City Gets New Tax Collection Muscle – May 5, 2010

Wednesday, May 5, 2010

VALLEY WEST – The City of Arcata can expect some relief on its ongoing battle to have Days Inn pay its bills following the passage of Ordinance 1403.

On April 21, the City Council waved the ordinance through, voting unanimously to grant new powers to City Hall to collect on old debts through property liens. Tweaking the Arcata Municipal Code, Arcata will now be able to place a tax lien on a motel or hotel title or forward an assessment to the county Tax Collector if the business fails to pay its Transient Occupancy Tax.

The main advantage for Arcata will be its ability to save staff time and funds by bypassing the court decisions process.

The ordinance will give the City new muscle on Valley West’s Motel Row, but the action was essentially motivated by Days Inn’s ongoing refusal to pony up on $130,000 in TOT funds it’s already collected from checking out motel guests. Last month, Arcata received a judgment in the amount of $92,667.99 related to delinquent TOT covering the period between November, 2008 and October, 2009. City Finance Director Janet Luzzi is pursuing a similar judgment for the time since November, 2009 through this March.

TOT revenue contributes nearly $900,000 annually and 10 percent of the City’s general fund.

The new ordinance will not aid Arcata’s efforts to get nearly $70,000 in unpaid utility billings from Days Inn. To date, City Manager Randy Mendosa has been unwilling to have Days Inn’s water shut off, reasoning that the decision would put workers out on the street and shutter the Valley West motel.

Days Inn owner, Penta Hospitality of San Jose, owes Arcata nearly $200,000 and growing daily. Penta owns 12 hotels and motels around the country with eight more “under development.”

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