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Extracted from Consolidated Report
This investigation was originally published as part of a larger consolidated report containing multiple investigations. View the consolidated PDF for the complete document.
⚠️ Translation Notice: This content has been automatically translated. The original English text is the official version. Translation may contain errors.
⚠️ Este contenido ha sido traducido automáticamente. El texto original en inglés es la versión oficial. La traducción puede contener errores.
Findings 3 findings
F1
Page 90
The TOT raises over $3 million annually, with over 75% coming from the Fifth Supervisorial District. This money goes into the unrestricted County General Fund; it is the main source of discretionary funds.
F2
Page 90
Collection of the TOT from established hotels and inns has not been a major problem. Audits and warning letters resulted in full payment of tax to the county.
F3
Page 90
The Tax Collector has a large and widespread problem identifying smaller and less visible facilities such as Bed and Breakfast facilities, vacation rentals, and retreat facilities. There is no regular, systematic program determining how many units exist and how many are paying the TOT. A perception exists that a large percentage of properties do not report and this leads to questions of fairness and uneven enforcement. The Grand Jury confirmed that many properties do not report. Lost revenues exceed several hundred thousand dollars.
Recommendations 4
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R4Page 90In one notorious incident, a single property rental agent ended up owing the County over $170,000 in TOT and over $100,000 in penalties. (He is currently subject to both criminal and civil prosecutions.) County Counsel first became aware of a problem as early as 1988, but the office was taken off the case several times as partial compliance was achieved. The amount rose from $40,149 in January 1994 to $90,000 in June 1995, to $146,000 in May 1996, to $270,000 in July 1997. The BOS decided in March 1998 not to take legal recourse against the individual property owners in this case after earlier threatening to do so. Part of the reason was that the County had knowledge of only 20 of the 35 properties involved until mid-1997. At least one property owner who had paid the TOT after the first BOS letter was refunded his money. Recommendation The Grand Jury, under the authority of Penal Code Section 932, orders the District Attorney to pursue vigorous collection in this case including filing a claim against the state Real Estate Recovery Fund (assuming the County obtains a court judgment).
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R5Page 90The Grand Jury finds that the County did not and does not have an aggressive enough program to collect the TOT. Recommendation The Tax Collector should establish procedures which include an active plan for collecting the TOT in a timely manner.
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R6Page 90Another property agent refuses to give the County specifics on how much tax results from each given property. There has been no enforcement action.
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R7Page 90The BOS adopted a revised ordinance in December 1998, with new reporting requirements, new sanctions in case of delinquency, and new authority for the Tax Collector in case of default. There are problems with some of the language and so a new ordinance is being prepared (April 1999). Recommendation The Grand Jury urges County Counsel and the Tax Collector to test the implementation of the revised TOT ordinance by bringing action against currently non-complying property owners and agents known within the Tax Collector's office. Response Required Board of Supervisors Auditor-Controller Tax Collector-Treasurer Comment The Grand Jury identifies several factors leading to its findings and recommendations. The fact that these departments are headed by elected officials prevents the BOS from providing meaningful oversight. As elected officials, they may desire a low, “friendly” profile that makes them vulnerable to glib or stubborn violators. Since County Counsel can only act on cases brought to it, and there is no County process for identifying potential need for action, Department Heads are the main players determining whether or not timely action is taken; there is a wide disparity in the manner and effectiveness of County Counsel utilization. All departments bemoan their limited staffing, saying this is why they cannot follow through better; if someone else collected the data they would use it, but they are too busy to gather it themselves. Also, most TOT units are on the Coast, far away from Ukiah offices, making it harder for staff based in Ukiah to address the problem. Finally, the BOS recognized in September, 1997, the need for “maximum coordination” between departments: this is a case in point.