Transient Tax Applies to Short-Term Rental of Private Residences in Malibu•

Application of Tax to Rehab Center Stays to Be ‘Voluntary’

BY BILL KOENEKER

The Malibu City Council last week decided to apply the Transient Occupancy Tax now on the books to short-term rental of private homes, and in a novel approach, to also tax the city’s drug rehabilitation facilities with the stipulation that the tax for short-term drug rehab stays would be voluntary.
The council’s action followed the recommendations of its administrative and finance subcommittee that were made when it opened up a budget hearing last week and was seen as a way to help shore up city coffers.
At the same time, members decided to add a provision about trying to get TOT money from drug rehab facilities. The city attorney called it a novel approach and members agreed to make the tax voluntary to avoid the action being challenged in court. Some members joked about who would pay a voluntary tax, but the businesses might consider doing so to deflect some of their local critics.
The city announced it would begin collecting the TOT on the short-term rental of private homes effective July 1 and published a legal notice to that effect.
The notice indicates that, if citizens are renting a home, apartment, condominium or vacation property for any period of 30 days or less, they must register the property with the city and submit a 12 percent occupancy tax.
Because the tax is on the books, it requires no new action. It is estimated the tax could add $200,000 revenue annually.
In addition, the council was told there might be a greater drop in revenues, including $700,000 that might be taken back by the state.
If enacted by Sacramento, the city would lose eight percent of its property taxes to the state. While this has not yet impacted the city’s proposed budget for the next fiscal year, council members talked about where cuts could be made if the state dips into city coffers.
Mayor Andy Stern suggested the city could forgo its wastewater studies in the Civic Center to make up the shortfall. The council agreed and gave it a tentative go-ahead if the need arises.
The council is scheduled to consider adopting the FY 2009-2010 budget at its next meeting on Monday, June 8.