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Ojai council upholds tax determination for Kasa Ojai operator, agrees to reduce penalties
Summary
In a separate appeal the same evening, the Ojai City Council upheld a tax-collector determination for Kasa Ojai, finding the operator failed to collect transient-occupancy tax on certain ancillary fees, and voted to trim or waive penalties/interest while directing staff to clarify taxable categories for hoteliers.
The Ojai City Council on May 12, 2025, heard a second appeal by the same appellant challenging a tax-collector determination covering Kasa Ojai and reached a similar decision as in the Sunnito matter: the council upheld the tax collector’s April 8 determination while agreeing to reduce or waive penalties or interest and asking staff to provide clearer guidance to operators.
City staff, through outside counsel Chelsea Ballot, recited the HDL audit findings for Kasa Ojai and argued the city’s transient occupancy code — including language clarified by Measure C — treats cleaning fees, crib fees, pet fees and rollaway-bed fees as types of rent that are taxable when tied to occupancy. "The term rent is defined ... inclusive of resort fees, cancellation fees, parking fees, and other fees tied to occupancy of a space in a hotel," Ballot said during the presentation.
The appellant again argued the audit methodology and statutory reading are flawed: he told the council that certain fees are contract damages or are not consideration for occupancy and emphasized that the municipal code distinguishes between the transient's tax debt and operator liability for tax actually collected and unremitted. He argued that retroactively converting uncollected transient fees into operator liability conflicts with several provisions and that the city did not provide adequate prospective guidance.
The city’s auditor explained that HDL requested folios, profit-and-loss statements and tax returns and that the audit’s sampling and reconciliation approach is the standard method used across jurisdictions; the city said the appellant failed to provide folios in a timely manner to rebut the findings.
After discussion, the council voted to uphold the tax collector’s determination for Kasa Ojai and to reduce or waive penalties and interest as a compromise. The roll-call vote was recorded with Council member Lang, Council member Whitman, Mayor Prom May and Mayor Gilman voting yes and Council member Rule voting no. Council asked staff to return with written guidance identifying which ancillary hotel charges should be treated as taxable rent under the OMC.
The decision leaves the audits and the city’s enforcement authority intact for now while directing clearer operational guidance to reduce future disputes.
