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HomeMy WebLinkAboutZOA TIMESHARES 1981 CITY OF PALM DESERT STAFF REPORT TO: Planning Commission FROM: Department of Environmental Services SUBJECT: Zoning Ordinance Amendment to Permit Time-Sharing in Certain Zones CASE: ZOA 14-81 DATE: November 3, 1981 BACKGROUND: Earlier this year the City established a moratorium and began investigating time-sharing. The City Council established a Time-share Committee. A meeting of the Time-share Committee was held in September and the attached report prepared by Staff, dated' August 4, 1981, was discussed. The Committee endorsed the regulations proposed in that report. City Council reviewed the Time-share Committee decision and referred the matter to Planning Commission for hearing. ENVIRONMENTAL ASSESSMENT: The addition of "Time-Sharing" as a permitted use in certain zones has been reviewed in accordance with the California Environmental Quality Act and determined to be a Class 5 Categorical Exemption. DISCUSSION: The August 4, 1981 report on Time-sharing (copy attached), provides a history of Time-sharing, a breakdown of California and Hawaii Time-sharing regulations. Additionally, a response to some of the major issues which had been raised concerning time-share, a discussion concerning land use compatibility (ie:where it should be permitted), and a memo from the City Attorney dated April 7, 1981, stating that in his opinion, the City does not have the constitutional authority to blanketly prohibit time- sharing. With this opinion from the City Attorney, Staff elected to propose an Ordinance Amendment which would permit "Time-sharing" in certain zones subject to the issuance of some type of use permit. A draft of the proposed Ordinance has been prepared and is attached hereto. The first and second sections of the Draft Ordinance would amend Chapter 3.28 of the Municipal Code to include "Time-sharing" as hotel type of land use for the purposes of the collection by the City of Transient Occupancy Tax. The third Section of the draft Ordinance would add a new Chapter to the Municipal Code. Section 25.100.010 defines "Time-Share". Section 25.100.020 delineates the zones in which "Time-share" will be permitted. In all zones the use is subject to the issuance of a Conditional Use Permit. The Draft Ordinance proposes to permit "Time-share" in all zones where the present code permits hotel uses. It is felt that this is reasonable because for all intents and purposes, a "Time-Share" land use is no different than a hotel. Only the ownership of the "Time-Share" is different in that the owners of time-share have an exclusive right to use of the facilities whereas the shareholders of hotels are paid dividends instead of having the right to use the hotel. This is discussed in more detail in the August 4, 1981 report. Section 25.100.030 delineates additional information which is to be submitted when a Conditional Use Permit application is submitted for a "Time-Share" project. Section 25.100.040, confers upon the Planning Commission the right to impose the same conditions on a Time-Share as may be imposed on any other Conditional Use Permit application. Section 25.100.050 requires that the Planning Commission must make necessary findings as required for a regular Conditional Use Permit, before the Conditional Use Permit may be granted. Section 25.100.060 specifies that the minimum number of units in a "Time-Share" project shall be twenty (20). This minimum number of units was recommended by a recognized expert in the field as being necessary to suport adequate on-site management, site maintenance and allow for proper marketing. Section 25.100.070 provides that "Time-Share" developments shall be designed to conform to the standards required for a hotel in the zone in which the property is located. Section 25.100.080 states that all "Time-Share" projects will be subject to the provisions of the City's Transient Occupancy Tax Ordinance. Section 25.100.090 exempts from the provisions of this Chapter time-share projects for which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. This Draft Amendment has been revised since it was issued by the Time-Share Committee. A Draft Ordinance based on a proposed Ordinance for Palm Springs, was included in the August 4, 1981 report. Certain sub-sections of Section 25.100.030 of that Draft Ordinance (ie: Information to be submitted with Conditional Use Permit application) have been deleted as it was felt they were unnecessary. Section 25.100.040 (Conditions of Approval) of that Draft Ordinance has been deleted and replaced by the existing Municipal Code Section relating to conditions which may be imposed on a Conditional Use Permit application. Section 25.100.050 of that Draft Ordinance (minimum Time-Share Structure Size) has been deleted because it was felt that other sections of the Code already limit the size of units through maximum number of units per acre, required open space and maximum height limits. PREPARED BY: REVIEWED AND APPROVED BY: /pa INTEROFFICE MEMORANDUM City of Palm Desert TO: TIME-SHARE COMMITTEE FROM: DEPARTMENT OF ENVIRONMENTAL SERVICES SUBJECT: TIME-SHARE ANALYSIS DATE: AUGUST 4, 1981 INTRODUCTION The Time-share Committee requested a comparative analysis of California and Hawaii time-share regulations. The study was generated by the Committee's concern of Council 's statements relating to Hawaii 's time-share problems. This report will analyze those regulations and address the concerns raised relative Y- to permitting time-sharing in Palm Desert. HISTORY OF TIME-SHARING In 1968 time-sharing was introduced in the United States, however, it was not readily accepted by developers. A strong resort condominium market reflective of the overall strength in the 1970 economy contributed to the lack of time-share developments. The downturn of the real estate industry in 1974 resulted in many unsold resort units. Time-sharing became one method for developers to salvage projects. Unfortunately, for these developments, time-share was an afterthought and not part of their original concept. Problems including poor financing, lack of concept understanding, and lack of exchange programs were commonplace. Despite these problems some high quality time- share developments succeeded. As time-share became more widespread better financing, consumer understanding and expanded exchange programs developed; builders also became more responsive to market demands. All of these improvements resulted in an incredible growth of time-share resorts; from 73 held by 40,000 owners in 1976 to 250 held by 200,000 owners two years later with a doubling in sales each year since 1976. CALIFORNIA-HAWAII REGULATIONS A table delineating the provisions of each state's requirements is provided in Appendix A. Both regulations were designed to reduce the problems that had developed in the time-sharing industry. California's regulations require the creation of a Homeowner's Association and the declaration of the CC&R' s. In addition, the developer must present evidence of habit ability or financial ability to complete the project, sufficient property interest in the project to assure its completion, and permissibility of the project by local ordinance. continued. . . Time-share Committee August 4, 1981 Page Two Appendix B provides a more detailed description of the regulations. This appendix is a copy of regulations proposed to implement SB 1736 which established criteria to regulate time-share in California by the Department of Real Estate. Hawaiian time-share regulations were established in November, 1980. Time-share projects are permitted in hotels and areas designated for hotel use, resort use, or transient vacation rentals use as determined by local authority. Existing time-share projects were exempted. Appendix C more fully describes the provisions of Hawaii 's regulations. PALM DESERT TIME-SHARE CONCERNS The major issues raised in Palm Desert concerning time-share are: a) Sales techniques - b) Advertising c) Maintenance d) Impact on transient occupancy tax There have been instances of sales techniqu where gifts are promised but not delivered and high pressure tactics used. These g rally involve your lower quality develop- ments such as converted motels. The five day cooling-off period provided by California 5 s5 regulation is one answer. Under this provision a purchaser may elect to cancel any ?j agreement. State regulations also require all advertising techniques to be reviewed 0- by the Department of Real Estate. In addition, a provision providing for a Purchaser's J Awareness Package could be provided in city regulations. The major concern of maintenance has been addressed by the requirement that the CC&R's of a development must provide for regular assessments to defray maintenance costs and provide several means of collecting from delinquent owners. In terms of the City's transient occupancy tax, the proposed time-share provisisions provide a vehicle enabling the City to collect those revenues from time-share develop- ments. WHO BUYS TIME-SHARES AND WHY? A study organized and funded by the Resort Time-Sharing Council of some 28,000 owners, at 185 locations, with a response of nearly 9700, was conducted in 1980. The result of that survey is attached to this report as Appendix D. The typical time-share purchaser was in his mid-forties, with an annual income in excess of $33,000, married and had an above average level of education. The reasons for time-share investment in order of importance: a) Exchange opportunity b) Future vacation savings c) Investment and resale potential Of those responding, 86.3% were either "very satisfied" or "satisfied" with their time-share purchase. 61.5% indicated they intended to acquire additional time-shares. Only 4.5% of the respondents were either "dissatisfied" or "very dissatisfied". continued. . . S Time-share Committee August 4, 1981 Page Three The survey showed that owners used their units an average of 8 days per year and spent $85 per day in the local community. LAND USE COMPATIBILITY California regulations presently require. an indication from the local jurisdiction that a proposed time-share project is not prohibited. The regulations basically permit time-sharing unless expressly prohibited by ordinance or requires a use permit. When one speaks of prohibition it is doubtful that a blanket prohibition could be established and defended--see attached City Attorney memo April 7, 1981. That memo states: "The prohibition of the time-share project as a form of development is not currently within the constitutional means of the City. " The problem in establishing a blanket prohibition relates to the difficulty in distinguishing the degrees and varieties of ownership and the affects these uses may have on the public health, safety, and general welfare. As was discussed previously and in the Hawaii Conference Committee Report, time-sharing and transient vacation rental use are identical uses of land, without regard to owner- ship. Land use decisions should be based on the use of the land and not on ownership. For this reason time-sharing and transient vacation rentals should either be permitted or prohibited on an equal basis within certain zones. The proposed ordinance makes such provision. As was discussed in the January 22, 1981, report on time-sharing to City Council (attached as Appendix E), resort hotels are permitted in the PC (4) zone, PR zone, R-3 zone and C-1 zone subject to obtaining development plan or conditional use permit approval . If time-sharing were not to be prohibited outright, then the use should be limited to the above noted zones subject to obtaining both a development plan and conditional use permit or some type of special permit process. As discussed in the January 22, 1981, report the "Transient Occupancy Tax" can be collected in "time-share" developments so the potential loss of hotel-zoned land to time-share developments should not present problems. In examining the amount of vacant PC (4) land in the City and the possible difficulties in obtaining financing for hotel developments, time-sharing may provide an alternate method of financing such developments. Permitting time-sharing in planned residential and R-3 zones where hotels are presently permitted, may result in conflicts between full-time owners and time-share occupants. However, present short-term rentals operating in the major country club developments within Palm Desert have not resulted in conflicts. Furthermore, case studies cited in The Resort Time Sharing Industry Report Vol . II showed no conflicts on mixed time-share permanent residential projects. It is felt that in the case of existing condominium developments, which may wish to change some of the units to time-share, .that a majority of the owners be required to vote in favor of the proposed change. continued. . . Time-share Committee August 4, 1981 Page Four In the case of a new mixed condominium time-share development, a provision requiring full disclosure of this fact and the location of the time-share units should be an adequate means of protecting anyone who does not wish to locate in a time-share development. SUMMARY In light of the City Attorney' s opinion of April 7, 1981, that the City does not have the constitutional authority to blanketly prohibit "time-sharing' throughout the City, that the best means of controlling time-share developments as to permit it in specified zones subject to the issuance of some type of use permit. A draft ordinance is attached to this report. The Time-share Committee should review this report and provide comment at the "- next committee meeting. It is proposed that the report with applicable comments of the committee incorporated then be forwarded to the City Council with an appropriate recommendation. MON A. I Z RAD/lr Attachments ; • l ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIO 'S OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIME-SHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging, -_ house, roominghouse, apartment house, time-share project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel .rooms,rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time- share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or charac- ter, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. ( D. "Rent" means the consideration charged or chargeable to the tenant or I!l person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be, payable prior to or following (in whole or in part) the occupancy to which it is attributable, and may have been paid in whole or in part in advance on a long- term basis, such as in a time-share project or similar arrangement. It is not the intent of this section to make the operator liab ewe tax on uncollected rent. However, uncollected rent must be reported. E. "Tax Administrator" means the director of finance, or such other individual as may be designated by the City Council . F. "Time-share Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room s , hotel or portion thereof, or segment of real property, annually or on some other seasonal or eriodic basis, fora period of time that has been or will be allotted from t e use or occupancy periods into which the time-share project which is involved has been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, room s , or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession,' permit', right of access, license, time-share arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of such occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 SS1, 2, 1976; Ord. 6 S2, 1973)." ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of time-share occupancy by a transient shall be the rental value of the unit or rooms which accommodated such occupancy, which rental value shall be ... com uted b determinin the rorata share of the total purchase rice of the time- share ri ht or entitlement whether or not involving an estate or any ownership in real property which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees assess- ments, charges and expenses charged by the operator as attributable to the time-share occupancy of the transient by whatever name such fees, assessments charges or expenses may be denominated, whether "occupyin fee" , "maintenance or operations charge" , "Per diem fee", "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price in any case wherein the time-share right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a 'proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the tran- sient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accommoda- tions furnished. (Ord. 6 53, 1973) . " SECTION 3: Addition. That Chapter 25. 100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25. 100 TIME-SHARE PROJECTS 25. 100.010 Defined. As used in this Chapter, time-share project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy per- iods into which the project has been divided and shall include, but not limited to time-share estate, interval ownership, vacation license, vacation lease, club member- ship, time-share use, and hotel/condominium. 25. 100.020 Permitted Zones. A time-share project shall be permitted only in the Planned Commercial Resort (PC-4) zone, Planned Residential (PR) zone, Multi- family (R-3) zone or General Commercial (C-1) zone, and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C U P Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a time-share project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. ( L ZS 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each time-share participant and, where applicable, to each unit in a project that is not subject to the time-share program or arrangement. , 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. i 6. Description of any proposed restrictions on the use, occupancy, It alteration or alienation of time-share intervals and rights. . 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. „Y 8. Description of time periods, types of units, and which units are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time-share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified U.S. Mail that application to so convert the project would be submitted to the Commission to- gether with when the City staff and the Commission would consider such application. 10. In the case of a new mixed project (ie: Time-sharing-condominium/ rental ) a description of the means proposed to be employed to disclose the number and location of all time-share units within the project. 11. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 12. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Co mission shall make in conjunction with Section 25.72.070, the Commission shall co sider the following: 1. The impact of the time-sharing project on transient rental stock; 2. The impact of time-sharing conversion on existing commercial bus- inesses; 3. The impact of time-sharing on present and future City services; 4. The impact of time-sharing on permanent residential stock; 5. Any other factors deemed relevant by the Commission. _ 25.100.050 Minimum Time-share Structure Size. A. Every time-share dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed portions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon: 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25.100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: - SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr N a A c Z H o c H m v A m --i -Hi z N r n n x a A Z m Z �--� H C) m z r H r m G7 o N L7 z a r m ;aM ON C) Z r VI m n C H m n o m m N CDo r m Z G o m H N _ C) -rl A A W H (n C-� Ci7 gym-. 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Z N O ��-. m C� m m A co z o N m N N Z N 2 Z --I O m G > n A OT D T .O O O O_ m O D nN_ m Cif T --I ME: m V 3 � m o r D o m :E: m z c') �. m m N m D r N x N O A Z ^ m T N D O G K A m m A rm— N O O r C. O N - A vbi cm') z m T o N o m 3 z 3 z D D z m m m x A z N A x C m.. D m N m D o cz) -Ni mCP z r c) W m z o D T r m o c-) K O O K K A c o m -i x o N ``-) o D m 3 O r N m o N o m m m y m x v m v .-� C) v m G) O O A G� 3 r O o m m C. x c C) z � m c, T � •O-I D m D = c� c� �-. n o -I m N z c • m 0 x D D r C-I x x x x x x x x o A z D rp ..r.. T_ICTIa.: Atm IIIFOX-mTIVE DIGEST OF PROPOSED C kN(U i RI TW, REGIII.ATIMS OF THE.' REAL ESTATE COMISSIONM . Decenber 23, 1980 Pursuant to the authority vested in him by .section 10080, 10131.6, 10170.4, 10249.2 and 11001 of the Fusiness and Professions Code, to irmle- m nt, interpret or rake specific Sections 10131.6, 10170.4, 10249.11, 11000, 11010, 11010.2, 11012, 11013.2, 11013.4, .11018, 11019.5 of the BiLminess and Professions Ca=e, DAVID II. FIX, Real Estate Cattaissioner of the State of California, proposes to adopt, amend or repeal regulations in Chapter 6, Title 10, California Administrative Code, as described helow: Please note that item; 1 through 30 propose the adoption of time--share subdivision regulatioms to ccxplermt the time-share leaislation effective January 1, 1981. These regulations and items 31 and 34 axe to beccxre effective as Pro- vided under Section 11346.2 of the Governrent Code on or. about April 28, 1981. The remaining changes, items 32 and 33, are to become effective on July 1, 1981. r 1. Amend Section 2790.7 - Chapter 601, Statutes of 1980, arenas Section 10249.3 and adds Section 10249.11 of the Business and Professions Code to include tire--share uses as out-of-state subdivision offerings. This arendmnt would conform this section to the provisions of the new law. 2. Adopt section 2810 - Defines "substantially eorplete" subdivision public report application for purposes of Chapter 1152, Statutes of 1980. 3. Adopt Section 2810.1 - Specifies the regulations in Article 12 applicable to tim-share projects. 4. Adopt Section 2810.2 - Requires applicant for tiro-share public report to present evidence of habitability of or financial ahilitY . to ocrplete the project, sufficient property interest it project to allow its ccspletion, and permissibility of project under local ordinance, if any. 5. Adopt Section 2810.3 - Prescribes purchase rnnev handling recniire- rents in ccmection erith tine-share offerings. 6. Adopt Section 2810.4 - Specifies conditions for the addition of a chmllina emit to a tis-e-share project. 7. Adopt rection 2810.5 - Prescribes when tine--share offerings with dc,ellina tmits both in the state and out: of. the state will. t,e treated as an out-of-state su)-divisi.on. 8. Adopt Section 2810.6 - Requires subdivider to notify Departm. nt of natural changes to tir\e-:hare project for which a public report has already been issued. I I 9. Adopt Section 2810,7 - Provides that Deal Estate Commissioner can approve alternative rights and remedies affording corq.)arahle benefits to tire-share miners. 10. Adopt Section 2811 - Requires the sponsor of a tine-share nroject to record a declaration dedicating any &elling units to the time-share project and requires certain provisions therein. 11. Adopt Section 2812 - Specifies standards for "reasonable arrang .cents" in time-share projects. 12. Adopt Section 2812. 1 - Requires transfer of control in time—share project to owners association or to trustee prior to eonsuyuating first sale of time-share interest in project. 13. Adopt Section 2812.2 - Reamres conveyance of tine-share project cl%?elling units to trustee prior to closing of sale of first tirie- share interest and prescribes elements of trust instruMent. 14. Adopt Section 2812.3 - Requires time-share project .,ponsor to provide security for pamtent of assessrmnts and . necifies requirerents for security. 15. Adopt Section 2812.4 - Prescribes conditions pertaining to the sponsor's subsidization of a time-share project operation. 16. Adopt Section 2812.5 - Rectuires covenant by tim-share project sponsor not to eneumher. (welling units after execration of the declaration without written consent of majority of other timers. 17. Adopt Section 2812.6 - Per uires the declaration in Section 2811 to prohibit partition of the project by a-mers. _18. Adopt Section 2812.7 - Prescribes conditions for joint timFa-share and ccryercial use of comm facilities. 19. Adopt Section 2812.8 - Prescribes that a minar:emit anent shall be erplcyed by a tire-share project. 20. Adopt .^section 2812.9 - Allaas rental of tin .hare interests to public under certain circumstances. 21. Adopt Section 2812.10 - Requires titre-share 1,.z ojr,ct tr, he insured against property damage and personal injur7 cl,tia�s. 22. Adopt Section 2313 - Requires regular reetinns of tiim-share project masers and prescribes reauirerents for such reeti.nas. 23. Arlmt Serti.on 2813.1 - Specifies nerbers' voting r..inhts in tire- share project timer association,. 24. Adopt Section 2813.2 - Prescribes ca-roosition and election procedures for governing bodies of tine-share Project amer association. 25. Adopt Section 2813.3 - Specifies rxnaireruits for reetings of governing bodies of tine-share project aver associations. -2- t 26. Adopt Section 2813.4 - Specifies requirements for assessments to defray costs of operating time-share projects. 27. Adopt Section 2813.5 - Requires dissemination of certain pertinent inforriation to all tine-share owners in a project. 28. Adopt Section 2813.6 - Requires that records of time-share project owners association be available for inspection and copying by association merihers. 29. Adopt Section 2813.7 - Specifies procedures and limits for a tire- share project owners association to discipline its merbers. 30. Adopt Section 2813.8 - Specifies procedures for amending governing instruments of time-share projects. 31. Repeal Section 2785 (h) (10) - Conformms this section to the recent decision in Council of Anthony Real Pstate Schools v. Fbx, San Diecio Superior Court, I'Io. 8 0 in idatincr this sub- division. The subdivision had. defined the organized disclosure of real estate exam questions as "unethical conduct". 32. & 33. Amend Sections 2861 and 2862 - Conforms these sections to Chapter 1149, Statutes of 1980 (AR 2915) which transfers jurisdiction over mobilehorre registrations f_rnm Department of Motor Vehicles to Department of Dousing and Ccr. nunity Development. NOIT: These sections are to become effective July 1, 1981. 34. Amend Section 3012 - Corrects "e.e_ tion" from licensees' continuing education recnrirement to "extension" of time for completing recmnre- ment. -3- i- s1312 CONFERENCE COMMITTEE REPORT NO. Honolulu, Hawaii April �� , 1980 Honorable Richard S . H. . Wong President of the Senate Tenth State Legislature Regular Session of 1980 State of Hawaii Sir--. .%r RE S B NO 1516 , S D. I, H.D 1 - Your Committee on Conference on the. disagreeing vote of the y _. Sena'te to the amendments proposed by .the House of Representatives. in S .B ... No. 1516 , S.D. 1, H.D,; 1, entitled:. "A BILL FOR AN ACT RELATING TO TIME SHARING" , having met, -and after full and free discussion, has agreed to i recommend and does recommend to the respective Houses the final passage of this bill in- an amended form The purpose of this bill is to regulate time sharing in .the. State of Hawaii Id its resolution of the several issues involved in this bill, your Conference Committee has taken note of the growth of time sharing over the past several years , both in the State of Hawaii and in other tourist destination areas . Your Committee is aware that time sharing has generated controversy among the various interested parties , including the governments of the., State and of the several counties, persons in the time share industry, and residents most = directly affected by the growth of time sharing and its potential for expansion_ Simply stated, those who favor time sharing see it as a continuing stimulus to the economy of the State through the . creation of additional jobs for residents of Hawaii and expenditures by time share participants .. Opponents challenge the conclusion that time sharing constitutes an economic .' advantage to the State, and consider it to be disruptive, particularly within areas where permanent residents live. The opponents would prefer the strict limitation or prohibi- tion of time sharing, while its proponents favor enabling legislation to establish definite guidelines and procedures Cfor its statutory regulation. SMA 783 496 r - CONFERENCE COMMITTEE REPORT NO. 'O � • ' ' Page 2 Your Committee concludes that it is necessary and timely for time sharing to be placed under strict governmental regulation if. the interests of the State , the time sharing "* industry, the purchasers of time share units and above all, the people of Hawaii, are to be served. Accordingly, it is the intention of your Committee that careful regulatory oversight of time sharing in the State of Hawaii be provided. - The following are some of the more significant areas of - regulation addressed in this measures - Sec. -3 Taxation .. Provides for reliable and efficient administration of real property and excise taxes. Sec. 4 . County authority. This mandate will be . : particularly helpful in efforts to clarify hotel, resort and .' transient vacation rental areas ­i ' The counties do not presently -Rfu one for the :less traditional forms, of. transient visitor .:-� a accommodations , and should address this in the near_ future Sec 5 Geographic limitations Provides a' general prohibitiorr, .eYcept as specifically allowed in the- enumerated subsections The first exemption is' a ,"grandfather provision : ram, to avoid any retroactive [effect of this section The second exemption subsection provides for two exemptions ti from the prohibitory -language: time sharing and transient >ztn w `vacation rentals are' allowed in hotels : -' Second; time sharing and r.: transient .vacation rentals are. allowed where designated for hotel i` use, resort use,` or vacation rentals use, pursuant county authority: under. Section 46-4, ' Hawaii. Revised Statute6 , . or where the county, `bg its legislative process.,' designates '.hotel, transient vacation. rental or resort use jWo- It is the clear intention. of your conferees that time r sharing and transient vacation rental use are. identica'�uses of end;without_regard,..torownersiA'-_and_that both-uses of_ land. , =_ shou7.3�be ad � c a dressed_ina oequl.._manner_:bythe counties. Your " conferees further note that county land use decisions are not ' based on ownership, but on the use of the -an min question.. As Z _ such, time shaxYng rn4__transient vacation_,rentals_ should be either peYmitt d or prohibited on an equal basis within an area deem-'(appiopr ate. by the county s• _ Your Committee further notes several areas of non-enforce- ment of. their own zoning ordinances by some- of the counties. In this regard, it is not the present character of the nei.ghbor-hoody but its intended use by the ,co'unty that is alsoR im_por_tant. The egislature intends`by 'this Actythat the counties will be guided by the notion that time sharing and transient vacation rentals should not be eritiitte7wl -YiFthoE life st-Tes of the permanent ' . __ ._.. . .-- -....._. y_ . res-rd "will be disrupted in an unreasonable manner. Any zoning code is only as good as its enforcement by a county. Sl4A 784 851 CONFERENCE COMMITTEE REPORT NO. � 6; - Page 3 In its review of time sharing and transient vacation rentals , your conferees concluded that several of the counties have n,,c used their zoning authority on these less formal and traditional types of transient visitor accommodations . The , problems caused by this shortcoming in the county zoning ordinances are clearly demonstrated. in the case of County of Maui vs. Puamana Management Corporation (Civil No. 3474-78) , presently on appeal to the Supreme Court of the State of Hawaii_ Your conferees elected. not to pre-judge where in an appro- priate area timesharing and transient vacation rentals should be allowed or prohibited, but. to leave that decision to each county. as a logical part of .its zoning or designation functions. ' Your Committee expects' that. the counties will act expeditiously '- ' 'to clarify the..propriety`of .these uses . under the zoning z. ordinances . . Sec_ -6 - - Time sharing in projects . Provides that time sharing must be explicitly and .prominently authorized . in project instruments before - such a use can commence in a project. _ Such authorization"shall be by a unanimous vote o ;- the unit owners . ' 'In. projects •which .presently contain time sharing use, the project.instruments..will determine the restrictions, if: any; to be imposed. ` a , --,Sec 7 maintenance charges. In recognition that time sharing- may result in more intensive use of buildings or projects and their common elements, your. Committee' has provided that higher maintenance fees; up to a maximum of an additional fifty pe�'�atmay be assessed against time share r units and transient vacation rental units located in- the same- building' as private residential units.: This proviso will more equitably distribute maintenance costs , and should have the collateral effect of discouraging the mixed use of buildings.. "t Sec:. 8 Mutual right to cancel . Provides a cooling- off-period of five calendar days after the execution of the contract or the receipt of the mandatory disclosure statement, whichever is the latter.. It .is hoped, that this will remove some of the incentive to use high pressure sales techniques. Sec. -9 Disclosure statement Provides for the dis- closure of pertinent information to prospective purchasers. i Sec. -10 Filing required; developer, sales agent, acquisition agent and Dian manager. Provides for filing of the disclosure statement with the director. It also requires the filing of certain information by the acquisition agent, sales agent and plan manager and requires those persons to be bonded. SMk 784 850 CONFERENCE COMMITTEE REPORT NO. Page 4 Sec . =11 Prohibited practices.' Your Committee has defined and prohibited undesirable marketing practices such as beach and street solicitation on a Statewide basis : Your Committee believes that these provisions will help ' to reduce the actual and perceived problems of time sharing. without unduly retarding the industry. Your Committee on Conference is in accord with the intent and purpose of S .B. No. 1516 , S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S .B No 1516, S D_ 1, H D_- 1, C.D 1_ , J Respect ffully submitted, MANAGERS ON THE PART OF THE w MANAGERS ON THE PART OF THE tr= HOUSE SENATE , #" y f� RUSSELL BLAIR, Chairman STE COBB, Chairman. k r ;✓w� . ,TrYMES AK2 , Member DANTE C RPE TER, ember L' r gAgK\JARSE , Mem - WADSWORTH YnE, Me er e 4 O ALD T. MASUTANI , Member 4 ITSUO SHITO, Member DONNA R. IKEDA, Member ' - s r SMA 784 824 ICE return coupled with the sizeable representation of the overall popula- tion .. . t tion were more than enough to conclude that the survey results were very reliable. ri Consumer Characteristics and Motivations It appears that when aggregating the variables of age, education, TM income, and family type, the timeshare market is composed of a very stable population. Due to their high income and educational attainment their middle-age and marital status, it would seem they are relatively protected from extreme problems with any economic recession in the country. This is especially evident in a market for relatively low rr cost recreational real property such as resort timesharing where most , FY}. units can be purchased for less than $5,000 a week. r F. Over one-half (56.3 percent) had household incomes in 1979 of $30,000 or more, and 17.1 percent had incomes of $50,000 or more. The approximate median annual income of timeshare households was about $ $33,500. By way of comparison, it was estimated that the median income 4 �. of all households in the United States in 1979 was only The average age of the head of household for timeshare buyers was 45.4. Over one-half (52.7 percent) were between the ages of 35 to 54. 43` The vast majority of timeshare buyers were married couples (89.4 per- n cent). By contrast, only about 62 percent of all households in the United States are now composed of married couples. } ,One of the most outstanding findings from the survey is the extremelyt high level of education attained by the respondents. Over three-quarters ter. (75.8 percent) had attended college, with over one-half 54.9 f*( percent) being college graduates, and 31.4 percent Navin done 8 graduate work. In regard to why people buy timeshares, the most frequently checked Yr : XI 2 f�a 14 <^' L Q1. answer was the exchange opportunity (71.4 percent) , followed by. the opportunity to save money on future vacation costs (59.4 percent) and investment or resale potential (38.8 percent) . Thus, respondents appear primarily concerned with flexible vacation plans while at the same time being interested in holding down future vacation costs. Timeshare Characteristics The majority of timeshare units owned by respondents had two- bedrooms (60.2 percent) , while only 10.4 percent were studios. The ri number of weeks purchased was fairly evenly distributed amongst the four seasons ranging from 239 g g . percent for Fall to 26.3 percent for Summer. This finding indicates that timeshares are marketable through- out the year and not just during peak vacation periods. Even though a recently offered commodity, over one-half (52.5 per- cent) of the respondents already had purchased two or more weeks of timeshare. About 10 percent had purchased their units in more than one resort location. It appears, therefore, that some timeshare buyers are already beginning to collect not only multiple weeks, but also multiple locations, even though being offered the exchange privilege with other locations. Even though relatively inexpensive compared to other types of recreational real property, the majority of timeshare buyers still finance their purchase rather than paying cash for it — 67.6 percent compared to 32.4 percent. Only 37.4 percent of the respondents stated they would have purchased their timeshare without the availability of financing. Consumer Satisfaction Respondents in the survey were asked, "In general, how satisfied Is �k 4 are you with your timeshare purchase?" Answers were overwhelmingly y h favorable with a veryhigh 86.3 „g percent stating they were either very satisfied" (44.6 percent) or "satisfied" (41.7 percent) . Some 72.5 percent said they would again purchase their timeshare in hindsight. "v High satisfaction was most apparent amongst respondents who: 1. had owned their timeshare longer; 2. had purchased multiple weeks; <: 3. had purchased higher g priced units; 4. had purchased larger units; fi 5. had purchased for use or because they liked the unit; sY . 6. intended to buy more' timeshares; _ 7. had used their timeshare; ' y a; 8. had requested anexchange; 9. had an exchange confirmed; 1. 10. received their own first trade choice; : . 11. were very satisfied with their trade i ; 12. felt the exchange privilege was fairly represented by their = 7 salesperson, : ;. 13. were middle age and above; ; 14. had attained higher educational levels; '} " 15. had higher incomes, 16. had purchased fee type units; and 17. had purchased units in projects originally built for timeshare. An extremely high 61.5 percent intended to buy additional time— shares, }" either at their present resort location (24.6 percent) and/or 3='6 1k: V at another location (36.9 percent). Such findings not only indicate a high degree of satisfaction amongst g present owners of timeshares, 16 but 'also a vast potential demand increase in the overall market. In other words, a potential market not only exists with untapped buyers but also with almost two-thirds of the existing buyers. Only 18.6 percent of the respondents said they will attempt to . sell their present timeshare and not buy another, i.e. , no longer be participants in the market. Some 40.2 percent stated they did not plan to buy additional timeshare but rather just keep what they presently own. Use of Timeshares ' A frequent argument made in the past against traditional types of recreational real properties (recreational lots, detached vacation homes, and wholly owned resort condominium units) was that they rarely were used by their owners. Such does not seem to be the case with resort time- shares. Some 62.0 percent of the respondents already had vacationed in their own timeshare unit. When combined with the respondents who have not yet used their own unit but have taken advantage of the exchange privilege, it appears that about three-quarters of the respondents already have used a timeshare unit of some kind. This is true even though 38.7 percent had made their purchase only within the past six months. Some 58.1 percent said they planned to use their interval every year in the future. Another 28.3 percent planned to use the exchange privilege every year, for a total planned timeshare annual use of 86.4 per- cent. If these figures are generalized to all projects for all seasons t of the year, it appears that the issue of this type of property sitting idle for long periods of time is much less relevant than it has been for traditional types of recreational property. 17 �f About one-half (55.7 percent) of the respondents had vacationed in their timeshare for a seven-day period, with the average stay being 8.2 days. The average number of visitors per party for the overall stay was 4.0, including 3.0 adults and 1.0 children. Consumer Expenditures Respondents were asked. to estimate their party's average daily expenditures in the local area during their most recent vacation in a '? timeshare unit. Results are summarized below: max' mi Average Item Daily Expenditure Groceries and liquor bought in a store $17.02 : Eating out and nightclubs 25.47 Other overnight lodging besides timeshare unit 2.67 Recreation (movies, green fees, tours, lift 14.00 tickets, etc.) Local transportation.(public bus, taxi, etc.) .76 ? Rental car 5.10 ; ti Local shopping (souvenirs, gifts, apparel, etc.) 13.90 Other !. 6.42 'r. Total $85.34 � Y If averages for the eight items are accumulated, the overall aver- age daily expenditure was $85.43 Respondents also spent an average of another $285 on travel expenditures, including $205 for air travel, $75 V= for car travel, and $5 for other travel. About 30 percent used air `t travel to arrive at their destination, and about 20 percent used a travel ` N < ,t:_•ya agent for booking air or lodging accommodations. � If average daily expenditures were multiplied by the average daily .-ter 18 %'4a o-.,h stay by the estimated use rate by the total number of timeshare owners, t it was found that well in excess of $100 million annually is spent locally by timeshare vacationers. This estimate does not include travel expenditures. More importantly, it does not Include contributions made by the timeshare projects themselves in terms of construction costs, taxes, fees management, sales g + expenditures, etc. Such estimates are s: i I measured in the following case studies.� - G 1{? Summary n F` After surveying Y g almost 10,000 timeshare owners, it was found that y the typical consumer was in his mid-forties, had an annual income in t excess of $33,000, married, and well educated. They owned a two-bedroom y timeshare unit and bought it both for immediate use and for future savings on vacations. The purchase was financed. Most owners already had purchased more than one week and most intended to buy additional weeks. Satisfaction^with present purchase was very prevalent. About three-qua rters had vacationed in a timeshare unit for an average stay of over eight days. The typical consumer spent $85 per day in the local area while on his timeshare vacation and another $285, for travel expenditures. ! i II 1 19 . s 6 CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with. the concept of timesharing. The City Council has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real estate property, timesharing involves the sa a of time segments of occupancy of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchases a resort condominium unit for occupation for a specific length of time/ each year. This type of timesharing is also known as- interval ownership and timeshare estate. E The difference between the two types is that under the latter form the - purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other forms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to the general public for transient- use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stork cooagrative.uni_ts usually serve as_._permanent residences. although:they can be timeshar.ed_Time- sharing,__as�efined in the Timeshare�Moratorium. Ordinance, encompass es these forms' of developments as well. B. Timesharin in Coachella 'Valley: Timeshare projects ventured into the Coachella Valley in the late 1970's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances reaulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. c Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice- in the City permits resort uses in the PC (4) .(Planned Commercial , Resort Center) zone. Uses permitted in this zone include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ) , R-3 (Multifamily) and C-1. (General Commercial ) zones with either development plan or conditional use permit approval . Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest in real property. B. Compatibility with Surrounding Uses: A major concern of the City is the compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with permanent residential uses. Resort/vacation use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party. C. Removal of Land for Residential Use: Construction of timeshare projects remove land available for the construction of residential units for p permanent residents. This is extremely important in Palm Desert since the v ^� City s economic base is expanding and the City, therefore, needs an ade- quate amount of land for vaeous residential uses to meet the housing needs of incoming residents. The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". .The top priority of the City should be to ensure that adequate land is available for the needs of residents. Timesharing also eliminates land for other types of resort and transient �Q uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway Ill and 44th Avenue) . If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be, invoived with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.02OF of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (20 yrs) 250.00 Rental Value per week 500.00 Rental Value per day 71.43 Transient Occupancy Tax per day (71.43 x 6%) _4i29 iE'xample 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned), with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy-Tax per day .(53.57 x 6%) 3:21� The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing January 22, 1981 Page Four material to be submitted to the Department for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies . there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; b) Ban timeshare projects from the City; or c) Rele ate timeshare projects to the Resort Commercial Zone, or other zone(gs) deemed appropriate, with a conditional use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b) , banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. ,o r ORDINANCE NO. AN ORDIANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm Desert; WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownershipin the City; Y WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. NOVI, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION is Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby added to the Code of the City of Palm Desert, to read as follows: - "Section 25.56.490 - Timesharing - Prohibiting. The conversion of an existing single family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California , by the following vote, to wit: I ORDINANCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: f S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25. 100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging- house, roominghouse, apartment house, timeshare project or facility, dormitory, public - ' or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of- the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall hive jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be, payable prior to or following (in whole or in part) the occupancy to which it is attributable, and may have been paid in whole or in part in advance on a long- term basis. such as in a ti,­.es^are oro.iect or similar arrangemient. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . -F. • "Timeshare Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), hotel or portion thereof, or segment of real property, annually or on some- other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the timeshare protect which is involved has been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, room(s), or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or is entitled to occupancy by reason of .concession, permit, right of access, license, timeshare arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without an break, then rior or subsequent periods of suc occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973,• may be considered. (Ord. 134 §51, 2, 1976; Ord. 6 §2, 1973). " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy y a transient shall e the rents value o the unit or rooms which accomodated such occupancy, which rental value sha 1 be computed by eterminin the rorata share of the total purchase rice of the timeshare ri ht or entitlement whether or not involving an estate or any ownership in real property) which share is allocable to the period of transient occupancy currently involved and adding thereto the total amount of any and all fees assessments charges and expenses charged by the operator as attributable to the timeshare occupancy of the transient by whatever name such fees, assessments charges or expenses may be deno- minated, whether "occupying fee" "maintenance or operations charge" "per diem fee" , "management fee" or like name or otherwise. In making the- computation referred to above of the prorata share of the total purchase price in any case wherein the timeshare riaht or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term such proration shall be made upon an assumed term of forty Years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any -reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 53, 1973)." SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code (:V the City of Palm Desert, to. read as follows: "CHAPTER 25.100 TIMESHARE PROJECTS 25.100.010 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25.100.020 Permitted Zones. -A timeshare project shall be permitted only in the Planned Commercia -Resort PC 4T zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72. of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description f sufficient to identify the property. f 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three , 4. The formula, fraction or of the common expenses and percentage P any voting rights assigned to each timeshare participant and, where applicable, to each unit in a project that is not subject to the timeshare program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to ftime in the future. 1 6. Description of any proposed restrictions on the use, occupancy, 111 alteration or alienation of timeshare intervals and rights. 7. Copies of all existing California Department of Real Estate Y reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the timeshare program (if less than all ) , and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial timeshare project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the pro- posed conversion. of some or all of the units to a timeshare basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by re,ceipted certi- fied U.S. Mail that application to so convert the project would be submitted to the Commission together with when the City Staff and the Commission would consider such application. f10. A description of the methods proposed to be employed to guarantee tl the future adequacy, stability and continuity of a satisfactory level of management and maintenance of .the timeshare project. 11. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and. proper consideration of the application. 25. 100.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: 1. The impact of the timesharing project on transient rental stock; 2. The impact of timesharing conversion on existing commercial businesses; 3. The impact of timesharing on present and future City services; 4. The impact of timesharing on permanent residential stock. 5. Any other factors deemed relevant by the Commission. 25.100.050 Minimum Timeshare Structure Size. L Every timeshare dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed por- tions and. garages. B. The standards may be increased by the design review process or the Planning Commission based upon 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. i ORDINANCE NO. Page Four 25. 100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California,. and the same shall be in full force and effect thirty (30) days after adoption. . PASSED, APPROVED, and ADOPTED this day of- ... 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN:. .. S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California y /lr Memo to James McPherson Re: Constitutionality of Time Sharing Prohibition April 7 , 1981 Dear Mr. McPherson: At your request, I have researched what I consider to be the constitutionality of a prohibition of time share projects within the City of Palm Desert as the same are defined by Section 11003. 5 of the Business and Professions Code of the State of California. It is my conclusion that a time sharing project cannot constitutionally be prohibited within cities , unless there is a specific finding that such a prohibition is necessary to preserve the public health, safety, morals or general welfare of the community. I find it difficult to distinguish the degrees and varieties of ownerships and to prohibit a form of ownership which may include a number of people, as opposed to, or as distinguished from a regulation of some lesser number. In any event, I think the prohibition of the time share project as a form of development is not currently within the constitutional means of the City. If further research is desired, please let me know. You v y truly, Ae J. ERWIN DJE :pb CITY OF PALM DESERT STAFF REPORT TO: Planning Commission FROM: Department of Environmental Services SUBJECT: Zoning Ordinance Amendment to Permit Time-Sharing in Certain Zones CASE: ZOA 14-81 DATE: November 3, 1981 BACKGROUND: Earlier this year the City established a moratorium and began investigating time-sharing. The City Council established a Time-share Committee. A meeting of the Time-share Committee was held in September and the attached report prepared by Staff, dated August 4, 1981, was discussed. The Committee endorsed the regulations proposed in that report. City Council reviewed the Time-share Committee decision and referred the matter to Planning Commission for hearing. ENVIRONMENTAL ASSESSMENT: The addition of "Time-Sharing" as a permitted use in certain zones has been reviewed in accordance with the California Environmental Quality Act and determined to be a Class 5 Categorical Exemption. DISCUSSION: The August 4, 1981 report on Time-sharing (copy attached), provides a history of Time-sharing, a breakdown of California and Hawaii Time-sharing regulations. Additionally, a response to some of the major issues which had been raised concerning time-share, a discussion concerning land use compatibility (ie:where it should be permitted), and a memo from the City` Attorney dated April 7, 1981, stating that in his opinion, the City does not have the constitutional authority to blanketly prohibit time- sharing. With this opinion from the City Attorney, Staff elected to propose an Ordinance Amendment which would permit "Time-sharing" in certain zones subject to the issuance of some type of use permit. A draft of the proposed Ordinance has been prepared and is attached hereto. The first and second sections of the Draft Ordinance would amend Chapter 3.28 of the Municipal Code to include "Time-sharing" as hotel type of land use for the purposes of the collection by the City of Transient Occupancy Tax. The third Section of the draft Ordinance would add a new Chapter to the Municipal Code. Section 25.100.010 defines "Time-Share". Section 25.100.020 delineates the zones in which "Time-share" will be permitted. In all zones the use is subject to the issuance of a Conditional Use Permit. The Draft Ordinance proposes to permit 'Time-share" in all zones where the present code permits hotel uses. It is felt that this is reasonable because for all intents and purposes, a 'Time-Share" land use is no different than a hotel. Only the ownership of the 'Time-Share" is different in that the owners of time-share have an exclusive right to use of the facilities whereas the shareholders of hotels are paid dividends instead of having the right to use the hotel. This is discussed in more detail in the August 4, 1981 report. Section 25.100.030 delineates additional information which is to be submitted when a Conditional Use Permit application is submitted for a 'Time-Share" project. Section 25.100.040, confers upon the Planning Commission the right to impose the same conditions on a Time-Share as may be imposed on any other Conditional Use Permit application. Section 25.100.050 requires that the Planning Commission must make necessary findings as required for a regular Conditional Use Permit, before the Conditional Use Permit may be granted. Section 25.100.060 specifies that the minimum number of units in a "Time-Share" project shall be twenty (20). This minimum number of units was recommended by a recognized expert in the field as being necessary to suport adequate on-site management, site maintenance and allow for proper marketing. Section 25.100.070 provides that "Time-Share" developments shall be designed to conform to the standards required for a hotel in the zone in which the property is located. Section 25.100.080 states that all "Time-Share" projects will be subject to the provisions of the City's Transient Occupancy Tax Ordinance. Section 25.100.090 exempts from the provisions of this Chapter time-share projects for which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1990. This Draft Amendment has been revised since it was issued by the Time-Share Committee. A Draft Ordinance based on a proposed Ordinance for Palm Springs, was included in the August 4, 1981 report. Certain sub-sections of Section 25.100.030 of that Draft Ordinance (ie: Information to be submitted with Conditional Use Permit application) have been deleted as it was felt they were unnecessary. Section 25.100.040 (Conditions of Approval) of that Draft Ordinance has been deleted and replaced by the existing Municipal Code Section relating to conditions which may be imposed on a Conditional Use Permit application. Section 25.100.050 of that Draft Ordinance (minimum Time-Share Structure Size) has been deleted because it was felt that other sections of the Code already limit the size of units through maximum number of units per acre, required open space and maximum height limits. i 9 PREPARED BY: REVIEWED AND APPROVED BY: /pa INTEROFFICE MEMORANDUM City of Palm Desert TO: TIME-SHARE COMMITTEE FROM: DEPARTMENT OF ENVIRONMENTAL SERVICES SUBJECT: TIME-SHARE ANALYSIS DATE: AUGUST 4, 1981 INTRODUCTION The Time-share Committee requested a comparative analysis of California and Hawaii time-share regulations. The study was generated by the Committee's concern of Council 's statements relating to Hawaii 's time-share problems. This report will analyze those regulations and address the concerns raised relative ' to permitting time-sharing in Palm Desert. HISTORY OF TIME-SHARING In 1968 time-sharing was introduced in the United States, however, it was not readily accepted by developers. A strong resort condominium market reflective of the overall strength in the 1970 economy contributed to the lack of time-share developments. The downturn of the real estate industry in 1974 resulted in many unsold resort units. Time-sharing became one method for developers to salvage projects. Unfortunately, for these developments, time-share was an afterthought and not part of their original concept. Problems including poor financing, lack of concept understanding, and lack of exchange programs were commonplace. Despite these problems some high quality time- share developments succeeded. As time-share became more widespread better financing, consumer understanding and expanded exchange programs developed; builders also became more responsive to market demands. All of these improvements resulted in an incredible growth of time-share resorts; from 73 held by 40,000 owners in 1976 to 250 held by 200,000 owners two years later with a doubling in sales each year since 1976. CALIFORNIA-HAWAII REGULATIONS A table delineating the provisions of each state' s requirements is provided in Appendix A. Both regulations were designed to reduce the problems that had developed in the time-sharing industry. California's regulations require the creation of a Homeowner's Association and the declaration of the CC&R's. In addition, the developer must present evidence of habit ability or financial ability to complete the project, sufficient property interest in the project to assure its completion, and permissibility of the project by local ordinance. continued. . . i Time-share Committee August 4, 1981 Page Two Appendix B provides a more detailed description of the regulations. This appendix is a copy of regulations proposed to implement SB 1736 which established criteria to regulate time-share in California by the Department of Real Estate. Hawaiian time-share regulations were established in November, 1980. Time-share projects are permitted in hotels and areas designated for hotel use, resort use, or transient vacation rentals use as determined by local authority. Existing time-share projects were exempted. Appendix C more fully describes the provisions of Hawaii ' s regulations. PALM DESERT TIME-SHARE CONCERNS The major issues raised in Palm Desert concerning time-share are: a) Sales techniques b) Advertising c) Maintenance d) Impact on transient occupancy tax S -e There have been instances of sales techniqu where gifts are promised but not delivered and high pressure tactics used. These g rally in your lower quality develop- ments such as converted motels. The fi e day cooling-off period provided by California 5t5 regulation is one answer. Under this provision a purchaser may elect to cancel any agreement. State regulations also require all advertising techniques to be reviewed y - by the Department of Real Estate. In addition, a provision providing for a Purchaser's 'I401� Awareness Package could be provided in city regulations. ,r,1-+laI The major concern of maintenance has been addressed by the requirement that the CC&R's of a development must provide for regular assessments to defray maintenance costs and provide several means of collecting from delinquent owners. In terms of the City's transient occupancy tax, the proposed time-share provisisions provide a vehicle enabling the City to collect those revenues from time-share develop- ments. WHO BUYS TIME-SHARES AND WHY? A study organized and funded by the Resort Time-Sharing Council of some 28,000 owners, at 185 locations, with a response of nearly 9700, was conducted in 1980. The result of that survey is attached to this report as Appendix D. The typical time-share purchaser was in his mid-forties, with an annual income in excess of $33,000, married and had an above average level of education. The reasons for time-share investment in order of importance: a) Exchange opportunity b) Future vacation savings c) Investment and resale potential Of those responding, 86.3% were either "very satisfied" or "satisfied" with their time-share purchase. 61.5% indicated they intended to acquire additional time-shares. Only 4.5% of the respondents were either "dissatisfied" or "very dissatisfied". continued. . . Time-share Committee August 4, 1981 Page Three The survey showed that owners used their units an average of 8 days per year and spent $85 per day in the local community. LAND USE COMPATIBILITY California regulations presently require. an indication from the local jurisdiction that a proposed time-share project is not prohibited. The regulations basically permit time-sharing unless expressly prohibited by ordinance or requires a use permit. When one speaks of prohibition it is doubtful that a blanket prohibition could be established and defended--see attached City Attorney memo April 7, 1981. That memo states: "The prohibition of the time-share project as a form of development is not currently within the constitutional means of the City. " The problem in establishing a blanket prohibition relates to the difficulty in distinguishing the degrees and varieties of ownership and the affects these uses - may have on the public health, safety, and general welfare. As was discussed previously and in the Hawaii Conference Committee Report, time-sharing and transient vacation rental use are identical uses of land, without regard to owner- ship. Land use decisions should be based on the use of the land and not on ownership. For this reason time-sharing and transient vacation rentals should either be permitted or prohibited on an equal basis within certain zones. The proposed ordinance makes such provision. As was discussed in the January 22, 1981, report on time-sharing to City Council (attached as Appendix E) , resort hotels are permitted in the PC (4) zone, PR zone, R-3 zone and C-1 zone subject to obtaining development plan or conditional use permit approval . If time-sharing were not to be prohibited outright, then the use should be limited to the above noted zones subject to obtaining both a development plan and conditional use permit or some type of special permit process. As discussed in the January 22, 1981, report the "Transient Occupancy Tax" can be collected in "time-share" developments so the potential loss of hotel-zoned land to time-share developments should not present problems. In examining the amount of vacant PC (4) land in the City and the possible difficulties in obtaining financing for hotel developments, time-sharing may provide an alternate method of financing such developments. Permitting time-sharing in planned residential and R-3 zones where hotels are presently permitted, may result in conflicts between full-time owners and time-share occupants. However, present short-term rentals operating in the major country club developments within Palm Desert have not resulted in conflicts. Furthermore, case studies cited in The Resort Time Sharing Industry Report Vol . II showed no conflicts on mixed time-share permanent residential projects. It is felt that in the case of existing condominium developments, which may wish to change some of the units to time-share, ,that a majority of the owners be required to vote in favor of the proposed change. continued. . . Time-share Committee August 4, 1981 Page Four In the case of a new mixed condominium time-share development, a provision requiring full disclosure of this fact and the location of the time-share units should be an adequate means of protecting anyone who does not wish to locate in a time-share development. SUMMARY In light of the City Attorney's opinion of April 7, 1981, that the City does not have the constitutional authority to blanketly prohibit "time-sharing" throughout the City, that the best means of controlling time-share developments as to permit it in specified zones subject to the issuance of some type of use permit. A draft ordinance is attached to this report. The Time-share Committee should review this report and provide comment at the next committee meeting. It is proposed that the report with applicable comments of the committee incorporated then be forwarded to the City Council with an appropriate recommendation. MON A. I Z RAD/lr Attachments ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIME-SHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging, _ house, roominghouse, apartment house, time-share project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel rooms,rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator ''means person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time- share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or charac- ter, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits , property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis, such as in a time-share project or similar arra Bement. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax Administrator" means the director of finance, or such other individual as may be designated by the City Council . F. "Time-share Occupancy" means occupancy related to the situation wherein__ a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel unit room s hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, rooms , or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession,'.permit', right of access, license, time-share arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of such occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 SS1, 2, 1976; Ord. 6 $2, 1973). " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of time-share occupancy by a transient shall be the rental value of the unit or rooms which accommodated such occupancy, which rental value shall be com ut! b determinin the rorata share of the total urchase rice of the time- share ri ht or entitlement whether or not involving an estate or any ownership in real property which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees assess- ments, charges and expenses charged by the operator as attributable to the time-share occupancy of the transient by whatever name such fees assessments charges or expenses may be denominated, whether "occupyin fee" , "maintenance or operations charge" Per diem fee", "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price in any case wherein the time-share right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. e transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a 'proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the tran- sient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accommoda- tions furnished. (Ord. 6 S3, 1973) . " SECTION 3: Addition. That Chapter 25. 100 is hereby added to the Code of the City of Palm Desert, to read as follows: it 25. 100 TIME-SHARE PROJECTS Il 25.100.010 Defined. As used in this Chapter, time-share project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy per- iods into which the project has been divided and shall include, but not limited to time-share estate, interval ownership, vacation license, vacation lease, club member- ship, time-share use, and hotel/condominium. 25. 100.020 Permitted Zones. A time-share project shall be permitted only in the Planned Commercial Resort (PC-4) zone, Planned Residential (PR) zone, Multi- family (R-3) zone or General Commercial (C-1) zone, and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a time-share project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. ( (_ yS 1t1D� 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage 'of the common expenses and any voting rights assigned to each time-share participant and, where applicable, to each unit in a project that is not subject to the time-share program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of time-share intervals and rights. , 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time-share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified U.S. Mail that application to so convert the project would be submitted to the Commission to- gether with when the City staff and the Commission would consider such application. 10. In the case of a new mixed project (ie: Time-sharing-condominium/ rental ) a description of the means proposed to be employed to disclose the number and location of all time-share units within the project. 11. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance. of the time-share project. 12. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Co mission shall make in conjunction with Section 25.72.070, the Commission shall co sider the following: 1. The impact of the time-sharing project on transient rental stock; 2. The impact of time-sharing conversion on existing commercial bus- inesses; 3. The impact of time-sharing on present and future City services; 4. The impact of time-sharing on permanent residential stock; 5. Any other factors deemed relevant by the Commission. _ 25.100.050 Minimum Time-share Structure Size. A. Every time-share dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed portions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon: 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25.100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and I circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: - �J. SHEILA R. 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December 23, 1980 Pursuant to the authority vested in him by Sections 10080, 10131.6, 10170.4, 10249.2 and 11001 of the Pusiness and Professions Code, to imnle- went, interpret or mike specific Sections 10131.6, 10170.4, 10249.11, 11000, 11010, 11010.2, 11012, 11013.2, 11013.4, .11018, 11018.5 of the Business and Professions Core, DAVID H. FOX, Real Estate Carndssioner of the State of California, proposes to adopt, arnnd or repeal recrulations in Chapter 6, Title 10, California Administrative Code, as described helaa: Please note that items 1 through 30 propose the adoption of tip share subdivision regulaticns to conplerent the tir-e-share legislation effective January 1, 1981. These regulations and items 31 and 34 are to becom effective as pro- vided under Section 11346.2 of the C,ovexnrent Code on or about April 28, 1981. The remaining changes, items 32 and 33, are to becone effective on July 1, 1981. 1. Amend Section 2790.7 - Chapter 601, Statutes of 1980, arends. Section 10249.3 and adds Section 10249.11 of the Business and Professions Code to include time-share uses as out-of-state subdivision offerings. This arendr+ent omuld conform this section to the provisions of the new law. 2, Adopt Section 2810 - Defines "substantially arplete" subdivision public report application for purposes of Chapter 1152, Statutes of 1980. 3. Adopt Section 2810.1 - Specifies the requlatious in Article 12 applicable to tires-share projects.. 4. Adopt Section 2810.2 - Requires applicant for time-share public report to present evidence of habitability of or financial ability to complete the project, sufficient property interest it .project to allow its cor. pletion, and 1-k- issibili.ty of project under local ordinance, if any. 5. Adopt Section 2810.3 - Prescribes purchase miney handling rexnrire- rents in connection with time-share offerings. 6. Adopt Section 2810,4 - .Specifies cnnclitions .for the addition of a dwelling unit to a tir-e-share project. 7, Ataopt Section 2810,5 - Prescribes when tiro-share offerings wit]i dcellina units both in the state and out: of the state will he treated as an out-of-stag SU1-0ivisi.on. 8. Adopt Section 2810.6 - Recce uir-es subdivider to notify Department of natural changes to tire-:;harp project for which a public report has already been issued.. I 9. Adopt Section 2810.7 - Provides that Real Estate Comnissioner can approve alternative rights and remedies af£ordinq corparable benefits to time-shaL e amers. 10. Adopt Section 2811 - RerpAres the sponsor of a tine-share project to record a declaration dedicating any dwelling units to the ti7re-share project and requires certain provision-, therein. 11. Adopt Section 2812 - Specifies standards for "reasonable arrangements" in tine-share projects. 12. Adopt Section 2812. 1 - Requires transfer of control in time-share project to a mers association or to trustee prior to mnsucmiatinq first sale of tine-share interest in project. 13. Adopt Section 2812.2 - Remares conveyance of tine-share project dwelling units to trustee prior to closing of sale of first tire- share interest and prescribes elements of trust instruyant. y 14. Adopt Section 2812.3 - Requires time-share project sponsor to provide security for pa�,Tmt of assessments and snecifies remlirervents for security. 15. Adopt Section 2812.4 - Prescribes conditions pertaining to the sponsor's subsidization of a tine-share project operation. 16. Adopt Section 2812.5 - RKTuires covenant 1w tirr-share project smnsor not to encipher dwellinq units aftar execution of the declaration without written consent of majority of other. amers. 17. .Adopt Section 2812.6 - Reruires the declaration in Section 2811 to prohibit partition of the project by amers. 18, luiopt Section 2812.7 - Prescribes condi ions for joint time-share and cw.mercial use of cnmmrnn faci]ities. 19. Adopt Section 2812.8 - Prescribes that a manaperejfl: arrent shall be en>ployed by a tine share project. 20. ,Adopt Section 2812.9 - Allms rental of tire-,hard i:kterrstc to public under certain circumstances. 21. Adopt Section 2812.10 - Requires time-share p ojr.f-t to k, i;isured against property dccunage and personal injury rLdins. 22. Adopt Section 2813 - Peauires regular reetinc.s of turn-share project a•mers and prescribes requirements for such reetings. 23. Adopt Section 2813.1 - Specifies members' voting r.irdits in tire- share project amer associations. 24. Adopt Section 2813.2 - Prescribes ca.nx;sition and election procedures for. governing bodies of tire-share project a-mer. association. 25. Adopt Section 2813.3 - Specifies rwmir rents for reetings of governing bodies of time-share project amer associations. -2- 26. Adopt Section 2813.4 - Specifies requirerents for assessrrents to defray costs of operating tine-share projects. 27. Adopt Section 2813.5 - Requires dissen nation of certain pertinent information to all tire-share owners in a project. 28. Adopt Section 2813.6 - Requires that records of time-share project owners association be available for inspection and copying by association nrmi ers. 29. Adopt Section 2813.7 - Specifies procedures and limits for a tire- share project owners association to discipline its merbers. 30. Adopt Section 2813.8 - Specifies procedures for amending governing instnsents of tine-share projects. 31. Repeal Section 2785 (b) (10) - Conforms this section to the recent decision in Council of Anthony Real A:state Schools v. Fbx, San Diego Superior Court, rdo. 8 0) , in idatinn this sub- division. The s�di.vision had. defined the organized disclosure of real estate exam questions as "unethical conduct". 32. & 33. Arend Sections 2861 and 2862 - Conforms .these sections to Chapter 1149, Statutes of 1980 (AR 2915) which transfers jurisdiction over mohilehome registrations from Depart*n_nt of Pflntor Vehicles to Department of dousing and Can unity Development. NOM: These sections are to beaxre effective July 1, 1981. 34. Arend Section 3012 - Corrects "exemption" from licensees' .continuing education requirem-nt to "extension" of time for completing rem.Are- meet. -3- f i- 51312 CONFERENCE COMMITTEE REPORT NO. �� Honolulu, Hawaii April �� 1980 Honorable Richard S . H. - Wong President of the Senate - Tenth State Legislature Regular Session of 1980 State of Hawaii Sir RE S B NO 1516 , S.D. " 1, H.D 1 4. Your Committee on Conference on the disagreeing vote of'the Senate to the amendments proposed by the House of Representatives < _:t in S'.B.- No. 1516 , S.D. 1', H D . I- entitled: t 1 s Y "A BILL FOR AN ACT RELATING TO TIME SHARING" , having met,`and after full and free discussion, has agreed to recommend .and does recommend to the respective Houses passage of. this bill in .an amended form The purpose of this bill is to regulate time sharing in .the State of Hawaii In its" resolution of the several issues involved in this bill, your Conference Committee has taken note of the growth of time sharing over the past several. years, both in . the State of Hawaii and in other tourist destination areas. Your Committee is aware that time sharing has generated r, controversy among the various interested parties , including .; the governments. of the State and of the several counties, persons in the time share industry; and residents most directly affected by the growth of time sharing and its potential for. expansion.. - { Simply stated, those who favor time sharing see it as a continuing stimulus to the economy of the State through the , -' creation of additional jobs for residents of Hawaii and _ 'expenditures by time share participants . Opponents challenge the conclusion that time sharing constitutes an economic .' advantage to the State , and consider it to be disruptive, particularly within areas where permanent residents live. The opponents would prefer the strict limitation or "prohibi- tion of time sharing, while its proponents favor enabling legislation to establish definite guidelines and procedures Cfor its statutory regulation. SMA 783 496 CONFERENCE COITAITTEE REPORT NO. Page 2 Your Committee concludes that it is necessary and to be placed under strict governmental timely for time sharing regulation if. the interests of the State , the time sharing industry, the purchasers of time share units and above all, the people of Hawaii, are to be served. Accordingly, it is the intention of your Committee that careful regulatory oversight of time sharing in the State of Hawaii be provided The following are some of the more significant areas of i- regulation addressed in this measure-- JSec. -3 Taxation.. provides for reliable and efficient administration of real property and excise taxes , Sec. -4 . County authority. This mandate will be particularly helpful in efforts to clarify hotel, resort and max, transient vacation Mental areas_ The counties do not presently41 ' f ur a�; .. . zone for the less-traditional forms of transient visitor � J,, '• £}accommodations;, and should address this in the near future ^4 I Sec 5 ' Geographic limitations `Provides a general x prohibitioir, _except as- specifically allowed in the- enumerated subsections'.' The first exemption"is' a ._"grandfather" provision rr� ,, v L S to avoid any retroactive effect of this section F 3t %r The secondexemption subsection' provides for two exemptions ; from the prohibitory -language .'.,'.. First, time sharing and transient "vacation rentals are' allowed' in hotels " Second; time.. sharing and transient vacation rentals are. allowed where designated for hotel "y ` use, resort use,. br:transient vacation rentals use, pursuant to county authority: under Section 4.6-4. Hawaii. Revised Statutes , . " or where the county,` by its legislative process,. designates hotel,. transient vacation rental or resort use s _ r It is the clear intention' of your conferees that timelow sharing and ttransient vacation rental use are. identica uses of Iand, without regard,.to_ownersand_that .both uses of land. '" f thour(!r be addressed in a_coequal.-manner_:by the counties . , Your, i conferees further note that county land use decisions are not based on ownership, but- on the use of the _ an in question.. As such,— time'sha­rng anc transient vacation,.rentals_ should be either peYmitted or prohibitedyon an�equal .oasis _within_an area - o r- deemecT-app`ropriate by the county. Your Committee further notes several areas of non-enforce- merit of their own zoning ordinances by some of the counties. In ' this regard, it is not the presentcharacter of the_nei.ghborhpodl but its intended use by the county that is_ also important. The eg -slature intends`by this Act that the counties will. be guided by the notion that time sharing and transient vacation rentals should not be ertilte�c whereytlie'life styles of the pe_rmaneat M; re"s will be disrupted in an unreasonable manner. Any zoning code is only as good as its enforcement by a county. S, A 784 851 CONFERENCE COMMITTEE REPORT NO. <� Page 3 In its review of time sharing and transient vacation rentals , your conferees concluded that- several of the counties have nut used their zoning authority on these less formal and traditional types of transient visitor accommodations . The , ;: . problems caused by this shortcoming in the county zoning _ ordinances are clearly demonstrated. in the case of County of Maui vs . Puamana Management Corporation (Civil No. 3474-78 ) , presently on appeal to the Supreme Court of the State of Hawaii. Your conferees elected not to pre-judge where in an appro- priate area time and transient vacation rentals should be allowed or prohibited, but- to leave that decision to each county- as a logical 'part of . its zoning or designation functions. ' Your Committee expects' that- the counties will act expeditiously 'to clarify the._proprietg of: these uses under the zoning ordinances . t Sec: -6 `-Time sharing in projects . Provides that time sharing must be explicitly and ,prominently authorize ,t in project instruments before ' such a*. use. can commence in a _ project.. _ Such authorization shall be by a unanimous vote o -• the unit. owners.: 'In. projects ,which _presently contain time sharing use,- the project- instruments: will determine the " restrictions ,._ if: any, to- be, imposed. Sec._ 7 " Maintenance charges . In. recognition that time sharing; may result .in more intensive �sse of buildings or projects and their common:,elements; ' your Committee' has ` provided that higher'maintenance fees; up to a maximum of an additional fifty per-ff-e-'n` —may be assessed against time share { r units and transient vacation rental units .located in""the. same. building as private residential units.: . This proviso will more equitably distribute maintenance costs , and should have the collateral effect of discouraging the mixed use of buildings. Sec'.. -8 Mutual right to canceY.'' Provides a cooling- off-period of five calendar days after the execution of the contract or the receipt of the mandatory disclosure statement, whichever is the latter.. It..is hoped that this. will remove some of the incentive to use high: pressure sales techniques. Sec.: 9 Disclosure statement. Provides for the dis- closure of pertinent information to prospective purchasers. i Sec -10 Filing required; developer, sales agent, acquisition agent and plan manager. Provides for filing of the disclosure statement with the director. It also requires the filing of certain information by the acquisition agent, sales agent and plan manager and requires those persons to be bonded . SMA 784 850 CONFERENCE COMMITTEE REPORT NO. Page 4 Sec . -11 Prohibited Practices. Your Committee has defined and prohibited undesirable marketing practices such as beach and street solicitation on a Statewide basis : ' Your Committee believes that these provisions will help to reduce the actual and perceived problems of time sharing. without unduly retarding the industry Your Committee on Conference is in accord with the intent and purpose of S .B . No. 1516 , S .D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S .B.. No. 1516, S .D.- l,, ,H..D_..1,: C.D 1 q. y {• Respectfully submitted, rjr MANAGERS ON THE PART OF THE -MANAGERS ON THE PART OF THE ' '>r•.' HOUSE SENATE ,< S. T v- �'r 5• s r ' 1 RUSSELL BLAIR, Chairman a STE COBB, Chairman. ' ,I1ES AKI , Member DANTE C RPE. TER, ember •? ter '' JA LA mRSEL , Me WADSWORTH YEE, Men er e r v ` f l O ALD T MASUTANI ,, Member - f` 2 t % j k ITSUO SHITO, Member DONNA R. IKEDA, Member SMA 784 824 return coupled with the sizeable representation of the overall popula- �.t *� tion were more than enough to conclude that the survey results were very reliable. Consumer Characteristics and Motivations It appears that when aggregating the variables of age, education, y income, and family type, the timeshare market is composed of a very stable population. Due to their high income and educational attainment, their middle-age and marital status, it would seem they are relatively Protected from extreme problems with any economic recession in the - country. This is especially evident in a market for relatively low { cost recreational real property such as resort timesharing where most units can be purchased for less than $5,000 a week. 4 . Over one-half (56.3 percent) had household incomes in 1979 of u' X $30,000 or more, and 17.1 percent had incomes of $50,000 or more. The k approximate median annual income of timeshare households was about ; 533,500. By way of comparison; it was estimated that the median income ' ' of all households in the United States in 1979 was only $16,500. � . _ I The average age of the head of household for timeshare buyers was 45.4. Over one-half (52.7 percent) were between the ages of 35 to 54. F+ The vast majority of timeshare buyers were married couples (89.4 per- cent). By contrast, only about 62 percent of all households in the }' . United States are now composed of married couples. f ' One of the most outstanding findings from the survey is the extremely v>r high level of education attained by the respondents. Over three-quarters (75.8 percent) had attended college, with over one-half (54.9 percent) being college graduates, and 31.4 percent havingdone graduate work. In regard to why people buy timeshares, the most frequently checked R= 3 it 14 x. Lam" 4%•v� answer was the exchange opportunity (71.4 percent) , followed by.the opportunity to save money on future vacation costs (59.4 percent) and investment or resale potential (38.8 percent) . Thus, respondents appear primarily concerned with flexible vacation plans while at the same time being interested in holding down future vacation costs. Timeshare Characteristics The majority of timeshare units owned by respondents had two- bedrooms (60.2 percent) , while only 10.4 percent were studios. The number of weeks purchased was fairly evenly distributed amongst the four seasons ranging from 23.9 8 g percent for Fall to 26.3 percent for Summer. This finding indicates that timeshares are marketable through- out the year and not just during peak vacation periods. Even though a recently offered commodity, over one-half (52.5 per- cent) of the respondents already had purchased two or more weeks of timeshare. About 10 percent had purchased their units in more than one resort location. It appears, therefore, that some timeshare buyers are �. already beginning to collect not only multiple weeks, but also multiple locations, even though being offered the exchange privilege with other locations. Even though relatively inexpensive compared to other types of recreational real property, the majority of timeshare buyers still finance their purchase rather than paying cash for it — 67.6 percent compared to 32.4 percent. Only 37.4 percent of the respondents stated they would have purchased their timeshare without the availability of financing. Consumer Satisfaction Respondents in the survey were asked, "In general, how satisfied 15 M} are you with your timeshare purchase?" Answers were overwhelmingly favorable with a very high 86.3 percent stating they were either "very satisfied" (44.6 percent) or "satisfied" (41.7 percent) . Some 72.5 percent said they would again purchase their timeshare in hindsight. High satisfaction was most apparent amongst respondents who: 1. had owned their timeshare longer; s` 2. had purchased multiple weeks; l'= ' 3. had purchased higher priced units; had purchased larger units; 5. had purchased for use or because they liked the unit y 6. intended to buy more'timeshares; r 7. had used their timeshare; 8. had requested an exchange, ti ii 9. had an exchange confirmed; r 10. received their own first trade choice; 11. were very satisfied with their trade; `f} 12. felt the exchange privilege was fairly represented by their ; _. : salesperson, 13. were middle age and above, 14. had attained higher educational levels; 1' 15. had higher incomes; 16. had purchased fee—type units; and 17. had purchased units in projerts originally built for timeshare. An extremely high 61.5 percent intended to buy additional time— shares, either at their present resort location (24.6 percent) and/or - n• at another location (36.9 percent). Such findings not only indicate a high degree of satisfaction amongst "g present owners of timeshares, *��'•- 16 ' but -also a vast potential demand increase in the overall market. In other words, a potential market not only exists with untapped buyers but also with almost two-thirds of the existing buyers. Only 18.6 percent of the respondents said they will attempt to sell their present. timeshare and not buy another, i.e. , no longer be F participants in the market. Some 40.2 percent stated they did not plan to buy additional timeshare but rather just keep what they presently own. Use of Timeshares w A frequent argument made in the past against traditional types of ' recreational real properties (recreational lots, detached vacation homes, and wholly owned resort condominium units) was that they rarely were used by their owners. Such does not seem to be the case with resort time- shares. Some 62.0 percent of the respondents already had vacationed in their own timeshare unit. When combined with the respondents who have not yet used their own unit but have taken advantage of the exchange privilege, it appears that about three-quarters of the respondents already have used a timeshare unit of some kind. This is true even though 38.7 percent had made their purchase only within the past six months. Some 58.1 percent said they planned to use their interval every year in the future. Another 28.3 percent planned to use the exchange privilege every year, for a total planned timeshare annual use of 86.4 per- cent. If these figures are generalized to all projects for all seasons of the year, it appears that the issue of this type of property sitting idle for long periods of time is much less relevant than it has been for traditional types of recreational property. 17 4. About one-half (55.7 percent) of the respondents had vacationed in their timeshare for a seven-day period, with the average stay being 8.2 days. The average number of visitors per party for the overall stay was 4.0, including 3.0 adults and 1.0 children. IF Consumer Expenditures x Respondents were asked. to estimate their parry's average daily expenditures in the local area during their most recent vacation in a + timeshare unit. Results are summarized below: 'f Average Item Daily Expenditure Groceries and liquor bought in a store $17.02 Eating out and nightclubs 25.47 Other overnight lodging besides timeshare unit 2.67 y Recreation (movies, green fees, tours, lift 14.00 =:= tickets, etc ) Local transportation (public bus, taxi, etc ) ,76 ' Rental car 5.10 Local shopping (souvenirs, gifts, apparel, etc.) 13.90 .r Other 6.42 . Total x $85.34 If averages for the eight items are accumulated, the overall aver- age daily expenditure was $85.43. Respondents also spent an average of r ,m another $285 on travel expenditures, including $205 for air travel, $75 for car travel, and $5 for other travel. About 30 percent used air ` z; Ns'.. travel to arrive at their destination, and about 20 percent used a travel agent for booking air or lodging accommodations. t„t If average daily expenditures were multiplied by the average daily r£ V 18 i""I stay by the estimated use rate by the total number of timeshare owners it was found that well in excess of $100 million annually is spent locally by timeshare vacationers. This estimate does not include travel expenditures. More importantly, it does not include contribution s made by the timeshare projects themselves in terms of construction costs, taxes, fees, management, sales expenditures, etc. such estimates are measured in the following case studies. =w F summary r After surveying a: Y g almost 10,000 timeshare owners' it was found that the typical consumer was in his mid-forties, had an annual income in excess of $33,000, married, and well educated. They owned a two-bedroom i timeshare unit and bought it both for immediate use and for future savings on vacations. The purchase was financed. Most owners already had purchased more than one week and most intended to buy additional weeks. Satisfaction with present purchase was very prevalent. About three quarters had vacationed in a timeshare unit for an average stay of over eight days. The typical consumer spent $85 per day in the local area while on his timeshare vacation and another $285 for travel expenditures. i j I f f! 19 - GA e/njb, x Q CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with the concept of timesharing. The City Council has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real estate property, timesharing involves the sa a of time segments of occupancy of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchases a resort condominium unit for occupation for a specific length of time/ each year. This type of timesharing is also known as- interval ownership and timeshare estate. The difference between the two types is that under the latter form the purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other farms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to -the general public for transient- use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stq"k cooReer Atji_ve units Visually serve As_..permanent residences, although, they can be tim1.eshared. Time- iMring,,as`defined in the Times_hare.Mora ociLum. Ordinancea encompasses tfiese formsyof developments as well. B. 'Timesharing in Coachella Valley: Timeshare projects ventured into the Coachella Valley in the late 1910's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances regulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. c Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice- in the City permits resort uses in the PC (4) .(Planned Commercial , Resort Center) zone. Uses permitted in this zone Include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ), R-3 (Multifamily) and C-1. (General Commercial ) zones with either development plan or conditional use permit approval . s Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest in real property. B. Compatibility with Surrounding Uses: A major concern of the City is the compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with permanent residential uses. Resort/vacation use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party. C. Removal of Land for Residential Use: Construction of timeshare projects remove land available for the construction of residential units for �(fp permanent residents. This is extremely important in Palm Desert since the v ^� City s economic base is expanding and the City, therefore, needs an ade- quate amount of land for vaeous residential uses to meet the housing needs of incoming residents. The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". .The top priority of the City should be to ensure that adequate land is J" available for the needs of residents. Timesharing also eliminates land for other types of resort and transient �Q uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway 111 and 44th Avenue) , If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be involved with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.02OF of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (20 yrs) 250.00 ` Rental Value per week 500.00 Rental Value per day 71.43 Transient Occupancy Tax per day (71.43 x 6%) -4.29 txample 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned), with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy.Tax per day .(53.57 x 6%) 3.21� The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing January 22, 1981 Page Four material to be submitted to the Department for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies . there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; . b) Ban timeshare projects from the City; or s - c) Rele ate timeshare projects to the Resort Commercial Zone, or other zones) deemed appropriate, with a conditional use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b) , banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. ,o r 1 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm Desert; s WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. _• NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION 1: Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy r period into which the project has been divided and shall include, but Il not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharing - Prohibiting. The conversion of an existing single family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. -- SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: J ORDINAIXE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr ORDINANCE IJO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25. 100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging- house, roominghouse, apartment house, timeshare project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration .charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis. such as in a t1m.es re r-roject or Similar arrance.-nent. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . •F. - "Timeshare Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel unit room(s) hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy_periods into which the timeshare project which is involved haS been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, room(s) , or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license, timeshare arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. ( Any such person so occupying space in a hotel shall be deemed to be a transient until L the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent perm suc occu ancy or entitlement to occu ancy shall not be counted when deter- mining whether a period erio exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973,• may be considered. (Ord. 134 -51, 2, 1976; Ord. 6 §2, 1973). " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy y a transient shall e t e—rentalva ue o t e unit or rooms which accomodated such occupancy, which rental value shall be computed by eterminin the rorata share of the total purchase rice of the timeshare right or entitlement whether or not involving an estate or any ownership in real property) which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees, assessments, charges and expenses charged by the operator as attributable to the timeshare occupancy p P V of the transient by whatever name such fees, assessments charges or expenses may be deno- minated, whether "occupying fee" "maintenance or operations charge" "per diem fee", "management fee" or like name or otherwise In making the- computation referred to above of the prorata share of the total purchase price in any case wherein the timeshare right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any-reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 53, 1973)." SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code c:i' the City of Palm Desert, to. read as follows: - "CHAPTER 25.100 TIMESHARE PROJECTS 25.100.010 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s.) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25.100.020 Permitted Zones. -A timeshare project shall be permitted only in the Planned—Commercial-Resort PC 4) zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72. of the Code. .. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. L 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each timeshare participant and, where applicable, to each unit in a project that is not subject to the timeshare program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of timeshare intervals and rights. 7. Copies of all existing California Department of Real Estate x reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the timeshare program (if less than all ) , and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial timeshare project, a verified description or statement of the number and percentage of the current.condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a timeshare basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to .so convert the project would be submitted to the Commission together with when the City Staff and the Commission would consider such application. ( 10. A description of the methods proposed to be employed to guarantee Il the future adequacy, stability and continuity of a satisfactory level of management and maintenance of .the timeshare project. 11. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and, proper _ . consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: 1. The impact of the timesharing project on transient rental stock; 2. The impact of timesharing conversion on existing commercial businesses; 3. The impact of timesharing on present and future City services; 4. The impact of timesharing on permanent residential stock. 5. Any other factors deemed relevant by the Commission. 25. 100.050 Minimum Timeshare Structure Size. A. Every timeshare dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed por- tions and. garages. B. The standards may be increased by the design review process or the Planning Commission based upon 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. i ORDINANCE NO. Page Four 25- 100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the state Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. .PASSED, APPROVED, and ADOPTED this day of:•.. 1981 by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: 4 NOES: ABSENT: ABSTAIN:. S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California Memo to James McPherson Re: Constitutionality of Time Sharing Prohibition April 7, 1981 Dear Mr. McPherson: At your request, I have researched what I consider to be the constitutionality of a prohibition of time share projects within the City of Palm Desert as the same are defined by Section 11003. 5 of the Business and Professions Code of the State of California. It is my conclusion that a time sharing project cannot constitutionally be prohibited within cities, unless there is a specific finding that such a prohibition is necessary to preserve the public health, safety, morals or general welfare of the community. I find it difficult to distinguish the degrees and varieties of ownerships and to prohibit a form of ownership which may include a number of people, as opposed to, or as distinguished from a regulation of some lesser number. In any event, I think the prohibition of the time share project as a form of development is not currently within the constitutional means of the City. If further research is desired, please let me know. You s v y truly, A��I J. ERWIN DJE:pb CITY OF PALM DESERT STAFF REPORT TO: Planning Commission FROM: Department of Environmental Services SUBJECT: Zoning Ordinance Amendment to Permit Time-Sharing in Certain Zones CASE: ZOA 14-81 DATE: November 3, 1981 BACKGROUND: Earlier this year the City established a moratorium and began investigating time-sharing. The City Council established a Time-share Committee. A meeting of the Time-share Committee was held in September and the attached report prepared by Staff, dated- August 4, 1981, was discussed. The Committee endorsed the regulations proposed°in that report. City Council reviewed the Time-share Committee decision and referred the matter to Planning Commission for hearing. ENVIRONMENTAL ASSESSMENT: The addition of 'Time-Sharing" as a permitted use in certain zones has been reviewed in accordance with the California Environmental Quality Act and determined to be a Class 5 Categorical Exemption. DISCUSSION: The August 4, 1981 report on Time-sharing (copy attached), provides a history of Time-sharing, a breakdown of California and Hawaii Time-sharing regulations. Additionally, a response to some of the major issues which had been raised concerning time-share, a discussion concerning land use compatibility Ge:where it should be permitted), and a memo from the City Attorney dated April 7, 1981, stating that in his opinion, the City does not have the constitutional authority to blanketly prohibit time- sharing. With this opinion from the City Attorney, Staff elected to propose an Ordinance Amendment which would permit 'Time-sharing" in certain zones subject to the issuance of some type of use permit. A draft of the proposed Ordinance has been prepared and is attached hereto. The first and second sections of the Draft Ordinance would amend Chapter 3.28 of the Municipal Code to include 'Time-sharing" as hotel type of land use for the purposes of the collection by the City of Transient Occupancy Tax. The third Section of the draft Ordinance would add a new Chapter to the Municipal Code. Section 25.100.010 defines "Time-Share". Section 25.100.020 delineates the zones in which 'Time-share" will be permitted. In all zones the use is subject to the issuance of a Conditional Use Permit. The Draft Ordinance proposes to permit 'Time-share" in all zones where the present code permits hotel uses. It is felt that this is reasonable because for all intents and purposes, a 'Time-Share" land use is no different than a hotel. Only the ownership of the 'Time-Share" is different in that the owners of time-share have an exclusive right to use of the facilities whereas the shareholders of hotels are paid dividends instead of having the right to use the hotel. This is discussed in more detail in the August 4, 1981 report. Section 25.100.030 delineates additional information which is to be submitted when a Conditional Use Permit application is submitted for a 'Time-Share" project. Section 25.100.040, confers upon the Planning Commission the right to impose the same conditions on a Time-Share as may be imposed on any other Conditional Use Permit application. Section 25.100.050 requires that the Planning Commission must make necessary findings as required for a regular Conditional Use Permit, before the Conditional Use Permit may be granted. Section 25.100.060 specifies that the minimum number of units in a "Time-Share" project shall be twenty (20). This minimum number of units was recommended by a recognized expert in the field as being necessary to suport adequate on-site management, site maintenance and allow for proper marketing. Section 25.100.070 provides that "Time-Share" developments shall be designed to conform to the standards required for a hotel in the zone in which the property is located. Section 25.100.080 states that all "Time-Share" projects will be subject to the provisions of the City's Transient Occupancy Tax Ordinance. Section 25.100.090 exempts from the provisions of this Chapter time-share projects for which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. This Draft Amendment has been revised since it was issued by the Time-Share Committee. A Draft Ordinance based on a proposed Ordinance for Palm Springs, was included in the August 4, 1981 report. Certain sub-sections of Section 25.100.030 of that Draft Ordinance (ie: Information to be submitted with Conditional Use Permit application) have been deleted as it was felt they were unnecessary. Section 25.100.040 (Conditions of Approval) of that Draft Ordinance has been deleted and replaced by the existing Municipal Code Section relating to conditions which may be imposed on a Conditional Use Permit application. Section 25.100.050 of that Draft Ordinance (minimum Time-Share Structure Size) has been deleted because it was felt that other sections of the Code already limit the size of units through maximum number of units per acre, required open space and maximum height limits. �� a PREPARED BY: ;F �vy�.-&t REVIEWED AND APPROVED BY: /pa i - INTEROFFICE MEMORANDUM City of Palm Desert TO: TIME-SHARE COMMITTEE FROM: DEPARTMENT OF ENVIRONMENTAL SERVICES SUBJECT: TIME-SHARE ANALYSIS DATE: AUGUST 4, 1981 INTRODUCTION The Time-share Committee requested a comparative analysis of California and Hawaii time-share regulations. The study was generated by the Committee's concern of Council 's statements relating to Hawaii ' s time-share problems. This report will analyze those regulations and address the concerns raised relative 'to permitting time-sharing in Palm Desert. HISTORY OF TIME-SHARING In 1968 time-sharing was introduced in the United States, however, it was not readily accepted by developers. A strong resort condominium market reflective of the overall strength in the 1970 economy contributed to the lack of time-share developments. The downturn of the real estate industry in 1974 resulted in many unsold resort units. Time-sharing became one method for developers to salvage projects. Unfortunately, for these developments, time-share was an afterthought and not part of their original concept. Problems including poor financing, lack of concept understanding, and lack of exchange programs were commonplace. Despite these problems some high quality time- share developments succeeded. As time-share became more widespread better financing, consumer understanding and expanded exchange programs developed; builders also became more responsive to market demands. All of these improvements resulted in an incredible growth of time-share resorts; from 73 held by 40,000 owners in 1976 to 250 held by 200,000 owners two years later with a doubling in sales each year since 1976. CALIFORNIA-HAWAII REGULATIONS A table delineating the provisions of each state's requirements is provided in Appendix A. Both regulations were designed to reduce the problems that had developed in the time-sharing industry. California's regulations require the creation of a Homeowner's Association and the declaration of the CC&R' s. In addition, the developer must present evidence of habit ability or financial ability to complete the project, sufficient property interest in the project to assure its completion, and permissibility of the project by local ordinance. continued. . . Time-share Committee August 4, 1981 Page Two Appendix B provides a more detailed description of the regulations. This appendix is a copy of regulations proposed to implement SB 1736 which established criteria to regulate time-share in California by the Department of Real Estate. Hawaiian time-share regulations were established in November, 1980. Time-share projects are permitted in hotels and areas designated for hotel use, resort use, or transient vacation rentals use as determined by local authority. Existing time-share projects were exempted. Appendix C more fully describes the provisions of Hawaii 's regulations. PALM DESERT TIME-SHARE CONCERNS The major issues raised in Palm Desert concerning time-share are: a) Sales techniques b) Advertising c) Maintenance d) Impact on transient occupancy tax S There have been instances of sales techniqu where gifts are promised but not delivered and high pressure tactics used. These g rally involve your lower quality develop- ments such as converted motels. The fi a day cooling-off period provided by California �s5 regulation is one answer. Under this provision a purchaser may elect to cancel any 4 3 agreement. State regulations also require all advertising techniques to be reviewed y� by the Department of Real Estate. In addition, a provision providing for a Purchaser's eOR Awareness Package could be provided in city regulations. 7 ;w+Is� The major concern of maintenance has been addressed by the requirement that the CC&R's Y of a development must provide for regular assessments to defray maintenance costs and provide several means of collecting from delinquent owners. In terms of the City's transient occupancy tax, the proposed time-share provisisions provide a vehicle enabling the City to collect those revenues from time-share develop- ments. WHO BUYS TIME-SHARES AND WHY? A study organized and funded by the Resort Time-Sharing Council of some 28,000 owners, at 185 locations, with a response of nearly 9700, was conducted in 1980. The result of that survey is attached to this report as Appendix D. The typical time-share purchaser was in his mid-forties, with an annual income in excess of $33,000, married and had an above average level of education. The reasons for time-share investment in order of importance: a) Exchange opportunity b) future vacation savings c) Investment and resale potential Of those responding, 86.3% were either "very satisfied" or "satisfied" with their time-share purchase. 61.5% indicated they intended to acquire additional time-shares. Only 4.5% of the respondents were either "dissatisfied" or "very dissatisfied". continued. . . V 1 Time-share Committee August 4, 1981 Page Three The survey showed that owners used their units an average of 8 days per year and spent $85 per day in the local community. LAND USE COMPATIBILITY California regulations presently require an indication from the local jurisdiction that a proposed time-share project is not prohibited. The regulations basically permit time-sharing unless expressly prohibited by ordinance or requires a use permit. When one speaks of prohibition it is doubtful that a blanket prohibition could be established and defended--see attached City Attorney memo April 7, 1981. That memo states: "The prohibition of the time-share project as a form of development is not currently within the constitutional means of the City. " The problem in establishing a blanket prohibition relates to the difficulty in distinguishing the degrees and varieties of ownership and the affects these uses may have on the public health, safety, and general welfare. As was discussed previously and in the Hawaii Conference Committee Report, time-sharing and transient vacation rental use are identical uses of land, without regard to owner- ship. Land use decisions should be based on the use of the land and not on ownership. For this reason time-sharing and transient vacation rentals should either be permitted or prohibited on an equal basis within certain zones. The proposed ordinance makes such provision. As was discussed in the January 22, 1981, report on time-sharing to City Council (attached as Appendix E), resort hotels are permitted in the PC (4) zone, PR zone, R-3 zone and C-1 zone subject to obtaining development plan or conditional use permit approval . If time-sharing were not to be prohibited outright, then the use should be limited to the above noted zones subject to obtaining both a development plan and conditional use permit or some type of special permit process. As discussed in the January 22, 1981, report the "Transient Occupancy Tax" can be collected in "time-share" developments so the potential loss of hotel-zoned land to time-share developments should not present problems. In examining the amount of vacant PC (4) land in the City and the possible difficulties in obtaining financing for hotel developments, time-sharing may provide an alternate method of financing such developments. Permitting time-sharing in planned residential and R-3 zones where hotels are presently permitted, may result in conflicts between full-time owners and time-share occupants. However, present short-term rentals operating in the major country club developments within Palm Desert have not resulted in conflicts. Furthermore, case studies cited in The Resort Time Sharing Industry Report Vol . II showed no conflicts on mixed time-share permanent residential projects. It is felt that in the case of existing condominium developments, which may wish to change some of the units to time-share, _that a majority of the owners be required to vote in favor of the proposed change. continued. . . Time-share Committee August 4, 1981 Page Four In the case of a new mixed condominium time-share development, a provision requiring full disclosure of this fact and the location of the time-share units should be an adequate means of protecting anyone who does not wish to locate in a time-share development. SUMMARY In light of the City Attorney' s opinion of April 7, 1981, that the City does not have the constitutional authority to blanketly prohibit "time-sharing throughout the City, that the best means of controlling time-share developments as to permit it in specified zones subject to the issuance of some type of use permit. A draft ordinance is attached to this report. The Time-share Committee should review this report and provide comment at the next committee meeting. It is proposed that the report with applicable comments of the committee incorporated then be forwarded to the City Council with an appropriate recommendation. MON A. I Z RAD/lr Attachments ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIME-SHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients , including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging, house, roominghouse, apartment house, time-share project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel .rooms,rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator m— e�he person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time- share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or charac- ter, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable, and may have been paid in whole or in part in advance on a long- term basis, such as in a time-share roject or similar arrangement. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax Administrator" means the director of finance, or such other individual as may be designated by the City Council . F. "Time-share Occupancy" means occupancy related to the situation wherein a urchaser receives the ri ht or entitlement in perpetuity, for life, or for a term of ears or other exten ed term, to the recurrent, exclusive use or occupancy of a lot, parcel unit room s , hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The said right or entitlement to occu anc ma attach in advance to a specific lot, parcel , unit, room s , or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession,' permit', right of access, license, time-share arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of such occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 551, 2, 1976; Ord. 6 $2, 1973) . " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of time-share occupancy by a transient shall be the rental value of the unit or rooms which accommodated such occupancy, which rental value shall be . computed by determininq the prorata share of the total purchase price of the time- share right or entitlement whether or not involving an estate or any ownershipI ' in real property which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees assess- ments charges and expenses charged b he, t operator as attributable to the time-share 9 P 9 Y occupancy of the transient by whatever name such fees, assessments, charges or expenses may be denominated, whether "occupying fee", "maintenance or operations charge", Per diem fee" , "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price, in any case wherein the time-share right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a 'proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the tran- sient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accommoda- tions furnished. (Ord. 6 §3, 1973). " SECTION 3: Addition. That Chapter 25. 100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25. 100 TIME-SHARE PROJECTS 25.100.010 Defined. As used in this Chapter, time-share project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy per- iods into which the project has been divided and shall include, but not limited to time-share estate, interval ownership, vacation license, vacation lease, club member- ship, time-share use, and hotel/condominium. 25. 100.020 Permitted Zones. A time-share project shall be permitted only in the Planned Commercial Resort (PC-4) zone, Planned Residential (PR) zone, Multi- family (R-3) zone or General Commercial (C-1) zone, and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a time-share project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. ( �_ g5-12,•*to 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage`of the common expenses and any voting rights assigned to each time-share participant and, where applicable, to each unit in a project that is not subject to the time-share program or arrangement. . 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. fI t 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of time-share intervals and rights. . 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time-share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified U.S. Mail that application to so convert the project would be submitted to the Commission to- gether with when the City staff and the Commission would consider such application. 10. In the case of a new mixed project (ie: Time-sharing-condominium/ rental ) a description of the means proposed to be employed to disclose the number and location of all time-share units within the project. 11. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 12. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Co mission shall make in conjunction with Section 25.72.070, the Commission shall co sider the following: 1. The impact of the time-sharing project on transient rental stock; 2. The impact of time-sharing conversion on existing commercial bus- inesses; 3. The impact of time-sharing on present and future City services; 4. The impact of time-sharing on permanent residential stock; 5. Any other factors deemed relevant by the Commission. _ 25. 100.050 Minimum Time-share Structure Size. A. Every time-share dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed portions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon: , 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25.100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of 1981 , by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: t SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr m o T v m m z .. Cn c m .. < .. �-. --i m .. m m m z ix. D fz') o (m!) >z r C)m o N N T \ m r m A O O - N m a C O m T -� m C) r Z Cif 0 3 N N O O m ti H Z C. --I -rri 0 N ram. O O n m CD m N r 3 a m0 N p m m c c N m 70 m O D N A c n m x m 3 z m z v m o n z xv m n r N O o o m mm O n m n m 'm m c z M --� o z CD O G' LO 3 m T -t z --1 m z (n n N A 3 �_ -I 3 A XD . 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D m c-) O m S c m O -A Z x n s .o x n Z Z -4 D Z O O 70 O (N m --I :E N O m m N ;-o N T T] O D �--� D N Z m Z z : z v n C') o a m n A o c- O r 3 2 r o o V 0 o m v n s -I m m o C7 c -1 m m m r m m Ln r v r x n D > N G� ti C7 .Z) N r m m O � N N iC1 N -� C N S Z m C') m 0 o -n T m =1 3 N T r, m CD r z m o m 0 i c m -i v C. D C CDV)N C7 m z z x m "aM m D O O o 3 v N T L m N O O z o M o 0 3 m m m o �. T s S X O -I C v z < z - z r y O D O m - � A 7J N m m N D N o < c1 + Z n .. D < (n m � 0 O z 2 n x x x x x D r x x x x x x x x x o z z n 1 N x D A T A m A O r A m O m C o E � -Di n m 'm --i A Z .. z o .. m c-) m m A o N m N Z --f O m C D C-) v om D T .0 O O O m O n W_ PO fib m MEm V --I I— m o r D m A o m m G) m czi� Z m A r" Ln 2 fn A m N :I- O C N < O \ A A m n Z A rm- m C. O (Nil --A A D m C O v O N C') m C-) T o Ln —I A r.-+ 1 T (N C:) N D n o T Ln m H Z m 1 m 2 Z A Z m m an r-i m D cci� m n —I Z N A O Cl) I m D o n o w m z n m .. T o n r c) o o70 < o m x o N A { z n N c� C:) D m m C) r N T c —i m o N o m v m O 2 —i n D m m x v i m v v m z CDo � o m 3 V O v C) m c x A z -i � C) m D = c) c-) r � m N Z C m 0 x x >e x x y c� D r C) x x x x x x x x O A z n ju rIOTICE XM INFORMATIVE DIC FST OF PROPOSED CHANCE i III THE RE(M ATICY.iS OF ]HIE RCAI, FSTA'r COI`R'IISSIO17-R . Decerrber 23, 1980 Pursuant to the authority vested in him by Sections 10080, 10131.6, 10170.4, 10249.2 and 11001 of the Business and Professions Code, to irmle- r;rnt, interpret or maYe specific Sections 10131.6, 10170.4, 10249.11, 11000, 11010, 11010.2, 11012, 11013.2, 11013.4, .11018, 11018.5 of the Business and Professions Cage, DAVID II. FOX, Real Estate Cormnissioner of the State of California, proposes to adopt, amend or repeal regulations in Chapter 6, Title 10, California Administrative Code, as described helao: Please note that items 1 through 30 propose the adoption of tirre-share subdivision regulations to ccnplerent the tire-share legislation effective January 1, 1981. These regulations and items 31 and 34 are to becrze effective as pro- vided under Section 11346.2 of the Covemnent Code on or about April. 28, 1981. The remaining changes, items 32 and 33, are to become effective on July 1, 1981. 1. Armnd Section 2790.7 - Chapter 601, statutes of 1980, amends Section 10249.3 and adds Section 10249.11 of the Business and r Professions Code to include titre-share uses as out-of-state subdivision offergs. en in This ardnent would conform this section to the provisions of the new law. 2. Adopt section 2810 - Defines "substantially complete" subdivision public report application for purposes of Chapter 1152, Statutes of 1980. 3. Adopt Section 2810.1 - Specifies the regulations in Article 12 applicable to tine-share projects. 4. Adopt Section 2810.2 - Requires applicant for tirr:-share public report to present evidence of habitability of or financial ahilit. to cornDlete the project, sufficient property interest in project to allow its ccxpletion, and permissibility of project under local ordinance, if any. 5, Adopt Section 2810.3 - Prescribes purchase monev handling re nrire- rents in connection rrith tine-share offerings. 6. Adopt Section 2810.4 - .Specifies conditions for the addition of a dwelling unit to a tir'e-share project. 7. Mopt section 2810.5 - Prescri-bes when tine-sham offerincIF3 with dc,ellina units both in tie state and out: of the state will he treated as an out-of-stag subdivision. 8. Adopt Section 2810.6 - Requires subdivider to notify Departmnt Of natural changes to ti7"e-:,hare project for which a public report has already been issued.. i ' 9. Adopt Section 2810.7 - Provides that Real Estate Cormrissioner can approve alternative rights and remedies affording oarparable benefits to tire-share amers. 10. Adopt Section 2811 - ReclrAres the sponsor of a tine-share Project to record a declaration dedicating any dwelling units to the time-share Project and requires res certain provisions therein, 11. Adopt Section 2812 - Specifies standards for "reasonable arrangements" in tiu--share projects. 12. Adopt Section 2812. 1 - Requires transfer of control in time-share project to aaners association or to trustee prior to eonsumatin P 7 P g first sale of time-share interest in project. 13. Adopt Section 2812.2 - Requires conveyance of tine-share project dwelling units to trustee prior to closing of sale of first time- share interest and prescribes elements of trust instrument. 14. Adopt Section 2812.3 - Requires time-share project .sponsor to provide security for paj4nent of assessments and specifies requirerents for security. 15. Adopt Section 2812.4 - Prescribes conditions pertaining to the sponsor's subsidization of a tire-share project operation. 16. Adopt Section 2812.5 - Requires covenant by tirr>-share project sx)nsor not to encuulher clr•rellinq writs after execution of the declaration without written consent of majority of other amer:s. 17. Adopt Section 2812.6 - Pequir-es the declaration in Section 2811 to prohibit partition of the project by comers. U. Adopt Section 2812.7 - Prescribes conditions for joint tinn-share and oomrercial use of ccm-, m facilities. 19. Adont Section 2812.8 - Prescribes that a nunaperrnt anent shall be erployed by a tine-share project. 20. Adopt Section 2812.9 - Alla•rs rental of tim-.harp i nterc>_sts to public under certain circumstances. 2.1. Adopt Section 2812.10 - Requires tirre-share p.i ujr,ct to }x! insure(? against property damage and personal injur/ r_l.tirs. 22. Adopt Section 2813 - Ra?uir_es rerzular reetinr.s of tirm-share project masers and prescribes recnrixerents for such reetings. 23. A.(Ikpt Section 2813.1 - Specifies mr-bers' voting r..ic$rts i=i tire- share project a•mer associations. 24. Adont Section 2813.2 - Prescribes camosition and election proce(tires for governing bodies of tine-share project amer association. 25. Adopt Section 2813.3 - Specifies rexnu-erents for reetings of governing bodies of tire-share project a+ner associations. -2- 26. Adopt Section 2813.4 - Specifies requirements for assessments to defray costs of operating time-share projects. 27. Adopt Section 2813.5 - Requires dissemination of certain pertinent information to all time-share owners in a project. 28. Adopt Section 2813.6 - Requires that records of tine-share project owners association he available for inspection and copying by association m=rihers. 29. Adopt Section 2813.7 - Specifies procedures and limits for a tire- share project owners association to discipline its ire hers. 30. Adopt Section 2813.8 - Specifies procedures for amending governing instrur:ents of time-share projects. 31. Repeal Section 2785(h) (10) - Conforms this section to the recent decision in Council of Anthony Real Rstate Schools v. Fox, San Diego Superior Court, Ido. 8 0 , in idatinq U is sub- division. The subdivision had defined the organized disclosure of real estate exam questions as "unethical conduct". 32. & 33. Amend Sections 2861 and 2862 - Conforms .these sections to Chapter 1149, Statutes of 1980 (AR 2915) which transfers jurisdiction over mcbilehorre registrations frnn DepaxtmnJrt of Motor Vehicles to Department of housing and Ca unity Development. NCYIT: These sections are to become effective July 1, 1981. 34. Amend Section 3012 - Corrects "exerption" from licensees' continuing education requirement to "extension" of time for completing remlire- ment. -3- �C, 51312 CONFERENCE COMMITTEE REPORT No. -A) Honolulu, Hawaii April �� 1980 Honorable Richard S . H. . Wong President of the Senate Tenth State Legislature Regular Session of 1980 State of Hawaii Sir.. RE S B NO- 1516 , S.D. 1, H.D 1 Your Committee on Conference on the disagreeing vote of the Sena"fe to the amendments proposed by .the House of Representatives in S .B .. No. 1516 , , S.D. T H.D : 1, entitled:. "A BILL FOR .AN ACT RELATING TO TIME SHARING" , having met, and after full and free discussion, has agreed to recommend .and does recommend to the respective Houses the final `. .:,'' : ' a`;:.- • passage of this bill in- an amended form ` The purpose of this bill is to regulate time sharing in the. State of Hawaii. In its resolution of the several issues involved in this bill, your Conference Committee has taken note of the growth of time. sharing over the past several years, both in i the State of Hawaii and in other tourist destination areas. Your Committee is aware that time sharing has generated <.= controversy among the various interested parties , including .: the governments of the State and of the several counties VV - persons in the time share industry; and residents most directly affected by the growth of time sharing and its potential for. expansion. -: Simply stated, those who favor time sharing see it as a continuing stimulus to the economy of the State through the . - creation of additional. jobs for residents of Hawaii and -expenditures by time share participants . Opponents challenge the conclusion that time sharing constitutes an economic . ' advantage to the State, and consider it to be disruptive, particularly within areas where permanent residents live. The opponents would prefer the strict limitation or prohibi- tion of time sharing, while its proponents favor enabling legislation to establish definite guidelines and procedures Cfor its statutory regulation. SMA 783 496 CONFERENCE COMMITTEE REPORT NO. "6 Page 2 Your Committee concludes that it is necessary and timely for time sharing to be placed under strict governmental regulation if the in of ,the State, the time sharing industry, the purchasers of time share units and above a11, the people of Hawaii, are to be served. Accordingly, it is 66 the intention of your Committee that careful regulatory oversight of time sharing in the State of Hawaii be provided. - ; The following are some of the more significant areas of regulation addressed in this measures Sec. -3 Taxation. Provides for reliable and efficient administration of real property and excise taxes r. .. .. Sec. -4 . County authority. This mandate will be particularly helpful in efforts to . clarify hotel, resort and a � transient vacation rental 'areas: The counties do not presently- zone for for the less traditional forms of transient visitor '; E t accommodaions ,. and should address this in the near future ' 4 Sec -5- Geographic limitations Provides a general x. prohibition, except as specifically allowed in the enumerated subsections. " The first exemption' is' a ."grandfather" provision ; >, to avoid retroactive effect retroacti effect of this section The second exemption subsection provides for two exemptions from the prohibitory'`_language.- '::First, time sharing and transient. vacation rentals are allowed in hotels .", Second, time sharing and s transient vacation rentals are. allowed where designated for use, resort. use:,; transient vacation rentals use, pursuant to 7 county authority: under. Section 46-4, Hawaii. Revised Statutes : Y or where the county, bg its legislative process,. designates ` hotel,. transient vacation. rental or resort use It. is the clear intention of your conferees that time t sharing and transient vacation-rental use are -identical uses of , t �_ _._ _. _ i rand;without regard..to�owneshi.P, and-'that both uses of and. - should`"be addressed .in -a_coequal.-manner by,_,the counties. Your conferees further note that county land use decisions are not based on ownership, but on the. use of the an_Jn question.. As such, time sharYnq anc�ransient vacation_.rentals._ should be either peYmitted or prohibited on an equal basis within an area = ' PP _ .� deemed'a rYo riate. by the county t � - Your Committee further notes several areas of non-enforce- ment of their own zoning ordinances by some- of the counties . In - this regard, it is not the resent character of the neighborhoods present but its interred use by the _county.that is also important. The elature intends-liy this Act that the counties will be guided by the notion that time sharing and transient vacation rentals should not be erfitte ,w ere;tlie lifesfy�es of the permanent yM' - _ _ ress'd' -will be disrupted in an unreasonable manner. Any zoning code is only as good as its enforcement by a county. SMA 784 851 CONFERENCE COM"QITTEE REPORT NO. :i Page 3 Iii its review of time sharing and transient vacation rentals , your conferees concluded that-. several of the counties . have nut used their zoning authority on these less formal and tre.ditional types of transient visitor accommodations . The . :. problems caused by this shortcoming in the county zoning ; ordinances are clearly demonstrated. in the case of County of Maui vs. Puamana Management Corporation (Civil No. 3474-78) , presently on appeal to the Supreme Court of the State of Hawaii_ Your conferees ' elected. not to pre-judge where in an appro- priate area time and transient vacation rentals should be allowed- or prohibited, but. to leave that decision to each county as a logical part of its zoning or designation functions Your Committee expects' that the counties will act expeditiously,' ' ` { 'to clarify the. propriety of: these. uses under the zoning ordinances . Seca -6 '-Time sharing in projects./ Provides that time sharing must be explicitly and .prominently authorized in project. instruments' before -such 'a use can commence in a °E project.. _ Such authorization shall be by a unanimous vote o '. the unit. owners .. 'In projects' which presently contain time L sharing use,.. the project.instruments will determine the restrictions, if any, to be imposed. r Sec 7 ' Maintenance charges: In recognition that time sharing. may' result .in- more intensive use of buildings or projects and their common elements ; your Committee has provided that higher maintenance fees`; up to a maximum of a c additional fifty pea —may be assessed against time share]. r' units and. transient vacation rental units located in the . . same. building' as_ private residential units. This proviso will more equitably distribute maintenance costs , and should have the collateral effect of discouraging the mixed use of buildings.' See.. 8 ' Mutual right to' cancel. Provides a cooling- off-period of five calendar days after the execution of the contract or the receipt of the mandatory disclosure statement, whichever is the latter. It .is hoped that this will remove some of the incentive to use high- pressure sales techniques. Sec. . -9 Disclosure statement Provides for the dis- closure of pertinent information to prospective purchasers. Seca -10 Filing required; developer, sales agent, acquisition agent and plan manager . Provides for filing of the disclosure statement with the director. It also requires - the filing of certain information by the acquisition agent, sales agent and plan manager and requires those persons to be bonded. SMA 784 850 ti: r CONFERENCE COMMITTEE REPORT NO. Page 4 Sec. =11 Prohibited practices. Your Committee has defined and prohibited undesirable marketing practices such as beach and street solicitation on a Statewide basis : ' = Your Committee believes that these provisions will help . ' to reduce the actual and perceived problems of time sharing. without unduly retarding the industry = Your Committee on Conference is in accord with the intent and purpose of S .B . No. 1516 , S .D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S .B.. No_ ' 1516, S .D.- 1,1 H-D_..1,. C.D I Respectfully submitted, ; MANAGERS ON THE PART OF THE -MANAGERS ON THE' PAR T OF THE r ?\ r HOUSE 1. , SENATE M RUSSELL BLAIR, Chairman STE COBB, Chairman , , ,K4ES A I , Member DANTE C RPE TER, ember > ' Y s r GIG,C , .s JA�LARSEi , Mem v WADSWORTH YEE, "Me er, e. O ALD T.. MASUTANI , Member '{` r C r ITSUO SHITO, Member DONNA R. IKEDA, Member ` t , w d SMA 784 824 \ tp / 'eNiSiX s 'h •`, return coupled with the sizeable representation of the overall popula- ' tion were more than enough to conclude that the survey results were very ~ reliable. Consumer Characteristics and Motivations It appears that when aggregating the variables of age, education, income, and family type, the timeshare market is composed of a very stable population. Due to their high income and educational attainment, their middle-age and marital status, it would seem they are relatively f.. protected from extreme problems with any economic recession in the country. This is especially evident in a market for relatively low cost recreational real property such as resort timesharing where most units can be purchased for less than $5,000 a week. Ff;:ctr.r Over one-half (56.3 percent) had household incomes in 1979 of uu ~ f 4 530,000 or more, and 17:1 percent had incomes of $50,000 or more. The approximate median annual income of timeshare households was about 533,500. By way of., co.mparison, it was estimated that the median income of all households in the United States in 1979 was only 516,500. The average age of the head of household for timeshare buyers was ent) were between the ages of 35 to 54. 45.4. Over one-half (52.7 perc :.'•r cy;x, The vast majority of timeshare buyers were married couples (89.4 per- ,: 7: cent). By contrast, only about 62 percent of all households in the United States are now composed of married couples. <— One of the most outstanding findings from the survey is the extremely { F� high level of education attained by the respondents. Over three-quarters (75.8 percent) had attended college, with over one-half (54.9 percent) being e colle r 4�"g graduates, and 31,4 percent havingdone graduate work. In regard to why people buy timeshares, the most frequently checked 14 Y answer was the exchange opportunity (71.4 percent) , followed by.the opportunity to save money on future vacation costs (59.4 percent) and investment or resale .8 38 potential.R p ( percent) . Thus, respondents appear primarily concerned with flexible vacation plans while at the same time being interested in holding down future vacation costs. �- Timeshare Characteristics The majority of timeshare units owned by respondents had two- �. bedrooms (60.2 percent) , while only 10.4 percent were studios. The number of weeks purchased was fairly evenly distributed amongst the four seasons, ranging from 23.9 percent for Fall to 26.3 percent for Summer. This finding indicates that timeshares are marketable through- out the year and not just during peak vacation periods. Even though a recently offered commodity, over one-half (52.5 per- cent) of the respondents already had purchased two or more weeks of ` timeshare. About 10 percent had purchased their units in more than one resort location. It appears, therefore, that some timeshare buyers are already beginning to collect not only multiple weeks, but also multiple locations, even though being offered the exchange privilege with other locations. Even though relatively inexpensive compared to other types of recreational real property, the majority of timeshare buyers still finance their purchase rather than paying cash for it — 67.6 percent compared to 32.4 percent. Only 37.4 percent of the respondents stated they would have purchased their timeshare without the availability of financing. Consumer Satisfaction Respondents in the survey were asked, "In general, how satisfied 15 '? are you with your timeshare purchase?" Answers were overwhelmingly favorable with a very high 86.3 percent stating they were either "very satisfied" (44.6 percent) or "satisfied" s (41.7 percent) . Some 72.5 percent said they would- again purchase their timeshare in hindsight. High satisfaction was most apparent amongst respondents who: ~ L' � 1. had owned their timeshare longer; 2. had purchased multiple weeks; 3, had purchased higher priced units; „ ✓.±a 4. had purchased larger units; LLB . ram. 5. had purchased for use or because they liked the unit; rq 6. intended to buy more' timeshares; 7. had used their, timeshare; 8. had requested an exchange; 9, had an exchange confirmed; 10. received their own first trade choice; 11. were very satisfied with their trade; s "s(c' 12. felt the exchange privilege was fairly represented by their . c salesperson, r 13. were middle age and above; ; 14. had attained higher educational levels; o: 15. had higher incomes, 16. had purchased fee—type units; and 17. had purchased units in projects originally built for timeshare. } ? An extremely high 61.5 percent intended to buy additional time— shares, either at their present resort location (24.6 percent) and/or ' at another location (36.9 percent) . Such findings not only indicate a high degree of satisfaction amongst g present owners of timeshares, 16 but 'also a vast potential demand increase in the overall market. In ! other words, a potential market not only exists with untapped buyers. but also with almost two-thirds of the existing buyers. Only 18..6 percent of the respondents said they will attempt to sell their present timeshare and not buy another, i.e. , no longer be participants in the market. Some 40.2 percent stated they did not plan to buy additional timeshare but rather just keep what they presently own. Use of Timeshares A frequent argument made in the past against traditional types of ' recreational real properties (recreational lots, detached vacation homes, and wholly owned resort condominium units) was that they rarely were used by their owners. Such does not seem to be the case with resort time- shares. Some 62.0 percent of the respondents already had vacationed in their own timeshare unit. When combined with the respondents who have not yet used their own unit but have taken advantage of the exchange privilege, it appears that about three-quarters of the respondents already have used a timeshare unit of some kind. This is true even though 38.7 percent had made their purchase only within the past six months. Some 58.1 percent said they planned to use their interval every year in the future. Another 28.3 percent planned to use the exchange - privilege every year, for a total planned timeshare annual use of 86.4 per- cent. If these figures are generalized to all projects for all seasons of the year, it appears that the issue of this type of property sitting idle for long periods of time is much less relevant than it has been for traditional types of recreational property. 17 j f v :. s Z: About one-half (55.7 percent) of the respondents had vacationed in S. ,c their timeshare for a seven-day period, with the average stay being 8.2 days. The average number of visitors per party for the overall stay was 4.0, including 3.0 adults and 1.0 children. Consumer Expenditures " F c t Respondents were asked. to estimate their party's average daily expenditures in the local area during their most recent vacation in a timeshare unit. Results are summarized below: .. •'.-k - Average Item Daily Expenditure w G;oceries and liquor bought in a store $17.02 '-- :t. Eating out and nightclubs 25.47 c Other overnight lodging besides timeshare unit 2.67 ' Recreation (movies, green fees, tours, lift 14.00 . tickets, etc ) F( Local transportation (public bus, taxi, etc ) .76 Rental car 5 10 «. Local shopping' , g' pp y (souvenirs efts, apparel, etc.) 13.90 Other 6.42 5 Total $85.34 v If averages for the eight items are accumulated, the overall aver- age daily expenditure was $85.43. Respondents also spent an average of mother $285 on travel expenditures, including $205 for air travel, $75 r for car travel, and $5 for other travel. About 30 percent used air ;c3.1 travel to arrive at their destination, and about 20 percent used a travel ; agent for booking air or lodging accommodations. Z?r If average daily expenditures were multiplied b the average daily P- Y g Y x. z` + 18 �'tia. stay by the estimated use rate by the total number of timeshare owners, Y it was found that well in excess of $100 million annually is spent locally by timeshare vacationers. This estimate does not include travel expenditures. More importantly, it does not include contributions made by the timeshare projects themselves in terms of construction costs, y taxes, fees, management, sales expenditures, etc. Such estimates are i measured in the following case studies. Summary After surveying almost 10,000 timeshare owners' it was found that the typical consumer was in his mid-forties, had an annual income in 2. excess of $33,000, married, and well educated. They owned a two-bedroom b timeshare unit and bought it both for immediate use and for future savings on vacations. The purchase was financed. Most owners already had purchased more than one week and most intended to buy additional weeks. Satisfaction with present purchase was very prevalent. About three quarters had vacationed in a timeshare unit for an average stay of over eight days. The typical consumer spent $85 per day in the local area while on his timeshare vacation and another $285, for travel expenditures. _ t i fi t I f It 19 e CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with the concept of timesharing. The City Council .has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. w II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real estate property, timesharing involves the sa a of time segments of occupancy of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchases a resort condominium unit for occupation for a specific length of time/ each year. This type of timesharing is also known as- interval ownership and timeshare estate. The difference between the two types is that under the latter form the purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other forms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to the general public for transient use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stgyk cooperativ eunits usually serve as .permanenences, although they can .be timeshared. Time- sharing; as efined in t residthe Timesfiare.Morator�ium_O~rdinance, encompasses tfiese forms�of developments as well . - B. 'Timesharing in Coachella Valle : Timeshare projects ventured into the Coachella Valley in the late 1970's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances reaulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. c Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice in the City permits resort uses in the PC (4) .(Planned Commercial , Resort Center) zone. Uses permitted in this zone include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ), R-3 (Multifamily) and C-1. (General Commercial ) zones with either development plan or conditional use permit approval . Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest in real property. B. Compatibility with Surrounding Uses: A major concern of the City is the j compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with perma nent Went residential uses. Resort/vacation Use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party- C. Removal of Land for Residential Use: Construction of timeshare projects remove land available for the construction of residential units for permanent residents. This is extremely important in Palm Desert since the V'^� City's economic base is expanding and the City, therefore, needs an ade- quate amount of land for vaeous residential uses to meet the housing needs of incoming residents. The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". The top priority of the City should be to ensure that adequate land is available for the needs of residents. 4)P Timesharing also eliminates land for other types of resort and transient ��� uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway 111 and 44th Avenue). If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. lam.. Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be involved with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.020F of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 / Purchase Cost per year (20 yrs) 250.00 Rental Value per week 500.00 Rental Value per day 71.43 - Transient Occupancy Tax per day (71.43 x 6%) 4:29 /Zxample 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned), with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy-Tax per day .(53.57 x 6%) 3.21� The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing : January 22, 1981 Page Four material to be submitted to the Dep artment for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies . there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; b) Ban timeshare projects from the City; or � . c) Rele ate timeshare projects to the Resort Commercial Zone, or other zones) deemed appropriate, with a conditiona=1 use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b) , banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. ;e ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25. 56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm f Desert; WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. a. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION 1: Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby addeli to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharing - Prohibiting. The conversion of an existing single family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: ORDINANCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: � . S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging house, roominghouse, apartment house, timeshare project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall hsve jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis. Such as in a t7Cteshare r.roiect or similar arran60T:ent. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . •F. "Timeshare Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel unit room(s) hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the timeshare pro.iect which is involved has been divided. The said right or entitlement tQ occupy may attach in advance to a specific lot, parcel , unit, room(s) , or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or it entitled to occupancy by reason of .concession, permit, right of access, license, timeshare arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of suchoccupancy or entitlement to occupancy shal n� be c_o_unted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973,• may be considered. (Ord. 134 551 , 2, 1976; Ord. 6 32, 1973). " 10 ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy y a transient shall e t e rents va ue o t e unit or rooms which accomodated such occupancy, which rental value shall be computed bill eterminin the rorata share of the total purchase rice of the timeshare ri ht or entitlement whether or not involving an estate or any ownership in real property) which share i.s allocable to the period of transient occupancy currently involved and adding thereto the total amount of any and all fees assessments charges and expenses charged by the operator as attributable to the timeshare occupancy of the transient by whatever name such fees, assessments charges or expenses may be deno- minated, whether "occupying fee", "maintenance or operations charge" "per diem fee", "management fee" or like name or otherwise In making the- computation referred to above of the prorata share of the total purchase price in any case wherein the timeshare right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 93, 1973)." SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code rF the City of Palm Desert, to. read as follows: ( - "CHAPTER 25.100 TIMESHARE PROJECTS ' l 25.100.O10 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25.100.020 Permitted Zones. A timeshare project shall be permitted only in the Planned Commercial-Resort PC 4) zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates , or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each timeshare participant and, where applicable, to each unit in a project that is not subject to the timeshare program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of timeshare intervals and rights. 7. Copies of all existing California Department of Real Estate Y reports or permits required by law or regulation. 8. - Description of time periods, types of units, and which units are in the timeshare program (if less than all ) , and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial timeshare project, a verified description or statement of the number and percentage of the current .condominium owners desiring or consenting to the pro- posed conversion. of some or all of the units to a timeshare basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to so convert the project would be submitted to the Commission together with when the City Staff and the Commission would consider such application. 10. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of .the timeshare project. 11. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: 1. The impact of the timesharing project on transient rental stock; 2. The impact of timesharing conversion on existing commercial businesses; 3. The impact of timesharing on present and future City services; 4. The impact of timesharing on permanent residential stock. 5. Any other factors deemed relevant by the Commission. 25.100.050 Minimum Timeshare Structure Size. A. Every timeshare dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed por- tions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. : Page Four 25. 100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the state Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, Caiifornia,, and the same shall be in full force and effect thirty (30) days after adoption. .PASSED, APPROVED,' and ADOPTED this day of... 1981, , Ca by the City Council of the City of Palm Desertlifornia, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN:. .. . :. . • S. ROY WI(L .. SON Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk [ City of Palm Desert, California /l r Memo to James McPherson Re: Constitutionality of Time Sharing Prohibition April 7, 1981 Dear Mr. McPherson: At your request, I have researched what I consider to be the constitutionality of a prohibition of time share projects within the City of Palm Desert as the same are defined by Section 11003. 5 of the Business and Professions Code of the State of California. It is my conclusion that a time sharing project cannot constitutionally be prohibited within cities, unless there is a specific finding that such a prohibition is necessary to preserve the public health, safety, morals or general welfare of the community. I find it difficult to distinguish the degrees and varieties of ownerships and to prohibit a form of ownership which may include a number of people," as opposed to, or as distinguished from a regulation of some lesser number. In any event, I think the prohibition of the time share project as a form of development is not currently within the constitutional means of the City. If further research is desired, please let me know. IYou v y truly, A;r J. ERWIN DJE :pb CITY OF PALM DESERT STAFF REPORT TO: Planning Commission FROM: Department of Environmental Services SUBJECT: Zoning Ordinance Amendment to Permit Time-Sharing in Certain Zones CASE: ZOA 14-81 DATE: November 3, 1981 BACKGROUND: Earlier this year the City established a moratorium and began investigating time-sharing. The City Council established a Time-share Committee. A meeting of the Time-share Committee was held in September and the attached report prepared by Staff, dated August 4, 1981, was discussed. The Committee endorsed the regulations proposed in that report. City Council reviewed the Time-share Committee decision and referred the matter to Planning Commission for hearing. ENVIRONMENTAL ASSESSMENT: The addition of "Time-Sharing" as a permitted use in certain zones has been reviewed in accordance with the California Environmental Quality Act and determined to be a Class 5 Categorical Exemption. DISCUSSION: The August 4, 1981 report on Time-sharing (copy attached), provides a history of Time-sharing, a breakdown of California and Hawaii Time-sharing regulations. Additionally, a response to some of the major issues which had been raised concerning time-share, a discussion concerning land use compatibility (ie:where it should be permitted), and a memo from the City Attorney dated April 7, 1981, stating that in his opinion, the City does not have the constitutional authority to blanketly prohibit time- sharing. With this opinion from the City Attorney, Staff elected to propose an Ordinance Amendment which would permit "Time-sharing" in certain zones subject to the issuance of some type of use permit. A draft of the proposed Ordinance has been prepared and is attached hereto. The first and second sections of the Draft Ordinance would amend Chapter 3.28 of the Municipal Code to include "Time-sharing" as hotel type of land use for the purposes of the collection by the City of Transient Occupancy Tax. The third Section of the draft Ordinance would add a new Chapter to the Municipal Code. Section 25.100.010 defines 'Time-Share". Section 25.100.020 delineates the zones in which 'Time-share" will be permitted. In all zones the use is subject to the issuance of a Conditional Use Permit. The Draft Ordinance proposes to permit 'Time-share" in all zones where the present code permits hotel uses. It is felt that this is reasonable because for all intents and purposes, a 'Time-Share" land use is no different than a hotel. Only the ownership of the 'Time-Share" is different in that the owners of time-share have an exclusive right to use of the facilities whereas the shareholders of hotels are paid dividends instead of having the right to use the hotel. This is discussed in more detail in the August 4, 1981 report. Section 25.100.030 delineates additional information which is to be submitted when a Conditional Use Permit application is submitted for a 'Time-Share" project. Section 25.100.040, confers upon the Planning Commission the right to impose the same conditions on a Time-Share as may be imposed on any other Conditional Use Permit application. Section 25.100.050 requires that the Planning Commission must make necessary findings as required for a regular Conditional Use Permit, before the Conditional Use Permit may be granted. Section 25.100.060 specifies that the minimum number of units in a "Time-Share" project shall be twenty (20). This minimum number of units was recommended by a recognized expert in the field as being necessary to suport adequate on-site management, site maintenance and allow for proper marketing. Section 25.100.070 provides that "Time-Share" developments shall be designed to conform to the standards required for a hotel in the zone in which the property is located. Section 25.100.080 states that all "Time-Share" projects will be subject to the provisions of the City's Transient Occupancy Tax Ordinance. Section 25.100.090 exempts from the provisions of this Chapter time-share projects for which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. This Draft Amendment has been revised since it was issued by the Time-Share Committee. A Draft Ordinance based on a proposed Ordinance for Palm Springs, was included in the August 4, 1981 report. Certain sub-sections of Section 25.100.030 of that Draft Ordinance (ie: Information to be submitted with Conditional Use Permit application) have been deleted as it was felt they were unnecessary. Section 25.100.040 (Conditions of Approval) of that Draft Ordinance has been deleted and replaced by the existing Municipal Code Section relating to conditions which may be imposed on a Conditional Use Permit application. Section 25.100.050 of that Draft Ordinance (minimum Time-Share Structure Size) has been deleted because it was felt that other sections of the Code already limit the size of units through maximum number of units per acre, required open space and maximum height limits. PREPARED BY: y REVIEWED AND APPROVED BY: /pa INTEROFFICE MEMORANDUM City of Palm Desert TO: TIME-SHARE COMMITTEE FROM: DEPARTMENT OF ENVIRONMENTAL SERVICES SUBJECT: TIME-SHARE ANALYSIS DATE: AUGUST 4, 1981 INTRODUCTION The Time-share Committee requested a comparative analysis of California and Hawaii time-share regulations. The study was generated by the Committee's concern of Council 's statements relating to Hawaii ' s time-share problems. This report will analyze those regulations and address the concerns raised relative -to permitting time-sharing in Palm Desert. HISTORY OF TIME-SHARING In 1968 time-sharing was introduced in the United States, however, it was not readily accepted by developers. A strong resort condominium market reflective of the overall strength in the 1970 economy contributed to the lack of time-share developments. The downturn of the real estate industry in 1974 resulted in many unsold resort units. Time-sharing became one method for developers to salvage projects. Unfortunately, for these developments, time-share was an afterthought and not part of their original concept. Problems including poor financing, lack of concept understanding, and lack of exchange programs were commonplace. Despite these problems some high quality time- share developments succeeded. As time-share became more widespread better financing, consumer understanding and expanded exchange programs developed; builders ,also became more responsive to market demands. All of these improvements resulted in an incredible growth of time-share resorts; from 73 held by 40,000 owners in 1976 to 250 held by 200,000 owners two years later with a doubling in sales each year since 1976. CALIFORNIA-HAWAII REGULATIONS A table delineating the provisions of each state's requirements is provided in Appendix A. Both regulations were designed to reduce the problems that had developed in the time-sharing industry. California's regulations require the creation of a Homeowner's Association and the declaration of the CC&R's. In addition, the developer must present evidence of habit ability or financial ability to complete the project, sufficient property interest in the project to assure its completion, and permissibility of the project by local ordinance. continued. . . Time-share Committee August 4, 1981 Page Two Appendix B provides a more detailed description of the regulations. This appendix is a copy of regulations proposed to implement SB 1736 which established criteria to regulate time-share in California by the Department of Real Estate. Hawaiian time-share regulations were established in November, 1980. Time-share projects are permitted in hotels and areas designated for hotel use, resort use, or transient vacation rentals use as determined by local authority. Existing time-share projects were exempted. Appendix C more fully describes the provisions of Hawaii 's regulations. PALM DESERT TIME-SHARE CONCERNS The major issues raised in Palm Desert concerning time-share are: a) Sales techniques ' b) Advertising c) Maintenance d) Impact on transient occupancy tax There have been instances of sales techniqu where gifts are promised but not delivered and high pressure tactics used. These g rally involve your lower quality develop- ments such as converted motels. The fi e day cooling-off period provided by California regulation is one answer. Under this provision a purchaser may elect to cancel any .0 agreement. State regulations also require all advertising techniques to be reviewed 3� if- by the Department of Real Estate. In addition, a provision providing for a Purchaser's fOk Awareness Package could be provided in city regulations. ,4, olit The major concern of maintenance has been addressed by the requirement that the CC&R's of a development must provide for regular assessments to defray maintenance costs and provide several means of collecting from delinquent owners. In terms of the City's transient occupancy tax, the proposed time-share provisisions provide a vehicle enabling the City to collect those revenues from time-share develop- ments. WHO BUYS TIME-SHARES AND WHY? A study organized and funded by the Resort Time-Sharing Council of some 28,000 owners, at 185 locations, with a response of nearly 9700, was conducted in 1980. The result of that survey is attached to this report as Appendix D. The typical time-share purchaser was in his mid-forties, with an annual income in excess of $33,000, married and had an above average level of education. The reasons for time-share investment in order of importance: a) Exchange opportunity b) Future vacation savings c) Investment and resale potential Of those responding, 86.3% were either "very satisfied" or "satisfied" with their time-share purchase. 61.5% indicated they intended to acquire additional time-shares. Only 4.5% of the respondents were either "dissatisfied" or "very dissatisfied". continued. . . Time-share Committee August 4, 1981 Page Three The survey showed that owners used their units an average of 8 days per year and spent $85 per day in the local community. LAND USE COMPATIBILITY California regulations presently require an indication from the local jurisdiction that a proposed time-share project is not prohibited. The regulations basically permit time-sharing unless expressly prohibited by ordinance or requires a use permit. When one speaks of prohibition it is doubtful that a blanket prohibition could be established and defended--see attached City Attorney memo April 7, 1981. That memo states: "The prohibition of the time-share project as a form of development is not currently within the constitutional means of the City. " The problem in establishing a blanket prohibition relates to the difficulty in distinguishing the degrees and varieties of ownership and the affects these uses m Y- may have on the public health, safety, and general welfare. As was discussed previously and in the Hawaii Conference Committee Report, time-sharing and transient vacation rental use are identical uses of land, without regard to owner- ship. Land use decisions should be based on the use of the land and not on ownership. For this reason time-sharing and transient vacation rentals should either be permitted or prohibited on an equal basis within certain zones. The proposed ordinance makes such provision. As was discussed in the January 22, 1981, report on time-sharing to City Council (attached as Appendix E), resort hotels are permitted in the PC (4) zone, PR zone, R-3 zone and C-1 zone subject to obtaining development plan or conditional use permit approval . If time-sharing were not to be prohibited outright, then the use should be limited to the above noted zones subject to obtaining both a development plan and conditional use permit or some type of special permit process. As discussed in the January 22, 1981, report the "Transient Occupancy Tax" can be collected in "time-share" developments so the potential loss of hotel-zoned land to time-share developments should not present problems. In examining the amount of vacant PC (4) land in the City and the possible difficulties in obtaining financing for hotel developments, time-sharing may provide an alternate method of financing such developments. Permitting time-sharing in planned residential and R-3 zones where hotels are presently permitted, may result in conflicts between full-time owners and time-share occupants. However, present short-term rentals operating in the major country club developments within Palm Desert have not resulted in conflicts. Furthermore, case studies cited in The Resort Time Sharing Industry Report Vol . II showed no conflicts on mixed time-share permanent residential projects. It is felt that in the case of existing condominium developments, which may wish to change some of the units to time-share, _that a majority of the owners be required to vote in favor of the proposed change. continued. . . Time-share Committee August 4, 1981 Page Four In the case of a new mixed condominium time-share development, a provision requiring full disclosure of this fact and the location of the time-share units should be an adequate means of protecting anyone who does not wish to locate in a time-share development. SUMMARY In light of the City Attorney' s opinion of April 7, 1981, that the City does not have the constitutional authority to blanketly prohibit "time-sharing" throughout the City, that the best means of controlling time-share developments as to permit it in specified zones subject to the issuance of some type of use permit. A draft ordinance is attached to this report. The Time-share Committee should review this report and provide comment at the next committee meeting. It is proposed that the report with applicable comments of the committee incorporated then be forwarded to the City Council with an appropriate recommendation. MON A. I Z RAD/lr Attachments ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIME-SHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging, house, roominghouse, apartment house, time-share project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel .rooms,rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Opera toe'rmeans the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time- share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or charac- ter, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. r D. "Rent" means the consideration charged or chargeable to the tenant or 1!t person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be, payable prior to or following (in whole or in part) the occupancy to which it is attributable, and may have been paid in whole or in part in advance on a long- term basis , such as in a time-share project or similar arrangement. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax Administrator" means the director of finance, or such other individual as may be designated by the City Council . F. "Time-share Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of ears or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room s , hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis, fora eriod of time that has been or willbe allotted from the use or occupancy periods into which the time-share project which is involved has been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, room s or ioportion of a hotel , or nvolve segment of real property, or may i designation or selectn of the same at a future time or times. G. ' Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession,' permit', right of access, license, time-share arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of such occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 SS1, 2, 1976; Ord. 6 S2, 1973 W' ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of time-share occupancy by a transient shall be the rental value of the unit or rooms which accommodated such occupancy, which rental value shall be com uted by eterminin the prorata share of the total purchase price of the time- share right or entitlement whether or not involvin an estate or an ownership in real property which share is all to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees assess- ments, charges and expenses charged by the operator as attributable to the time-share occupancy of the transient by whatever name such fees assessments charges or expenses may be denominated, whether "occupyin fee" "maintenance or operations charge" z .. Per diem fee", management fee or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price, in any case wherein the time-share right or entitlement is in perpetuit or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a 'proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the tran- sient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accommoda- tions furnished. (Ord. 6 §3, 1973) . " SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25. 100 TIME-SHARE PROJECTS 25.100.010 Defined. As used in this Chapter, time-share project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy per- iods into which the project has been divided and shall include, but not limited to time-share estate, interval ownership, vacation license, vacation lease, club member- ship, time-share use, and hotel/condominium. 25.100.020 Permitted Zones. A time-share project shall be permitted only in the Planned Commercial Resort (PC-4) zone, Planned Residential (PR) zone, Multi- family (R-3) zone or General Commercial (C-1) zone, and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with CUP Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a time-share project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. ( i ZS. 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. l ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each time-share participant and, where applicable, to each unit in a project that is not subject to the time-share program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to r time in the future. i { 6. Description of any proposed restrictions on the use, occupancy, Il alteration or alienation of time-share intervals and rights. . 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. H. Description of time periods, types of units, and which units are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time-share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified U.S. Mail that application to so convert the project would be submitted to the Commission to- gether with when the City staff and the Commission would consider such application. 10. In the case of a new mixed project (ie: Time-sharing-condominium/ rental ) a description of the means proposed to be employed to f disclose the number and location of all time-share units within the project. 11. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 12. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25. 100.040 Conditions for Approval . In addition to the findings, the Co mission shall make in conjunction with Section 25.72.070, the Commission shall co sider the following: 1. The impact of the time-sharing project on transient rental stock; 2. The impact of time-sharing conversion on existing commercial bus- inesses; 3. The impact of time-sharing on present and future City services; 4. The impact of time-sharing on permanent residential stock; 5. Any other factors deemed relevant by the Commission. _ 25.100.050 Minimum Time-share Structure Size. A. Every time-share dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed portions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon: 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25. 100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: - t SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr I` O m m A r A m -I Z N .-) r m D m r- .. � z r x n Az z ., r m C) CD N c� z D r C) N N T m r m A N --I A Z CD C) m z N m n c m n L/) T -I m •O r A Z G1 0 m Ln N N O - C:) m O .T-� O .�-� O a O cm) D D C-) E Z m n O vzi -A-I m _ n 3 m CDm -D-1 A � 7c7�� m m o D z A C-) D r N O O O m_ Z -A m m O n T � Z m -1 m c z m -i v O z .� Z. C) C) N 3 D m T cm) Z m z N D N .r S=° Z n C) Q. 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O � cN) D 3D .C-. m T E N •Zi-i7 O i�i m C') m m M W z O N m N VI Z N 2 Z -1 O O 2 T .O O n CDT --i 2 O CD Wm O D W m m .. m c) -a '� m ram- 3 m o m E W z z z z t�M �-+ i m N m D r N 2 N O ti Z n —1 2 m m N —1 o � � m D z ;a m m r N O O N n m (7 T O N O Ln D --I O T m ti m z m z n n m m O CZ') N ---I m > (n m O GZ') -N-I m N S7 O co mm z D T O -L O < < O rt) -4 cm) N A < D N O G) O D m 3 p r N m T c -) m O N O m _ m m m > o m --Av T m m m z o o 70 Cl 3 m O X v CDm m x C z -4 m C-) - `O T 1 ri m D = n c� I r c) z m z N C m 0 x x x x x y D r T X X X X X X X X O .T Z i-r D U . rJOTICr APID IJIF\OM-DATIVE DIGEST OF PROPOSED CE NC'S IN THE REMIATIMS OF THE KCAL ESTATE ODMAISSIONER . Decerber 23, 1980 Pursuant to the authority vested in him by Sections 10080, 10131.6, 10170.4, 10249.2 and 11001 of the Pusiness and Professions Code, to irmle- ment, interpret or Tooke specific Sections 10131.6, 10170.4, 10249.11, 11000, 11010, 11010.2, 11012, 11013.2, 11013.4, 11018, 11018.5 of the P miness and Professions Code, DAVID H. FM, Real Estate Cannissioner of the State of California, proposes to adopt, amend or repeal regulations in Chapter 6, 'title 10, California Administrative Code, as described }relow: Please note that items 1 through 30 propose the adoption of tire-share subdivision regulations to ccn1pler-ent the timo-share legislation effective January 1, 1981. These regulations and items 31 and 34 are to beca*e effective as pro- vided under Section 11346.2 of the (;ovenu ent code r.n or about April 28, 1981. The rur wining changes, items 32 and 33, are to become effective on July 1, 1981. 1, !mend Section 2790.7 - Chapter 601, Statutes of 1980, amends Section 10249.3 and adds Section 10249.11 of the Business and Professions Code to include tile.-share uses as out-of-state subdivision offerings. This amendrmt would conform this section to the provisions of the new lava. 2, Adopt Section 2810 - Defines "su'-)stantially complete" subdivision public report application for purposes of Chapter 1152, Statutes of 1980. 3. Adopt Section 2810.1 - Specifies the regulaticais in Article 12 applicable to tine-share projects. 4. Adopt Section 2810.2 - Recjuires applicant for tiri-share public report to present evidence of habitability of or financial ahilit_ , . to eorgplete the project, sufficient property interest in project to alloy its o s giletion, and permissibility of project under local ordinance, if any. 5. Adopt Section 2810.3 - Prescribes ptlrc:hase ronev handling reni ire- ments in connection with tine-share offerings. 6. Adopt Section 2810.4 - Specifies conditions .for the addition of a dcaelling unit to a time-share project. 7. Adopt Section 2810.5 - Prescribes when tiro-share offerings wits dcnellincr units both in the stage and out: of the state will be treated as an out-of-state suldivision. 8. Adopt Section 2810.6 - Rewires subdivider to notify Department of natural changes to time :,harp proic-t for which a public report has already been issued. i 9. Adopt Section 2810.7 - Provides that Real Pstate Commissioner can approve alternative rights and renedies affording canparable benefits to tirp-share amers. 10. Adopt Section 2811 - ReoPiires the sponsor of a tire--share project to record a declaration dedicating any dwelling units to the tine-share project and requires certain provisiays therein. 11. Adopt Section 2812 - Specifies standards for "reasonable arrangements" in tide-share projects. 12. Adopt Section 2812. 1 - Requires transfer of control in time-share project to owners association or to trustee prior to consurmatinq first sale of titre--share interest in project. 13. Adopt Section 2812.2 - Rpmnrp_s conveyance of tire-share project dwelling units to trustee prior to closing of sale of first tirp- share interest and prescribes elements of trust instru rent. 14. Adopt Section 2812.3 - Requires titre-share project sponsor to provide security for pannent of assessments and specifies requirements for security. 15. Adept Section 2812.4 - Prescribes conditions pertaining to the sponsor's subsidization of a time-share project operation. 16. Adopt Section 2812.5 - Regnuires oovenant by tirr_-share project s xinsor not to encu*iher duelling units after execution of, the declaration without written consent of majority of other ame.*s. 17. Adopt Section 2812.6 - Ramares the declaration in Section 2811 to prohibit partition of the project }?v amers. 18. Adopt Section 2812.7 - Prescribes condition., for joint time-share and co-rercial use of ccrTrxn facilities. 19. Adont Section 2812.8 - Prescribes that a mana�crrnt anent shall be erlployed by a tine-share project. 20. Adopt Section 2812.9 - Alla-m rental of tirr-share interests to public under certain circu7stanms. 21. Adopt Section 2812.10 - Requires titre-sham p.iojr,ct tro be ijrsurerl against property o3--uunage and personal injuur/ cl,iuns. 22. Adopt Section 2813 - Requires rer?ular reetinc,s of tin?-share project a•mers and prescribes recnuirerents for such reatinm. 23. Axknt Section 2813.1 - Specifies rerbers' voting r.icdits ii tire- share project amer association... 24. Adopt Section 2813.2 - Prescribes camyosition and election procctires for governing bodies of tine-share project a•mer association. 25. Adopt Section 2813.3 - Specifies recnuremnts for meetings of governing booties of time-share project aner associations. -2- 26. Adopt Section 2813.4 - Specifies sequirenents for assessor nts to defray costs of operating tine-share projects. 27. Adopt Section 2813.5 - Requires dissemination of certain pertinent information to all tine-share owners in a project. 28. Adopt Section 2813.6 - Requires that records of tine-share project owners association be available for inspection and copying by association neri)ers. 29. Adopt Section 2813.7 - Specifies procedures and limits for a tirp- share project owners association to discipline its mr.bers. 30. Adopt Section 2813.8 - Specifies procedures for amending governing instrurents of time-share projects. 31. Repeal Section 2785 (b) (10) - Conforms this section to the recent decision in Council of Anthony Rstate Schools v. Ebx, San Diego Superior Court, No. 82M0) , in idatina tTris sub- division. Ilse sLbdivision had defined the organized disclosure of real estate exam questions as "unethical conduct". 32. & 33. Amend Sections 2861 and 2862 - Conforms these sections to Chapter 1149, Statutes of 1980 (AB 2915) which transfers jurisdiction over mobilehom registrations fxnro Departrent of Motor Vehicles to Department of housing and Comunity Developrent. NOM: These sections are to beanie effective ,Tuly 1, 1981. 34. Amend Section 3012 - Corrects "exe. tion" from licensees' continuing education reTiirerent to "extension" of time for co mleting require- ment. e: -3- �- 51312f CONFERENCE COMMITTEE REPORT No. 9-AO Honolulu,- Hawaii April �� 1980 Honorable Richard S . H. Wong President of the Senate Tenth State Legislature Regular Session of 1980 State of Hawaii " Sir:- RE: S:B. NO.11516 , S.D. 1, H.D_ 1 ' •-r Your Committee on Conference on the disagreeing vote of the yt. Senate to the amendments proposed by., the House of Representatives ; in S .B . No. 1516 , S .D. 1 H.D.,: 1 '- entitled: a "A. BILL FOR AN ACT RELATING TO TIME SHARING" , h having met, and after full and free discussion, has agreed to s recommend .and does recommend to the respective Houses the final passage of this bill in an amended form / y ;i The purpose of this bill is to regulate time sharing in the State of Hawaii w In its resolution of the several issues involved in this bill, your Conference Committee has taken note of the growth of time sharing over the past several years, both in the State of Hawaii and in other tourist destination areas. . Your Committee is aware that time sharing has generated <*= controversy among the various interested parties , including .: the governments of the State and of the several counties, persons in the time share industry; and residents most directly affected by the growth of time sharing and its _ potential for expansion.. s Simply stated, _ those who favor time sharing see it as a continuing stimulus to the economy of the State through the creation of additional. jobs for residents of Hawaii and 'expenditures by time share participants . Opponents challenge the conclusion that time sharing constitutes an economic , ' advantage to the State, and consider it to be disruptive, particularly within areas where permanent residents live. The opponents would prefer the strict limitation or prohibi- tion of time sharing, while its proponents favor enabling legislation to establish definite guidelines and procedures Cfor its statutory regulation. SMA 783 496 CONFERENCE COMMITTEE REPORT NO. t Page 2 Your Committee concludes that it is necessary and timely for time sharing to be placed under strict governmental regulation if the interests of the State, the time sharing industry, the purchasers of time share units and above a11, the people of Hawaii, are to be served. Accordingly, it is the intention of. your Committee that careful regulatory oversight of time sharing in the State of Hawaii be provided. The following are some of the more significant areas of regulation addressed in this measure Sec. -3 Taxation.. Provides for reliable and efficient administration of real property and excise taxes . Sec_ y This mandate -4 . County authorit will be ' particularly helpful in efforts to clarify hotel, resort and c z transient vacation rental areas: ' The counties do not presently t a r.}. . zone for the "less traditional forms of transient visitor ' accommodations , and should address this in the near future v` - Sec S Geographic limitations Provides a' general itiorr, except as specifically prohib allowed in the' enumerated hx subsections: The first exemption is` a -"grandfather'! provision , 1� S to avoid any retroactive {{effect of this section 1 ` f .5•,t The second exemption subsection provides for two exemptions , from the prohibitory`-Ianguage ':Firstf time sharing and transient h vacation rentals are allowed in hotels . : Second; time sharing and rtransient_vacation rentals are. allowed where designated for hotel use, resort use;. br:transient vacation rentals use, pursuant to 7 county authority. under Section' 46-41 ' Hawaii Revised Statutes, ` ', or where the county, by its legislative process ,.: designates hotel; transient vacation rental or resort use r it is the clear intention of your conferees that time , . _ : sharing and transient vacation rental use are. identical uses of ,- Iari that cT;without�regard,_.torownesi�aril _both uses Should;be addressed-in-a_ coequal-manner;by_ the counties. Your toriferees further note that county land use decisions are not based on ownership, but on the' use of the an _in uestion.. As ` 4.___ such, time sh'aYYngactransient vacation..rentals- should be either pe`rmi" or- prohibited on an�equal basis within_an area eemed—appr`opri t by the county _ Your Committee further notes several areas of non-enforce- ment of their own zoning ordinances by some- of the counties . In this regard, it is not the-p_resent character of the nei.ghbo.rhoo1 . but its intended use by the county that is also important. The egislature intends by this Act that the counties will be guided" by the notion that time sharing and transient vacation rentals should not be ertzttte$�whe're,^tlie-life;s'tyTes:of_the permanent w^ resrd will be disrupted in an unreasonable manner. Any zoning code is only as good as its enforcement by a county. SMA 784 851 CONFERENCE COMMITTEE REPORT NO. Page 3 Iu its review of" -time sharing and transient vacation a v rentals . your conferees concluded that several ral of the counties have ntt used their zoning authority on these less formal and trp.ditional types of transient visitor accommodations.. The , ;: . problems caused by this shortcoming in the county zoning _ ordinances are clearly demonstrated. in the case of County of Maui vs. Puamana Management Coraoration (Civil No. 3474-78) , presently on appeal to the Supreme Court of the State of Hawaii. Your conferees elected. not to pre-judge where in an appro- priate area time sharing and transient vacation rentals should be allowed or prohibited, but. to leave that decision to each county as a logical part of -.its zoning or designation functions. Your Committee expects' that. the counties will act expeditiously ' to clarify the._propriety- of .these. uses under .the. zoning +: ordinances . Y Sec. '. -6 Time sharing in projects Provides" that - time sharing must be explicitly and prominently authorized ,r in project instruments before ' such *a use can commence in a " project.. _ Such authorization- shall be by a unanimous vote o - the unit. owners ' -In: projects which. presently contain time „ r sharing use, the project instruments will determine the , restrictions, if any, to be imposed. Sec.. 7 Maintenanceycharges : In recognition"that K - time sharing may result .in more intensive use of buildings or projects and their common elements ; your Committee- has w provided that higher maintenance fees, up to a maximum of an additional fifty peren --ay be assessed against time share ^ 4` units and. transient vacation rental units located in- the same. building- as. private residential units. This proviso will more equitably distribute maintenance costs , and should '• have the collateral effect of discouraging the mixed use of buildings. Sec.. 8 Mutual right to cancel .`` Provides a cooling- off-period of five calendar days after the execution of the contract or the receipt of the mandatory disclosure statement, whichever is the latter. It .is hoped that this will remove - some of the incentive to use high pressure sales techniques. Sec. -9 Disclosure statement. Provides for the dis- closure of pertinent information to prospective purchasers . i Sec. -10 Filing required; developer, sales agent, acquisition agent and plan manager. Provides ror filing of the disclosure statement with the director. It also requires the filing of certain information by the acquisition agent, sales agent and plan manager and requires those persons to be bonded. Si0, 784 850 CONFERENCE C0.�4MITTEE REPORT NO. Page 4 Sec. =11 Prohibited practices. Your Committee has defined and prohibited undesirable marketing practices such as beach and street solicitation on a Statewide basis .' ` Your Committee believes that these provisions will help to reduce the actual and perceived problems of time sharing. ; without unduly retarding the industry Your Committee on Conference is in accord with the intent and purpose of S .B. No. 1516 , S.D. 1, H.D. 1, as amended herein, and recommends that it pass Final Reading in the form attached hereto as S .B.. No. 1516, S .D.• 1,:..H..D_..1,:. C.D. l. .. ; r Respectfully submitted, ;r MANAGERS ON THE PART OF THEMANAGERS ON THE PART OF THE r ' Y a; HOUSE SENATE' r r 1: 4_ RUSSELL BLAIR, Chairman . STE COBB, Chairman . � ° ,TIES AKI, Member _ s DANTE C RPE TER, ember V. JA(: \LARSEN , Me WADSWORTH YnE, MeniJ6er.9.0 <. \\V\ .• / /(11 �' I -5.tom .• �^ S r Y i O ALD T. MASUTANI ,. Member - ITSUO SHITO, Member G. t DONNA R. IKEDA, Member SMA 784 824 eNiJiX : >? return coupled with the sizeable representation of the overall Popula- tion were more than enough to conclude that the survey results were very reliable. Consumer Characteristics and Motivations ;3 It appears that when aggregating the variables of age, education, 62 - income, and family type, the timeshare market is composed of a very va stable population. Due to their high income and educational attainment, their middle-age and marital status, it would seem they are relatively protected from extreme problems with any economic recession in the " country. This is especially evident in a market for relatively low lT' cost recreational real property such as resort timesharing where most ,r-Y.�i= units can be purchased for less than $5,000 a week. Over one-half (56.3 percent) had household incomes in 1979 of i;mqq. - a•�. $30,000 or more, and 17.1 percent had incomes of $50,000 or more. The ry approximate median annual income of timeshare households was about $33,500. By way of comparison, it was estimated that the median income ...: of all households in the United States in 1979 was only $16 500. a� The average age of the head of household for timeshare buyers was . {z : 45.4. Over one-half (52.7 percent) were between the ages of 35 to 54. 7 The vast majority of timeshare buyers were married couples (89.4 per- cent) . By contrast, only about 62 percent of all households in the ? . . United States are now composed of married couples. One of the most outstanding findings from the survey is the extremely high level of education attained by the respondents. Over three-quarters > L �* •SeT. w (75.8 percent) had attended college, with over one-half (54.9 percent) , �ser beingcollege g graduates and 31.4 percent having done p g graduate work. In regard to why people buy timeshares, the most frequently checked : 14 s, answer was the exchange opportunity (71.4 percent), followed by the opportunity to save money on future vacation costs (59.4 percent) and investment or resale potential (38.8 percent) . Thus, respondents appear primarily concerned with flexible vacation plans while at the same time being interested in holding down future vacation costs. Timeshare Characteristics The majority of timeshare units owned by respondents had two- bedrooms (60.2 percent) , while only 10.4 percent were studios. The number of weeks purchased was fairly evenly distributed amongst the four seasons, ranging from 23.9 percent for Fall to 26.3 percent for Summer. This finding indicates that timeshares are marketable through- e` out the year and not just during peak vacation periods. Even though a recently offered commodity, over one-half (52.5 per- cent) of the respondents already had purchased two or more weeks of timeshare. About 10 percent had purchased their units in more than one resort location. It appears, therefore, that some "timeshare buyers are 5 already beginning to collect not only multiple weeks, but also multiple locations, even though being offered the exchange privilege with other locations. Even though relatively inexpensive compared to other types of recreational real property, the majority of timeshare buyers still finance their purchase rather than paying cash for it — 67.6 percent compared to 32.4 percent. Only 37.4 percent of the respondents stated they would have purchased their timeshare without the availability of financing. Consumer Satisfaction Respondents in the survey were asked, "In general, how satisfied 15 4�S are you with your timeshare purchase?" Answers were overwhelmingly favorable with a very high 86.3 percent stating they were either "very ; s. satisfied" 44.6 percent) or satisfied" (41.7 percent) . Some 72,5 :•^4 percent said they would again purchase their timeshare in hindsight, '7 High satisfaction was most apparent amongst respondents who: � . n 1. had owned their timeshare longer; 2. had purchased multiple weeks; =5` 3, had purchased higher priced units; 4. had purchased larger units; 5. had purchased for use or because they liked the unit; r'q 6. intended to buy more'timeshares; . 7, had used their timeshare; s 8. had requested an exchange; 9. had an exchange confirmed; yf 10. received their own first trade choice; 11. were very satisfied with their trade; 5 12. felt the exchange privilege was fairly represented by their f salesperson, 13. were middle age and above; 14. had attained higher educational levels; " 15. had higher incomes; 16. had purchased fee—type units; and } 17. had purchased units in projects originally built for timeshare, s - 4 An extremely high 61.5 percent intended to buy additional time shares, either at their present resort location (24.6 percent) and/or :3a v, at another location (36.9 percent), Such findings not only indicate a high degree of satisfaction amongst g present owners of timeshares, �'•`• 16 , 1 but 'also a vast potential demand increase in the overall market. In other words, a potential market not only exists with untapped buyers. but also with almost two-thirds of the existing buyers. Only 18..6 percent of the respondents said they will attempt to sell their present timeshare and not buy another, i.e. , no longer be participants in the market. Some 40.2 percent stated they did not plan to buy additional timeshare but rather just keep what they presently Use of Timeshares A frequent argument made in the past against traditional types of recreational real properties (recreational lots, detached vacation homes, and wholly owned resort condominium units) was that they rarely were used by their owners: Such does not seem to be the case with resort time- shares. Some 62.0 percent of the respondents already had vacationed in their own timeshare unit. When combined with the respondents who have not yet used their own unit but have taken advantage of the exchange privilege, it appears that about three-quarters of the respondents already have used a timeshare unit of some kind. This is true even though 38.7 percent had made their purchase only within the past six months, ( Some 58.1 percent said they planned to use their interval every E year in the future. Another 28.3 percent planned to use the exchange privilege every year, for a total planned timeshare annual use of 86.4 per- ¢j cent. If these figures are generalized to all projects for all seasons of the year, it appears that the issue of this type of property sitting idle for long periods of time is much less relevant than it has been for traditional types of recreational property. 17 '2 = s About one-half (55.7 percent) of, the respondents had vacationed in =. i� their timeshare for a seven-day period, with the average stay being 8.2 rMR days. The average number of visitors per party for the overall stay ( ^` was 4.0, including 3.0 adults and 1.0 children. Consumer Expenditures ''� Respondents were asked. to estimate their party's average daily expenditures in the local area during their most recent vacation in a Pi timeshare unit. Results are summarized below: F. Average Item Daily Expenditure y Groceries and liquor bought in a store $17.02 s}a` Eating out and nightclubs 25.47 Yr i� al Other overnight lodging besides timeshare unit 2.67 13 Recreation (movies, green fees, tours, lift 14.00 tickets, etc ) Local transportation. (public bus, taxi, etc.) .76 Rental car 5.10 ` hn, Local shopping 4s �, pp g (souvenirs, gifts, apparel, etc.) 13.90 Other 6.42 Total r5 i a85.34 „'. ..0 If averages for the eight items are accumulated, the overall aver- age daily expenditure was $85.43. Respondents also spent an average of another $285 on travel expenditures, including $205 for air travel, $75 �s g for car travel, and $5 for other travel. About 30 percent used air travel to arrive at their destination, and about 20 percent used a travel agent for booking air or lodging accommodations. If average daily expenditures were multiplied by the average daily "0 Is n. yZ{ L stay by the estimated use rate by the total number of timeshare owners, it was found that well in excess of $100 million annually is spent locally by timeshare vacationers. This estimate does not include travel ' expenditures. More importantly, it does not include contributions made by the timeshare projects themselves in terms of construction costs, taxes, fees, management, sales expenditures,xpenditures, etc. Such estimates are measured in the following case studies. r Summary After surveying almost 10,000 timeshare owners, it was found that ppa11TT... the typical consumer was in his mid-forties, had an annual income in excess of $33,000, married, and well educated. They owned a two-bedroom timeshare unit and bought it both for immediate use and for future savings on vacations. The purchase was financed. Most owners already had purchased more than one week and most intended to buy additional weeks. Satisfaction with present purchase was very prevalent. About three-quarters had vacationed in a timeshare unit for an average stay of over eight days. The typical consumer spent $85 per day in the local area while on his timeshare vacation and another $285 for travel expenditures. f i Ii 19 CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with the concept of timesharing. The City Council has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real estate property, timesharing involves the sa a of time segments of occupancy of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchases a resort condominium unit for occupation for a specific length of time/ each year. This type of timesharing is also known as- interval ownership and timeshare estate. The difference between the two types is that under the latter form the purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other forms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to the general public for transient- use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stq"k cooperative units usually serve as permanent residences., although, they can be timeshared. Time- sharing;__ase£ined in the fimeshare�Morator3�umOrdinance? encompasses these forms- of developments as well. -- `" B. Timesharing in Coachella Valle : Timeshare projects ventured into the Coachella Valley in the late 1970's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances regulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. c_ Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice in the City permits resort uses in the PC (4) .(Planned Commercial , Resort Center) zone. Uses permitted in this zone Include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ) , R-3 (Multifamily) and C-1. (General Commercial ) zones with either development plan or conditional use permit approval . Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest In real property. B. Compatibility with Surroundin Uses: A major concern of the City is the compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with permanent residential uses. Resort/vacation use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party. C. Removal of Land for Residential Use: Construction of timeshare projects remove land available for the construction of residential units for permanent residents. This is extremely important in Palm Desert since the City's economic base is expanding and the City, therefore, needs an ade- quate amount of land for vaeous residential uses to meet the housing needs of incoming residents. . The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". .The top priority of the City should be to ensure that adequate land is available for the needs of residents. ,,O�0 Timesharing also eliminates land for other types of resort and transient uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway 111 and 44th Avenue). If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be, involved with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.02OF of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (20 yrs) 250.00 ' Rental Value per week 500.00 Rental Value per day ' 71.43 Transient Occupancy Tax per day (71.43 x 6%) -4.-29 t6ample 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned), with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy.Tax per day .(53.57 x 6%) 3.21� The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing January 22, 1981 Page Four material to be submitted to the Department for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; b) Ban timeshare projects from the City; or c) Relegate timeshare projects to the Resort Commercial Zone, or other zone(s) deemed appropriate, with a conditiona-1 use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b) , banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. �0 � r ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm F Desert; WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION 1: Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharing - Prohibiting. The conversion of an existing single family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the.City. " SECTION 3: Addition. That Section 25. 56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to brit: ORDINAiiCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: � . S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr t ORDINANCE 110. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25. 100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging- house, roominghouse, apartment house, timeshare project or facility, dormitory, public " - or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis . such as In a timeshare r.roject or simll$r arranaement. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . •F. - "Timeshare Occupancy" means occupancy related to the situa�ion wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of years or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel unit room(s) hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis. for a period of time that has been or will be allotted from the use or occupancy periods into which the timeshare Project which is involved has been divided. The said right or entitlement to occupancy may attach in advance to a specific lot, parcel , unit, room(s), or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. "Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession., permit, right of access, license, timeshare arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of suc occupancy or entitlement to occupancy shall not be counted when deter- mining w et er a perio exceeds the stated thirty consecutive days. In determining w et era person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 -551, 2, 1976; Ord. 6 §2, 1973). " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy by a transient shall e the rental value-757 The unit or rooms which acc_omodated such occupancy, which rental value shall be computed bit determinen the rogat share of the total purchase rice of the timeshare right or entitlement trhether or not involving an estate or any ownership in real property) which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees, assessments, charges and expenses charged by the operator as attributable to the timeshare occupancy of the transient by whatever name such fees, assessments charges or expenses may be deno- s _ minated, whether "occuoving fee" "maintenance or operations charge" "per diem fee", "management fee" or like name or otherwise In making the- computation referred to above of the prorata share of the total purchase price in any case wherein the timeshare right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 53, 1973). " SECTION 3: Addition. That Chapter 25. 100 is hereby added to tiie Code cif' the City of Palm Desert, to read as follows: - "CHAPTER 25.100 �- TIMESHARE PROJECTS 25.100.010 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25.100.020 Permitted Zones. 'A timeshare project shall be permitted only in the Planned Commercial-Resort PC 4T zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. L 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. . Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each timeshare participant and, where applicable, to each unit in a project that is not subject to the timeshare program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of timeshare intervals and rights. 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. 8. _ Description of time periods, types of units, and which units are in the timeshare program (if less than all ) , and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial timeshare project, a verified description or statement of the number and percentage of the current-condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a timeshare basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to so convert the project would be submitted to the Commission together with when the City Staff and the Commission would consider such application. t10. A description of the methods proposed to be employed to guarantee 1l the future adequacy, stability and continuity of a satisfactory level of management and maintenance of .the timeshare project. 11. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: 1. The impact of the timesharing project on transient rental stock; 2. The impact of timesharing conversion on existing commercial businesses; 3. The impact of timesharing on present and future City services; 4. The impact of timesharing on permanent residential stock. 5. Any other factors deemed relevant by the Commission. L 25. 100.050 Minimum Timeshare Structure Size. A. Every timeshare dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed por- tions and. garages. B. The standards may be increased by the design review process or the Planning Commission based upon 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. I ORDINANCE NO. Page Four 25.100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California,:and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of, .. 1981, er by the City Council of the City of Palm Dest, California, by the following vote, to wit: AYES: NOES: a ABSENT: ABSTAIN:. S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk [ City of Palm Desert, California /lr Memo to James McPherson Re: Constitutionality of Time Sharing Prohibition April 7 , 1981 Dear Mr. McPherson: At your request, I have researched what I consider to be the constitutionality of a prohibition of time share projects within the City of Palm Desert as the same are defined by Section 11003. 5 of the Business and Professions Code of the State of California. It is my conclusion that a time sharing project cannot constitutionally be prohibited within cities, unless there is a specific finding that such a prohibition is necessary to preserve the public health, safety, morals or general welfare of the community. I find it difficult to distinguish the degrees and varieties of ownerships and to prohibit a form of ownership which may include a number of people, as opposed to, or as distinguished from a regulation of some lesser number. In any event, I think the prohibition of the time share project as a form of development is not currently within the constitutional means of the City. If further research is desired, please let me know. IYou v y truly, Ae'I J ERWIN r DJE :pb TRANSIENT OCCUPANCY TAX (TIME SHARE) 1. Transient Occupancy Tax is based on rental value (ie: 6% of Rental Value: TOT). 2. Rental value is determined by adding maintenance fee and purchase cost/week. 3. Time-share is usually sold in specific intervals for either infinite periods or for definite periods. Infinite Period (40 Yr. Assumed*) Definite Period (ie: 20 Yrs) Selling Price Per Week $10,000 $10,000 Purchase Cost $10,000 250 500 10,000 Per Week 40 20 Maintenance 200 200 Rental Value 450 /Wk 700 /Wk TOTAL $ 27 /Wk $ 42 /Wk or $ 3.86 /Day $ 6 /Day NOTE: 40 Year is assumed Life Expectancy of Building as determined for depreciation purposes by the Internal Revenue Service. PA ' 4,,E i San Diego Country Estates Timeshare Budget FYE 12/31/82 REVENUE Assessment Dues 861 ,988 Bonus Time 7,200 Interest Income 27,000 Other Income 1 ,800 TOTAL INCOME 897,988 EXPENSES San Diego Country Estates Association Dues 16,500 y Villas IV Association Dues 94,000 San Vicente Racquet Club Memberships 32,200 Golf Club Memberships 46,100 Salary Maintenance 24,200 Salary Transportation 7,500 Employer Taxes and Insurance, 9,500 d, Hotel Services 288,000 Office Supplies 8,600 Maintenance and Repair Buildings & Grounds 10,000 Maintenance and Repair Interior 13,500 Maintenance and Repair Transportation 7 ,900 Telephone 18,800 Sewer 12,700 Electric 79,200 Cable 21 ,500 ** Taxes and Licenses ** 4,100 Insurance 10,700 Legal 2,500 Accounting and Collection 47,700 Management Fee 43,100 Miscellaneous 71800 TOTAL EXPENSE 0062100 RESERVE FUNDING (12.5%) 107,749 TOTAL BUDGET/ESTIMATED ANNUAL OPERATING COSTS 9131849 NET INCOME/BUDGET DEFICIT [15,8611 UNDESIGNATED RESERVES 16,000 NET INCOME/BUDGET EXCESS 139 Monthly Dues , 1982, 1 Bedroom 39.40 Monthly Dues, 1982, 2 Bedroom 50.39 ** NOTE: Property tax expenses have been eliminated from the budget for 1982 until the ramifications of Proposition 13 on Timeshare Development can be determined. M October 9, 1981 1 PROPERTY MANAGEMENT Dear Good Life Owner: In compliance with the management reporting requirements in Article IV, Section 2, Paragraph (j) , Statement (1 ) of the "Declaration of Covenants, Conditions and Restrictions" for Timesharing Ownership within San Vicente Country Villas IV, we are attaching the 1932 Pro Forma Operating Statement (Budget) indicating the projected revenues and expenses. The monthly dues for January 1 , 1982 to December 31 , 1982, will be $39.40 for Owners of one bedroom units and $50.39 for Owners of two bedroom units (see detail attached) . These dues are an increase of twelve percent (12%) over the 1981 year. Please note the budget does not include the expenses for property taxes per the attached letter of explanation. Also, the bonus time rates will be changed beginning January 1 , 1982 to $26.00 for a one bedroom unit and $31 .00 for a two bedroom unit. As in 1981 , we are continuing to experience significant inflation and San Diego Country Estates Timeshare is no exception. The increase is primarily a result of. . . . . 1 ) Salary increases for employees and the addition of another maintenance employee with the increased room occupancy 2) Sewer charges which were previously included in monthly dues to Villas IV 3) Increase in dues or membership fees of at least ten (10) to twenty (20) percent associated with San Diego Country Estates Association, San Vicente Villas IV Association, San Vicente Racquet Club, and the, Estates Golf Club 4) Increased fees for contract services rendered for hotel services We feel we can continue to provide a property you will be proud of. Thank you for your continuing support, we look forward to being of service to you. Kindest regards. Sincerel n C Woody Car, , Agent San Diego Country Estates Timeshare TImeohore Menogement, Inc., 23680 Son VIcenle Rood, Ramona, CA 92065 • (714) 789.2213 PROPERTY TAXES Dear Good Life Owner: The San Diego County Assessor has announced a new basis of Taxation and the average property tax will be at least $ 60 annually per vacation share. The new tax is based on each individual sales purchase price, and is the Assessor's interpretation of Proposition 13. Your Agent, Timeshare Management, Inc. , is exploring legislative and legal avenues for relief through appealing the new tax at another Good Life Property, Laguna Shores in Orange County. Pending their legal findings, it is necessary to maintain the financial integrity of your property. for that reason: Due to the unexpected financial burden and ramificatidns of Proposition 13 , the Agent recommends that the Owners be billed individually for the property tax, based on a method and technique to be determined later in December 1981 , for payments due in April and December, 1982 and there- after, if necessary to maintain a budget without special assessments. A bill for your taxes per unit owned will be sent to you. We will not include property taxes in the 1982 Association Budget, as each Owner: will be sent a property tax bill on February 15th and October 15th; 1982. If you have any questions, please contact me. Sincerely, Woody ary Agent San Diego Country Estates Timeshare i TRANSIENT OCCUPANCY TAX (TIME SHARE) 1. Transient Occupancy Tax is based on rental value (ie: 6% of Rental Value: TOT). 2. Rental value is determined by adding maintenance fee and purchase cost/week. 3. Time-share is usually sold in specific intervals for either infinite periods or for definite periods. Infinite Period (40 Yr. Assumed) Definite Period (ie: 20 Yrs) Selling Price Per Week $10,000 $10,000 Purchase Cost Per Week $10,000 250 500 $10,000 Maintenance 200 200 Rental Value 450 /Wk 700 /Wk TOTAL $ 27 /Wk $ 42 /Wk or $ 3.86 /Day $ 6 /Day NOTE: 40 Year is assumed Life Expectancy of Building as determined for depreciation purposes by the Internal Revenue Service. I m� oi,'ll� iZe,wp da4 Sea" ORDINANCE No. 236 AN ORDINANCE OF THE CITY OF PALM DESERT, CALIFORNIA, DECLARING AN EMERGENCY AND PROHIBITING AND PLACING A MORATORIUM ON TIME-SHARE PROJECTS IN ANY ZONE WITHIN THE CITY OF PALM DESERT. THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, DOES HEREBY ORDAIN, AS FOLLOWS: SECTION 1. URGENCY. This Ordinance is adopted as an urgency measure pursuant to the authority of Section 65858 of the Government Code of the State of California, to institute a moratorium upon establishment within the City of Palm Desert of any "time-share" or "interval ownership" project. The nature of the emergency justifying the adoption of this Ordinance as an urgency measure is that. a number of time-share or interval ownership projects are !� being developed or proposed for development within the City at a time when the extent of needed control, the effect of existing zoning controls, the effect upon transient occupancy P Y tax revenues, and the nature of sales and promotional techniques Lio be used, all remain uncertain. Each of such matters is or ay be contrary to the public health, safety and welfare. SECTION 2 . DEFINITIONS. ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDIANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm Desert; WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm , Desert, as follows: SECTION 1: Addition. That Section 25. 56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby addell to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharin - Prohibitin . The conversion of an existing single family residentia unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing -Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: ORDINANCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr ORDINANCE NO. AN ORDINANCE OF THE CITY COUiiCIL OF THE CITY OF PALM DESERT,- CALIFORNIA, AMENDING SECiIO ;S OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIME-SHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including; but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging, house, roominghouse, apartment house, time-share project or .facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel .rooms,rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator'rmeans the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time- share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or charac- ter, the managing agent shall also be deemed an operator for the purpose o•P this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis, such as in a time-share roject or similar arran ement. It is not the intent of t is section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax Administrator" means the director of finance, or such other individual as may be designated by the City Council . F. "Time-share Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life, or for a term of ears or other extended term, to the recurrent, exclusive use or occupancy of a lot, parcel unit rocm s hotel or portion thereof, or segment of real property, annually or on some other seasonal or eriodic basis, fora eriod of time that has been or will beal lotted from the use or occupancy periods into which the time-share project which is involved has been divided. The said ri ht or entitlement to occu anc ma attach in a vance to a specific lot parcel unit room s or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time or times. G. Transient" means any person who exercises occupancy or is entitled to occupancy by reason of concession,' permit', right of access, license, time-share arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent periods of such occupancy or entitlement to occupancy shall not be counted when deter- mining whether a period exceeds the stated thirty consecutive days. In determim ng whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973, may be considered. (Ord. 134 SS1, 2, 1976; Ord. 6 S2, 1973). " 1 1 ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of time-share occupancy by a transient shall be the rental value of the unit or rooms which accommodated such occupancy, which rental value shall be com uted by determinin the rorata share of the total purchase rice of the time- share ri ht or entitlement whether or not involving an estate or any ownership in real property which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees, assess- ments, charges and expenses charged by the operator as attributable to the time-share occupancy of the transient by whatever name such fees, assessments, charges or expenses_ may be denominated, whether "occupying fee", "maintenance or operations charge", 'Per diem fee" , "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price, in any case wherein the time-share right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a :proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the ti,an- sient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accommoda- tions furnished. (Ord. 6 §3, 1973). " . SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25. 100 TIME-SHARE PROJECTS ` ~ 25.100.010 Defined. As used in this Chapter, time-share project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy per- iods into which the project has been divided and shall include, but not limited to time-share estate, interval ownership, vacation license, vacation lease, club member- ship, time-share use, and hotel/condominium. 25.100.020 Permitted Zones. A time-share project shall be permitted only in the Planned Commercial Resort (PC-4) zone, Planned Residential (PR) zone, Multi- family (R-3) zone or General Commercial (C-1) zone, and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. i 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a time-share project shall submit in the application at �y least the following information: 1. Legal description, street address or other location description I V sufficient to identify the property. L I a 2. Description of the time-share periods into which the project is Mproposed to be divided. d 3. Description of the nature of time-share rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. I •` ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each time-share participant and, where applicable, to each unit in a project that is not subject to the time-share program or arrangement. 5. A description of the means proposed to be employed to properly ` and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, �yj alteration or alienation of time-share intervals and rights. . 7. Copies of all existing California Department of Real Estate y reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time-share program. 9. In the event an existing condominium project is proposed to be (10 D converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the proposed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a verified statement of the number and percentage of owners who have received notification, either personally or by receipted certified U.S. Mail that application to so convert the project would be submitted to the Commission to- gether with when the City staff and the Commission would consider such application. 10. In the case of a new mixed project (ie: Time-sharing-condominium/ rental ) a description of the means proposed to be employed to r'D disclose the number and location of all time-share units within the project. 11. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 12.. Any other information which the Commission or the applicant y/ considers necessary or desirable to an appropriate and proper LA� w consideration of the application. SS-1Z 020 0.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: -L^ �-. The impact of the time-sharing project on transient rental stock; The impact of time-sharing conversion on existing commercial bus- inesses; The impact of time-sharing on present and future City services; �1? The impact of time-sharing on permanent residential stock; Any other factors deemed relevant by the Commission. _ .050 Minimum Time-share Structure Size. A. Every time-share dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed portions and garages. B. The standards may be increased by the design review process or the Planning Commission based upon: 1. Usability of the dwelling unit by the ultimate occupant; Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25.100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED, and ADOPTED this day of 1981 , by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: S. ROY WILSON, Mayor ATTEST: CJ. . SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr i INTEROFFICE MEMORANDUM City of Palm Desert TO: Marty Bouman FROM: Carlos L. Ortega SUBJECT: TIMESHARING DATE: October 23 , 1980 Marty: Planning needs the Council ' s reaction to timesharing of condos . 1 . Does Council see it as a problem? •��� 2 . Should the Planning Department do a study and address the issue? vo APA , i 3. 28 . 010--3. 28 . 020 Chapter 3 . 28 TRANSIENT OCCUPANCY TAX* Sections: 3.28.010 Short title. 3.28 . 020 Definitions. 3 . 28. 030 Tax imposed. 3.28 . 040 Exemptions . 3 .28 . 050 Operator 's duties. 3 . 28 . 060 Registration. 3. 28 . 070 Returns and payment. 3. 28 . 080 Penalties and interest. 3. 28 . 090 Failure to collect and report tax. 3 . 28 .100 Appeal. 3 . 28 . 110 Records. 3 . 28 .120, Refunds . 3. 28 .130 Actions to collect. 3. 28.140 Revocation of permit. 3 .28 .150 Recording certificate--Lien. 3 . 28 .160 Priority and lien of tax. 3. 28 .170 Warrant for collection of tax. 3. 28 .180 Seizure and sale . 3. 28 . 190 Successor 's liability--Withholding by pur- chaser. 3. 28 . 200 Liability of purchaser--Release. 3.28 . 210 Responsibility for payment. 3.28 . 220 Extension of time. 3. 28. 230 Divulging of information forbidden. 3 .28 .240 Joint agreement. 3 .28 .250 Violation--Penalty. 3.28. 010 Short title. The short title of this chapter is the "uniform transient occupancy tax ordinance. " (Ord. 6 91, 1973) . 3. 28 . 020 Definitions. Except where the context other- wise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients , including, but not limited to dwelling, lodging or sleeping purposes , and includes any hotel, inn, tourist home or house, motel, studio hotel, bachelor hotel , lodginghouse, roominghouse, apartment house, * For statutory provisions on transient occupancy taxes , see Rev. and Tax Code 997280 and 7281. C . 53 3 . 28 . 030 Cj dormitory, public or private club, mobile home or house r; trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code . B. "Occupancy" means the use or possession, or the right to the use or possession, of any room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented . C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sub- lessee, mortgagee in possession, licensee, or any other capa- city. where the operator performs his functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilitites as his principal. Compliance with the pro- visions of this chapter by either the principal or the manag- ing agent shall, however, be considered to be compliance by both. D. "Rent" means the consideration charged orfchargeable for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property or service of any nature whatsoever. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, . or such other individual as may be designated by the city council. F. "Transient" means any person who exercises occu- pancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a -- period of thirty consecutive calendar days or less, counting portions of calendar days as full days . Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973 , may be considered. (Ord. 134 991, 2, 1976 ; Ord. 6 §2 , 1973) . 3. 28 . 030 Tax imposed. For the privilege of occupancy in any hotel, each transient is subject to, and shall pay a tax in the amount of six percent of the rent charged by the operator. The tax constitutes a debt owed by the transient to the city which is extinguished only by payment to the operator or to the city. The traniient shall pay the tax to the operator of the hotel at the time the rent is paid. If Cthe rent is paid in installments, a proportionate share of 54 3 . 28 . 040--3 . 28 . 060 the tax shall be paid with each installment. The unpaid C ` tax shall be due when the transient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the city by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 93, 1973) . 3. 28. 040 Exemptions. A. No tax shall be imposed upon: 1. Any person as to whom or any occupancy as to which it is beyond the power of the city to impose the tax provided in this chapter; 2 . Any federal or state officer or employee when on official business; 3 . Any officer or employee of a foreign government who is exempt by reason of express provision of federal law or international treaty. B. No exemption shall be. granted except upon;a claim therefor made at the time rent is collected and under penalty of perjury upon a form prescribed by the tax administrator. (Ord. 6 §4 , 1973) . 3.28 . 050 Operator' s duties . Each operator shall col- lect the tax imposed by this chapter to the same extent and at the same time as the rent is collected from every tran- sient. The amount of the tax shall be separately stated from the amount of the rent charged. No operator of a hotel shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator; or that it will not be added to the rent; or that, if added, any part will be refunded ex— cept in the manner provided in this chapter. (Ord. 6 §5, 1973) . 3. 28 . 060 Registration . A. Every person desiring to engage in or conduct business as operator of a hotel renting to trasients within the city shall file with the tax adminis- trator an application for a transient occupancy registration permit for each place of business. Every application for such a permit shall be made upon a form prescribed by the tax administrator and shall set forth the name under which the applicant transacts or intends to transact business, the location of his place of business and such other information as the tax administrator may require . The application shall be signed by the owner if a natural person, by a member or partner, if an association or partnership, by an executive officer or some person specifically authorized by the cor- poration to sign the application in the case of a 55 3. 28 . 070 coporation. The transient occupancy registration permit C must be in effect at all times while the business is in operation and shall be at all times posted in a conspicuous place on the premises. The permit shall, among other things, state the following: 1. Name of hotel; 2 . Name of operator; 3. Hotel address; 4 . The date upon which the permit was issued. 5. "This Transient Occupancy Registration Permit signifies that the person named on the face hereof has ful- filled the requirements of the Uniform Transient Occupancy Tax Chapter by registering with the Tax Administrator for the pupose of collecting from transients the Transient Occu- pancy Tax and remitting said tax to the Tax Administrator. This Permit does not authorize any person to conduct any unlawful business in an unlawful manner, nor operate a hotel without strictly complying with all applicable laws, includ- ing but not limited to those requiring a permit from any board, commission, department or office of this City. This Permit does not apply in lieu of such other permits which are otherwise required. " B. At the time of making an application for a registra- tion permit, the applicant shall pay a registration fee of five dollars for each permit issued. (Ord. 6 §6, 1973) . 3.28 . 070 Returns and payment. A. The tax imposed under Section 3 . 28 . 030 is due and payable to the tax adminis- trator, on the first day of the month following the close of each calendar month and become delinquent on the first day of the second succeeding calendar month following the close of each calendar month. B. Each operator shall, on or before the last day of the month following the close of each calendar month, make a return to the tax administrator, on forms provided by him, of the total rents charged or chargeable as provided in Sec- tion 3. 28. 030, whether or not received including any rentals charged for occupancies exempt under the provisions of Sec- tions 3. 28. 020 through 3. 28 .040 and the amount of tax col- lected for transient occupancies. Amounts claimed on the return as exempt shall be fully itemized and explained on the return or supporting schedule. At the time the return is filed, the tax fixed at the rate of six percent of the amount of rentals charged or chargeable, which are not exempt from tax under Sections 3. 28. 020, 3. 28 . 040 and 3. 28 .120, shall be remitted to the tax administrator. The tax adminis- trator may establish other reporting periods and may require a cash deposit or bond for any permit holders if he deems it necessary in order to insure collection of the tax and he may require further information in the return. All taxes collected by operators pursuant to this chapter shall be C 56 3 . 28 . 080--3. 28 . 090 held in trust for the account of the city until payment Y`s thereof is made to the tax administrator. C. Each operator shall notify the tax administrator, ten days prior to the sale or cessation of business for any reason and returns and payments are due immediately upon the sale or cessation of business. (Ord. 134 §4 , 1976 : Ord. 6 97 , 1973) . 3. 28 . 080 Penalties and interest. A. Any operator who fails to pay any tax to the city or any amount of tax required to be collected and paid to the city including amounts based on determinations made by the tax administra- tor under Section 3. 28 .090 , within the time required, shall pay a penalty of ten percent of the tax plus interest at the rate of one-half percent per month, or fraction thereof, from the date on which the tax or the amount of tax required to be collected becomes due and payable to the city until the date of payment.` B. If the tax administrator determines that nonpayment of any remittance due under this chapter is due to fraud, a penalty of one hundred percent of this amount of the tax shall be added thereto in addition to the penalties stated in subsection A of this section. (Ord. 6 98 , 1973) . 3 28 090 Failure to collect and report tax. A. If any operator fails or refuses to collect the x and to make within the time provided in this chapter any report and remittance of the tax or any portion thereof required by this chapter, the tax administrator shall proceed in such manner as he deems best to obtain facts and information on which to base his estimate of the tax due. As soon as the tax administrator procures such facts and information as he is able to obtain upon which to base the assessment of any tax imposed by this chapter payable by any operator who has failed or refused to collect the same and to make such re- port and remittance, he shall proceed to determine and assess against such operator the tax, interest and penalties pro- vided for by this chapter. In case such determination is made, the tax administrator shall give a notice of the amount so assessed by serving it personally or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at his last known address. B. The operator may within ten days after the serving or mailing of such notice make application in writing to the tax administrator for a hearing on the amount assessed. If application by the operator for a hearing is not made within the time prescribed, the tax, interest and penalties, if any, determined by the tax administrator shall become final and conclusive and immediately due and payble. If such application is made, the tax administrator shall give not less than five days ' written notice in the manner prescribed 57 3 .28 .100--3 . 28 .120 in this chapter to the operator to show cause at a time and place fixed in the notice why the amount specified therein should not be fixed for such tax, interest and penalties. At such hearing, the operator may appear and offer evidence why such specified tax, interest and penalties should not be so fixed. After such hearing, the tax administrator shall determine the proper tax to be remitted and shall thereafter give written notice to the person in the manner prescribed in this chapter of the determination and the amount of such tax, interest and penalties . The amount determined to be so due shall be payable after fifteen days unless an appeal is taken as provided in Section 3 .28 .100. (Ord. 6 §9, 1973) . 3. 28 . 100 Appeal . Any operator aggrieved by any deci- sion of the tax administrator with respect to the amount of any tax, interest and penalties , if any, may appeal to the city council by filing a notice of appeal with the city clerk within fifteen days of the serving of the assessment or determination of tax and penalties, if any, due. The city council shall fix a time and place for hearing the appeal, and the city clerk shall give notice in writing to the operator at his last known address. The findings of the city council shall be final and conclusive and shall be served upon the appellant in the manner prescribed in Sec- tion 3. 28. 090 for service of notice of hearing. Any amount C _ found to be due shall be immediately due and payable upon the service of notice. (Ord. 6 §10, 1973) . 3 .28 . 110 Records . It shall be the duty of every operator liable for the collection and payment to the city of any tax imposed by this chapter to keep and preserve, in the city, for a period of three years, records in such form as the tax administrator may require to determine the amount g of such tax. The tax administrator shall have the right to inspect such records at all reasonable times and may subpoena the records of any operator who refused to make them avail- able for examination. (ord. 6 911, 1973) . 3. 28 . 120 Refunds. A. Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously or illegally collected or received by the city under this chapter, it may be refunded as pro- vided in subsections B and C of this section; provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the tax administrator within three years of the date of payment. The claims shall be on forms furnished by the tax administrator . B. An operator may claim a refund or take as credit against taxes collected and remitted the amount overpaid, Cpaid more than once or erroneously or illegally collected or 58 3 . 28. 130--3 . 28 . 150 received when it is established in a manner prescribed by C the tax administrator that the person from whom the tax has been collected was not a transient; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent, subsequently payable by the transient to the operator. C. A transient may obtain a refund of taxes overpaid or paid more than once erroneously or illegally collected or received by the city by filing a claim in the manner pro- vided in subsection A of this section, but only when the tax was paid by the transient directly to the tax administrator, or when the transient having paid the tax to the operator, establishes to the satisfaction of the tax administrator that the transient has been unable to obtain a refund from the operator who collected the tax. D. No refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records. (Ord. 6 912, 1973) . 3. 28 .130 Actions to collect. The remedies set forth in Sections 3 .28 . 140 through 3. 28 . 210 shall be applicable to preexisting tax debts provided for in this chapter. (Ord. 6 §13 (part) , 1973) . 3. 28 .140 Revocation of permit. A. Whenever any C. operator fails to comply with any. provision of this chapter relating to occupancy tax or any rule or regulation of the tax administrator relating to occupancy tax prescribed and adopted under this chapter, the tax administrator, upon hearing, after giving the operator ten days ' notice in writ- ing specifying the time and place of hearing and requiring him to show cause why his permit or permits should not be revoked, may suspend or revoke any one or more of the permits held by the operator. B. The tax administrator shall give to the operator written notice of the suspension or revocation of any of his permits. The notices required in this section may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. C. The tax administrator shall not issue a new permit after the revocation of a permit unless he is satisfied that the former holder of the permit will comply with the pro- visions of this chapter relating to the occupancy tax and regulation of the tax administrator. During the period of time while such a permit is suspended, revoked or otherwise not validly in effect, the tax administrator may require that the operation be closed. (Ord. 6 513 (A) , 1973) . 3 28. 150 Recording certificate--Lien. A. If any Camount required to be paid to the city under this chapter 59 3 . 28 .160--3.28 .170 is not paid when due, the tax administrator may, within three years after the amount is due, file for record in the office of the Riverside County recorder a certificate specifying the amount of tax, penalties and interest due, the name and address as it appears on the records of the tax administrator of the operator liable for the same and the fact that the tax administrator has complied with all pro- visions of this chapter in the determination of the amount required to be paid. B. From the time of the filing for record, the amount required to be paid together with penalties and interest constitutes a lien upon all real property in the county owned by the operator or afterwards and before the lien expires acquired by him. The lien has the force, effect and priority of a judgment lien and shall continue for ten years from the time of filing of the certificate unless sooner released or otherwise discharged. (Ord. 6 §13 (B) , 1973) . 3. 28 . 160 Priority and lien of tax. A. The amounts required to be paid by any operator under this chapter with penalties and interest shall be satisfied first in any of the following cases : 1. Whenever the person is insolvent; 2. Whenever the person makes a voluntary assign- ment of his assets; 3. Whenever the estate of the person in the hands of executors, administrators, or heirs is insufficient to pay all. the debts due from the deceased; 4 . Whenever the estate and effects of an absconding, concealed or absent person required to pay any amount under this chapter are levied upon process law. This chapter does not give the city a preference over any recorded lien which attached prior to the date when the amounts required to be paid became a lien. B. The preference given to the city by this section shall be subordinate to the preferences given to claims for personal services by Sections 1204 and 1206 of the Code of Civil Procedure. (Ord. 6 913 (C) , 1973) . 3. 28 . 170 Warrant for collection of tax. At any time within three years after any operator is delinquent in the payment of any amount required in this chapter to be paid or within three years after the last recording of a certifi- cate under Section 3. 28 .140 , the tax administrator may issue a warrant for the enforcement of any liens and for the col- lection of any amount required to be paid to the city under this chapter. The warrant shall be directed to any sheriff, marshal or constable and shall have the same effect as a writ of execution. The warrant shall be levied and sale Cmade pursuant to it in the same manner and with the same 60 3. 28 .180--3 .28 . 200 effect as a levy of and a sale pursuant to a writ of execu- tion. The tax administrator may pay or advance to the sheriff, marshal or constable, the same fees, commissions and expenses for his services pursuant to a writ of execu- tion. The tax administrator, and not the court, shall approve the fees for publication in a newspaper. (Ord. 6 §13 (D) , 1973) . 3. 28 . 180 Seizure and sale. At any time within three years after any operator is delinquent in the payment of any amount, the tax administrator may forthwith collect the amount in the following manner: The tax administrator shall seize any property, real or personal, of the operator and sell the property, or a sufficient part of it, at public auction to pay the amount due together with any penalities and interest imposed for the delinquency and any costs incurred on account of the seizure and sale . Any seizure made to collect occupancy taxes due shall be only of prop- erty of the operator not exempt from execution under the provisions of the Code of Civil Procedure. (Ord. 6 913 (E) , 1973) . i 3. 28 . 190 Successor ' s liability--Withholding by pur- chaser. If any operator liable for any amount under this cater sells out his business or quits the business, his successor or assigns shall withhold sufficient of the pur- - chase price to cover such amount until the former owner produces a receipt from the tax administrator showing that it has been paid or a certificate stating that no amount is due. (Ord. 6 §13 (F) , 1973) . 3 . 28 .200 Liability of purchaser--Release. If the pur- chaser of a hotel fails to withhold purchase price as re- quired, he shall become personally liable for the payment - of the amount required to be withheld by him to the extent of the purchase price, valued in money. Within sixty days after receiving a written request from the purchaser for a certificate, or within sixty days from the date the former owner ' s records are made available for audit, whichever period expires the later, but in any event not later than ninety days after receiving the request, the tax adminis- trator shall either issue the certificate or mail notice to the purchaser at his address as it appears on the records of the tax administrator of the amount that must be paid as a condition of issuing the certificate. Failure of the tax administrator to mail the notice will release the purchaser from any further obligation to withhold purchase price as above provided. The time within which the obligation of the successor may be enforced shall start to run at the time the operator sells his business or at the time that the determination against the operator becomes final, whichever 61 3 . 28. 210--3. 28. 250 event occurs later. (Ord. 6 §13 (G) , 1973) . 3 . 28 . 210 Responsibility for payment. Any tax required to be paid by any transient under the provisions of this chapter shall be deemed a debt owed by the transient to the city. Any such tax collected by the operator which has not been paid to the city shall be deemed a debt owed by the operator to the city. Any person owing money to the city under the provisions of this chapter shall be liable to an action brought in the name of the city for the discovery of such amount. (Ord. 6 §13 (H) , 1973) . 3. 28 . 220 Extension of time . The tax administrator, for good cause, may extend for not to exceed one month the time for making any return or paying any amount, required to be paid under this chapter. The extension may be granted at any time, provided a request therefor is filed with the tax administrator within or prior to the period for which the extension may be granted. Any person to whom an exten- sion is granted shall pay one percent per month or fraction thereof from the date on which the tax would have been due without the extension until the date of payment. (Ord. 6 §15, 1973) . 3 . 28 . 230 Divulging of information forbidden. It is unlawful for any person having an administrative duty under ' this chapter to make known in any manner whatever the busi- ness affairs, operation, or information obtained by an in- vestigation or the records of any operator or any other person visited or examined in the discharge of official duty, or the amount or source of income, profits, losses, expendi- tures , or any particular thereof set forth or disclosed in any return, or to knowingly permit any return or copy thereof to be seen or examined by any person. Successors, receivers , trustees , executors, administrators, assignees and guarantors, if directly interested, may be given information as to the items included in the amounts of any unpaid tax or amounts of tax, penalties and interest required to be collected. (Ord. 6 §16 , 1973) . 3. 28. 240 Joint agreement. The city is empowered to enter into a joint powers agreement with other cities and the county, and if such agreement or agreements can be made wherein central collection for the county is provided, then it shall be done upon approval by the city council. (Ord. 6 918 , 1973) . 3.28 . 250 Violation--Penalty. It is unlawful for any person to violate any provision or fail to comply with any of the requirements of this chapter. Any person violating Cany provision of this chapter or failing to comply with any 62 3 . 28 . 250 of the requirements is deemed guilty of a misdemeanor in accordance with Chapter 1 .12 of this code. Any operator or other person who wilfully fails or refuses to register as required in this chapter, or to furnish any return required to be made, or who fails or refuses to furnish a supplemental return or other data re- quired by the tax administrator, or who renders a false or fraudulent return or claim is guilty of a misdemeanor, and is punishable as set out in Chapter 1.12 . Any person re- quired to make, render, sign or verify any report or claim who wilfully makes a false or fraudulent report or claim with intent to defeat or evade the determination of any amount due required by this chapter to be made, is guilty of a misdemeanor and is punishable as set out in Chapter 1. 12 . (Ord. 134 93 , 1976 : Ord. 6 914, 1973) . 63 CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with the concept of timesharing. The City Council has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real estate property, timesharing involves the sale of time segments of occupancy of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchas s a resort condominium unit for occupation for a specific length of time each year. This type of timesharing is also known as� interval ownership and timeshare estate. The difference between the two types is that under the latter form the purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other forms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to the general public for transient use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stock—cooperattveguni_ts_usually serve .as perman.et�t residences. although they can be_ timeshared._Time_ shartng. �as ae#ined in the Timeshare._Morator_ i.umOrdinance, e__ncompasses_ t-Fe -forms of developments as weil .� v B. Timesharing in Coachella Valle Timeshare projects ventured into the Coachella Valley in the late 1970's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances regulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice in the City permits resort uses in the PC (4) (Planned Commercial , Resort Center) zone. Uses permitted in this zone include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ), R-3 (Multifamily) and C-1 (General Commercial ) zones with either development plan or conditional use permit approval . Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest in real property. B. Compatibility with Surrounding Uses: A major concern of the City is the compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with permanent residential uses. Resort/vacation use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party. C. Removal of Land for Residential Use: Construction of timeshare projects remove land available for the construction of residential units for permanent residents. This is extremely important in Palm Desert since the City's economic base is expanding and the City, therefore, needs an ade- quate amount of land for varous residential uses to meet the housing needs of incoming residents. The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". The top priority of the City should be to ensure that adequate land is available for the needs of residents. Timesharing also eliminates land for other types of resort and transient uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway 111 and 44th Avenue) . If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. J i►,y Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be' involved with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.02OF of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life. of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (20 yrs) 250.00 Rental Value per week 500.00 Rental Value per day 71.43 Transient Occupancy Tax per day (71.43 x 6%) 4:29 Example 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned) , with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy Tax per day (53.57 x 6%) 3.21� The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing January 22, 1981 Page Four material to be submitted to the Department for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; b) Ban timeshare projects from the City; or c) Relegate timeshare projects to the Resort Commercial Zone, or other zone(s) deemed appropriate, with a conditional use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b) , banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. + ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm Desert; { WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION 1: Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharing - Prohibiting. The conversion of an existing single family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: ORDINANCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: l S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr N ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25. 100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging- house, roominghouse, apartment house, timeshare project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly-and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to -be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis such as in a timeshare �,roiect or similar arranaemlent. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . F "Timeshare Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity, for life or for a term of years or other extended term to the recurrent exclusive use or occupancy of a lot, parcel unit room(s) hotel or portion thereof, or segment of real property, annually or on some other seasonal or periodic basis for a period of time that has been or will be allotted from the use or occupancy periods into which the timeshare project which is involved has been dividprL The said righS or entitlement to occupancy may attach in advance to a specific lot parcel unit room(s) or portion of a hotel , or segment of real property, or may involve desiqnation or selection of the same at a future time or times. G. "Transient" means. any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license, timeshare arran ement or ownershi or agreement, or other agreement for a period of t jrty consecutive ca en ar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without an break, then prior or Subsequent erio s o suc occu ancy or entit ement to occu anc shallnot be counted when deter- mining w et er a pert exceeds t e stated thirty consecutive a s. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973,• may be considered. (Ord. 134 551, 2, 1976; Ord. 6 §2, 1973). " ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy y a transient shalI be t e�T ul e of t e unit or rooms which accomodated such occupancy, which rental value shall e computed by de—termining the prorata share of the total purchase price of the timeshare ri lit or entitlement whether or not involving an estate or any ownership in real property) which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees, assessments, charges and expenses charged by the operator as attributable to the timeshare occupancy of the transient by whatever name such fees, assessments, charges or expenses may be deno- minated, whether "occupying fee", "maintenance or operations charge", "per diem fee" , "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price, in any case wherein the timeshare right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term, such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 53, 1973). " SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25. 100 I TIMESHARE PROJECTS 111 25.100.010 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25. 100.020 Permitted Zones. A timeshare project shall be permitted only in the Planned Commercial-Resort PC 4) zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72 of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. J CITY OF PALM DESERT TO: City Council and City Manager FROM: Department of Environmental Services SUBJECT: Timesharing DATE: January 22, 1981 I. INTRODUCTION: This report is the result of a council directive to study timesharing. The study will address the various land use, revenue, and sales tactics issues involved with the concept of timesharing. The City Council has declared a three month moratorium on timeshare projects in response to growing interest of converting existing units to timeshare. II. BACKGROUND: A. Timeshare Defined: Unlike other forms of real gestate property, timesharing involves the sa a of time segments of occupancy`of dwelling units. Although a variety of forms exist, there are two principle types of time- sharing. The first type is called right-to-use. With this type, a purchaser pays a sum that entitles him to occupy a unit for a specific length of time each year for a specific number of years. Other forms of timesharing in this category include vacation license, vacation lease, club membership and timeshare use. The second type of timesharing is commonly known as fee simple ownership. With this type, a buyer purchases a resort condominium unit for occupation for a specific length of time/ each year. This type of timesharing is also known as- interval ownership and timeshare estate. The difference between the two types is that under the latter form the - purchaser owns a piece of real property. The owner builds up equity and pays property tax. The owner can sell , bequeath, or rent his slice of the property. According to the Department of Real Estates' proposed regulations, a timeshared unit is one that consists of 12 or more timeshare owners. The Department's proposed regulations do not distinguish between timeshare and other forms of developments that sell units for time periods such as hotel/condos or stock cooperatives. Hotel/condos are similar to timeshare units, but with fewer owners per units. When units are not occupied by owners they are available to the general public for transient. use. Stock cooperative are units owned by a corporative entity with shareholders holding the right to occupy the units. Stpck. cooVrP&j Leu nits usyall,y serve ds__p_erma.nent idences, although.they can -be timeshared Time- shartng,; as__ eft hied in the TimesfiareYMo,ratoiaam. Ordinance, .encompasses these`formsof developments as well . B. Timesharing in Coachella Valley: Timeshare projects ventured into the Coachella Valley in the late 1970's. Most of the existing projects are located in Palm Springs. Currently, only one timeshare project--the Shadow Mountain Resort and Racquet Club--exists in Palm Desert. In res- ponse to the increasing number of timeshare projects occuring in the Valley, many of the desert cities have placed moratoriums on such develop- ments until appropriate studies have been completed. Since the passage of the moratoriums, Rancho Mirage has banned timeshare projects from the City and Palm Springs is holding public hearings on ordinances regulating timesharing and collecting of a transient occupancy tax. Palms Springs' proposed ordinance permits timeshare projects in those zones which permits hotels/motels. The Palm Desert City Council has already seen the Rancho Mirage Ordinance; Palm Springs' proposed ordinances are attached for your information. 1 Timesharing January 22, 1981 Page Two III. LAND USE ISSUES: A. Use Defined: Timesharing is generally considered a resort or vacation land use. Surveys completed by the industry indicate that vacation concerns (such as the opportunity to exchange a unit in one area for a unit in another area, the certainty of having accomodations, and the savings on future vacation costs) are the major reasons people acquire timeshare units. Articles written by industry personnel indicate that timesharing is a resort/vacation use of land. Current zoning practice- in the Cit permits resort uses in the PC (4) (Planned Commercial , Resort Center zone. Uses permitted in this zone include hotels and related ancillary commercial uses, entertainment facilities, and restaurants. Resort hotels are also permitted in the PR (Planned Residential ), R-3 (Multifamily) and C-1. (General Commercial ) zones with either development plan or conditional use permit approval . Besides being a resort use, timesharing is a transient type of activity. Purchasers of timeshare units are transient residents, here only for a short time period. Units, therefore, take on the characteristic as being temporary lodging, such as hotel rooms, although there may be an interest in real property. B. Compatibility with Surroundin Uses: A major concern of the City is the compatibility of timeshare projects with surrounding land uses, parti- cularly residential uses. Generally, the situation consists of mixing a transient residential use with permanent residential uses. Resort/vacation Use is inappropriate in residential areas due to the increased traffic generation and multiple occupancies which may disturb the peace and quiet of residential neighborhoods. In addition, lifestyles between those who are permanent residents and those who are transient residents can be different; conflicts between the two should be minimized through separation of the two uses. Therefore, timeshare projects should not be permitted in residential zones. Staff has received numerous inquiries regarding the conversion of an individual condominium unit to timesharing. This should not be allowed for the reasons stated above. Also, once an individual unit timeshares, it will be difficult to reconvert that unit for residential use since conversion would require all owners to agree to sell to the same party. C. Removal of Land for Residential Use: Construction of timeshare projects remove and available for the construction of residential units for permanent residents. This is extremely important in Palm Desert since the City's economic base is expanding and the City, therefore, needs an ade- quate amount of land for varous residential uses to meet the housing needs of incoming residents. The current and proposed General Plans recognize this need and set the goal of providing a "variety of housing types and densities for varying income levels and lifestyles throughout the City". The top priority of the City should be to ensure that adequate land is available for the needs of residents. Timesharing also eliminates -land for other types of resort and transient uses, such as hotels with convention facilities. The City Council and Planning Commission have expressed an interest in expanding the City's convention facilities, as exemplified during the discussions regarding DP 03-80 (.Stein-Brief/Vista's proposed project to construct a condo/hotel resort with convention facilities at the southwest corner of Highway ill and 44th Avenue) . If permitted in resort commercial zones, timesharing projects could preclude the development of other resort projects with facilities the City desires. ram. -• l Timesharing January 22, 1981 Page Three IV. REVENUE ISSUE: A. Transient Occupancy Tax: The primary concern of the City in this area pertains to the transient occupancy tax. Section 3.28.030 of the Palm Desert Municipal Code imposes a 6% tax on the rent charged by the operator of transient accomodations. Although ownership of real property could be involved with timesharing the units are still occupied by transients, or short termed occupants. As defined by Section 3.28.02OF of the Municipal Code, a transient is a person who "exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license or other agreement for a period of thirty consecutive calendar days or less." Most, if not all , timeshare owners fit this definition. Since timesharing is a transient use, it appears that the City could charge a transient tax on said units. What needs to be determined is the "rental value" of timeshare occupancies upon which the tax is levied. In a normal hotel/motel rental , the "rental value" is the room rental rate charged to the occupant. In timeshare, there is no specific rental rate per day usage. Timeshare owners pay two costs which comprise the "rental value" of the unit: 1) the purchase price of the unit for the term of its use, which could be construed to be a form of prepaid rent; and 2) the annual maintenance fee paid or payable, which includes maintenance . charges, taxes, management fees, furniture, replacement reserves, and other assessments. In those cases where a term is not specified, a 40 year term should be assumed, since the IRS allows 40 years as a useful life of a hotel or apartment building for depreciation purposes. Com- bining the two costs results in a rental value in following examples: Example 1: Timeshare unit sold for $5000 for an annual weekly stay for a term of 20 years, with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 7 Purchase Cost per year (20 yrs) 250.00 Rental Value per week 500.00 Rental Value per day 71.43 Transient Occupancy Tax per day (71.43 x 6%) 4:29 Example 2: Timeshare unit sold for $5000 for an annual weekly stay (no term mentioned) , with an annual maintenance fee of $250 (for the one week) payable monthly. The rental value per week of occupancy would be calculated as follows: Maintenance Fee $250.00 Purchase Cost per year (40 yrs) 125.00 Rental Value per week 375.00 Rental Value per day 53.57 Transient Occupancy.Tax per day (53.57 x 6%) 3:211/ The above method to compute transient occupancy tax as it relates to timesharing has been adopted by many California cities and is presently under consideration in Palm Springs. V. SALES TACTICS Members of the City Council have received complaints from citizens regarding sales tactics used by some developers of timeshare projects. Many people are lured to projects by such gimmicks as free give aways. Once arriving at the project the consumer is subjected to a strong sales pitch and, in some instances, the promised gift is not available. In response to numerous com- plaints the Department of Real Estate is requiring all timeshare promotional Timesharing January 22, 1981 Page Four material to be submitted to the Department for review. Also, all advertised gifts must be available and given away. The Palm Springs City Attorney, during a meeting of that City's Timesharing Task Force, felt that outside the activities of the Department of Real Estate and various law enforcement agencies . there was little else a city can do, although this issue could be investigated further should alleged abuses continue. VI. RECOMMENDATIONS: Three options are available to the Council for action: a) Take no action; b) Ban timeshare projects from the City; or c) Rele ate timeshare projects to the Resort Commercial Zone, or other zone(?s) deemed appropriate, with a conditional use permit, establish development standards, and amend Transient Occupancy Tax (Title 3 of the Municipal Code) to collect said tax. Staff's recommendation is to adopt option (b), banning timesharing from the City for the reasons stated in this report and in the proposed ordinance. Staff further recommends that, should the ban be ruled invalid by a Court of Law, Council direct Staff to proceed with option (c). Proposed draft ordinance amending various sections of Title 3 (Transient Occupancy Tax) and Title 25 (Zoning Ordinance) of the Municipal Code is attached for your consideration. I. ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, ADDING SECTIONS TO CHAPTER 25.56 (GENERAL PRO- VISIONS, ZONING ORDINANCE) OF THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: WHEREAS, there is a shortage of affordable housing in the City of Palm Desert; WHEREAS, the conversion of residential property within the City to vacation/ resort timesharing projects eliminates residential property, otherwise available for rental or ownership in the City; WHEREAS, vacation/resort timesharing project use is inappropriate in resi- dential areas due to the increased traffic generation and multiple occupancies disturb- ing the peace and quiet of residential neighborhoods; and WHEREAS, vacation/resort timesharing project use precludes the development of other resort uses desirable to the City. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Palm Desert, as follows: SECTION 1: Addition. That Section 25.56.480 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.480 - Timesharing - Defined. Timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit room(s) , or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy period into which the project has been divided and shall include, but not limited to timeshare estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. " SECTION 2: Addition. That Section 25.56.490 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.490 - Timesharin - Prohibitin . The conversion of an existing sing a family residential unit, an existing condominium unit, an existing apartment or multifamily residential unit, or an existing hotel or motel room or unit to a timeshare unit or project is prohibited in all zones in the City. The construction, selling or development of any timeshare project is prohibited in all zones in the City. " SECTION 3: Addition. That Section 25.56.500 is hereby added to the Code of the City of Palm Desert, to read as follows: "Section 25.56.500 -Timesharing - Exception. Section 25.56.480 is not applicable to those projects for which applications for,approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects in which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. PASSED, APPROVED and ADOPTED this day of 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: 1 ORDINANCE NO. Page Two AYES: NOES: ABSENT: ABSTAIN: If . l S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk City of Palm Desert, California /lr t { ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA, AMENDING SECTIONS OF CHAPTER 3.28 (TRANSIENT OCCUPANCY TAX) AND ADDING CHAPTER 25.100 (TIMESHARING) TO THE MUNICIPAL CODE. The City Council of the City of Palm Desert, California, DOES HEREBY ORDAIN as follows: SECTION 1: Amendment. That Section 3.28.020 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: A. "Hotel" means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including, but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , lodging- house, roominghouse, apartment house, timeshare project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, as permitted by Section 7281 of the Revenue and Taxation Code of the state, or other similar structure or portion thereof subject to the business license provided by this code. B. "Occupancy" means the use or possession, or the right or entitlement to the use or possession, of any hotel room, rooms or any portion thereof offered for rent for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. C. "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, timeshare project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally the same duties and liabilities as his principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. D. "Rent" means the consideration charged or chargeable to the tenant or person entitled to occupancy, for the occupancy of space valued in money whether Il received in money, goods, labor or otherwise, including the full value of receipts, cash, credits, property, or service of any nature whatsoever. "Rent" may have been or may be payable prior to or following (in whole or in part) the occupancy to which it is attributable and may have been paid in whole or in part in advance on a long- term basis. such as in a timeshare nroiect or similar arrangement. It is not the intent of this section to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. E. "Tax administrator" means the director of finance, or such other individual as may be designated by the City Council . F • "Timeshare Occupancy" means occupancy related to the situation wherein a purchaser receives the right or entitlement in perpetuity for life, or for a term of years or other extended term to the recurrent exclusive use or occupancy of a lot, parcel unit room(s) hotel or portion thereof or segment of real property, annually or on some other seasonal or periodic basis for a period of time that has been or will be allotted from the use or occupancy_periods into which the timeshare project which is involved has been divided The said right or entitlement to occupancy may attach in advance to a specific lot parcel unit rooms) or portion of a hotel , or segment of real property, or may involve designation or selection of the same at a future time ar times. G. "Transient" means- any person who exercises occupancy or is entitled to occupancy by reason of concession., permit, right of access, license, timeshare arrangement or ownership or agreement, or other agreement for a period of thirty consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a hotel shall be deemed to be a transient until L the period of thirty days has expired. Unless days of occupancy or entitlement to occupancy by one person are consecutive without any break, then prior or subsequent erjods oT suci occupancy or entitlement to occupancy shall not be counted when deter- mjnjng m et er a period exceeds the stated thirty consecutive days. In determining whether a person is a transient, uninterrupted periods of time extending both prior and subsequent to November 26, 1973,• may be considered. (Ord. 134 551, 2, 1976; Ord. 6 §2, 1973). " 1 ORDINANCE NO. Page Two SECTION 2: Amendment. That Section 3.28.030 of the Code of the City of Palm Desert, California, is hereby amended to read as follows: "3.28.030 Tax Imposed. For the privilege of occupancy in any hotel , each transient is subject to and shall pay a tax in the amount of six percent of the rent charged by the operator or otherwise payable by the transient. The tax constitutes a debt owed by the transient to the City which is extinguished only by payment to the operator or to the City. For purposes of this section, the rent deemed payable on account of timeshare occupancy y a transient shall e t e renta va ue o t e unit or rooms which accomodated such occupancy, which rental value shall be compute by aeterminin the rorata share of the total urchase rice of the timeshare right ntitlemen or et whether or not involving an estate or any ownership in real property) which share is allocable to the period of transient occupancy currently involved, and adding thereto the total amount of any and all fees, assessments, charges and expenses charged by the operator as attributable to the timeshare occupancy of the transient by whatever name such fees, assessments, charges or expenses may be deno- minated, whether "occupying fee" . "maintenance or operations charge" "per diem fee", "management fee" or like name or otherwise. In making the computation referred to above of the prorata share of the total purchase price, in any case wherein the timeshare right or entitlement is in perpetuity or for life or otherwise not for a definite or ascertainable term such proration shall be made upon an assumed term of forty years. The transient shall pay the tax to the operator of the hotel at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due when the transient ceases to occupy space in the hotel . If for any reason the tax due is not paid to the operator of the hotel , the tax administrator may require that such tax shall be paid directly to the tax administrator. Tax on occupancies in exchange for services of any kind is due and payable to the City by the operator, the amount of tax being determined on the basis of six percent of the current rental value of the accomodations furnished. (Ord. 6 53, 1973) . " SECTION 3: Addition. That Chapter 25.100 is hereby added to the Code of the City of Palm Desert, to read as follows: "CHAPTER 25.100 TIMESHARE PROJECTS 7 111 25.100.010 Defined. As used in this Chapter, timeshare project shall mean one wherein a purchaser receives the right in perpetuity, for life, or for a term of years, to the recurrent, exclusive use or occupancy of a lot, parcel , unit, room(s), or segment of real property, annually or on some other seasonal or periodic basis, for a period of time that has been or will be allotted from the use or occupancy periods into which the project has been divided and shall include, but not limited to time- share estate, interval ownership, vacation license, vacation lease, club membership, timeshare use, and hotel/condominium. 25.100.020 Permitted Zones. A timeshare project shall be permitted only in the Planned ommercia -Resort PC 4T zone and then only if and when a Conditional Use Permit has been obtained therefor from the Planning Commission in accordance with Chapter 25.72. of the Code. 25.100.030 Information to be Submitted with C.U.P. Application. In addition to the information required by Section 25.72.020, an applicant for a Conditional Use Permit approval involving a timeshare project shall submit in the application at least the following information: 1. Legal description, street address or other location description sufficient to identify the property. L 2. Description of the timeshare periods into which the project is proposed to be divided. 3. Description of the nature of timeshare rights, entitlements, estates, or the like into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed. ORDINANCE NO. Page Three 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each timeshare participant and, where applicable, to each unit in a project that is not subject to the timeshare program or arrangement. 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to time in the future. 6. Description of any proposed restrictions on the use, occupancy, alteration or alienation of timeshare intervals and rights. 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. 8. Description of time periods, types of units, and which units are in the timeshare program (if less than all ), and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial timeshare project, a verified description or statement of the number and percentage of the current.condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a timeshare basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to so convert the project would be submitted to the Commission together with when the City Staff and the Commission would consider such application. ` 10. A description of the methods proposed to be employed to guarantee Il the future adequacy, stability and continuity of a satisfactory level of management and maintenance of .the timeshare project. 11. Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and. proper consideration of the application. 25.100.040 Conditions for Approval . In addition to the findings, the Commission shall make in conjunction with Section 25.72.070, the Commission shall consider the following: 1. The impact of the timesharing project on transient rental stock; 2. The impact of timesharing conversion on existing commercial businesses; 3. The impact of timesharing on present and future City services; 4. The impact of timesharing on permanent residential stock. 5. Any other factors deemed relevant by the Commission. 25.100.050 Minimum Timeshare Structure Size. A. Every timeshare dwelling unit hereafter erected or converted shall have a minimum living floor area of at least 1000 square feet, exclusive of unroofed por- tions and. garages. B. The standards may be increased by the design review process or the Planning Commission based upon 1. Usability of the dwelling unit by the ultimate occupant; 2. Compatibility of the dwelling to the neighborhoods. ORDINANCE NO. Page Four 25. 100.060 Exceptions. This Chapter is not applicable to those projects which applications for approval from the State Department of Real Estate have been filed prior to December 4, 1980, or projects which the City has approved prior to December 4, 1980. " SECTION 4: Certification. The City Clerk of the City of Palm Desert, California, is hereby directed to cause this Ordinance to be published once within fifteen (15) days of adoption in the Palm Desert Post, a newspaper published and circulated within the City of Palm Desert, California, and the same shall be in full force and effect thirty (30) days after adoption. . .PASSED, APPROVED,' and ADOPTED this day of- 1981, by the City Council of the City of Palm Desert, California, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN:. S. ROY WILSON, Mayor ATTEST: SHEILA R. GILLIGAN, City Clerk [ City of Palm Desert, California /lr t DATE: January 7, 1981 TO: City Council FROM: Assistant City Manager via City Manager AMEND TRANSIENT OCCUPANCY ORDINANCE TO CLARIFY ITS APPLICABILITY TO "TIME-SHARE" UNITS RECOMMENDATION: That the City Council amend the Transient Occupancy Ordinance to clarify its applicability to Transient Occupancy of units on a "time-share" basis or arrange- ment. BACKGROUND: On October 15, 1980, the City Council adopted an interim zoning ordinance which placed a 4-month moratorium on sales of time-share units that, as of October 15, 1980, had neither been sold nor offered for sale. Developments within Palm Springs that were exempted from the moratorium ordinance were the following: - Tennis Club (Hotel) - Baristo Road - Desert Isle Associates (Hotel) - 2555 E. Palm Canyon Dr. - Azure Sky Resort/Share (Hotel) - 1661 Calle Palo Fierro - Casites del Monte (new condos) - 2700 S. Palm Canyon Dr. - Trinidad (Hotel)- 1900 E. Palm Canyon Dr. - Canyon Plaza Hotel & Resort (Hotel) - 2601 Golf Club Dr. Immediately after the moratorium went into effect, the City Manager announced that a Task Force would be created to deal with the various issues surrounding "time-share" sales , ownerships and concerns. On November 11, 1980, the Time-Share Task Force held its first meeting and defined its purpose as one to share information about time-share ownerships, concepts and con- cerns and to work together to resolve concerns, help the City adopt meaningful and reasonable regulations within the law to deal with time-share issues as quickly as possible so the present moratorium on new time-share sales can be lifted and, at the same time, to protect the interests of the buying public, the interests of the City and the interests of the developers. One of the specific issues that the Task Force dealt with was the applicability of Transient Occupancy Taxes to transicnt occupancy of "time-share" units. The Task Force members all expressed beliefs that the Transient Occupancy Tax should apply to transient uses in time- share projects. Reviewing the City' s existing Transient Occupancy Tax Ordinance with Ray Ott, former City Attorney now under contract to the City of Palm Springs, staff concluded that the existing ordinance covered transient 1 a 1 sMOTTV SHI aaurs pawnsse sT wzaq zpaA-Op e '40pz3uOD saTes azegs-awTq aq3 UT paUOTgUaw ST wzaq ou UagM 3pg4 agoN OL ' S $ _ (%L x £6 'T8$) AeQ zad xpy Aoupdn000 quaTsupzy £6 ' 18 $ sAeP L OLS$ ApQ zad anTen TequaH OLS$ xaaM zad anTen Tpquag OSZ = wzaq *.IA O� ; gsoD asegoznd OZ£$ = xaaM T - aa3 90upuaquTew :sMoTTo3 se pa3eTnoTPO aq pTnoM Aouedn000 30 xaaM zad anTen Tpguaz aqy •ATgquow aTgpApd (xaaM auo agg 103) OZ£$ 3o aa3 aoupuaguTew Tenuue up ggTM ' (pauoT3uaw wzaq ou) 'ATTpnuue Apqs xaaM T e zo3 000 'OT$ zo3 PTOs azegs-awTy •Z aTdwpxs 06 '9 $ = (%L x 6Z ' 68$) AeQ zad xey Aoupdn000 quaTsupzy 6Z 'b8 $ = sAeP L = 065$ Ava zad anTen TequGH 06S$ xaaM zad anTen Tegua)H OZ£ = wzaq * -TA SZ _ gSOD asegoznd OLZ$ = xaaM T - aa3 aoueua3uTew :sMoTTo3 se pagpTnoTuo aq pTnoM Aoupdn000 3o xaaM zad anTen Te3uaz aqy •ATgquow aTgpAed (xaaM auo ag3 zo3) OSZ$ 30 aa3 0oueua3uTew Tpnuue up g4TM 'szeaA SZ 3o wzaq e zo3 'ATTpnuup Apgs xaaM p zo3 000 ' 8$ zo3 pTos azegs-awTy •T aTdwpxg :sMoTTo3 sp 'anTen Te3uaz e uT s3Tnsaz S4800 (Z) OM3 agq buTuTgwoO •quaz pTpdaac 3o wzo3 p ST 'goa33a UT 'gOTgM 'asn sqT 3o wzaq ag3 zo3 gTun aqq 30 aOTzd asegoznd aqq (Z pue :squawssassp zaggo pue 'Sanzasaz 3uawG3uTdaz azngTuzn3 'saa3 quaaabeupw 'saxeq 'sabzeg0 aOueuaquTew sapnTOuT gOTgM 'aTgpApd zo pTud aa3 aoueuaquzew Tenuup ag3 (T :grun aqq 30 „anTen Te3uaz„ agq do axew gOTgM sApd zauMo azegs-awTq p SgsoO (Z) oMg azp azagq 'ATTpngov •zauuuw quaza33TP p UT „3uaz„ Aed SzauMO azegs-awry •abusn 3o 3gbTu zo A gz ep zad ae Tequaz OT3ioads ou sT azagq 'azegs-awrq uI •qusdn000 aq3 oq pabzpgO 94PI Te3uaz wooz ag3 ST „anTen Tu4uaz„ aq3 'Tuquaz Taqoq Tewzou p uI •paTnaT ST xeg aq3 gOTgM uodn sarouedn000 azegs-awT3 3o „anTen Te3uaz„ SaUT3ap UOTgOas STgy • 0£0 ' 6Z '£ uOTgoaS UT ST aoueuTpzo pasodozd aqq UT papnTOUT abupgo qupgzodwT gsow agy •quTod gegq 49TJPT0 03 papuawwooaz buTaq azp aouuuipzo aqq oq sa5upg0 Mai p 'zanaMog •ssaT zo sAep 0£ 3o Agzpd awes eqq Aq saTOupdn000 snonuTquoo apnTOUT qug3 asogq aze saTOupd -n000 quaTsupzy •sgoaCozd azegs-awTq UT SaTODUdn000 -Z- abed 186T 'L Azpnuer 3JNVNIQ2i0 . DMVdf1000 ZN3ISNVHI QN3WV Z e T AMEND TRANSIENT OCCUPANCY ORDINANCE January 7, 1981 Page -3- 40 years as a useful life of a hotel or apartment build- ing for depreciation purposes . It should be clarified that the recommendation to adopt a method of determining "rental value" of time-share occupancies as indicated, is a staff recommendation and not a Task Force recommendation. There was a split on the Task Force as to how rental value should be computed. for time-share occupancies. Time-share developers be- lieved that only 30% to 35% of the purchase price should be counted since the developer' s gross sales to original cost ratios run about 5 to 1 to 3 to 1 (e.g. a time-share development costing $1, 000, 000 will sell for about $3, 000, 000 to $6, 000, 000 . ) Staff' s contention is that the amount paid for the purchase of a time-share unit is still the cost to the occupant regardless of the profit margin to the developer. If it were a hotel , that purchase cost would have to be recovered through the room rental rates charged. Attached is a proposed ordinance amending the City' s Transient Occupancy Tax Ordinance to clarify its applica- bility to transient occupancy of time-share units and to define "rental value" of time-share occupancies . The underscored words and phrases in the proposed ordinance are the changes being recommended. Other ordinances dealing with the zoning and land use issues surrounding "time-share" projects will be processed through the Planning Commission and will be the subject of separate reports. llr.1 , ,� DALLAS J. FLICEK Assistant to the City Manager APPROVED City Manager ATTACHMENT: 1. Ordinance 1 a 3 ORDINANCE NO. AN ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE TRANSIENT OCCUPANCY TAX ORDINANCE TO CLARIFY THAT ORDINANCE'S APPLICABILITY TO TRANSIENT OCCUPANCY OF UNITS ON A "TIME-SHARE" BASIS OR ARRANGEMENT. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1 . Section 3.24.020 of the Palm Springs Municipal Code, relating to definitions governing administration of the transient occupancy tax, hereby is amended to read as follows: 3.24.020 Definitions. Except where the context otherwise requires, the definitions given in this section shall govern the construction of this chapter: (1 ) "Hotel " means any structure, or any portion of any structure, which is occupied or intended or designed for use or occupancy by transients, including but not limited to dwelling, lodging or sleeping purposes, and includes any hotel , inn, tourist home or house, motel , studio hotel , bachelor hotel , lodging house, roaming house, apartment house, time-share project or facility, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure or portion thereof, duplex, triplex, single-family dwelling units except any private dwelling house or other individually-owned single-family dwelling unit rented only occasionally (infrequently) and incidentally to the normal occupancy by the owner or his family; provided that the burden of establishing that the housing or facility is not a hotel as defined herein shall be upon the owner or operator thereof; who shall file with the tax administrator such information as the tax administrator may require, to establish and maintain such status. (2) "Occupancy" means the use or possession, or the right or entitle- ment to the use or possession, of any hotel , room, rooms or any portion thereof offered for rent or used or occupied for dwelling, lodging or sleeping purposes regardless of the purpose for which such rooms are rented or provided. 1 c 1 ay; ;o a,aeys eye.a o,a ayy uLuLwuayap q payn woo aq LLEys amen Leyua.a 40L4M ouE n000 vans payepoww000e gotgm s woo.a do yLun ay; }o an Len LeyuaU a4y aq [Legs yuaLsueay e q oue n000 aaEys-awLy ;o yun000e uo alge E pawaap yuai ayy `uoLyoas slyy }o saso an .aoj •k4L0 04y oy do .ao;Pjado aq; oy yuawSed Sq SLUo pagsLn6ULyxa SL goLgM kjL3 ayy 04 yuaLSUEuy ayy Sq pamo ;gap e saynyLysuoo xey PCPs 'pau,aaouoo SL yuaLSUE.ay ayy se ,aE}osul •yuaLSueJ4 ayy q aLge E asLM,aagyo do ,aoyaaado ayy Sq pa6Uego yuaU a44 40 yuaodad uanaS ;o yunowe ayy uL xey e SEd LLe4s PUP `04 yoaCgns SL yuaLsue.ay 40Ea ' Layoy Sue uL Souedn000 ;o a6aLLnL.ad aq; .aoj •paso wL xei 0£O'bZ'E :sMoLLo; se pea,a oy papuawe SL Sga,aay apo3 LedL3LunW SbULAS wLed 944 10 0£0'bZ'£ UoLyoaS 'Z NOI133S •s ep ,aepuaLea klJL44 payEyS ayy spea0xa pope E .taggaqm 6ujULWJa4aP uagm payunoo aq you LLe4s Noupdnno oy yuawaLyLyua do Soupdn000 vans }o spoLua Yuan asgns uo aoLa uayy '�eaaq uE ynoq;lm anLynoasuoo aae uosua auo q oue n000 oy yuawaLyLyua ao oue n000 ;o s ep ssaLUA •sSep S4.AL44 paaoxa you saop Souedn000 ;o poLdad Layoy Lenyoe sL4 dL yuaLSUE.ay E aq oy pawaap aq LLEys Layoy a UL aoeds 6uLSdn000 os uos,aad Suy •sSep LLn} se sSep aepuaLeo ;o SUoL4jod 6ULyuno3 `ssaL ao sSep .aepuaLeO anLynoasuoo S4.AL44 ;o poL.aad a .ao; `ainyeu uanayeyM ;o yuaw -aa,a6e J0440 do `yuawaa.a E do LgS,aauMo Uo yuawa UEu.ae a,aEgs-awLy 'asuaoLL 'ssa0oe ;o y46L.4 'ylwaad 'uoLSSaouOo ;o Uoseaa Sq Souednno oy pa M4ua SL do Souedn000 SaSLo.aaxa oqm uosiad Sue sueaw „yuaLSUE.ai„ (g) -saw p do awLy a.anyn} a ye awes ayy ;o uoLyoaLaS ,ao uoLyeu LSap anLonuL 7PW ,ao ` qjadojd Leau ;o yuaw as do ' Layoy E }o uopjo uo ` (s)woo,a 'yLun ` Laoue 'yol oL;Loa s e oy aouenpE uL yaEyye ew 0uE n000 oy yuawaLyLyua ,ao yy La pLes aqi •papLnLp uaaq SPq panLonuL SL 43LyM yoaCOJ aue4S-awL4 ayy yoL4M 04UL SpO pa oue n000 do asn ayy wou; payyoLLe aq LLLm ,ao uaaq Se4 jPgy awLy 40 POLjad a .ao; 'sLseq oLpoL,aa do Leuoseas .aayyo awns uo ,ao llenuue ' y,aa o.a LEa.a }o yuaw as ,ao `;oa,aayy uoLy,ao JO Layoy ' (s)woo,a `yLun ' L@:)dP 'yoL a ;o koupdn000 do asn anLsnloxa `yua,aanoa,a a4y oy `w,aay papuayxa .aayyo do sjp@k }o waay a uo; .ao `a;tl ao} yLnya .aa uL yuawaLyLyua .ao yy La a4y sanLaaa.a .aasE4a,an a ula,aaym uoLyen4Ls ayy oy payela.a Nouednom sueaw oue n000 a.aEyS-awLi,, (Z) Z i (3) "Operator" means the person who is proprietor of the hotel whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, time-share project or facility manager or operator, or any other capacity. Where the operator performs his or its functions through a managing agent of any type or character, the managing agent shall also be deemed an operator for the purpose of this chapter, and shall have jointly and severally .the same duties and liabilities as the principal . Compliance with the provisions of this chapter by either the principal or the managing agent shall , however, be considered to be compliance by both. (4) "Person" means any individual , firm, partnership, joint venture, association, social club, fraternal organization, joint stock company, corporation, estate, trust, business trust, receiver, trustee, syndicate, or any other group or combination acting as a unit. (5) "Rent" means the amount of the consideration charged or charge- able to the tenant or person entitled to occupancy, for the occupancy of space, valued in money whether received in money, goods, labor or other- wise, including the full value of receipts, cash, credits, property or services of any kind or nature, without any deduction whatsoever. "Rent" may have been, or may be, payable or paid prior to or following (in whole or in part) the occupancy to which it is attributable, and may have been paid in whole or in part in advance on a long-term basis, such as in a "time-share" project or similar arrangement. It is not the intent of this subsection to make the operator liable for the tax on uncollected rent. However, uncollected rent must be reported. (6) "Tax Administrator" means the city manager or his designated agent. 1 c 3 - 2 - • L l' 09-85$L dM - b - :a a 3110 ddtl '8 03M3IUa .AokeW 3uaL3 F;L3 FlndaO S8 VINaOdIlVO `S9NIadS WIVd 30 AM :1S311V :1N3SOV :S30N :S3AV ' L86L ;o xPp S144 03ld00V •mPL 4;Lm aOuepuOooP uL pagSLLgnd aq of 'mPL of 6uLp,aoaOP pa,Aeda.ad FLnp ';uawasLjJanpP A'PLdsLp P ao ;oa.Aay; Fupwwns P uo awes aql asnpo o; pup a6pssed s;L .aalle sleep (SL) uaalltl 10 uoL;PuLdxa aq; aaolaq a3uPuLp.Ao SLy; to a6essed ay; of A';tl,Aao 01 p043aJLp pup paAap.Ao kgaaay sL j.aaL3 k1L0 ayl •a6essed sit uodn A'LalPLpawwL 43a;4a O�Pl LLPys `k;L3 aq; ;o sasuadxa luauuno PUP Lpnsn uol Saxe; of 6uL4PLau aOUPuLp,AO up 6uLaq 'aoueuLp.40 SL41 'NOI1V3I19nd ONV 31tl0 3AI133333 '£ WIDE -s.ApaS k4.Aol ;o wual pawnssp up uo n appw aq LLPgs uoL4PJ o.a 4ons `w.aal 9LgPuiP4.aaOSP uo a;LuL;ap e Ao; lou asLmaaylo ao aILL Ao; ao lLn;a as uL sL ;uawz)RL4ua ,AO 44 Lu a.APgs-awL; ayl uLa.Aaym aseo XUP uL 'aoLu @sL)q:).And LPlol ay; 10 a.aegs e;e.a oid ay; 10 anoge of pa,A,aala,A uoLlp;n woo ay; Bqjew uI •asLMJaylo ,AO awPu DILL d0 „Dal ;uawa PUPw„ „`Dal waLp ua „ „'a .APga suOL;P.Aa 0 JO aouPualuLPw„ '„Dal 5ULfidnoDO,, .aay;aym 'pa4PULwouap aq ew sasua xa ao sa jpyo ';uawssasse 'saal Bons awPu .aana;Pqm kq luaLsue.a; a44 ;o kouedn3oo a.A24S-9wLl ay; 04 aLgP;ngLullP se uo4pja o aq4 Xq pa ,APgD sasua xa pup sa uPyo 's;uawssassP 'saal LLP PUP Sup to ;unowP Le;O; ayl O;a,Aay; 5ULPPR pue paALOAUL AL4u@jjno ouP n000 ;uaLsuPa; 10 poLJa ay; of aLgpOoLLp sL a.APyS gOLym (R4jadoid LPaJ uL dLqsjaumo kUP JO ale;sa up uLALOAUL 40u JO ua44aym) luawaL;Llua .Ao 44 L,A OAP4S-awLl ay; ;0 aOLJ aseyoAn LPIO; 7 O i _ 1 ORDINANCE NO. AN ORDINANCE OF THE CITY OF PALM SPRINGS, CALIFORNIA, ESTABLISHING ZONING REGULATIONS RELATING TO THE USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1 . Chapter 93 of the Palm Springs Zoning Ordinance, relating to General Conditions and regulations applicable to the zoning of land throughout the City, hereby is amended by adding thereto a new section to be numbered 9315. 00 and reading as follows : 9315.00 USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS A. DEFINITION For the purposes of this Section, a time-share project is one in which time-share rights or entitlements to use or occupy any real property or portion thereof has been divided as defined in sub- section (7) of Section 3.24.020 of the Palm Springs Municipal Code, into twelve (12) or more time periods of such rights or entitle- ments. B. ZONES IN WHICH PERMITTED: CONDITIONAL USE PERMIT REQUIRED A time-share project shall be permissible only in such zones and at the locations therein where a hotel use would be permitted as herein- after provided. Unless otherwise provided elsewhere in this Zoning Ordinance, the zones in which such projects are permissible are the R-3, R-4, R-4VP, C-B-D, C-1 , C-IAA, C-2 and A Zones. Time-share projects shall also be permissable in the G-R-5 and R-2 Zones when- ever the subject site in either zone is located fronting on a major or secondary thoroughfare as indicated on the City's General Plan. No time-share project, use or occupancy shall be permitted in a Planned Development District unless expressly shown or described on the approved development plan for such district. No time-s e project shall be d in any case wherein co - r cove ditions and restrictions expressly prohibit time-share uses No time-share project shall be allowed in an "A" Zone. A Conditional Use Permit shall be required in accordance with Section 9402.00 for any time-share project. C. APPLICATION FOR TIME-SHARE PROJECT APPROVAL An applicant for approval of a proposed time-share project shall submit a completed application on a form as prescribed by the Depart- ment of Community Development, in addition to any other application information or forms that may be necessary in the particular case. D. TRANSIENT OCCUPANCY TAX APPLICABLE All time-share projects shall be subject to the provisions of the City's Transient Occupancy Tax Ordinance. 1 c 1 4 1 c 2 Ord. No. Page 2 E. TIME-SHARE CONDITIONAL USE PERMIT In addition to other considerations of a Conditional Use Permit for a Time-share project, the following shall apply: 1 . In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified i description or statement of the number and percentage of the current condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a time-share basis shall be submitted. Also in such instance, there shall be submitted, a verified statement of the number and percentage of owners who have received notification, either personally ` (proof by signature of the recipient or witness) or by receipted certified U.S. Mail , that application to so convert the project would be submitted to the Commission. 2. The Commission may approve or deny an application for Conditional Use Permit for a time-share project, in accordance with the general provisions regarding findings and conditions in Section 9402.00. No application shall be approved unless, among other considerations , it appears that more than 50% of the owners of condominium units (not including those owned by the applicant and/or the developer or any person or entity affiliated there- with) have received notification, either personally or by receipted certified U.S. Mail as referred in sub-section E-1 above. The Commission may impose such conditions as it deter- mines are necessary to protect the public safety, health, peace and welfare. Each use permit shall be issued with a condition attached that no time-share rights or entitlements shall be sold or offered for sale unless , at such time, there then exists a valid final subdivision public report for the sale of such time-share rights or entitlements, issued by the Depart- ment of Real Estate of the State of California. In determining whether, and under what conditions to issue any such Conditional Use Permit, the Commission, among other things, may consider: a. The impact of the time-sharing project on transient or per- manent rental stock; b. The impact of time-sharing on present and future City services; C. Nonconformity with current zoning regulations and the General Plan, and reasonable conditions to eliminate same; d. Nonconformity with existing uniform building and fire codes and reasonable conditions to eliminate same; e. The Sign program proposed for the project; f. The landscaping proposed for the project; g. Traffic circulation and parking; h. The applicant's description of the methods proposed to be employed to guarantee the future adequacy, stability and con- tinuity of a satisfactory level of management and maintenance of the time-share project. i . The desirability of requiring an office of the managing agent or agency be located locally or on-site, as appropriate. t Ord. No. Page 3 j .. Any other factors deemed relevant and any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application . F. APPEALS. Any decision of the Planning Commission on such Conditional Use Permit shall be appealable to the City Council within fifteen (15) days of the resolution approving or disapproving such permit, as provided in the Section 9402.00-D. Appeals on trust lands shall be .in accordance with the contracted agreement between the City of Palm Springs and the Agua Caliente Indian Tribal Council . SECTION 2. EXCEPTIONS. This Ordinance shall not affect time-share projects for which approved permits from the State Department of Real Estate have been issued prior to October 16, 1980, or projects in which units have been law- fully sold or offered for sale to the public prior to October 16, 1980. SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconsti- tutional by the decision of a court of competent jurisdiction, such decisions shall not affect the validity of the remaining portions of this Ordinance. SECTION 4. EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30) days after passage. SECTION 5. PUBLICATION. The City Clerk is hereby ordered and directed to certify to the passage of this Ordinance, and to cause the same or a summary thereof or a display advertisement, duly prepared according to law, to be published in accordance with law. ADOPTED this day of 1981 . AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By Deputy City Clerk P1 Mayor % REVIEWED & APPROVED: AAi" ? 1 c 3 ' . WP 2861-3 ORDINANCE NO. AN ORDINANCE OF THE CITY OF PALM SPRINGS, j CALIFORNIA, ESTABLISHING ZONING REGULATIONS RELATING TO THE USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1 . Chapter 93 of the Palm Springs Zoning Ordinance, relating to General Conditions and regulations applicable to the zoning of land throughout the City, hereby is amended by adding thereto a new section to be numbered 9315.00 and reading as follows: 9315.00 USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS. A. DEFINITION For the purposes of this Section, a time-share project is one in which time-share rights or entitlements to use or occupy any real property or portion thereof has been divided as defined in sub- section (7) of Section 3.24.020 of the Palm Springs Municipal Code, into twelve (12) or more time periods of such rights or entitle- ments. B. ZONES IN WHICH PERMITTED: CONDITIONAL USE PERMIT REQUIRED A time-share project shall be permitted only in such zones and at the locations therein where a hotel would be permitted, and then only if and when a Conditional Use Permit has been obtained therefor from the Commission in accordance with Section 9402.00, provided, however, that any existing hotel or apartment house use converting to a time-share project shall be exempted from this requirement if such hotel or apartment house is certified pursuant to Section as conforming in all respects to the then current zoning and General Plan regulations and to all applicable building and fire prevention codes. Unless otherwise provided elsewhere in this Zoning Ordinance, the zones in which such projects are permissible are the G-R-5, R-2, R-3, R-4, R-4VP, C-B-D, C-1 , C-lAA and C-2 Zones. No time-share project, use or occupancy shall be permitted in a Planned Develop- ment District unless expressly shown or described on the approved development plan for such district. C. INFORMATION TO BE SUBMITTED WITH C.U.P. APPLICATION An applicant for a Conditional Use Permit or Planned Development District (P-D) approval involving a time-share project shall submit in the application at least the following information: 1 . Legal description, street address or other location description sufficient to identify the property. 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights, entitlements, estates, or the like, into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed: k Ord. No. Page 2 4. The formula, fraction or percentage of the common expenses and any voting rights assigned to each time-share participant and, F where applicable, to each unit in a project that is not subject to the time-share program or arrangement. 5. A description of the means proposed to be employed to properly { and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to s time in the future. I 6. Description of any proposed restrictions on the use, occupancy, r alteration or alienation of time-share intervals and rights. k 7. Copies of all existing California Department of Real Estate ' reports or permits required by law or regulation. 8. Description of time periods , types of units, and which units 4 are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time- share program. 9. In the event an existing condominium project is proposed to be converted to a whole or partial time-share project, a verified i description or statement of the number and percentage of the current condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a time-share basis. Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to so convert the project would be submitted to the Commission together with when the City r Staff and the Commission would consider such application. 10. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 11 . Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. D. CONDITIONS FOR APPROVAL The Commission may approve or deny an application for Conditonal Use 6 Permit for a time-share project, in accordance with the general provisions regarding findings and conditions in Section 9402.00. The Commission may impose such conditions as it determines are necessary to protect the public safety, health, peace and welfare. Each use permit shall be issued with a condition attached that the developer will comply with all the applicable State Law and regu- lations of the California Department of Real Estate and subdivision laws and ordinances. In determining whether, and under what con- ditions to issue any such Conditional Use Permit, the Commission, among other things, shall consider: 1 . The impact of the time-sharing project on transient rental r ' stock; 2. The impact of time-sharing conversion on existing commercial businesses; 3. The impact of time-sharing on present and future City services; Ord. No. Page 3 4. Nonconformity with current zoning regulations and the General Plan, and reasonable conditions to eliminate same; 5. Nonconformity with existing uniform building and fire codes and reasonable conditions to eliminate same; 6. Sign program; 7. Landscaping; 8. Traffic circulation and parking; 9. Any other factors deemed relevant by the Commission. E. APPEALS. Any decision of the Planning Commission on such Conditional Use Permit shall be appealable to the City Council within fifteen (15) days of the resolution approving or disapproving such permit, as provided in the Section 9402.00-D. 1 SECTION 2. EXCEPTIONS. This Ordinance shall not affect time-share projects. i for which approved permits from the State Department of Real Estate have been issued prior to October 16, 1980, or projects in which units have been law- fully sold or offered for sale to the public prior to October 16, 1980. SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconsti- tutional by the decision of a court of competent jurisdiction, such decisions shall not affect the validity of the remaining portions of this Ordinance. SECTION 4. EFFECTIVE DATE.,, This Ordinance shall be in full force and effect thirty (30) days after passage. SECTION 5. PUBLICATION. The City Clerk is hereby ordered and directed to certify to the passage of this Ordinance, and to cause the same or a summary thereof or a display advertisement, duly prepared according to law, to be published in accordance with law. ADOPTED this day of 1981 . AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By Deputy City Clerk Mayor REVIEWED & APPROVED: WP 2856-7 F PAIA4 so ti a yY�\-P Z N City of Palm springs *+ •CALI FOR NIA 1"0P, P.O. BOX 1786. PALM SPRINGS, CALIFORNIA 92263 DATE: December 17, 1980 f{{ TO: Time-Share Task Force Members FROM: Dallas J. Flicek, Assistant City Manager At our December 16 , 1980 Time-Share Task Force meeting , the city staff presented a draft ordinance establishing f zoning regulations for time-share uses. The members of the task force who were present suggested and assisted staff in making a number of changes to the draft. Enclosed, for your information, is a copy of the proposed i ordinance as it stands after all the suggestions were in- corporated. r The task force decided to have another meeting on Tuesday? December 23, 1980 at 9 a.m. , to give an opportunity to those task force members who were unable to be with us to review this proposed ordinance. Hope to see you then. Sincerely, DALLAS. J. FLICEK Assistant City Manager DJF: lr Enc. 4 I f 4I 4 ORDINANCE NO. I � AN ORDINANCE OF THE CITY OF PALM SPRINGS, j CALIFORNIA, ESTABLISHING ZONING REGULATIONS RELATING TO THE USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS. THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, DOES ORDAIN AS FOLLOWS: SECTION 1 . Chapter 93 of the Palm Springs Zoning Ordinance, relating to General Conditions and regulations applicable to the zoning of land throughout the City, hereby is amended by adding thereto a new section to be numbered 9315.00 and reading as follows: 9315.00 USE OR OCCUPANCY OF LAND ON A "TIME-SHARE" BASIS. A. DEFINITION �i For the purposes of this Section, a time-share project is one in which time-share rights or entitlements to use or occupy any real property or portion thereof has been divided as defined in sub- section (7) of Section 3.24.020 of the Palm Springs Municipal Code, into twelve (12) or more time periods of such rights or entitle- ments. B. ZONES IN WHICH PERMITTED: CONDITIONAL USE PERMIT REQUIRED A time-share project shall be permitted only in such zones and at the locations therein where a hotel would be permitted, and then only if and when a Conditional Use Permit has been obtained therefor from the Commission in accordance with Section 9402.00, provided, however, that any existing hotel or apartment house use converting to a time-share project shall be exempted from this requirement if such hotel or apartment house is certified pursuant to Section as conforming in all respects to the then current zoning and General Plan regulations and to all applicable building and fire prevention codes. Unless otherwise provided elsewhere in this Zoning Ordinance, the zones in which such projects are permissible are the G-R-5, R-2, R-3, R-4, R-4VP, C-B-D, C-1 , C-lAA and C-2 Zones. No time-share project, use or occupancy shall be permitted in a Planned Develop- ment District unless expressly shown or described on the approved development plan for such district. C. INFORMATION TO BE SUBMITTED WITH C.U.P. APPLICATION An applicant for a Conditional Use Permit or Planned Development District (P-D) approval involving a time-share project shall submit in the application at least the following information: 1 . Legal description, street address or other location description sufficient to identify the property. 2. Description of the time-share periods into which the project is proposed to be divided. 3. Description of the nature of time-share rights , entitlements, estates, or the like, into which the project is proposed to be divided, and the methods by which additional such interest may be created or existing interests may be transferred or conveyed: Ord. No. Page 2 4. The formula, fraction or percentage of the common expenses and j any voting rights assigned to each time-share participant and, f where applicable, to each unit in a project that is not subject to the time-share program or arrangement. y 5. A description of the means proposed to be employed to properly and effectively collect and remit to the City the transient occupancy taxes which will become due and payable from time to i time in the future. 6. Description of any proposed restrictions on the use, occupancy, F alteration or alienation of time-share intervals .and rights. s 7. Copies of all existing California Department of Real Estate reports or permits required by law or regulation. [ 8. Description of time periods , types of units, and which units C are in the time-share program (if less than all ) , and the length of time each of the units are committed to the time- fi share program. 9. In the event an existing condominium project is proposed to be 1' converted to a whole or partial time-share project, a verified description or statement of the number and percentage of the current condominium owners desiring or consenting to the pro- posed conversion of some or all of the units to a time-share basis . Also in such instance there shall be submitted a veri- fied statement of the number and percentage of owners who have received notification, either personally or by receipted certi- fied U.S. Mail that application to so convert the project would ;I be submitted to the Commission together with when the City ` Staff and the Commission would consider such application. ; 10. A description of the methods proposed to be employed to guarantee the future adequacy, stability and continuity of a satisfactory level of management and maintenance of the time-share project. 11 . Any other information which the Commission or the applicant considers necessary or desirable to an appropriate and proper consideration of the application. i D. CONDITIONS FOR APPROVAL The Commission may approve or deny an application for Conditonal Use 6 .-Permit for a time-share project, in accordance with the general provisions regarding findings and conditions in Section 9402.00. The Commission may impose such conditions as it determines are ri necessary to protect the public safety, health, peace and welfare. Each use permit shall be issued with a condition attached that the developer will comply with all the applicable State Law and regu- lations of the California Department of Real Estate and subdivision laws and ordinances. In determining whether, and under what con- ditions to issue any such Conditional Use Permit, the Commission, among other things, shall consider: 1 . The impact of the time-sharing project on transient rental F stock; 2. The impact of time-sharing conversion on existing commercial businesses; 3. The impact of time-sharing on present and future City services; Ord. No. Page 3 4. Nonconformity with current zoning regulations and the General Plan, and reasonable conditions to eliminate same; 5. Nonconformity with existing uniform building and fire codes and reasonable conditions to eliminate same; 6. Sign program; 7. Landscaping ; 8. Traffic circulation and parking; 9. Any other factors deemed relevant by the Commission. E. APPEALS. Any decision of the Planning Commission on such Conditional Use Permit shall be appealable to the City Council within fifteen (15) days of the resolution approving or disapproving such permit, as provided in the Section 9402.00-D. SECTION 2. EXCEPTIONS. This Ordinance shall not affect time-share projects_ for which approved permits from the State Department of Real Estate have been issued prior to October 16, 1980, or projects in which units have been law- fully sold or offered for sale to the public prior to October 16, 1980. SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconsti- tutional by the decision of a court of competent jurisdiction, such decisions shall not affect the validity of the remaining portions of this Ordinance. SECTION 4. EFFECTIVE DATE. This Ordinance shall be in full force and effect thirty (30) days after passage. SECTION 5. PUBLICATION. The City Clerk is hereby ordered and directed to certify to the passage of this Ordinance, and to cause the same or a summary thereof or a display advertisement, duly prepared according to law, to be published in accordance with law. ADOPTED this day of 1981 . AYES: NOES: ABSENT: ATTEST: CITY OF PALM SPRINGS, CALIFORNIA By Deputy City Clerk Mayor REVIEWED & APPROVED: i WP 2856-7 CITY OF SOUTH LAKE TAHOE ORDIN.MCIt NO. 558 AN Oktll7.:':i�;C, irE(;U[:i;i'TPlC 7l„ O:d (j= VACA1'lUh: 'ili(E. SltA1:1NV i'li:%Jt;�i'S IN THE CITY OF SOUTH LAKE TAHOE The Council of the City of South Lake Tahoe does ordain as follows: Section 1: The following is hereby added to the City Code of the City of South Lake Tahoe as Article VIII of Chapter 28A: Article VIII. Vacation Time Sharing Projects, Section 28A-55. Statement of Legislati•.e Intent. 1. Whereas there is a critical shortage of affordable housing in the City of South Lake Tahoe; 2. And whereas, the conversion of residential property within the City to vacation time sharing projects eliminates residential property other- wise available for rental in the City; 3. And whereas, vacation time sharing projects have the character of a cormercial use due to the multiple occupancy of such projects by those participating in time sharing projects; . 4. And whereas, such projects are the appropriately confined to commercial zones; 5, . And wrlicreas, such commiercial or quasi-commercial use, is inappro- priate in residential areas due to the iacreascd traffic generation and multi- ple occupancies disturbing the peace and quiet of residential neighborhoods; The city Council of the City of South Lake Tahoe does hereby find and determ:in:: that this ordinance is necessary to accomplish the obicctives set Forth in the above section and to protect the public health, safety and welfare or the citizens of the City of SoutD. Lake Tahoe pursuant to the lags of the State of California. . . Section 28A-56. Definitions. 1.. "Develeper" means, in the case of any giver property, any pCTS011 or entity which is in the business of creating or i•.hich is in the business of sell- ing its own time-share intervals in any time-share program. This dc+fin`.tion does not include a rerson acting :,olely as a sales agent for a previously approved time-share program. 2. "Develon:ecnt ," "Project" or "Property" means all of the real pro;:cr- ty subject to a project instrument. 3. "Offering" means any offer to sell, solicitation, inducem^nt or advertisement whether by radio, television, newspaper, or by r.'iail whereby a person is given an opportunity to acquire a tine-share interval. Any offering of a time-share interval which is not located in this City shall not be an offering if such offer is in compliance 1•rith the law of the juris- diction in4:}ll.r,}l t)lc tl ',P-Sti t)'r, [r,r ? TrY:r•,i n..J 4. "Persoll" Wua;ls one Lr Mule ;,atul'ai p1 .fsoili, _-)iooratlu.ii partnerships, associations , trusts, other entities or any combination thereof. r S. "Project Nstrument" means one or more recordable documents anplicable to the whole project by whatever name denominated, containing restrictions or covenants regulating the use, occupancy or disposition of an entire project, including any amendments to the documents, but excluding any law, ordinance or governmental regulation. . 6. "Purchaser" means any person other than a developer or lender who acquires an inter,:st in a time-share interval. 7. "Sale Agent" means a person who sells or offers to sell "time- share 'n "time-share program" to a purchaser. share intervals i a g p S. "Time-Share Estate" means an ownership or leasehold estate in property devoted to a tir..e-share fee (tenants in common, time span ownership, interval ownership) or a time-share lease. . 9. "Time-Share Interval" means a time-share estate of a time-share use. 10. "Time-Share Instrument" means any document by whatever name denominated, creating or regulating time-share programs, but; excluding any law, ordinance or governmental regulation. 11. ''Time-Share Program" means any arrangement for time-share inter- vals in a time-sharing project whereby the use, occupancy or possession of real property has been made subject to either a time-share estate or time-share use whereby su&.. use, occupancy or possession circulates smono purchasers of the time-share intervals according to a fixed or floating time schedule on a periodic basis for a specific period of time during any given year, but not necessarily for consecutive years. 12. "Time-Share Use" means any contractual right of exclusive occupancy which does not fall within the definition of a "Time-Share Estate" including, without limitation, a vacation license, prepaid hotel reservation, club membership, limited partnership or vacation bond. 13. "Unit" means each portion of the real property or real property improvement in a project lrhich is divided into time-share intervals: 14. "Vacation Tirle-Sharing Project" means any real property that is subject to a time-share program. i Section 2SA-57. Time Sharing Projects Permitted in Commercial. Zones Only. Vacation time-sharing projects which are otherwise appropriate to the underlying land use district may be pernissi.ble in commerical districts sub- T . J ject to the issuance of a special use permit, following review by the Planning Commission. Vacation time-sharing projects are prohibited in all other districts. The developer shall provide the Plannin Commission with the � following documentation: 1. Instruments for a time-share estate. a. The legal description, street address or other description sufficient to identify the property. b. Identification of time periods by letter, name, number or combination thereof. c. Identification of the time-share estate and the method whereby additional time-share estates may be created. d. The formula, .fraction or percentage, of the common expenses and any voting rights assigned to each time-share estate and, where applicable, to each unit in a project that is not subject to t:.ho time-share program, e. Any restrictions on the use, occupancy, alteration or aliena- tion of time-share 'intervals. f. Any other matters that the developer orscommission deems r reasonably necessary to consideration of the project including any 'required environmental documents. '. Instruments for time-share uses. a. Identification by name of the tine-sharing project and street address where the timersharing project is situated, la. Identification of time periods, type of units and the ur.its r that are in the time-share program and the length of time that each of the units are condnicted to the time-share program, c. In the case of a time-sharing project, identification of which units are in the time-share program and the method whereby other units may be added, deleted or substituted. d. Any restrictions on the u3c, occupancy, alteration or trans- fer of a time-share interval. • e. Any other matters the developer or commission deem rep-sonably necessary to consideration of the project, including any required environmental documents. Section 2S:1-SS. Conditions Upon Approvals and rint;eals. The Planning Commission may impose such conditions as it may deem necessary to protect the public health, safety and welfare of the conua.utity on a � ti-mc-sharing project. Any decision by the Planning Comrission o;i such a special use permit shall be appealable to the City Council as provided in the zoning ordinance. Section 2: -Severability. If any section, subsection, sentence, clause or phrase of this ordinance is for any refl5o(i i.: "I 0:( !1nconSl. litional 1w the decision Ora court of compel. rigi shall no': affect the validity of the xemaining portions of this ord-z:ance. Section 3: This ordinance shall be published one (1) time in the officirl City newspaper within fifteen (15) days after its adoption and shall take effect thirty (30) days after its adoption. FIRST READING: February 19, 1980 SECOND READING: March 4, 1980 PASSED MD ADOPTED by the City Council of the City of :,ouch Lake Tahoe at a regular meeting held on March 4 `, 1950 by the following vote: AYES: •Councilmembers Cefalu, Hubbell , Laine, and ?flood; NOES: Councilmembers None ABsrw: Councilmembers Tru n l . Mayor ATTEST: - "Cxty Clerk (CITY-:-SEAL) I, Evelyn Roberson, City Clerk of the City of South Lake Tahoe hereby certify that the foregoing is a true and correct cony of Ordinance No. 558, entitled "An Ordinance Regulating the Creation of Vacation Time Sharing Projects in the City of South Lake Talloe", and duly authorized by the City Council of the City of South Lace Tahoe on tiaLc-b- DATED-: March 4, 1980 City CleI'l .(CITY SEAL) •�. . . - e _ 17 `CITY OF SOUTH LAKE TAHOE RESOLUTION NO.. 1980- -// A. RES0Lti5!'I'0N OF THE. }'L71NIi :N( ;'.0ygi15fJX T' "t THE CITY OF SOUTH LAKE TAHOE SETTING FORTH POLICIES FOR THE REVIEW OF TIME SHARING PROJECTS WHFR.EAS, it is desirable that potential applicants £oz the (,,on- version of existing commercial properties to time sharing uses be awa,.e of the requirements for processing such applications by the Planning Commission; . AND WHEREAS, it, is the intent'on of the Planning Commission through such policies to insure that ime sharing .conversions meet, ir. so _far as is practicable, all. current city codes and. ordinances; AND WHEREAS, it is the policy of the Planning Commission that approval of such conversions should result i.n �a substantial upgrading of the existing site amenities._, and architectural features of, projects.. proposed for conversion; NOW THEREFORE BE IT RESOLVED that: 1. Applications for the conversion of existing commercial ' properties to time sharing uses shall, as part of the application for ; such bonversion,. submit the following: a) a plot plan showing in reasonable detail the means by which the project will comply with the parking requirements of the City of South Lake Tahoe; including the purchase .of additional pro— perty should that be required. b) a conceptual landscaping and project amenities, if any, and proposed additional land:;ceping and project amenities such as useable open space, bikeways, .walkways, clubhouses, gazebos, swimming pools, spas, and the like. c) conceptual architectural drawings, in the form of elevations or similar representations, showing proposed structural and facade changes intended to upgrade the existing property. This shall include color chips, if appropriate, showing the proposed color of the building. d) a conceptual site facilities plan, showing proposed drainage, snow storage, and on and off site improvements as tequired by the Public Woks Department. e) a floor plan showing in reasonable detail the location and type of units. f) evidence of review by the South Tahoe Public Utility Distr•�ct regarding anticipated increase or decrease in sewer flows resulting from the change in use. 2 . All such 1._ans, after review by ` the immission, may be further reviewed by the' Architectural Review Committee, and additional detail if required by the Commissio:, placing such a condition upon the project approval. 3.. Any proposed time sharing projer.t shall comply ,. in. eso fat as is practicable, with current fire and building code with regard to fire protection and energy efficiency. Such compliance shall be excused only if it would requir= substantial reconstruction of the existing structure to obtain z.nd suc'- failure to comply presents no danger to the health and safety of the occupants of such structures . 4 . This resolution shall apply only to projects approved on rr after the effective date hereof. ' All other such projects which have no heretofor received final approval from the Commission may be required to submit the plans required',.hereunder to the Architectural Review .Committee for. its review ant approval. . PASSED AND ADJPTED by .the Planning Commission of the City of South Lake Tahoe on 3, /9&W , 1980 by the following vote : ; AYES : Commissioners NOES : Commissioners F ABSENT: Commissioners 2 Chairwoman F