Agenda Item 8D
April 12,2016
Action
MEMORANDUM
TO:
FROM:
County Council
/2
J
Room Rental and Transient Tax-
Jeffrey
L.
zyontf."<Senior Legislative Analyst
SUBJECT:
Action: Expedited Bill 6-16, Taxation
Definitions
Government Operations and Fiscal Policy Committee recommendation (3-0): enact
Expedited Bill 6-16 as introduced.
Expedited Bill 6-16, Taxation - Room Rental and Transient Tax - Definitions, sponsored
by Lead Sponsor Council President at the request of the County Executive was introduced on
March 15,2016.
Bil1 6-16 would clarify the definition of broker to include entities that facilitate or arrange
payment of room rental for sleeping accommodations; and clarifY that service fees or broker fees
charged by brokers or other entities for sleeping accommodations are within the definition of room
rental for purposes of calculation of the tax. The Bill would also make editorial changes to locate
definitions in alphabetical order and conform the expression of the definition to code standards.
The Council conducted a public hearing on April 5. The only speaker was Finance
Director, Joseph Beach, who spoke in favor of enacting Bill 6-16 as introduced. The Council did
not receive any other comments on the legislation.
The Government Operations and Fiscal Policy Committee conducted a worksession on
April 7, 2016.
Mr.
Beach participated in the Committee's discussion. He noted that Bill 6-16 was
requested by the Executive because an internet broker failed to understand the code in a manner
consistent with the Finance Department's interpretation.
In
Mr.
Beach's opinion, Bill 6-16 would
help the Department of Finance in its future dealings with internet brokers and would confirm the
Department's past interpretation. The Committee recommended that the Council enact Expedited
Bill 6-16 as introduced. Its recommendation is consistent with the Executive's recommendation.
This packet contains:
Expedited Bill 6-16
Legislative Request Report
Memo from County Executive
Fiscal and Economic Impact statement
F:\LAW\BILLS\1606 Room Rental And Transient Tax\Action Memo.Docx
Circle #
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Expedited Bill No. _ _6"..-......
16::::.-_ __
Concerning: Taxation - Room Rental and
Transient Tax - Definitions
Revised: March 2,2016 Draft No.
4
Introduced:
March 15, 2016
Expires:
September 15, 2017
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
---!..!.No~n~e~
_ _ _ _ __
Ch.
Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
Lead Sponsor: Council President at the Request of the County Executive
AN EXPEDITED ACT
to:
(l)
clarify
the definition ofbroker to include entities that facilitate or arrange payment
of room rental for sleeping accommodations;
(2)
clarify that service fees or broker fees charged by brokers or other entities for
sleeping accommodations are within the definition ofroom rental for purposes of
calculation of the
tax;
and
generally amend the room rental and transient
tax.
(3)
By amending
Montgomery County Code
Chapter 52, Taxation
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
amendment.
*
* *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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ExPEDITED BILL
No. 6-16
1
Sec. 1. Section 52-16 is amended as follows:
52-16. Room rental and transient tax
2
3
*
(b)
following meanings:
*
*
4
5
The following words and phrases, when used in this Section, have the
6
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[Transient:
An
individual who, for any period of30 or fewer consecutive
. days, actually occupies a sleeping accommodation.]
Broker[:
A] means
~
person, other than the owner or operator of a hotel
8
9
10
11
or motel, that receives, facilitates or arranges payment, directly,
indirectly, or through an online platform, for hotel or motel
accommodations from a transient who is subject to the tax under
subsection (a).
Director
means the Director of Finance or the Director's designee.
Hotel or motel
means[:
(I)
Any] any hotel, inn, hostelry, tourist home or
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l3
14
15
16
house, motel, apartment hotel, rooming house, dwelling unit or other
lodging place that offers for compensation sleeping accommodations in
the County. [(2)] A hotel or motel does not include:
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19
ill
[(A)] a hospital, medical clinic, nursing home, rest home,
convalescent home, assisted living facility, or home for elderly
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21
22
23
individuals; or
ill
[(B)] a facility owned or leased by an organization that is exempt
from taxation under section 50l(c)(3) of the Internal Revenue
Code if the primary use of the facility is other than housing
overnight guests.
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25
26
27
Hotelkeeper[
:
A] means
~
person that:
(1)
(2)
owns or operates a hotel or motel; or
acts as a broker.
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EXPEDITED BILL
No. 6-16
28
29
30
31
32
33
34
Room rental[:
The] means the total charge required to be paid by a
transient for a sleeping accommodation.
Room rental includes any
service fee, broker's fee, or other charge or fee required to be paid
.hy
the
transient regardless of what the charge is called or how the charge is
designated.
Room rental does not include any optional charge for
services in addition to the charge for use of sleeping space.1 such as Wi­
Fi access, food, beverage, movie rental, or fitness center access. The
portion ofthe total charge, ifany, that represents
~
charge other than room
rental must be separately billed.
Transient
means an individual who, for any period of 30 or fewer
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39
40
41
42
43
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consecutive days, actually occupies
~
sleeping accommodation.
[Director: Director ofFinance or the Director's designee.]
*
*
*
Sec. 2. Expedited Effective Date:
The Council declares that this legislation is
necessary for the immediate protection ofthe public interest. This Act takes effect on
the date on which it becomes law.
45
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Approved:
47
Nancy Floreen, President, County Council
48
Approved:
Date
49
Isiah Leggett, County Executive
Date
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LEGISLATIVE REQUEST REPORT
Expedited Bill 6-16
Taxation
-
Room Rental and Transient Tax
-
Amendments
DESCRIPTION:
This Bill would amend County law by clarifying that portion of the room
rental charge that is subject to the County's Room Rental and Transient Tax.
With the expansion in the number of brokers and the use of different terms to
describe non-discretionary charges to the transient it is necessary to further
clarify the calculation of the transient tax.
To facilitate the efficient and orderly assessment and collection of the Room
Rental and Transient Tax.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
Department of Finance
FISCAL IMPACT:
To be requested.
ECONOMIC
IMPACT:
EV ALUATION:
To be requested.
Subject to the general oversight of the County Executive and the County
Council.
Unknown.
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
Michael
J.
Coveyou, Chief, Division of Treasury, Department of Finance
None.
APPLICATION
WITHIN
MUNICIPALITIES:
PENALTIES:
None.
F:\LAW\BILLS\1606 Room Rental And Transient Tax\Transient Tax Amendment LRR.Doc
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OFFICE OF THE
COUNTY
EXECUTIVE
ROCK.VJL1.E,
MARYLAND 20851l
Isiah Leggett
County Executive
MEMORANDUM
February
9, 2016
TO:
FROM:
SUBJECT:
Expedited
am
No. -XX-16,
Amendments to Montgomery County Code
Chapter 52 - Taxation - Room Rental and Transient Tax
I am recommending an amendment to Chapter 52-16 ofthe County Code to
clarify the definition of a broker and the portion of the room rental charge that is subject to the
County's Transient Tax. The current Code
already
requires that the total charge that a transient
must
pay
is subject to this tax, but given the expansion
in
the number of brokers and the use of
different tenns to describe non-discretionary charges to the transient
it
is necessary
to
further
clarify the calculation of the transient tax.
I urge the Council to support this legislation. My staff are available to respond to
any questions you may have on this amendment or provide additional clarification.
Attachments
cc: Timothy L. Firestine, Chief Administrative Officer
Marc P. Hansen, County Attorney
Bonnie
Kirkland,
Assistant Chief Administrative Officer
Joy Nurmi, Special Assistant to the County Executive
Patrick Lacefield, Director, Public Information Office
Jennifer Hughes, Director, Office of Management and Budget
Michael Coveyou Chief; Division of the Treasury, Department of Finance
Joseph F. Beach, Director, Department of Finance
j
montgomerycountyrnd.goy/311
240-773-3556 TTY
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Fis£al Impact Statement
Expedited BiU XX-16, Taxation - Room Rental and
Transient
Tax Amendments
1. Legislative Summary.
This
ex~ited
bill would amend
County
law
by
clarifying
that
portion of the room rental
charge that is subject to the County's Room Rental and Transient Tax.
2. An estimate of changes in County revenues and expenditures regard1ess of whether the
revenues or expenditures are assumed in the recommended or approved budget. Includes
source of information, assumptions, and methodologies
used. '
This Bill would have no fiscal impact on the County.
3. Revenue and expenditure estimates covering at least the next 6 fiscal years.
This Bill would have no fiscal impact on the County.
4. An actuarial analysis through the entire amortization
period
for each bill
that
would affect
retiree pension or group insurance costs.
This Bill would have no fiscal impact on the County.
5.
An
estimate ofexpenditures related to County's information technology (IT) systems,
including Enterprise Resource Planning (ERP) systems.
This is not applicable to this Bill.
6. Later actions that may affect future revenue and expenditures
if
the bill authorizes future
spending.
This is not
applicable
to this Bill.
7. An
estimate
of
the
staff time
need~
to
implement the bill.
This is not applicable to this Bill.
8. An explanation of how the addition of new
staff
responsibilities would affect other duties.
There are no additional duties.
9. An estimate of costs when an additional appropriation is needed.
No additional appropriation is needed.
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10. A description of any variable
that
could affect revenue and cost estimates.
This
is
not applicable to
this
Bill.
11. Ranges ofrevenue or expenditures that are uncertain or difficult
to
project.
This
is
not applicable
to
this
Bill.
12.
If
a bill
is
likely to have no fiscal impact, why that is the case.
This
is
not applicable
to
this
Bill.
13..
Other fiscal impacts or comments.
This is
not applicable to
this
Bill.
14. The following contributed
to
and concurred
with
tbisanalysis:
, Michael Coveyollt·Department of Finance
,
Jane Muldra. Office ofManagement and Budget
Date'
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Economic Impact Statement
Expedited Bill
#1#-16,
Taxation-
Room RentaJ
and
Transient Tax· Amendments
Background:
This legislation would clarifY the definition of broker and room rental charges to include
entities
that
facilitate or arrange payment of room rental for sleeping accommodations.
Expedited
Bill ##-16
clarifies service fees or broker fees charged
by
brokers or other
entities for sleeping accommodations that are within the defInition
of
room rental far
purposes of
calculating
the
tax.
1. The sources of information, assnmptions, and methodologies used.
Expedited Bill ##-16 amends Section 52-16 of the County Code by clarifying that
portion of the room rental charge subject
to
the
County's Room
Rental
and Transient
Tax. Since the
legis1ation
proposes clarifying language
in
the
calculation of
the
transient
tax.
there are no sources of information, assumptions and methodologies
used
in
the
preparation
of the
economic
impact
statement.
2..
A description of any
variable
that could
affect
the economic
impact
estimates.
There are no variables
that
could affect the economic impact estimates.
3. The BiD's positive or negative effect,
if
any on employment, spending, savings,
investmellt,
incomes, and
property
values
in
the
COllnty.
Expedited BilJ ##-16 has no economic impact on the
Countts
employmen~
spending, savings, investrnents
1
incomes, and property values because it is merely a
clarification
ofexisting law.
4. If a Bill
is
likely to have no economic impact, why
is
that the case?
Please
see
paragraph #3
S. The following contributed to or concurred with this analysis;
David
Platt, Michael
Coveyou, and Robert Hagedoorn. Department ofFinance.
~f~
s h F. Beach, Director
Department
of
Finance
Da!
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