Inglewood Ordered to Halt Bed-Tax Raids on Hotels

A group of hotel and motel owners in Inglewood have won a temporary restraining order in Superior Court that prevents the city from making unannounced inspections without warrants when enforcing its bed tax.

The Inglewood Hotel/Motel Assn. has sued to halt the city’s aggressive collection of the bed tax, or transient occupancy tax, a levy on the rates charged to hotel guests. Accusing hotels of not paying their fair share of tax money, the city has sent auditors to the businesses to inspect cash registers, rooms and business records.

In calling last week for a temporary halt to the inspections and the collection of additional business records, Judge William Huss ordered a preliminary hearing July 16. He ruled that further inspections could result in “injury” to the businesses.

City Atty. Howard Rosten said the ruling has no great effect on the city because city inspectors never forced their way into the businesses.

“We went along for years with a sleepy policy, and now we’re being more aggressive,” he said. “That is going to cause some concern. . . . Ultimately, it will all smooth out.”

Frank A. Weiser, a Los Angeles attorney representing the association, said he is encouraged by the decision and optimistic that the judge will find that the city has been overstepping its bounds.

The hoteliers’ suit also challenges the city’s policy of charging the tax for up to 90 days, instead of the 30 days used by most cities. Huss refused to issue a retraining order on the city’s 90-day rule or on the collection of the tax itself.

City officials said their hard-line position began two years ago when audits and spot visits to hotels and motels showed that some were shortchanging the city by renting rooms, charging the bed tax and then not turning over the money to the city.

Assistant City Manager Norman Cravens estimated that more than half of the city’s 35 hotels and motels have underreported the tax.

“We just want what they collected,” he said. “It’s our money at that point. They make us seem like real heavies, but in most cases they are not giving us what we ask for.”

Meanwhile, the hotel owners voiced strong objections at Tuesday’s City Council meeting to a planned increase in the city’s bed tax from 10% to 12%, which is expected to raise $250,000. The city is also considering an increase in the interest rate on delinquent payments from 0.5% to 1% per month.

Stan Sharma, who owns the 130-room Tradewinds Hotel on Century Boulevard, urged the council to postpone the tax increase, which he said would hurt an already struggling industry.

Sharma said Los Angeles has a 12.5% occupancy tax, but that it uses much of the money to promote the hotels to tourists. Inglewood has no convention bureau and has not said how the tax increase will help the businesses, he said.

Council members, who will vote on the tax increase at their Tuesday meeting, gave the hotel owners little sympathy.

Councilman Anthony Scardenzan accused the hotel owners of pocketing money that should have gone to the city and helping to promote prostitution and drug sales by renting to undesirables.

“Your industry is one of the main industries that is bringing corruption into this city,” he said.

Only Councilman Garland Hardeman opposed raising the levy, saying the city should have looked at cutting expenditures before raising taxes.

Along with the proposed increase in the bed tax, Inglewood is considering raising its apartment rental tax from $10 per unit to $20 per unit, and all other business taxes 10%.