credits and property and services of any kind or nature, without any deduction therefrom whatsoever.”
Batt contended that the guidelines issued by San Francisco’s tax collector were invalid because they went beyond “carrying out and enforcing the payment, collection and remittance of taxes,” which the tax collector is authorized to do by another city ordinance.
She said the guidelines changed the definition of “occupant” and amounted to a new tax on hotel parking. Batt argued that a guest must actually be in the room in order to “use and possess” it, and that any service must be related to such in-room use and possession before it can be taxed.
She further asserted that the guidelines conflicted with the city and county’s Board of Supervisors’ intent to exempt hotel parking, and violated the state Constitution by increasing the hotel tax with a vote of the electorate.
San Francisco Superior Court Judge Curtis E.A. Karnow rejected Batt’s claims, and the Court of Appeal affirmed in an opinion by Justice James A. Richman.
“Unlike plaintiff, we do not approach the Guidelines with a suspicious anticipation of finding illegality,” he wrote.
Examining the hotel tax ordinance’s language with respect to “services,” Richman said the term “would appear to be that vast residuum of amenities offered or made available to guest, limited only by the imagination—or by the nerve—of hoteliers to charge extra.”
Pointing out that “laundering and dry cleaning is not done in a guest’s room, but not even plaintiff disputes the validity of an additional charge for such services,” the justice wrote that Batt’s “emphasis upon confining the City’s taxing power to the four walls of a hotel ‘guest room’ is unduly narrow.”
Richman then rejected Batt’s assertion that an exemption for hotel parking from another ordinance imposing a 15 percent tax on parking in a lot carried over to the hotel tax ordinance, and noted that the state constitutional provision requiring electoral approval of new taxes was enacted after San Francisco’s hotel tax ordinance and was not retroactive.
He also rebuffed Batt’s argument that the court should adopt the definition of “occupancy” in New York City’s administrative code, which has been construed not to include parking.
“Absent a showing that San Francisco’s Hotel Tax is modeled on New York’s, there is no reason the former should not be construed according to its own terms, as we have done,” he said.
Justices Paul R. Haerle and James R. Lambden joined Richman in his opinion.
The case is Batt v. City and County of San Francisco, A123253.
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