Transient Occupancy Tax Lien Ordinance Authorized By Council, Heads to City Attorney for Preparation

The City Council directed the City Attorney to prepare an ordinance that would help the city collect unpaid taxes accrued by a closed hotel.

Last year, Urban Commons, which owns the Pasadena Sheraton, filed for Chapter 11 bankruptcy as part of a Delaware filing that contained two dozen hotels with more than $500 million in debt. The debt included $850,000 in back Transient Occupancy Taxes (TOT) owed to the city, according to city records.

The Transient Occupancy Tax, or TOT, is paid by everyone who stays at a local hotel. Hotel operators are compelled by city law to collect a TOT and Tourism Business Improvement District (TBID) assessments from guests, and those funds “shall be held in trust for the account of the city until payment is made to the tax administrator.”

TOT funds are scheduled to be turned over on or before the 20th day of the month. The money goes into the city’s general fund.

But according to the lawsuit, “all or some of the monies owed under the TOT and TBID ordinances were used in the purchase, improvement and repair of the Hotel and other properties and assets owned and/or operated by one or more (defendant).”

Urban Commons Cordova A, LLC, which oversees the Sheraton Pasadena Hotel is part of Eagles Holding Trust (EHT). EHT was named in the city lawsuit.

According to Federalpay.org, EHT SPH, LLC received a $1.16 million SBA PPP coronavirus relief loan in May at 303 Cordova St., the address listed for the Pasadena Sheraton.

“The City has been attempting to collect unpaid Transient Occupancy Tax (TOT), penalties and interest from the former owner and operator of the Sheraton Hotel through civil litigation in a California court and through one of the operator’s bankruptcy proceedings in a Delaware bankruptcy court,” according to a city staff report.

The ordinance will allow the City to file a certificate of lien for outstanding TOT or TBID (providing that the final City decision confers lienholder rights, without the need to litigate the issue). The ordinance would allow enforcement by warrant, seizure and sale of hotel property.

The ordinance will also allow imposition of TOT and TBID liability on successor owners consistent with state law, imposition of attorney’s fees and costs where the City brings an action to recover unpaid TOT and TBID; and the ability to add criminal and civil penalties in addition to TOT and TBID penalties and interest already allowed.

Here are the other items on Monday’s consent calendar:

• A $733,700 contract to Yamada Enterprises for library shelving procurement and installation. The contract scope includes supplying and installing new library bookstack shelving at the Rose Palace Library, 235 S. Raymond Ave., to hold the Central Library collection. In May 2021, the Pasadena Central Library building closed by order of the city’s Building Official due to structural deficiencies. As a result, library personnel and equipment were relocated to other sites, however, the library collection of approximately 250,000 items remains.

• Recognition of $68,00 in revenue from the estate of Robert G. Low and appropriation to supplement the purchase of children’s books. In May 2022, the Library received notification of a bequest in the amount of $68,000 to supplement its budgeted funds for the purchase of library books for children. The bequest, from the Estate of Robert G. Low, is in the amount of $68,000, subject to these terms and conditions: For supplementing the regularly budgeted funds for the purchase of books for children and young readers, and to improve, encourage, and expand reading skills and literary interests for the purchase of only books and not for the purchase of computers, tapes, or videos.

• Authorize the Interim City Manager to extend contracts with Sierra Cybernetics, Inc., Superb Tech, Inc., Trinus Corporation, 22nd Century Technologies, Inc., Howroyd-Wright Employment Agency, Inc. OBA AppleOne Employment Services, Jada Systems, Inc., and JBA International LLC for IT temporary staffing services to December 31, 2023, without increasing the authorized total not-to-exceed amount on each contract. Each contract was for a period of three years, or until $400,000 is expended.

• A Memorandum of Understanding (MOU) between the City of Pasadena and the International Brotherhood of Electrical Workers for the term of July 1 through June 30, 2026. The International Brotherhood of Electrical Workers (IBEW) represents approximately 110 employees in a variety of skilled electrical maintenance and construction classifications in the Departments of Public Works and Water and Power. The existing MOU between the City and the IBEW expired on June 30.

• A $319,000 contract with G.B. Cooke for labor and materials to repair Azusa conduit for the water and power department. The City owns and operates the Azusa Hydroelectric Power Plant as well as the conduit. The conduit consists of approximately five miles of tunnels and pipelines alongside the steep rugged San Gabriel Mountains and conveys water from San Gabriel and Morris Dams to the Plant to generate electricity. In August 2019, PWP staff discovered that a conduit section of approximately four feet in length had suffered a failure in an area about one mile north of the Morris Dam. The event caused a sidewall blowout, which resulted in a large leak. Due to the rugged mountain terrain, the failed section of the conduit can only be reached by entering at the Morris Dam and walking for approximately one mile inside the Conduit. All repair materials and necessary tools have to be hand-carried inside the conduit.

• A $271,220 contract with Peterson Chase General Engineering Construction for on-call services for removal and installation of concrete K-rail and TL2 sleds. In addition to annual removal and replacement of the equipment on Colorado Blvd, the contractor will also provide on-call services to remove and/or relocate K-rail on any streets where on-street dining is no longer requested or needed by adjacent restaurants and/or the business improvement districts.

• A $405,433 contract with GRBCON, Inc. for Storm Drain Repairs. This project consists of the repair of storm drain catch basins at various locations in the City of Pasadena. The work includes the removal and replacement of storm drain catch basin decks; repair and relining of storm drain structures and pipes; removal and installation of protection bars on storm drain catch basins; and the cleaning of and removal of debris from City-owned catch basins.

• Adopt a Resolution of Intention to vacate Nina Street from Sunnyslope Avenue to its east terminus. the proposed street vacation and construction of a new automobile sales and showroom building requires the coordination of various agencies and departments to ensure that water, gas, electrical and other infrastructure is removed and replaced appropriately. Council’s action does not commit the City to any project but allows for an additional two weeks of coordination, prior to the Planning Commission’s review of the project on July 27 since the California Streets and Highways Code Section states that ” … a notice of the hearing on the proposed vacation shall be published for at least two successive weeks prior to the hearing.”

• A $797.597 contract with Precision Aerial Services, Inc. to furnish and deliver inspection, service, repair, and maintenance of boom, crane, and aerial platform trucks.

• A $1,930,879 contract with Southwest Pipeline & Trenchless Corp. for annual sewer relining and repairs. The City of Pasadena’s sewer system consists of over 1. 7 million linear feet of pipe ranging from 6 to 42 inches in diameter, 60 percent of which is over 70 years old. Sewer relining is a trenchless technology that can extend the life of a pipe by up to 50 years by installing cured-in-place pipe liner that adheres to an existing sewer pipe and covers cracks; preventing root intrusions and other discontinuities.

• $1,250,000 contract with Bob Wondries Motors to furnish and deliver Ford automotive parts. The Department of Public Works, Building Systems and Fleet Management Division (BSFMD) repairs and maintains the City’s fleet of over 1,100 vehicles and equipment, of which approximately 360 are manufactured by Ford. The City’s fleet of Ford vehicles include service trucks and police cruisers that perform vital and diverse public service tasks in the field. As such, it is necessary for BSFMD to purchase and stock replacement automotive parts and supplies for use in repair and maintenance work on Ford vehicles.

• Contract award to Wiss, Janney, Elstner Associates, Inc.; Kpff, Inc.; IDS Group, Inc.; Degenkolb Engineers; and Nabih Youssef & Associates for on-call structural engineering services for an amount not-to-exceed $500,000 for each consultant. The Department of Public Works is seeking qualified on-call structural engineering services consultants to provide professional services on an as-needed basis for the City of Pasadena’s Capital Improvement Program (CIP) over the next four years. The scope of work may include, but is not limited to, preliminary studies, seismic analysis, forensic engineering, peer review, bridge inspection, construction plans, specifications, cost estimates, construction administration, and building code analysis.

• Contract award to iTennis LLC and Move Your Feet to operate the city’s tennis program. The City of Pasadena Parks, Recreation and Community Services Department (PRCS) offers the Pasadena community a quality tennis program which includes lessons, group clinics, camps, tournaments and leagues. The program operates up to seven days a week, year-round (except on holidays) for participants ages five and up. Due to the specialized skills required to provide these services, PRCS has contracted with an outside vendor with the experience and qualifications to provide a professionally managed tennis program at affordable prices.

• Contract award to Mission School Transportation Inc for school bus transportation services. The Parks, Recreation and Community Services Department (PRCS) provides recreational and educational opportunities to people of all ages and abilities. Approximately 60 times per year, buses are chartered to transport seniors, youth and people with disabilities to various athletic, educational and social activities, competitions, events, and excursions. Funding for this service is available through local sales tax return funds Propositions A and C. Traditional yellow school buses are generally used to transport youth, while seniors and Adaptive Recreation participants require coach and wheelchair-accessible buses.

• Determination of exempt surplus land for city owned parcels 121 N. Chester and 228 Del Monte Street. City staff requests authorization to sell two unused land parcels located at 121 N. Chester Avenue and 228 Del Monte Street purchased by the city in 197 4 and 1975, respectively. The City has no current or future use for these parcels and seeks authorization to sell these parcels to the adjacent residential property owners of 131 N. Chester Avenue and 230 Del Monte Street, respectively at no less than their appraised value.

• Brookside Golf Course Fee Ceiling Adjustments. On June 15, 2020, City Council approved a “not to exceed” fee adjustment for Brookside. This allows the General Manager to approve golf rate recommendations based on the local golfing market and feedback from the Golf Advisory and Golf Committee comprised of Pasadena residents and various stakeholder representatives of Brookside. The ceiling of this structure was inevitably going to be outpaced at some point by inflation. Staff at the time in 2020 was unaware of the accelerated future inflationary impacts caused by the global COVID-19 pandemic. Since July 1, 2021, one golf fee is at the ceiling price of $50. Staff has already received approval for adjustments to fiscal year 2023’s golf rates. There are two fees that are pending approval prior to being allowed to exceed the maximum amount of $50. In order to stay consistent across all fees charged at Brookside, staff recommends the ceiling to be raised on an annual basis by inflation only, rounded up to the nearest whole dollar. This number is given to the Rose Bowl Operating Company by the City of Pasadena each year prior to the budgeting process. Golf tournament fees are also capped at $90 currently and staff recommends the same system be applied to that ceiling as well.