HOT audit flags $1.13 million in deficiencies across 19 hotels; city to collect or reaudit

FOAC reviewed and accepted the results of round 10 of the city's hotel-occupancy-tax (HOT) audits, which identified approximately $1.13 million in deficiencies across 19 of 20 hotels sampled.

Miguel Ortea of the internal audit department said the contractor-led reviews covered the four-year period from Jan. 1, 2022 through Dec. 31, 2025 and reconciled hotel revenue and exception records against the taxes reported to the city. The round-10 reviews initially identified $1,131,941.83 in deficiencies for 19 hotels; one hotel showed no deficiency.

"Deficiency letters were sent on April 23, 2026," Ortea told the committee, adding that hotels have 30 days to pay and 60 days under the state's tax code to file a redetermination or otherwise challenge the audit findings. He cautioned the initial dollar figure may change after reaudits and responses; prior rounds were reduced after reaudit.

Council members pressed whether deficiencies reflect intentional nonpayment. Marietta Marin, deputy CAFO, said the city is not "missing" money and framed the audit as a due-diligence recovery process: many deficiencies arise from underreported revenue, overstated or unsupported exceptions, or recordkeeping errors rather than intentional withholding.

Adrian Serrano, the chief internal auditor, said preliminary results across ten rounds show the city collects about 75–76% of identified deficiencies after audit follow-up and reaudits. Marin summarized penalties and interest applied to late HOT liabilities: 5% penalty after 30 days, an additional 5% at 60 days and then 6% annual interest compounded thereafter; penalties and interest are charged in addition to principal deficiency amounts.

The committee moved and unanimously accepted the review and directed the report to city council for any further action.