City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
That the City Council deny LAX Plaza Hotel’s appeal of the Tax Administrator’s decision
of November 10, 2005 fixing the Transient Occupancy Tax (including related penalties and
interest) owed by the hotel; and
That the City Council find that LAX Plaza Hotel owes the City $469,983.25 for Transient
Occupancy Tax (including related penalties and interest).
PROCEDURE:
1. Mayor calls for a brief staff report and receives and files all reports and notices.
2. Mayor invites Appellant LAX Plaza Hotel to address the City Council.
3. Mayor invites Respondent City Treasurer/Tax Administrator to address the City
Council.
4. City Council discusses the matter and arrives at its decision.
BACKGROUND:
The Culver City Municipal Code (CCMC) imposes a Transient Occupancy Tax (TOT) on
hotel occupancy. Government employees on official business, officers and employees of
foreign governments, guests who have stayed longer than 30 days and those guests
presenting a written agreement providing for a period of occupancy greater than 30 days
are exempt from the TOT. The CCMC requires that any exemptions be claimed under
penalty of perjury, on a form prescribed by the City, at the time that any occupancy fee is
collected. Under the CCMC, hotel operators collect the TOT on behalf of the city. These
Meeting Date:11/28/05 Item Number: A-2
AGENDA ITEM: Appeal By LAX Plaza Hotel From The Tax Administrator’s
Transient Occupancy Tax Determination of November 10, 2005.
Contact Person/Dept.:
Nagam Rao/City Treasurer's Office
Phone Number: (310) 253-5889
Fiscal Impact: Yes [x] No [] General Fund: Yes [x] No []
Public Hearing: [] Action Item: [x] Attachments: [X]
Public Notification: LAX Plaza Hotel on 11/23/05; Master Notification List on 11/23/05
Department Approval:
Crystal Alexander
CAO Approval:
Martin Cole for Jerry Fulwood 11/22/05
City Controller Approval: N/ACity of Culver City, California
City Council Agenda Item Report
taxes are to be held in trust by the hotels until they are remitted to the City. At the end of
every month|1010|, each hotel operator is obligated to file a tax return and remit, to the Tax
Administrator, all TOT collected on the City’s behalf during the prior month.
A. TOT Enforcement/Collection Procedures
The CCMC provides an assessment procedure designed to help the City establish the
TOT due from hotels failing to comply with their obligation to file TOT returns and
remit the TOT collected on behalf of the City. Under this assessment procedure, the
Tax Administrator is authorized to estimate the amount of TOT (along with the
attendant interest and penalties) due from hotels which have failed to file TOT returns.
Once the Tax Administrator makes such an estimate, the Tax Administrator must notify
the involved hotel about the amount assessed and about the hotel’s right to request a
hearing, before the Tax Administrator, regarding the amount of the assessment.
If the assessed hotel fails to request a hearing within ten days of service of the notice of
assessment, the assessed amount becomes final and immediately due and payable.
However, if the assessed hotel requests a hearing, the Tax Administrator must set the
matter for a hearing, at which hearing the hotel operator can show why the assessed
amount should not be fixed as the TOT owed by the hotel. After this hearing, the Tax
Administrator determines the amount of TOT (including interest and penalties) due and
notifies the hotel of that amount. This amount becomes due and payable fifteen days
after the Tax Administrator makes his/her determination, unless the hotel appeals to the
City Council.
Upon the filing of such an appeal, the City Council must set the appeal for a hearing.
After such hearing, the findings of the City Council become final and conclusive and
any amount found by the City Council to be due becomes payable upon service of
notice of the City Council’s findings. Should a hotel fail to pay the assessed amount
after exhaustion of these assessment procedures, the City can file a lawsuit to enforce
the City Council’s findings and collect the assessed TOT.
B. Factual Summary
As of early October, 2005, the Ramada Hotel (the prior name of LAX Plaza Hotel) and
LAX Plaza Hotel had failed to file tax returns and to remit the TOT collected for
thirteen of the months occurring between October, 2003 and August, 2005.
The City Treasurer’s Office wrote to the hotel about these delinquencies on each of the
following dates:|1010| Monthly reporting and remitting are per a July 2001 Tax Administrator’s ruling and applies to all hotels/motels.City of Culver City, California
City Council Agenda Item Report
December 8, 2003
February 16, 2004
March 4, 2004
December 3, 2004
March 3, 2005
April 13, 2005
June 17, 2005
The City Attorney’s Office sent the hotel a related demand letter on August 24, 2005.
At around this time, City staff also received information that the LAX Plaza Hotel was
about to be sold. Since the hotel had not responded to any of the letters from either the
City Attorney’s or the City Treasurer’s offices and since there was now a risk that the
business would be dissolving and/or leaving town, City staff began formulating
enforcement and collection strategies during August and September, 2005.
The primary enforcement and collection strategy formulated by City staff involved use
of the TOT assessment procedures. TOT returns and remittances are due on the last day
of the month subsequent to its collection. So, as of October 12, 2005, the hotel was
delinquent on TOT returns and remittances through August, 2005. Therefore, to
commence the TOT assessment procedures, on October 12, 2005, the City Treasurer, in
her role as the Tax Administrator, notified LAX Plaza Hotel that based on an estimate
of their room revenues, she had arrived at an assessment of $639,388 as the TOT
(including interest and penalties) owed by the hotel for the thirteen months (i.e. through
August, 2005) for which the hotel had failed to file TOT returns and remit TOT
payments. (Attachment 1; also, Exh. 8 at the hearing of November 8, 2005.) The Tax
Administrator did not include TOT owed for September, 2005 in this notification
because the September TOT returns were not due until October 31, 2005. At the same
time, the Tax Administrator notified the hotel operators of their right to request a
hearing at which the hotel could challenge the assessed amount.
On October 24, 2005, LAX Plaza Hotel submitted a letter asserting that the TOT
(including interest and penalties) owed by the hotel for the involved thirteen months, as
well as September, 2005, was actually $424,030.14. Since there was a significant
discrepancy between what the Tax Administrator estimated was owed by the hotel and
what the hotel estimated was owed, the Tax Administrator informed the hotel operators
of their right to a hearing on this issue and set that hearing for November 8, 2005.
(Attachment 2; also, Exh. 14 at the hearing of November 8, 2005.) At the same time,
the Tax Administrator informed the hotel that, in preparation for the hearing on
November 8, her staff would be exercising its right to audit the hotel’s TOT records.
Treasury Division Manager Nagam Rao and an audit manager from the City’s outside
audit firm visited LAX Plaza Hotel on November 3, 2005 and were able to audit the
hotel’s TOT records.City of Culver City, California
City Council Agenda Item Report
At the hearing of November 8, 2005 (“show-cause hearing”), the hotel and City
representative agreed on the amount of gross revenues collected by the hotel during the
delinquent thirteen months occurring between October, 2003 and August 2005. The
hotel and City representatives also expanded their discussions to cover the month of
September 2005, as the hotel’s representatives had included this month in their letter
requesting the show-cause hearing and as the TOT returns and remittances for
September, 2005 had become delinquent as of November 1, 2005.
The only unresolved issue at the show-cause hearing was the amount of exemptions the
hotel was entitled to claim for the months under review. At the show-cause hearing,
hotel representatives asserted that $338,443.12 of the revenues generated during the
fourteen months (through September, 2005) were exempt from TOT. However, the
hotel representatives did not present any documentation to substantiate these
exemptions at the hearing. Further, even during the audit conducted by the City’s
Treasury Division Manager and outside auditor on November 3, 2005, the hotel
representatives had been unable to produce adequate documentation to support the
hotel’s claim that revenues of $338,443.12 be exempted from the TOT calculations.
At the show-cause hearing, the Tax Administrator requested that the hotel file the
missing TOT returns. The hotel’s representatives agreed to do so.
On November 10, 2005, the Tax Administrator issued findings based on the evidence
presented and stipulations made at the show-cause hearing. (Attachment 3.) These
findings related to fourteen months of delinquencies (i.e. delinquencies through
September, 2005) because the parties had stipulated, during the show-cause hearing, to
the amount of gross revenues involved for these fourteen months. In her findings, the
Tax Administrator disallowed the $338,443.12 exemption asserted by the hotel for this
fourteen-month period because the hotel had failed to submit adequate documentation
to support the $338,443.12 exemption. Therefore, the Tax Administrator’s findings
fixed the TOT (including penalties and interest) owed by the hotel for the involved
fourteen months at $506,095.16. Had the hotel submitted the documentation required to
substantiate its asserted $338,443.12 exemption, the TOT (including penalties and
interest) would have been fixed at $456,648.34, a difference of $49,446.82.
On November 10, 2005, the hotel filed TOT returns for the thirteen delinquent months
occurring between October, 2003 and August 2005. To date, the hotel has not filed its
TOT return for the month of September 2005, nor have they submitted any reason as to
why they have not done so. The gross revenues reported on these thirteen TOT returns
were the same as the gross revenues which had been agreed to during the show-cause
hearing for these same thirteen months. However, notwithstanding that the hotel had
still not produced any documentation to substantiate any of its asserted exemptions, City of Culver City, California
City Council Agenda Item Report
these TOT returns asserted $253,717.12|1010| in exemptions for the involved thirteen
months.
Obviously, the exemption amount as well as the TOT (including penalties and interest)
due will vary depending on whether one is addressing a thirteen-month or a
fourteen-month period and depending on whether one assumes that all of the asserted
exemptions are allowed or disallowed. The table, below, attempts to summarize all of
these variables in table format:
TABLE
Status as of October 12,
2005 (at time of mailing of
Notice of Transient
Occupancy Tax
Assessment)
Status as of November 8,
2005 (at time of the Show-
Cause Hearing)
Number of Months
Delinquent
13 14
Amount claimed as
exemptions by the hotel
$253,717.12 $338,443.12
TOT due per City Staff (if
all exemptions are
disallowed)
(Tax+penalties+interest)
$469,983.25 $506,095.16
TOT due per Hotel (if all
exemptions are allowed)
(Tax+penalties+interest)
$431,720.27 $456,648.34
DISCUSSION:
Since under the CCMC any hotel aggrieved by the Tax Administrator’s decision after a
show-cause hearing can appeal such decision to the City Council and since the hotel
continued to assert a position contrary to the Tax Administrator’s show-cause decision,
City staff have construed the hotel’s continued insistence on asserting the unsubstantiated
$253,717.12 exemption as an appeal of the Tax Administrator’s show-cause findings. |1010| $253,717.12 is the asserted exemption amount for the involved thirteen months (i.e. for the thirteen months
which were the subject of the Tax Administrator’s Notice of Assessment of October 12, 2005). $338,443.12
is the amount asserted by the hotel as exempt for the involved thirteen months plus September, 2005.
These were the fourteen months which were discussed at the show-cause hearing.City of Culver City, California
City Council Agenda Item Report
City staff grappled with determining whether this appeal should relate to the
fourteen-month period which both parties discussed and stipulated to (at least regarding the
amount of gross revenues during this fourteen month period) at the show-cause hearing or
whether this appeal should relate only to the thirteen-month period which was the subject
of the Notice of Transient Occupancy issued on October 12, 2005. As noted previously, the
Tax Administrator’s Notice of Transient Occupancy Tax Assessment only related to the
thirteen months through August, 2005, since the September, 2005 TOT return had not
become due at the time the Notice of Transient Occupancy Tax Assessment was issued.
Upon advice of counsel, staff have determined not to include the September, 2005 TOT
and asserted exemption within the scope of this appeal because doing so could subject the
City to a claim that the City violated the hotel’s due process rights by not having provided
the hotel with a noticed opportunity to be heard regarding the September, 2005 TOT.
Accordingly, City staff have decided to limit the scope of this appeal to the Tax
Administrator’s decision disallowing the $253,717.12 asserted exemption and fixing the
TOT (including penalties and interest) owed by the hotel for the thirteen-month period
(through August, 2005) at $469,983.25|1010|.
It is important to note that the only issue involved in this appeal is whether to uphold the
Tax Administrator’s decision to disallow $253,717.12 in exemptions claimed by LAX
Plaza Hotel during the involved thirteen months. If the City Council upholds that decision,
the City Council should also uphold the Tax Administrator’s decision fixing the TOT
(including penalties and interest) owed by the hotel at $469,983.25. If the City Council
overturns the Tax Administrator’s decision to disallow $253,717.12 in exemptions, the City
Council should also find that the Tax Administrator should have fixed the TOT (including
penalties and interest) owed by the hotel at $431,720.27.
It should be noted that any hotel which has paid the TOT has the right to amend its TOT
returns and claim a refund for any excess tax paid within 3 years from the time the TOT
was initially paid, subject to the hotel specifying the grounds upon which the refund claim
is founded. In view of this, the appellants would be eligible to claim a refund for whatever
exemptions they may wish to subsequently claim, provided they are able to furnish the
supporting documentation and file their amended return(s) within the 3 year time limit.
FISCAL ANALYSIS:
If the City Council upholds the decision/findings of the Tax Administrator, $469,983.25
will be payable to Culver City upon service of notice of the City Council’s decision. If the |1010| The Tax Administrator’s findings, issued November 10, 2005, actually fixed the TOT (including interest and
penalties) at $506,095.16. This is the TOT (including interest and penalties) for the involved 13 months plus
September, 2005 with all asserted exemptions being disallowed. $469,983.25 is the TOT (including interest and
penalties) for the involved 13 months, exclusive of September 2005, with all asserted exemptions being disallowed. City of Culver City, California
City Council Agenda Item Report
City Council reverses the decision/findings of the Tax Administrator, $431,720.27 will be
payable to Culver City upon service of notice of the City Council’s decision.
ATTACHMENTS:
1. Notice of Transient Occupancy Tax Assessment
2. Notice of Hearing regarding Transient Occupancy Tax Assessment
3. Notice of Fixing of Transient Occupancy Tax Assessment
MOTION:
That the City Council:
A.
1. Deny LAX Plaza Hotel’s appeal of the Tax Administrator’s decision of
November 10, 2005 fixing the Transient Occupancy Tax (including related
penalties and interest) owed by the hotel;
AND
2. Find that LAX Plaza Hotel owes $469,983.25 as Transient Occupancy Tax
(including related penalties and interest).
OR
B.
1. Grant LAX Plaza Hotel’s appeal of the Tax Administrator’s decision of
November 10, 2005 fixing the Transient Occupancy Tax (including related
penalties and interest) owed by the hotel;
AND
2. Find that LAX Plaza Hotel owes $431,720.27 as Transient Occupancy Tax
(including related penalties and interest).
MEETING DATE: 11/28/05
AGENDA ITEM: Appeal by LAX Plaza Hotel from the Tax Administrator's Transient
Occupancy Tax Determination of November 10, 2005.
ATTACHMENTS
Pages
1. Notice of Transient Occupancy Tax Assessment 1 —2
2. Notice of Hearing regarding Transient Occupancy Tax Assessment 3 — 5
3. Notice of Fixing of Transient Occupancy Tax Assessment 6 — 897 'ULVER BOULEVARD CULVER CITY, CA 9023 . 07 www.culvercity.arg
I
CONFIDENTIAL
October 13, 2005
Hidebami Minagawa
Urban Hotels Inc., dba LAX Plaza Hotel
6333 Bristol Parkway
Culver City, CA 90230
VIA
eaette/Z, CITY
HAND DELIVERY
SUBJECT: Notice of Transient Occupancy Tax Assessment
Dear Mr. Minagawa:
Your business has failed to remit Transient Occupancy Taxes (TOT), for which
our office has communicated with you on numerous occasions. On August 24,
2005, you also received communication from the City Attorney on this same
issue. Your business collected the TOT on behalf of the City of Culver City
for each of the following periods, for which no tax filing or remittance was
delivered:
October, 2003
through August, 2005
Pursuant to Culver City Municipal Code Section 11.02.135, I have assessed
your business to owe in Transit Occupancy Taxes for the above-
listed months. In addition, the interest and penalties caused by these
delinquencies are , The total amount your business is being assessed
is $639,388, a breakdown of which is shown on the enclosed spreadsheet, and
is an extrapolation based on prior payments.
Pursuant to the aforementioned code section, you may, within 10 days of the
serving or mailing of this notice, apply in writing to the Tax Administrator for
a hearing on the amount which has been assessed against your business. If you
don't make such application within 10 days of the serving or mailing of this
notice, the tax, interest and penalties assessed via this notice shall become final
and conclusive and immediately due and payable.
If you do make such an application, you should address your written
application to the undersigned at the above address. Upon receipt of such
application, we will notify you of a hearing date for this application. Note that
pursuant to Culver City Municipal Code Section 11.02.145, as operator of the
hotel, you have the duty to keep and preserve all records as may be necessary
to determine the tax, and that the Tax Administrator shall have the right to
CRYSTAL C. ALEXANDER CITY TREASURER
CITY TREASURER'S OFFICE TEL 310.253.5865 FAX 310253.5880Sincerely,
Enclosure , Penalty and Interest Assessment
Ev,16-
ThLL
;v1
g]_
LA-X Plus TOT /1.•mr.et
CONFIDENTIAL
inspect these records.
Your prompt attention to this matter is advisable. An online version of the Culver City Municipal
Code is available at www.arnlegal.conilculvercity_ca/
Crystal C. Alexander, CCMT
Tax Administrator
Copy Shashi Poudyal, Property Manager
Blanca Romero, Controller
Mayor Vera & Members of the City Council
Jerry Fulwood, CAO
Carol Schwab, City Attorney
Susan Evans, Community Development Director
Nagam Rao, Treasury ManagerOFFICE OF THE CITY TREASURER
CITY OF CULVER CITY
9770 CULVER BOULEVARD, CULVER CITY, CALIFORNIA 90232-0507
(310) 253-5865
FAX (310) 253-5880|10 10|-c),\AAQ,AP +-
CRYSTAL ALEXANDER
City Treasurer
CONTEDENTIAL
October 27, 2005
H.A. Solomon, Controller
Urban Hotels Inc., clba LAX Plaza Hotel
6333 Bristol Parkway
Culver City, CA 90230
Certified Mail and Via Facsimile
SUBJECT: Notice of Hearing Regarding Transient Occupancy Tax Assessment
Hearing Date: November 8, 2005
Hearing Time: 10:00 am
Hearing Location: City Hall, First Floor, Conference Room 1 B
Dear Mr. Solomon:
We are in receipt of your letter dated October 24, 2005_ The City has interpreted this
letter to serve as your business' application for a hearing, pursuant to the provisions of
Section 11.02.135 of the Culver City Municipal Code (CCMC), regarding the City's
Transient Occupancy Tax (TOT) assessment dated October 12 (mailed) and October 13,
2005 (hand delivered.)
In response to this application for hearing, we have scheduled a hearing, pursuant to the
provisions of Section 11.02.135 of the CCMC, to show cause why the amount specified
in the City's assessment should not be fixed as your business' TOT, interest and penalties
owed to the City. That hearing has been set for November 8, 2005 at 10:00 am. You
have the right to appear at that hearing to offer evidence why the tax, interest and
penalties contained in the City's TOT assessment should not be so fixed. If you fail to
appear at that hearing, your business' TOT assessment will be fixed at the amount shown
on the TOT assessment: $639,388.
Further, the City has the right to inspect your business' TOT records at all reasonable
times pursuant to Section 11.02.135 of the CCMC. In preparation for the cause hearing
noted above, the City will be exercising its right to inspect your business' TOT records
on November 3, 2005 at your business site at 6333 Bristol Parkway, Culver City. Both
City staff and a representative of the City's outside audit firm, Lance, Soil & Lunghard,
will be present for the inspection. Please make sure that all of your TOT records,
Culver City Employees take pride in effectively providing the highest levels of service to enrich the quality of life for the community by building on
our tradition of more than seventy-five years of public service, by our present commitment, and by our dedication to meet the challenges of theSincerely,
Page 2
Co
...7",L, FaENTU
including but not limited to the records identified in the attachment, are made available
for the City's inspection at that time.
If you have questions regarding procedural aspects of the hearing, please contact me or
Roland Miranda, Deputy City Attorney.
Crystal C. Alexander, CCMT
Tax Arlin i-n stator
Attachment
Copy Hideburni Minagawa, President
Shashi Poudyal, Property Manager
Carol Schwab, City Attorney
Roland Miranda, Deputy City Attorney
Nag= Rao, Treasury Division Manager
Michael Chu, Partner, Lance, Soil & Lunghard, LLP
Docosnan12OFFICE OF THE CITY TREASURER
CITY OF CULVER CITY
9770 CULVER BOULEVARD, CULVER CITY, CALIFORNIA 90232-0507
CaNE'rr"-
(310) 253-5865
FAX (310) 253-5880
CRYSTAL ALEXANDER
City Treasurer
Attachment to Notice of Hearing Regarding Transient Occupancy Tax Assessment
(1)Monthly Statements of Gross Room Revenues, Tax Exemptions, and adjustments, for
the months under review i.e. October 2003, 1to .,z1.
August 2005. )("v1
(2)Daily Room Revenue and Transient Occupancy Tax collected for the months under
review.
(3)Hotel Room Charges.
(4)Additional Room Charges.
(5)Details of any Special Packages that the Hotel may be operating which may impact
the room rates.
(6)Hotel's written Policy on exemption from the City of Culver City Transient
Occupancy Tax.
(7)Any Rewards Program that they may be operating or participating in, and if they are
reimbursed for the same.
(8)No Show, Attrition or Cancellation Policy.
(9) City of Culver City Tax Exemption Forms in support of the Tax Exemptions being
claimed.
e (10) Qualifying Rental agreements in cases where long term residents have been granted tax
exemptions from day 1.
(11) If Meals are offered, then documentation to show that the Transient Occupancy Tax and
the Sales Tax components are not co-mingled in the billing process.
Culver City Employees take pride in effectively providing the highest levels of service to enrich the quality of life for the community by building on
our tradition of more than seventy-five years of public service, by our present commitment, and by our dedication to meet the challenges of the
r.filrm97,,, CULVER BOULEVARD CULVER CITY, CA 90232-0507 www.cuivercity.org
Pirtt WW"1"1117--
Mr. H.A. Solomon
Controller
LAX Plaza Hotel
6333 Bristol Parkway
Culver City, CA 90230
November 10, 2005
ettittelt CITY
Delivered Via Hand Delivery, Certified Mail and Facsimile
SUBJECT: Notice of Fixing of Transient Occupancy Tax Assessment:
Transient Occupancy Tax Assessment of $506,095.16 Due in
Full on or Before Monday, November 28, 2005
Dear Mr. Solomon:
On October 12 and 13, 2005, pursuant to provisions of Culver City Municipal
Code (CCMC) Section 11.02.135 concerning the failure to report and remit the
collection of transient occupancy tax (TOT) I, as Tax Administrator, issued a
notice of TOT assessment in the amount of $639,388.
On October 24, 2005, I received a letter from you, which was construed to be a
request for hearing on the amount assessed. Accordingly, on October 27, 2005
I sent you a notice of hearing regarding the assessment, to schedule the hearing
for November 8, 2005. Said notice also instructed you that representatives of
the City would visit the hotel premises on November 3, 2005, to inspect the
TOT records, pursuant to CCMC Section 11.02.145.
A hearing was held in the City Council Chambers on November 8, 2005 from
10:00 am to 12:15 pm. Witnesses presenting evidence at the hearing included
Mr. Nagam Rao, Treasury Manager (representing the City) and Mr. Don
Kaaukai, Managing Partner, and yourself (representing LAX Plaza Hotel.)
You were advised at the commencement of the hearing that its primary purpose
was for hotel representatives to show cause why the $639,388 assessed by the
City should not be fixed as the amount owned by LAX Plaza Hotel for its
TOT, plus related interest and penalties.
Mr. Rao entered items into evidence (Exhibits 1 through 25), which consisted
of correspondence and related paperwork. You entered into evidence one item
(Exhibit A) of related paperwork. All of these items are now included in the
file of record from the hearing, as there were no objections from either party on
any item concerning their entry- into the record.
CRYSTAL C. ALEXANDER CITY TREASURERMy major fmdings of fact from the hearing are as follows:
1) Mr. Kaaukai are Mr. Solomon stipulated they were the authorized representatives of the hotel
for the purposes of the hearing.
2) Per City Exhibits 1 through 7, from a time period of February 16, 2004 through August 24,
2005, the City (both the City Treasurer's and City Attorney's Offices) had corresponded
with the hotel regarding the hotel's delinquency in paying the TOT. Mr. Rao testified that no
written response was received from hotel representatives in response to any of this
correspondence and that, further, the only verbal conversations on the matter were always
initiated by Mr. Rao. Mr. Kaaukai and Mr. Solomon did not dispute this.
3) Mr. Kaaukai and Mr. Solomon stipulated to receipt and knowledge of the contents of City
Exhibit 14. This exhibit is the City's October 27, 2005 Notice of Hearing Regarding
Transient Occupancy Tax Assessment. This notice included an attachment, which outlined
the TOT records that were to be examined on November 3, 2005.
4) Mr. Rao and Mr. Shirish Patel, Audit Manager of the City's outside audit firm, Lance, Soil &
Lunghard, examined TOT records at the hotel premises on November 3, 2005. Mr. Patel was
unable to attend the hearing, but submitted a memo (City Exhibit 23) regarding the records
review that was conducted.
5) As a result of the TOT records examination noted above, representatives of the City and the
hotel attempted to reconcile differences between the City's assessment, which was an
estimate, and the hotel's calculation of the amount that it claimed was due the City for taxes,
interest and penalties, based on actual records examined. City Exhibit 24 explains the
methodology for the recalculation of the tax (inclusive of penalties and interest) due.
6) Mr. Rao, Mr. Kaaukai and Mr. Solomon agreed that the gross revenue, for the time periods
for which the LAX Plaza did not file tax returns and pay remittances, is the total figure
shown in City Exhibit 24-A, column 2, which is $
7) Mr. Solomon, being familiar with the calculations behind the figures in City Exhibit 24-A, is
also in agreement with the penalties and interest calculations. However, Mr. Solomon
disputed total disallowment of the exemptions claimed, which total $338,443.12, per column
3 of City Exhibit 24-A. However, Mr. Solomon failed to produce any records supporting the
exemptions claimed,
Based on the fmdings noted above, which are based on testimony provided at the hearing and items
entered into evidence at the hearing, I have determined that:
The $338,443.12 in exemptions claimed by the hotel but unsupported by required
documentation will be disallowed.
The LAX Plaza Hotel owes the City of Culver City a total of $506,095.16.
This amount must be paid in full, on or before Monday, November 28, 2005.71,
Pursuant to CCMC section 11.02.140, if the LAX Plaza Hotel is aggrieved by this
decision and chooses to appeal this determination to the City Council, it must file a
notice of appeal with the City Clerk within fifteen (15) days of the service or mailing of
the this determination of tax due.
If you have questions regarding this determination, please contact me or Roland Miranda, Deputy
City Attorney.
Crystal C. Alexander, CCMT
Tax Administrator
Copy City:
Jeny Fulwood, CAO
Carol Schwab, City Attorney
Roland Miranda, Deputy City Attorney
Nagam Rao, Treasury Manager
LAX Plaza Hotel:
Ifidebumi Minagawa, President
Don Kaaukai, Managing Partner
Shashi Pouydal, Property Manager
1AX Plro Jicuirs Ocurninulau
gz