News
Decision Leaves Hotel Owner Taxed
January 01, 2005
Jolie Houston, Berliner Cohen partner, has successfully defended the City of Gilroy’s Transient Occupancy Tax Ordinance against a constitutional challenge.
The California Court of Appeal, Sixth Appellate District upheld a lower court’s decision in favor of the City of Gilroy finding the City’s Transient Occupancy Tax Ordinance (the “TOT Ordinance”) to be valid and constitutional. Jolie is currently an Assistant City Attorney for the City of Gilroy.
In June 1998, the City of Gilroy notified the owner of a motel in Gilroy that he owed $26,292.33 in delinquent taxes, interest and penalties under the city’s TOT Ordinance. The TOT Ordinance, adopted by many California cities in the 1970s, requires the proprietor of each “hotel” to collect, along with the rent, a tax from each “transient” for the privilege of “occupancy” in the hotel.
The motel owner filed a petition for writ of mandate and complaint for declaratory and injunctive relief. The owner claimed that the TOT Ordinance was facially void for vagueness in violation of the due process guarantees of the United States and California Constitutions. The lower court entered judgment in favor of the City.
The court of appeal affirmed, finding that the TOT Ordinance gave fair notice of the tax collection and reporting requirements and provided reasonably adequate standards to guide enforcement. The court rejected the owner’s argument that the terms “hotel,” “occupancy,” and “transient” were confusing because they were defined in a circular way and failed to distinguish between temporary and permanent living arrangements.
In Vinod Patel v. City of Gilroy, (2002) 97 Cal. App.4th 483; 118 Cal. Rptr.2d 354, both the California and United States Supreme Courts turned down the owner’s efforts to obtain further appellate review.
“The Patel opinion provides useful guidance as to when key terms in a transient occupancy tax ordinance pass constitutional muster,” according to JoAnne Speers with the League of California Cities. The League of California Cities supported the City’s request for publication because of the case’s statewide significance.
Jolie Houston, Berliner Cohen partner, practices in the areas of Land Use and Municipal Law. She is currently the City Attorney for the City of Los Altos and the Assistant City Attorney for Gilroy. She was formerly the Deputy City Attorney for the City of Santa Clara. She joined Berliner Cohen in 1998, and represents private land use clients in a wide variety of land use and regulatory approvals.
Berliner Cohen’s land use and municipal law practice consists of experienced transactional attorneys, litigators, and regulatory specialists with extensive experienced in public and private representation in all phases of land use and municipal law. Berliner Cohen is one of the largest law firms in San Jose serving the business and regulatory needs of private business and public agencies. For 40 years, the Firm has developed the special expertise required by a diverse client base consisting of some of Silicon Valley’s largest corporations, new ventures, leading real estate developers, cutting-edge software manufacturers, healthcare providers, mortgage banking companies, municipalities and public agencies. Berliner Cohen also meets the growing demands of the San Joaquin Valley with its expanding office in Merced.