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Recording in progress.

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Although it's 4 o'clock, we're going to wait 5 more minutes for our remaining calling who is not arrived.

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Thank you.

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Thank you.

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Thank you.

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Thank you.

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Thank you.

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Thank you.

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Thank you.

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Thank you.

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Good afternoon, everyone. It's now 405 p.m. This is the actually a regular city council meeting

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on August 4th of 2026 held a special time for p.m. and I would like to ask our clerk to call the

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roll please. Marisa? Councilmember Lance Burke? Here. Councilmember Garcia Cadena? Here. Mayor Stollard? Here. Councilmembers Vega and Marino are absent.

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All right. We expect councilmember Marino momentarily, but councilmember Vega is out of town.

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All right. Well, now we begin with the pledge of allegiance. I will lead it today. Please join me.

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And our heart. I pledge allegiance to the flag of the United States of America. And to the Republic, we'll reach a stance.

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More emanation under your eye. In divisible, we'll deliver it to you. And it's just horrible.

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I don't know what that means. Pardon me?

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Yeah. Okay. All right.

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And this brings us to item D, which is public comment. Public comment is the time in the meeting

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for people who wish to address the council on items not on our agenda to stand up and do so.

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Madam Clerk, do we have any expressions of public comment today? I have two speakers signed up to speak. First is a male, Ben Hodg.

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Okay. And your first name is Amel? Yeah. Welcome.

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Come right up and speak into that microphone or no one on watching remote. They will be able to hear you.

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Okay. Hello. My name is Amel Ben Hodg. And I'm here to support Valley Valley.

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Valerie Cantaro's proposal for fourth and hope. So my family has been volunteering there for the last year.

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Most teaching art and just hanging out with the residents and talking and there are some of the kindest people I've ever met.

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In spite of some of the hard things they have faced, they never complain. They tell their stories with humor and dignity.

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Residents are often seniors battling cancer, depression, dementia and other difficulties that are not their fault.

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Many grow up in abusive homes or suffer from domestic abuse. Many were injured when they were doing military service.

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So you show that lack of green space increases risk of anxiety and depression and worsens mental health conditions.

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The tiny homes are of course a blessing. But as you drive there, you notice just one small tree out front with many trees squeezing into the little bit of shade.

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You also often see people trying to get into the city on busy roads in their real chairs so that they can get their groceries.

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I would be so proud if our city could show the rest of California how to better treat vulnerable people with dignity by making this place a little greener and safer.

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After all we are the city of the trees. Thank you.

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Thank you. Appreciate your coming.

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And you said we have another card to today.

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Next speaker is Fatima Benhash.

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All right.

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Welcome.

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I'm Fatima.

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I'm Fatima, a resident of Woodland.

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And I'm also here in support of Valerie Kenteros with Fourth and Hope to give some reasons that Woodland should increase trees in nature along roads,

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especially near the East Beamer and Code 102 area.

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First of all, it's important that the city of Woodland considered the mental and physical health of unhoused and formerly unhoused populations in city planning decisions.

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Research done by the USDA has shown that spending time around trees reduces stress and anxiety, lowers blood pressure and improves mood.

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This is especially important for senior populations.

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California's unhoused senior populations are growing rapidly with adults over 50 making up nearly 40% of those needing shelter.

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Having more nature will lead to better physical and mental well-being for these populations.

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Secondly, trees can make cities feel up to 14 degrees cooler, which is especially important in this weather.

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We're here in an air conditioned room, which is this, we're here in an air conditioned room, but imagine what it's like to be constantly outside without shelter when it's consistently in the hundreds.

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Thank you.

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Thank you.

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Are there additional cards?

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I do have one additional speaker, Valerie Kenteros.

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All right.

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Please proceed.

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You have three minutes.

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We may still be signing up to speak.

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Next speaker is Valerie Kenteros.

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All right.

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We're going to start the clock over.

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All right.

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It's a technical dipty.

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Oh, sorry.

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Okay.

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I guess my breath.

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We have to take the beeline.

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It was late.

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Sorry about that.

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Good evening.

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Good evening.

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City Council members.

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My name is Valerie Kenteros.

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Thank you for giving me the opportunity to speak tonight.

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I am here because I care deeply about the community I live in.

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I live at the community of Hope Tiny Homes on East Beamer.

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The community has made up of seniors.

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Those who have gone through hardships and people with mental disabilities.

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Like, for example, myself by polar disorder in PTSD.

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We, I don't even need these cards.

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Let me just tell you.

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We cannot travel out of the tiny homes.

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Some of the seniors have not left in three years.

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Only when a case manager picks them up to take them to a doctor's appointment.

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The path holes are severe.

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I go to college and I pass on the scooter.

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The path holes are all through the street.

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There's no way of avoiding them going around them.

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The street is horrible.

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There's no sidewalks on my way home from school on several occasions.

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I see Frankie on his.

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Usually he's in a wheelchair.

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He's on a scooter today.

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But in his wheelchair trying to get to AMPM.

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A couple feet away from semi trucks.

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I, too, have almost been hit on my way to and from school.

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There's no sidewalks.

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There's no safe area.

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The bike lanes have debris in them.

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Glass weeds growing up through them on East Beamer itself.

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And also green areas.

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There's no trees.

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There's no sitting areas.

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For the people.

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I know when they brought the plan to you.

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It looked like a lot of community areas.

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A lot of green areas.

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I've seen those pictures.

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It's not what it is today.

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It's a hard paved.

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Hard paved.

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Hard scape.

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Not a landscape.

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And I see some of my senior neighbors.

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Health.

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The dressing.

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I take care of one of the seniors across the way from me.

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He's in his 70s.

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I bring him dinner every night.

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I'm not.

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I'm not.

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I just worker.

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I go to school.

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We just share our dinner with him.

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And his health is digressing.

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He has nowhere to walk and sit and enjoy his life.

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They're isolated in their apartments.

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He's not the only one.

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I brought one of my friends.

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Robert Telly.

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He's going to speak as well.

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But the seniors are isolated in their apartments.

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They're air conditioned.

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I tried to just deliver the Zoom ID to all the apartment just right.

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And I had to come home.

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It was so hot for me.

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My dog to be out there.

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There needs to be more trees.

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And I have an idea for that is to partner with the community.

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The community gardens that are in the area with them community gardens.

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Maybe they can partner with us because a lot of the people that live there are not physically or mentally capable to maintain a landscape plot.

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So if we partnership with the schools or companies foundations as well as when my son passed away.

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My job had sponsored a bench for him with his name on it.

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It didn't just become somewhere to sit.

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It was a remembrance of my son.

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And if you have others that would like to sponsor a bench or a treat that they can have their family name on or their company name to support the community of hope.

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There's ideas that we can do that are not going to be funded, you know, the community can help us.

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But we need to humanize the people that are out there.

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They think of us as a community of 50 more seconds.

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Okay, we're not delinquents where people, let's not just survive, let's thrive.

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Thank you for coming.

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All right.

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And where was anyone else wishing to speak tonight?

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Today.

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I'm going to say you have an additional card.

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Apologies.

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I do have two more cards.

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Next is Frankie Silva.

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Come on up.

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Mr. Silva, pull that microphone down to you if you can.

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If you can't, we'll bring you a portable one.

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The clerk is bringing you a portable mic.

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Okay.

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Thank you.

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That way you can you can look at us.

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My name is Frank Silas and I two live in the tiny homes.

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And I was very difficult for me to get to the store.

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I'm barely a mile.

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The roads are all messed up and it's hard for me to get out.

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And I want to get out and explore more things.

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I do dialysis four times a week where I have to go around the corner.

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It's just around the corner, but still a lot just to get there.

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And I only have this to give me there.

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And I already were broken my wheelchair.

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And my medical alone and covered so much.

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And I really want to get out and do more stuff.

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Now, just beginning to be better my health wise.

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And so I want to enjoy whatever time I do have, you know.

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Yeah, I want to give you guys to help any health assistance, please.

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We appreciate you coming today.

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We know it probably takes a big effort for you to be here.

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Yeah.

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Thank you.

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Thank you, sir.

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Next speaker I have is Robert Talley.

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It's pretty much the same, but he was saying too.

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You know, just people out to it like me.

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I got a wheelchair, a walker, because I can't walk.

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My legs get out coming here.

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The knee.

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Some things down out to really bad.

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By the sidewalk for one, people have been killed.

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Don't know already for three or four people trying to come out there.

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There's no sidewalk to walk on.

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You got to walk on in the road with a white line.

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My friend just got run over it this last year by 18.

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You got killed.

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Something needs to be down out there, because people can't.

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It's dangerous out there.

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It's a worse road to drive on through.

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And we need some trees out there at the tiny home, something to grow for shade.

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There's nothing out there.

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No shade at all.

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And the bugs are starting to come in out there.

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It's really bad.

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But the main concern is my friend.

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He can't get around.

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You know, I appreciate it if you guys think about that.

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Very much.

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Thank you.

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And thank you for coming, sir.

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I have no further comment or sign up to speak.

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Any further public comment from the audience today?

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Okay.

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We'll conclude public comment.

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Thanks you for the input.

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With all respect, we are well aware of the condition of the road,

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the absence of sidewalks, the absence of shade.

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But we do have housing there now, which we didn't have.

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We're crawling before we walk and we're walking before we run.

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Unless we're rolling.

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Okay.

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We love you.

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You're part of our community.

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We care about you.

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We put our caring into first things first.

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It's time to get on with some of the things.

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We'll see what we can do as we go forward.

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Right now, I know they're building the new restrooms and shower rooms.

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You know, we can't even hear you because you're not at the mic.

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But that's all right.

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We understand what you're saying.

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All right.

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We'll conclude public hearing with that and move along to the next item of the agenda,

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which is item E communications.

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And I don't believe anyone today wishes to speak.

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Is that correct?

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Yeah, we're not.

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Council has no communications.

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But it's just national night out.

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We might mention that.

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Mr.

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Yeah.

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We're just going to mention two things.

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One national night out.

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We have about 29 block parties throughout the community.

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It'll be celebrating this evening in the heat.

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So I encourage neighbors to get out and get to know each other and stay hydrated.

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And then on that topic as well, cooling centers for this heat wave we're experiencing.

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Anybody needs access to cooling center or a place to cool down.

252
00:29:38,240 --> 00:29:43,240
The city and the county both have a map that we sponsor where you can identify different locations throughout the community,

253
00:29:43,240 --> 00:29:44,240
where you can go and cool off.

254
00:29:44,240 --> 00:29:48,240
So please access those resources if needed.

255
00:29:48,240 --> 00:29:51,240
Thank you, Mr. Manager.

256
00:29:51,240 --> 00:29:52,240
All right.

257
00:29:52,240 --> 00:29:55,240
That brings us to public hearings.

258
00:29:55,240 --> 00:29:59,240
We only have a single item today, which is why we're meeting.

259
00:29:59,240 --> 00:30:00,240
It's a...

260
00:30:00,000 --> 00:30:11,000
Now, item 2, the subject is the appeal of determination of transit occupancy tax amount for shadow-oax hospitality ink. Mr. Manager, do you want to introduce the thing?

261
00:30:11,000 --> 00:30:21,000
Actually, before we move on to this next item, we need about five more minutes. It sounds like for our IT department to figure out why the system is not.

262
00:30:21,000 --> 00:30:31,000
We're working on a technical problem. The council will stand in recess for five to ten minutes. Hopefully we can get back as soon as the problem is resolved.

263
00:30:31,000 --> 00:30:33,000
We'll be briefly recessed.

264
00:30:51,000 --> 00:30:53,000
Thank you.

265
00:31:21,000 --> 00:31:23,000
Thank you.

266
00:31:51,000 --> 00:31:53,000
Thank you.

267
00:32:21,000 --> 00:32:23,000
Thank you.

268
00:32:51,000 --> 00:32:53,000
Thank you.

269
00:33:21,000 --> 00:33:23,000
Thank you.

270
00:33:51,000 --> 00:33:53,000
Thank you.

271
00:34:21,000 --> 00:34:23,000
Thank you.

272
00:34:51,000 --> 00:34:53,000
Thank you.

273
00:35:21,000 --> 00:35:23,000
Thank you.

274
00:35:51,000 --> 00:36:06,000
All right, it is now 52425.

275
00:36:06,000 --> 00:36:11,000
Councilman Moreno has joined us. Just when we got to the business of the meeting, David.

276
00:36:11,000 --> 00:36:16,000
So the timing is perfect apologies to all that we had to take a little time.

277
00:36:16,000 --> 00:36:22,000
A little delay there, but now Mr. Manager would you proceed with item F.

278
00:36:22,000 --> 00:36:28,000
Yeah, and the interest of time, I'm just going to hand it over to Ms. McKinney who will walk the council through the presentation.

279
00:36:28,000 --> 00:36:29,000
Thank you.

280
00:36:30,000 --> 00:36:44,000
Good afternoon. I'm Kim McKinney administrative services director and this afternoon we're here for an appeal hearing on the determination of a transient occupancy tax amount do for shadow ox hospitality.

281
00:36:45,000 --> 00:36:51,000
As indicated in the staff report, whether recommended action is to conduct the public hearing.

282
00:36:51,000 --> 00:37:03,000
For the appeal for the determination of the tax amount following administrative hearing for shadow in transient occupancy tax audit assessment issued on July 1st, 2026.

283
00:37:03,000 --> 00:37:19,000
Concerning violation of municipal code chapter 3.12 for unpaid taxes penalties fraud penalties and interest and then to adopt the resolution to uphold the tax administrators determination and deny the appeal.

284
00:37:19,000 --> 00:37:34,000
So briefly here, the municipal code chapter that we're talking about 3.12 is for our transient occupancy tax or TOT and also related is the tourism business improvement district or T bit on here.

285
00:37:34,000 --> 00:37:46,000
So our woodland municipal code section 312 establishes our TOT program, which is a 10% charge on room rents at primarily at hotels here in town.

286
00:37:46,000 --> 00:37:56,000
Per the ordinance the amounts collected for TOT must be held in trust in account for the city until they are remitted to the city.

287
00:37:57,000 --> 00:38:06,000
Also require that monthly tax returns be prepared and that they are due by the 15th of each calendar month to the city finance department.

288
00:38:07,000 --> 00:38:15,000
Similarly to TOT, it is 2% of the room rents and is also collected reported and enforced in the same manner as the TOT.

289
00:38:15,000 --> 00:38:27,000
When there are delinquent payments of the tax, the municipal code outlines 4 areas that can be included in the calculation.

290
00:38:27,000 --> 00:38:40,000
There's an original delinquency, so for the first 4 weeks that an amount is delinquent, there's an additional 10% late payment penalty that is added on to the original taxes do.

291
00:38:40,000 --> 00:38:53,000
If there continues to be a delinquency after that first 4 weeks there's an additional 10% of a continued delinquency payment so total of 20% between the two for late payment penalties.

292
00:38:53,000 --> 00:39:01,000
There's also a section for a fraud penalty which is 25% of the tax do when non payment is determined to be fraudulent.

293
00:39:01,000 --> 00:39:16,000
And finally there's a allowance for interest on the unpaid taxes which is 1 half of a percent per month or portion of a month on any of the unpaid taxes but not on any of the penalties associated with that tax.

294
00:39:17,000 --> 00:39:32,000
So a little history I went here tonight specific to shadow ends to excuse me to shadow oaks hospitality and they own and operate best western shadow in here in town.

295
00:39:33,000 --> 00:39:41,000
We have been struggling for some time to get timely remittance of reports and payments starting in fall of 2022.

296
00:39:42,000 --> 00:39:49,000
They did eventually get caught up but then ceased remitting payments for TOT and T-Bid in May of 2023.

297
00:39:50,000 --> 00:39:57,000
From that time through June 30, 2026 there would have been 37 monthly payments that were due.

298
00:39:58,000 --> 00:40:01,000
The city has received two payments during that time.

299
00:40:01,000 --> 00:40:06,000
One in July of 2023 for partial payment of the May taxes due.

300
00:40:06,000 --> 00:40:13,000
And a second in October 2023 for partial payment of August 2023 taxes due.

301
00:40:13,000 --> 00:40:19,000
There was a third payment but the check was returned for insufficient funds so it's not included on here.

302
00:40:20,000 --> 00:40:27,000
And there was just in the staff report we noted that there were three payments but one of those actually didn't count as a payment.

303
00:40:27,000 --> 00:40:34,000
So since October 2023 we have received no money, no payment from shadow oaks.

304
00:40:35,000 --> 00:40:42,000
During our communication with them via email and we're requesting reports and updates on payments.

305
00:40:42,000 --> 00:40:51,000
The hotel management didn't note in several emails to the city manager and staff that economic hardship was a reason for nonpayment.

306
00:40:51,000 --> 00:41:04,000
Noting increased utility costs, lending costs and general economic factors as a reason for nonpayment.

307
00:41:04,000 --> 00:41:08,000
As I noted earlier, the requirements of the ordinance.

308
00:41:08,000 --> 00:41:16,000
There are supposed to be a monthly TOT or tax return filed by the 15th following the end of each month.

309
00:41:16,000 --> 00:41:22,000
During the period of May 2023 through now.

310
00:41:23,000 --> 00:41:29,000
We received some of those those tax returns but many of them were laid if we received them in all.

311
00:41:29,000 --> 00:41:37,000
And in many cases in lieu of filling out the return we did get a turnout from the hotel management software that was provided by shadow oaks.

312
00:41:37,000 --> 00:41:50,000
So that we could do the calculations ourselves rather than the management completing their own forms.

313
00:41:51,000 --> 00:42:10,000
So when we got those reports from shadow oaks and we reviewed them and we can see separate line items on those reports denoting that TOT and Tbit were collected by shadow oaks from the hotel guests, but they have not been remitted to the city.

314
00:42:10,000 --> 00:42:14,000
No information of any kind has been provided since January 2026.

315
00:42:14,000 --> 00:42:23,000
So we have reports up through January 2026 that allow us to determine what the TOT and Tbit is but for the months of May through June.

316
00:42:23,000 --> 00:42:26,000
I'm sorry February through June we have received no reports.

317
00:42:26,000 --> 00:42:32,000
There are taxes due that we have no information to calculate what those might be.

318
00:42:32,000 --> 00:42:39,000
And I guess I'll just note that July's report and remittance will be due next week so we're coming up on another one.

319
00:42:41,000 --> 00:42:51,000
So the determination of the amounts due that we're here to talk about today included taxes and assessment owed.

320
00:42:51,000 --> 00:42:58,000
Late payment penalties fraud penalties assessed and interest on the unpaid tax balances.

321
00:42:58,000 --> 00:43:02,000
And this is based on a point in time calculation.

322
00:43:02,000 --> 00:43:07,000
And as I just mentioned we've only received reports through January of 2026.

323
00:43:07,000 --> 00:43:17,000
The actual taxes owed through January 2026 of 695,580 dollars.

324
00:43:17,000 --> 00:43:29,000
Late payment penalties which I described earlier, which is an original 10% and additional 10% for continued delinquency of 141,793 dollars.

325
00:43:29,000 --> 00:43:35,000
And we've included a fraud assessment penalty here of 173,895 dollars.

326
00:43:35,000 --> 00:43:45,000
And then interest on those balances of unpaid taxes of 78,371 dollars for a total due of 1,899,640 dollars.

327
00:43:45,000 --> 00:43:48,000
And again that's a point in time actually.

328
00:43:48,000 --> 00:43:53,000
Oh currently more than that but we don't have the information to calculate that currently.

329
00:43:53,000 --> 00:43:58,000
And as every month goes by additional interest accrues on the unpaid balances as well.

330
00:43:58,000 --> 00:44:13,000
I'd also want to note that the the appellant here tonight has not disputed any of the amounts for taxes owed.

331
00:44:13,000 --> 00:44:22,000
Late payment penalties are interest calculation but they do indicate that they dispute the fraud penalty.

332
00:44:22,000 --> 00:44:36,000
So this language in the when the municipal code is clear that all cult money collected from guests for taxes and assessment must be held separately for remittance to the city.

333
00:44:36,000 --> 00:44:42,000
At the time the money is collected it isn't the hotels money anymore but rather funds owed to the city.

334
00:44:42,000 --> 00:44:51,000
It's clear from the reports that the appellant has provided to the city that they did in fact charge their guests for the TOT and Tbit assessments.

335
00:44:51,000 --> 00:44:56,000
It's also clear that they have not remitted those funds to the city.

336
00:44:56,000 --> 00:45:00,000
As I noted earlier the appellant has previously stated through email community.

337
00:45:00,000 --> 00:45:10,000
Education that their non-payment is due to their ongoing financial hardship, which really should not affect remittance of the funds held specifically for another entity.

338
00:45:10,000 --> 00:45:18,000
The appellant does not dispute that they owe money, or any of the calculated taxes, late payment penalties or interest.

339
00:45:18,000 --> 00:45:28,000
The appellant has recently indicated that it has made payments and intends to pay, but no payments have been made to the city for 33 months at this point.

340
00:45:28,000 --> 00:45:38,000
They may know indication of when they intend to pay the city, even though these amounts have been collected by them and intentionally, they continue to retain the money legally owed to the city.

341
00:45:38,000 --> 00:45:50,000
I believe if they were genuine and interest to comply with the municipal code, they would at a minimum pay the amounts that they do not dispute, which is the majority of the balance due at this point.

342
00:45:51,000 --> 00:46:04,000
The appellant also continues to ignore the requirements of the municipal code, and it does not provide monthly tax returns or any information that the city could use to calculate taxes owed through current day.

343
00:46:04,000 --> 00:46:15,000
It's based on these items, it's the termination of the tax administrator, the fraud penalty authorized by the Woodland Municipal Code is warranted.

344
00:46:15,000 --> 00:46:21,000
And then this is all in the staff report, and I won't go through every one of it, but it's kind of a history of how we got here.

345
00:46:21,000 --> 00:46:34,000
There is following a process that's outlined in the municipal code that allows for an administrative hearing when we when there are notified by the tax administrator of total amounts due.

346
00:46:34,000 --> 00:46:41,000
We did hold that administrative hearing and tonight is the the appellants appeal of the finding based on that.

347
00:46:41,000 --> 00:46:49,000
In addition to that, we also have filed tax leans for dealing with amounts through the January 2026 amount.

348
00:46:49,000 --> 00:46:57,000
And it is likely we would continue to do that as we have more information available for amounts that were not covered on the leans before.

349
00:46:58,000 --> 00:47:05,000
And so back here, we're just going to the recommended action is to conduct a public hearing.

350
00:47:05,000 --> 00:47:15,000
And following the public hearing, we recommend that you adopt the resolution to uphold the tax administrators determination and deny the appeal.

351
00:47:15,000 --> 00:47:17,000
Thank you, does that include your report?

352
00:47:17,000 --> 00:47:18,000
It does.

353
00:47:18,000 --> 00:47:21,000
Thank you, members of the council, you've heard the staff report.

354
00:47:21,000 --> 00:47:24,000
Are there any questions that you have a staff.

355
00:47:24,000 --> 00:47:26,000
I do.

356
00:47:26,000 --> 00:47:29,000
Cost member Lansburg.

357
00:47:29,000 --> 00:47:31,000
Thank you, Mayor.

358
00:47:31,000 --> 00:47:35,000
Besides penalties, etc.

359
00:47:35,000 --> 00:47:48,000
What other sanctions are available to the city when a business owner refuses to pay a due amounts?

360
00:47:48,000 --> 00:47:55,000
For example, pulling their business license, pulling their occupancy permits.

361
00:47:55,000 --> 00:48:00,000
Yeah, I don't believe the municipal code speaks to allowing anything like that.

362
00:48:00,000 --> 00:48:05,000
Really, it ultimately says that any unpaid amounts become debt owed to the city.

363
00:48:05,000 --> 00:48:10,000
And we have a ability to pursue legal collection of any debt that's owed to us.

364
00:48:10,000 --> 00:48:16,000
But outside of that, it doesn't have provisions for the operating.

365
00:48:16,000 --> 00:48:20,000
I don't know if the attorney wants to weigh in.

366
00:48:20,000 --> 00:48:23,000
I declare counsel, but we can do it there.

367
00:48:23,000 --> 00:48:28,000
We can take a closer look at those other options, but maybe available to the city.

368
00:48:28,000 --> 00:48:33,000
I don't know the city, municipal code off the top of my head, unfortunately.

369
00:48:33,000 --> 00:48:43,000
However, I think in terms of the interest and penalties, those are in the ordinance that governs the transient occupancy tax collection.

370
00:48:43,000 --> 00:48:47,000
Or allow for in your ordinance outside of that particular ordinance.

371
00:48:47,000 --> 00:48:48,000
That's the topic today.

372
00:48:48,000 --> 00:48:53,000
We can take a look and explore that as well.

373
00:48:53,000 --> 00:48:54,000
Additional questions?

374
00:48:54,000 --> 00:48:55,000
Yes.

375
00:48:55,000 --> 00:49:03,000
Who makes the call regarding the issue of fraud?

376
00:49:03,000 --> 00:49:07,000
Per the municipal code is the attacks administrator, which is our city clerk.

377
00:49:07,000 --> 00:49:12,000
What is the standard used to determine fraud?

378
00:49:13,000 --> 00:49:18,000
There is no standard that's defined in the code.

379
00:49:18,000 --> 00:49:23,000
Is there an amount pointing fingers trust me?

380
00:49:23,000 --> 00:49:26,000
This has been since 2023.

381
00:49:26,000 --> 00:49:30,000
This is August of 2026.

382
00:49:30,000 --> 00:49:39,000
Why weren't you here six months after they didn't pay?

383
00:49:39,000 --> 00:49:45,000
Well, like many businesses, right, we work with them to try to bring them current on past due taxes.

384
00:49:45,000 --> 00:49:50,000
We've been communicating regularly with the hotel operator.

385
00:49:50,000 --> 00:49:52,000
They indicated their intent to pay.

386
00:49:52,000 --> 00:49:56,000
We have filed several leans for the past due taxes.

387
00:49:56,000 --> 00:50:04,000
And we got to the point where they finally contested the amounts calculated, which prompted the administrative hearing,

388
00:50:04,000 --> 00:50:06,000
which was held in front of the city clerk.

389
00:50:06,000 --> 00:50:09,000
And then they appealed the determination of the city clerk.

390
00:50:09,000 --> 00:50:16,000
So here we are before the council to make a determination.

391
00:50:16,000 --> 00:50:17,000
Okay.

392
00:50:17,000 --> 00:50:18,000
I may have others in a minute.

393
00:50:18,000 --> 00:50:19,000
Go ahead.

394
00:50:19,000 --> 00:50:20,000
Okay.

395
00:50:20,000 --> 00:50:22,000
Thank you.

396
00:50:22,000 --> 00:50:23,000
All right.

397
00:50:23,000 --> 00:50:25,000
I don't believe the rest of us have questions.

398
00:50:25,000 --> 00:50:29,000
So I think at this point it's appropriate for me to open the public hearing.

399
00:50:29,000 --> 00:50:37,000
I invite the event to come forward and to state their case.

400
00:50:37,000 --> 00:50:43,000
Normally speakers have three minutes for this purpose, but especially hearing, I think you can take a little more time.

401
00:50:43,000 --> 00:50:45,000
And by the way, my name is Craig Hanson.

402
00:50:45,000 --> 00:50:46,000
I'm council.

403
00:50:46,000 --> 00:50:48,000
I'm council for the.

404
00:50:48,000 --> 00:50:50,000
And your name Craig Hanson.

405
00:50:50,000 --> 00:50:51,000
Next to me too.

406
00:50:51,000 --> 00:50:53,000
Thank you very much.

407
00:50:53,000 --> 00:50:54,000
Mr. Mayor.

408
00:50:54,000 --> 00:50:56,000
Council members.

409
00:50:56,000 --> 00:51:02,000
Just to remember where with the format, I have some some legal argument to make.

410
00:51:02,000 --> 00:51:08,000
I brought Mr. Darshan Patel who is the corporate representative for Shadow Oaks.

411
00:51:08,000 --> 00:51:11,000
He's prepared to talk about some things as well.

412
00:51:11,000 --> 00:51:16,000
Is there a time parameter or format that we should be aware of.

413
00:51:16,000 --> 00:51:18,000
Council respond.

414
00:51:18,000 --> 00:51:19,000
I can speak to that.

415
00:51:19,000 --> 00:51:21,000
There is no formal set time parameter.

416
00:51:21,000 --> 00:51:23,000
You have about the same time that's.

417
00:51:23,000 --> 00:51:27,000
I have to present your side so that would be about 15 minutes or so.

418
00:51:27,000 --> 00:51:28,000
Okay. Thank you.

419
00:51:28,000 --> 00:51:34,000
So I think I think what we'll do is we'll begin with with kind of my general legal discussion.

420
00:51:34,000 --> 00:51:37,000
Of of how we see things.

421
00:51:37,000 --> 00:51:40,000
And then I'll invite my client, Mr. Patel.

422
00:51:40,000 --> 00:51:47,000
To talk a little bit about the financial hardship and the lack of fraud that we're dealing with here.

423
00:51:47,000 --> 00:51:52,000
So you know as was made clear by the opening statements.

424
00:51:52,000 --> 00:52:00,000
There are have been assessed the outstanding taxes.

425
00:52:00,000 --> 00:52:07,000
There have been late penalties at $141,000 assessed.

426
00:52:07,000 --> 00:52:12,000
Fraud penalties of 173,895 dollars.

427
00:52:12,000 --> 00:52:15,000
That's what we're testing here today.

428
00:52:15,000 --> 00:52:17,000
An interest of 78,000.

429
00:52:17,000 --> 00:52:23,000
So the underlying principle amount, the late penalties and the interest are not contested.

430
00:52:23,000 --> 00:52:32,000
My client intends to pay those is containing financing that we expect to have close by the end of this month to pay those.

431
00:52:32,000 --> 00:52:36,000
And what we're here to talk about today is a lack of fraud.

432
00:52:36,000 --> 00:52:41,000
So there were two code sections that were cited to support the fraud.

433
00:52:41,000 --> 00:52:50,000
One, it's just section 3.12.070 with returns and remittances.

434
00:52:50,000 --> 00:52:53,000
Makes no reference to the term fraud.

435
00:52:53,000 --> 00:52:59,000
The term fraud actually appears in section 3.12.080.

436
00:52:59,000 --> 00:53:10,000
Sub-C, which reads, if the tax administrator determines that the non-payment of any remittance due under this chapter is due to fraud.

437
00:53:11,000 --> 00:53:24,000
A penalty of 25% of the amount of the tax shall be added there to in addition to the penalties stated in sub-sections A and B of this section.

438
00:53:24,000 --> 00:53:30,000
Fraud is a serious term and it is defined under the law if it's not defined under the code.

439
00:53:30,000 --> 00:53:36,000
And it's a term that refers to dishonesty and deceit.

440
00:53:36,000 --> 00:53:44,000
And that involves a misrepresentation, a fact, or an omission, a material fact.

441
00:53:44,000 --> 00:53:52,000
Everything that was contained in this report and that you'll hear from my client is that my client was always honest.

442
00:53:52,000 --> 00:53:59,000
Submitted reports that the city was used to determine the taxes owed.

443
00:54:00,000 --> 00:54:06,000
Was up front about the financial circumstances that my client and his family and the hotel were facing.

444
00:54:06,000 --> 00:54:09,000
My client will talk a little bit more about that.

445
00:54:09,000 --> 00:54:20,000
But never misrepresented anything.

446
00:54:20,000 --> 00:54:24,000
There was never a false TOT return submitted.

447
00:54:24,000 --> 00:54:28,000
There was never any under-reporting of taxable room revenue.

448
00:54:28,000 --> 00:54:31,000
Never any concealed transactions.

449
00:54:31,000 --> 00:54:35,000
Never every never any fabricated or altered financial record.

450
00:54:35,000 --> 00:54:40,000
A no false statement that the taxes had been paid when they were not.

451
00:54:40,000 --> 00:54:43,000
No representation intended to mislead the city.

452
00:54:43,000 --> 00:54:49,000
And there's no secret diversion of funds to shadow oaks for their personal benefit.

453
00:54:49,000 --> 00:54:54,000
And no deceptive device that caused or facilitated the nonpayment.

454
00:54:54,000 --> 00:55:00,000
So the critical questions that remain unanswered are what was the lie.

455
00:55:00,000 --> 00:55:03,000
What was concealed?

456
00:55:03,000 --> 00:55:05,000
What record was falsified?

457
00:55:05,000 --> 00:55:09,000
What false statements did shadow oaks make?

458
00:55:09,000 --> 00:55:12,000
What, how was the city deceived?

459
00:55:12,000 --> 00:55:16,000
The answer to the questions is none of those things happened here.

460
00:55:16,000 --> 00:55:20,000
This is not an issue of fraud.

461
00:55:20,000 --> 00:55:29,000
To put this in perspective, there's already obviously significant late penalties that my client will need to pay.

462
00:55:29,000 --> 00:55:41,000
And if the standard that the city so far has been applying were these standard, which is, hey, you didn't pay them.

463
00:55:41,000 --> 00:55:45,000
You knew you need to pay them and they remain unpaid.

464
00:55:45,000 --> 00:55:51,000
Then late penalties and fraud penalties would be merged into one standard.

465
00:55:51,000 --> 00:55:54,000
And there would be no segregation between the two.

466
00:55:54,000 --> 00:56:00,000
That would render the fraud penalty meaningless.

467
00:56:00,000 --> 00:56:08,000
Basically, anyone who didn't pay TOT on time would be guilty of fraud and subject to a 25% penalty.

468
00:56:08,000 --> 00:56:21,000
Meanwhile, those folks who were dishonest with the city who submitted false information or misled the city would be held to the same standard as those who were honest.

469
00:56:21,000 --> 00:56:29,000
And submitted the information and didn't pay because they couldn't, not because they were lying or dishonest.

470
00:56:29,000 --> 00:56:32,000
So fraud means something.

471
00:56:32,000 --> 00:56:36,000
Our legal counsel for the city knows that.

472
00:56:36,000 --> 00:56:44,000
And as was submitted in the presentation, this standard of fraud was applied without really understanding what fraud is.

473
00:56:44,000 --> 00:56:49,000
Because there's no definition of in the code, but there's certainly a definition of law.

474
00:56:49,000 --> 00:56:54,000
And it is deceit and is dishonesty that did not occur here.

475
00:56:54,000 --> 00:57:04,000
So I'd like to bring my client, Mr. Patel, I've been proud enough to represent Shadow Oaks and the Patel family for over 10 years.

476
00:57:04,000 --> 00:57:11,000
He's going to talk a bit about the financial circumstances that led to the inability to pay.

477
00:57:11,000 --> 00:57:20,000
And the efforts to obtain financing that were hopeful are going to manifest within weeks to allow full repayment of the TOT.

478
00:57:20,000 --> 00:57:28,000
So can you just tell the council who you are and how you relate to the hotel?

479
00:57:28,000 --> 00:57:29,000
Absolutely.

480
00:57:29,000 --> 00:57:31,000
So my name is Marshall and Patel.

481
00:57:31,000 --> 00:57:34,000
I am the owner representative for Shadow Oaks.

482
00:57:34,000 --> 00:57:35,000
Is it too close?

483
00:57:35,000 --> 00:57:36,000
Stay close.

484
00:57:36,000 --> 00:57:38,000
Can you hear me?

485
00:57:38,000 --> 00:57:40,000
My name is Marshall and Patel.

486
00:57:40,000 --> 00:57:44,000
I'm the owner representative for Shadow Oaks Hospitality.

487
00:57:44,000 --> 00:58:02,000
And Mr. Patel, were you always, you and Shadow Oaks were always honest with the city with regard to financial reporting TOT and your financial hardship.

488
00:58:02,000 --> 00:58:05,000
Absolutely.

489
00:58:05,000 --> 00:58:13,000
Did Shadow Oaks ever falsify any records or reduced tax with room revenue shown in the reports of the city?

490
00:58:13,000 --> 00:58:14,000
No.

491
00:58:14,000 --> 00:58:17,000
Did Shadow Oaks creating false exemptions?

492
00:58:17,000 --> 00:58:21,000
Or keep a second set of books for concealed room transactions from the city?

493
00:58:21,000 --> 00:58:22,000
No.

494
00:58:22,000 --> 00:58:28,000
Did Shadow Oaks ever miss identified the operator or his seal that who won't demand to hotel?

495
00:58:28,000 --> 00:58:29,000
No.

496
00:58:29,000 --> 00:58:36,000
And during the delinquency, did Shadow Oaks continue providing the city with information from which the city could calculate the taxes do?

497
00:58:36,000 --> 00:58:39,000
Absolutely.

498
00:58:39,000 --> 00:58:42,000
Let's talk about the financial distress.

499
00:58:42,000 --> 00:58:44,000
What happened with the...

500
00:58:44,000 --> 00:58:47,000
Was there a renovation that occurred in 2021?

501
00:58:47,000 --> 00:58:49,000
That is correct.

502
00:58:49,000 --> 00:58:51,000
And what renovation was that going?

503
00:58:51,000 --> 00:58:59,000
Refreshing gas bedrooms with new furniture, new carpeting wall textures and such.

504
00:58:59,000 --> 00:59:01,000
And about how many rooms were being renovated?

505
00:59:01,000 --> 00:59:04,000
At that time, 30.

506
00:59:05,000 --> 00:59:10,000
And was there any difficulties with the contractor working on that project?

507
00:59:10,000 --> 00:59:11,000
Absolutely.

508
00:59:11,000 --> 00:59:12,000
We left.

509
00:59:12,000 --> 00:59:13,000
We made way.

510
00:59:13,000 --> 00:59:20,000
So the contractor abandoned the work during a remodel of approximately 30 rooms, which I write.

511
00:59:20,000 --> 00:59:21,000
And the lobby.

512
00:59:21,000 --> 00:59:22,000
Yes.

513
00:59:22,000 --> 00:59:26,000
What effect did that have on the lobby in the breakfast operation?

514
00:59:26,000 --> 00:59:32,000
Guess what after checking in at Kiosk in one of the guest bedroom, there is no breakfast offerings.

515
00:59:32,000 --> 00:59:39,000
The lobby opened until May of 2023.

516
00:59:39,000 --> 00:59:47,000
And how did that affect the guest experience?

517
00:59:47,000 --> 00:59:48,000
It affected them.

518
00:59:48,000 --> 00:59:54,000
I mean, guests stay with us for breakfast and a bedroom and a lobby to get away from the bedroom.

519
00:59:54,000 --> 00:59:56,000
So it definitely affected them fully.

520
00:59:56,000 --> 01:00:00,000
And it's construction expanded what happened to the number of rooms available to guests.

521
01:00:00,000 --> 01:00:16,000
It kept shrinking. At the largest one in shrinkage about how many rooms were on the bill? 60 out of how many? 122. So about half the hotel was shut down. Correct.

522
01:00:16,000 --> 01:00:25,000
And that obviously eliminated revenue, producing inventory during the market recovery is that right? That is correct.

523
01:00:25,000 --> 01:00:40,000
And approximately how long did Shadowlbs obtain financing to continue the renovation in September 22?

524
01:00:40,000 --> 01:00:43,000
That is correct, yes. And who did obtain financing through?

525
01:00:43,000 --> 01:00:45,000
State Bank of Texas.

526
01:00:45,000 --> 01:00:48,000
Okay. And fortunately, what was the interest rate?

527
01:00:48,000 --> 01:00:52,000
6.75% five-year term.

528
01:00:52,000 --> 01:00:53,000
Interest only.

529
01:00:53,000 --> 01:00:55,000
And was that variable?

530
01:00:55,000 --> 01:00:56,000
Yes.

531
01:00:56,000 --> 01:00:58,000
And what did that ultimately climb to?

532
01:00:58,000 --> 01:00:59,000
15%.

533
01:00:59,000 --> 01:01:00,000
Okay.

534
01:01:00,000 --> 01:01:06,000
And at times was the monthly payment up to $120,000 a month?

535
01:01:06,000 --> 01:01:08,000
Yes. 120,000 plus.

536
01:01:08,000 --> 01:01:09,000
Okay.

537
01:01:09,000 --> 01:01:15,000
And about what were the monthly revenues during the time that you were paying a $120,000 on lender fees?

538
01:01:15,000 --> 01:01:19,000
Anywhere from 98,000 to 200,000?

539
01:01:19,000 --> 01:01:23,000
What happened to the annual revenues by 2025?

540
01:01:23,000 --> 01:01:29,000
It had gone down over 40% in revenue.

541
01:01:29,000 --> 01:01:33,000
So what was it before and after of the decline?

542
01:01:33,000 --> 01:01:38,000
It went from 3.5 million down to 1.9 million.

543
01:01:38,000 --> 01:01:43,000
And besides the construction costs and the lender costs,

544
01:01:43,000 --> 01:01:49,000
what were the general expenses just to keep the hotel going?

545
01:01:49,000 --> 01:01:52,000
First obligation is your lender.

546
01:01:52,000 --> 01:01:55,000
Then your second one is your franchise and your OTAs.

547
01:01:55,000 --> 01:02:00,000
Your third would be your payroll and your taxes afterwards regarding your payroll taxes.

548
01:02:00,000 --> 01:02:04,000
And then after that you have your utilities.

549
01:02:05,000 --> 01:02:13,000
And even though revenues decreased by half, did the expenses decrease?

550
01:02:13,000 --> 01:02:19,000
No, they actually increased with inflation.

551
01:02:19,000 --> 01:02:25,000
After making all the payments were absolutely necessary to keep the...

552
01:02:25,000 --> 01:02:32,000
Well, let me ask you this, in addition to paying the expenses just to keep the hotel going,

553
01:02:32,000 --> 01:02:37,000
did you and your family fund any personal funds into the business?

554
01:02:37,000 --> 01:02:40,000
Yes, my wife and I funded it.

555
01:02:40,000 --> 01:02:42,000
Out of your own personal savings?

556
01:02:42,000 --> 01:02:43,000
That is correct.

557
01:02:43,000 --> 01:02:47,000
So after all these payments and funding the operations from your personal savings,

558
01:02:47,000 --> 01:02:50,000
was there any money left over to pay the TOT?

559
01:02:50,000 --> 01:02:51,000
No.

560
01:02:51,000 --> 01:02:59,000
Did you and your family divert any income to your pockets rather than paying the TOT?

561
01:02:59,000 --> 01:03:00,000
No.

562
01:03:00,000 --> 01:03:09,000
And if you had not paid the franchise fees, the ongoing operational expenses,

563
01:03:09,000 --> 01:03:12,000
the lender fees, what would have happened to the business?

564
01:03:12,000 --> 01:03:18,000
First obligation if I didn't pay the lender, they would take the keys the following day of the day.

565
01:03:18,000 --> 01:03:21,000
Third or second one would be franchise.

566
01:03:21,000 --> 01:03:26,000
If you do not pay your franchise fees, they take you off the public or the OTA or your online.

567
01:03:26,000 --> 01:03:28,000
So there's no reservations coming in.

568
01:03:28,000 --> 01:03:31,000
After that, if you don't pay payable, you have no staff.

569
01:03:31,000 --> 01:03:32,000
Nobody's cleaning the rooms.

570
01:03:32,000 --> 01:03:34,000
Nobody's at the front desk.

571
01:03:34,000 --> 01:03:38,000
After that, if you don't pay your PG&E or water bills or something.

572
01:03:38,000 --> 01:03:45,000
And during this time of hardship, what measures did Shadow Oaks take to reduce costs?

573
01:03:45,000 --> 01:03:56,000
Shadow Oaks got rid of all senior management, all revenue management, all marketing.

574
01:03:56,000 --> 01:04:02,000
Did anyone at Shadow Oaks ever instruct the hotel personnel to hide room revenue from the city?

575
01:04:02,000 --> 01:04:03,000
No.

576
01:04:03,000 --> 01:04:08,000
Did anyone at Shadow Oaks ever knowingly submit a false report to reduce tax?

577
01:04:08,000 --> 01:04:09,000
No.

578
01:04:09,000 --> 01:04:14,000
Did Shadow Oaks ever make any false statement to induce the city refrain from collecting the TOT?

579
01:04:14,000 --> 01:04:15,000
No.

580
01:04:15,000 --> 01:04:23,000
What are the current efforts right now to obtain financing to pay the city?

581
01:04:23,000 --> 01:04:24,000
Absolutely.

582
01:04:24,000 --> 01:04:33,000
So we're looking at the whole intentions have been to find financing that's feasible, not just financing to get out to get to another.

583
01:04:33,000 --> 01:04:36,000
You know, Jack to pay Jill or Jill to pay Jack.

584
01:04:36,000 --> 01:04:40,000
How long have you been making efforts to re-finance the hotel?

585
01:04:40,000 --> 01:04:42,000
Since 2023.

586
01:04:42,000 --> 01:04:45,000
And what is the current status of those efforts?

587
01:04:45,000 --> 01:04:48,000
We have a lender, such a close at the end of the month.

588
01:04:48,000 --> 01:04:58,000
And assuming that we arrive at a figure that includes the taxes, the late payment penalties and the interest

589
01:04:58,000 --> 01:05:05,000
is it Shadow Oaks's intention to use the refinancing funds to pay off those demands?

590
01:05:05,000 --> 01:05:06,000
That's correct.

591
01:05:06,000 --> 01:05:15,000
And even with the money from the refinance, we still be working with limited funds to keep the business going.

592
01:05:15,000 --> 01:05:20,000
We'll be continuing to work the business, yes, with funds.

593
01:05:20,000 --> 01:05:31,000
And would a late or fraud penalty, almost $174,000, impeded the business's ability to recover from its financial hardship?

594
01:05:31,000 --> 01:05:32,000
Absolutely.

595
01:05:32,000 --> 01:05:36,000
Also, I am just interjecting since it's been about 15 minutes.

596
01:05:36,000 --> 01:05:43,000
So if you could wrap up your opening and then you'll have a chance for a re-bottle after the cities re-bottle as well.

597
01:05:43,000 --> 01:05:44,000
Okay.

598
01:05:44,000 --> 01:05:45,000
So thank you.

599
01:05:45,000 --> 01:05:50,000
And I just, just to close, you know.

600
01:05:50,000 --> 01:05:57,000
Obviously, businesses suffer from hardship.

601
01:05:57,000 --> 01:05:58,000
It happens.

602
01:05:58,000 --> 01:06:02,000
Unexpected situations, contractors leaving the job.

603
01:06:02,000 --> 01:06:09,000
Lenders having sometimes predatory loan terms.

604
01:06:10,000 --> 01:06:16,000
This is a business that is a well-mitting family that employs a lot of folks and is doing what it can

605
01:06:16,000 --> 01:06:18,000
to recover from this.

606
01:06:18,000 --> 01:06:24,000
And intends to make the city whole on the outstanding taxes of it did not commit fraud.

607
01:06:24,000 --> 01:06:27,000
It's never been dishonest with the city.

608
01:06:27,000 --> 01:06:29,000
It hasn't concealed anything.

609
01:06:29,000 --> 01:06:31,000
It hasn't just represented anything.

610
01:06:31,000 --> 01:06:41,000
So we asked that the city not issue un-supported fraud penalties against this decision.

611
01:06:41,000 --> 01:06:48,000
Thank you.

612
01:06:48,000 --> 01:06:54,000
At this point, I suppose the city has the opportunity to respond.

613
01:06:54,000 --> 01:06:57,000
I don't know if there's much to respond to.

614
01:06:57,000 --> 01:07:00,000
Do you wish to respond to any of the statements made?

615
01:07:00,000 --> 01:07:04,000
We do have a couple of comments, yeah.

616
01:07:04,000 --> 01:07:09,000
First, I would say that in regards to what the appellan just mentioned here.

617
01:07:09,000 --> 01:07:14,000
This would not be the first time that we've heard that financing was imminent to pay amount

618
01:07:14,000 --> 01:07:15,000
due to the city.

619
01:07:15,000 --> 01:07:19,000
We've been hearing that for almost three years now that it was imminent.

620
01:07:19,000 --> 01:07:22,000
We were having, you know, into the month we're going to pay you.

621
01:07:22,000 --> 01:07:23,000
We're going to pay you.

622
01:07:23,000 --> 01:07:29,000
And like I mentioned before, it's been almost three years since we received any payment whatsoever

623
01:07:29,000 --> 01:07:32,000
from the appellant.

624
01:07:32,000 --> 01:07:36,000
They walked through here the financial hardships that they are facing

625
01:07:36,000 --> 01:07:42,000
and in doing so basically admitted that they took the city's money and spent it on other things

626
01:07:42,000 --> 01:07:45,000
that they were required to admit, remit the money to us,

627
01:07:45,000 --> 01:07:52,000
but they instead spent it for other items to run the hotel business.

628
01:07:52,000 --> 01:07:58,000
And also, you know, one of the questions that was asked there was whether or not the

629
01:07:59,000 --> 01:08:05,000
appellant had ever, or had they been providing information to the city all along

630
01:08:05,000 --> 01:08:09,000
so that we could count or do an accounting of how much they owe us.

631
01:08:09,000 --> 01:08:13,000
And Mr. Patel responded, absolutely.

632
01:08:13,000 --> 01:08:18,000
They've provided the information to us and we have not found that to be accurate along the way.

633
01:08:18,000 --> 01:08:21,000
They have not provided the information in a timely manner.

634
01:08:21,000 --> 01:08:26,000
In many cases, it took finally their attorneys sending it to us.

635
01:08:26,000 --> 01:08:32,000
Sometimes, you know, six, seven, eight months late, and they still refuse to provide the data to us.

636
01:08:32,000 --> 01:08:45,000
So I think it's dishonest for him to say that they absolutely have provided the information to the city to allow us to do the calculations for the TOT.

637
01:08:45,000 --> 01:08:53,000
I think that covers it just ultimately and all the information they provided about their operations is really essentially irrelevant.

638
01:08:53,000 --> 01:08:56,000
It is not their money to spend.

639
01:08:56,000 --> 01:08:57,000
Thank you.

640
01:08:57,000 --> 01:09:00,000
I think probably rather than asking Council to comment at this point,

641
01:09:00,000 --> 01:09:05,000
we'll go for a rebuttal and then it comes back to us to resolve.

642
01:09:05,000 --> 01:09:06,000
Okay.

643
01:09:06,000 --> 01:09:11,000
So you have a few more minutes if you wish to respond to the things that Kim has said.

644
01:09:11,000 --> 01:09:12,000
Thank you.

645
01:09:12,000 --> 01:09:15,000
And again, it comes down to they haven't paid.

646
01:09:15,000 --> 01:09:20,000
There's there's a remedy for that and it's the late payment penalty and the interest,

647
01:09:20,000 --> 01:09:25,000
which are not insignificant, which my client acknowledges will be paid.

648
01:09:25,000 --> 01:09:28,000
Yes, there have been prior efforts to refinance.

649
01:09:28,000 --> 01:09:31,000
There have been hope that those efforts would manifest.

650
01:09:31,000 --> 01:09:36,000
I've been closely working with my client to get that refinancing done.

651
01:09:36,000 --> 01:09:42,000
And my client is here to tell you under oath today that those efforts are manifesting.

652
01:09:42,000 --> 01:09:44,000
There's there's final walkthroughs.

653
01:09:44,000 --> 01:09:46,000
There's we're at the point now.

654
01:09:46,000 --> 01:09:50,000
We're ready to have a funding actually by the end of this month.

655
01:09:50,000 --> 01:09:52,000
So we're all going to get this resolved.

656
01:09:52,000 --> 01:09:53,000
Thank you, sir.

657
01:09:53,000 --> 01:09:54,000
And thank you.

658
01:09:54,000 --> 01:09:55,000
All right.

659
01:09:55,000 --> 01:09:57,000
That brings it back to us.

660
01:09:57,000 --> 01:10:05,000
And we have to decide whether to sustain the decision of the staff or to sustain the appeal.

661
01:10:05,000 --> 01:10:08,000
And Mr. Mayor, since this is a public hearing.

662
01:10:08,000 --> 01:10:12,000
If we have any comments from the public generally, that would be a good time to.

663
01:10:12,000 --> 01:10:13,000
All right.

664
01:10:13,000 --> 01:10:15,000
It is a public hearing.

665
01:10:15,000 --> 01:10:18,000
So I'm going to open the public hearing.

666
01:10:18,000 --> 01:10:19,000
Are there any comments?

667
01:10:19,000 --> 01:10:20,000
I see no one in the room.

668
01:10:20,000 --> 01:10:21,000
I met him clerk.

669
01:10:21,000 --> 01:10:23,000
Is there anybody online?

670
01:10:23,000 --> 01:10:25,000
Oh, I apologize.

671
01:10:25,000 --> 01:10:28,000
You know, something you were perfectly covered by these two gentlemen.

672
01:10:28,000 --> 01:10:30,000
So I didn't even see you.

673
01:10:30,000 --> 01:10:31,000
I apologize.

674
01:10:31,000 --> 01:10:33,000
Since I'm here.

675
01:10:33,000 --> 01:10:39,000
I think that what the city is saying was fraught that they collected the money and didn't

676
01:10:39,000 --> 01:10:40,000
get to them.

677
01:10:40,000 --> 01:10:42,000
And I don't think that was touched on.

678
01:10:42,000 --> 01:10:45,000
And I do houses and stuff all over the place.

679
01:10:45,000 --> 01:10:48,000
I like the body and say, oh, I can't tell my linden.

680
01:10:48,000 --> 01:10:51,000
I'm going to pay you in no pain.

681
01:10:51,000 --> 01:10:52,000
And 33 months.

682
01:10:52,000 --> 01:10:56,000
Nobody would step along to collect.

683
01:10:56,000 --> 01:10:58,000
And did you identify yourself for the record?

684
01:10:58,000 --> 01:11:00,000
Oh, my name is Dr. John Jackson.

685
01:11:00,000 --> 01:11:02,000
I'm a resident of Woodman.

686
01:11:02,000 --> 01:11:03,000
Thank you.

687
01:11:03,000 --> 01:11:04,000
All right.

688
01:11:04,000 --> 01:11:05,000
Okay.

689
01:11:05,000 --> 01:11:07,000
Any additional public comment?

690
01:11:07,000 --> 01:11:08,000
All right.

691
01:11:08,000 --> 01:11:09,000
All right.

692
01:11:09,000 --> 01:11:11,000
I apologize for missing you.

693
01:11:11,000 --> 01:11:12,000
All right.

694
01:11:12,000 --> 01:11:14,000
All right.

695
01:11:14,000 --> 01:11:16,000
All right.

696
01:11:16,000 --> 01:11:18,000
There being no further public comment.

697
01:11:18,000 --> 01:11:20,000
The hearing is closed.

698
01:11:20,000 --> 01:11:25,000
And now that we've heard from both the staff and from the appellant.

699
01:11:25,000 --> 01:11:27,000
And we've been back and forth.

700
01:11:27,000 --> 01:11:29,000
It had heard from the public.

701
01:11:29,000 --> 01:11:32,000
It's now in the council's hands to decide.

702
01:11:32,000 --> 01:11:34,000
Is anybody wish to speak?

703
01:11:35,000 --> 01:11:41,000
Are we allowed to ask the appellant or it's council questions?

704
01:11:41,000 --> 01:11:42,000
Yes.

705
01:11:42,000 --> 01:11:43,000
You're allowed to ask questions.

706
01:11:43,000 --> 01:11:44,000
Tell me.

707
01:11:50,000 --> 01:11:56,000
Council, you would have dreamed that your client runs a hotel.

708
01:11:56,000 --> 01:11:57,000
That's correct.

709
01:11:57,000 --> 01:12:02,000
And you would have dreamed that your client is aware that the city of Woodland has a TOT.

710
01:12:02,000 --> 01:12:03,000
That's correct.

711
01:12:03,000 --> 01:12:11,000
And you agree that your client had paid TOT in the past while they're up to yes.

712
01:12:11,000 --> 01:12:14,000
You, you, you relied heavily on the word honesty.

713
01:12:14,000 --> 01:12:17,000
And I, I think you should.

714
01:12:17,000 --> 01:12:23,000
But one of the questions I have is, if your client collected the TOT from the guest,

715
01:12:23,000 --> 01:12:28,000
I wasn't that put aside knowing it doesn't belong to him.

716
01:12:28,000 --> 01:12:31,000
Would you like to respond?

717
01:12:32,000 --> 01:12:36,000
So the TOT funds are deposited with the whole entire deposit.

718
01:12:36,000 --> 01:12:37,000
It's not a separate account.

719
01:12:37,000 --> 01:12:38,000
It goes into.

720
01:12:38,000 --> 01:12:42,000
So when you get, when you come in to the best Western, when you hotel,

721
01:12:42,000 --> 01:12:43,000
$100 plus tax.

722
01:12:43,000 --> 01:12:45,000
So let's say it's 12% tax.

723
01:12:45,000 --> 01:12:46,000
That's 12 dollars.

724
01:12:46,000 --> 01:12:48,000
So the deposit's going to be $120.

725
01:12:48,000 --> 01:12:52,000
Now if that came through at OTA, they're going to subtract their 25%

726
01:12:52,000 --> 01:12:54,000
20% OTA is like booking.com.

727
01:12:54,000 --> 01:12:56,000
Expedient such.

728
01:12:56,000 --> 01:12:59,000
Then, you know, and, and so forth.

729
01:12:59,000 --> 01:13:04,000
So, unfortunately, there's no way for us to extract your TOT or the any tax

730
01:13:04,000 --> 01:13:05,000
dollars to the side.

731
01:13:05,000 --> 01:13:07,000
It automatically goes.

732
01:13:07,000 --> 01:13:09,000
It gets deposit as one lump sum.

733
01:13:09,000 --> 01:13:13,000
Mr. Patel, it's my to stand here.

734
01:13:13,000 --> 01:13:18,000
The only hotel in City of Woodland who's behind in their TOT.

735
01:13:18,000 --> 01:13:20,000
How do other hotels do it?

736
01:13:20,000 --> 01:13:21,000
Pardon me?

737
01:13:21,000 --> 01:13:25,000
How do other hotels collect and set aside their TOTs?

738
01:13:25,000 --> 01:13:28,000
So for us, I mean, I'm not sure how other people operate their hotel.

739
01:13:28,000 --> 01:13:31,000
Do you ever ask another hotel how they do it?

740
01:13:31,000 --> 01:13:34,000
No, they, their deposits come in the same way our deposits come in.

741
01:13:34,000 --> 01:13:36,000
Let me ask you a question.

742
01:13:36,000 --> 01:13:40,000
Is that 10% your money or it's belong to the city?

743
01:13:40,000 --> 01:13:43,000
It belongs, I mean, it's, I'm not denying it.

744
01:13:43,000 --> 01:13:45,000
It doesn't, it doesn't belong to me.

745
01:13:45,000 --> 01:13:46,000
Not your money is it?

746
01:13:46,000 --> 01:13:47,000
I never said I'm denying it.

747
01:13:47,000 --> 01:13:48,000
Okay.

748
01:13:48,000 --> 01:13:49,000
Why don't you set it aside?

749
01:13:49,000 --> 01:13:52,000
In some other fashion, talk to an account, talk to your lawyer.

750
01:13:52,000 --> 01:13:55,000
To figure out a way to set that money aside.

751
01:13:55,000 --> 01:13:57,000
And you would be here today.

752
01:13:57,000 --> 01:13:59,000
Had you done that?

753
01:13:59,000 --> 01:14:02,000
To be honest, there's no possible way for us.

754
01:14:02,000 --> 01:14:06,000
Because they make it, or I don't believe that, sir, at all.

755
01:14:06,000 --> 01:14:08,000
There's other hotels are doing it.

756
01:14:08,000 --> 01:14:11,000
You collected the 10% from your guest.

757
01:14:11,000 --> 01:14:15,000
There has to be an accounting, a method, a banking method.

758
01:14:15,000 --> 01:14:20,000
Talk to your counsel about setting that aside and giving it to the properties.

759
01:14:20,000 --> 01:14:26,000
Sir, we take in 180,000 maximum deposit or overhead is fixed up to 40.

760
01:14:26,000 --> 01:14:27,000
I'm not asking that.

761
01:14:27,000 --> 01:14:31,000
I'm asking you, if that's your money.

762
01:14:31,000 --> 01:14:32,000
I never denied.

763
01:14:32,000 --> 01:14:34,000
I never said it was my money.

764
01:14:34,000 --> 01:14:36,000
My question is, why wasn't it set aside?

765
01:14:36,000 --> 01:14:37,000
In some fashion.

766
01:14:37,000 --> 01:14:39,000
I'm explaining to yourself, sir.

767
01:14:39,000 --> 01:14:40,000
I'm not buying that explanation.

768
01:14:40,000 --> 01:14:42,000
It's the problem, sir.

769
01:14:42,000 --> 01:14:47,000
Did you look at methods of finding a way to set it aside?

770
01:14:47,000 --> 01:14:50,000
Sir, there is no way for us to set it aside.

771
01:14:50,000 --> 01:14:52,000
That's what I'm trying to convey to you.

772
01:14:52,000 --> 01:14:54,000
Is that if the 240 break even, right?

773
01:14:54,000 --> 01:14:56,000
And monthly income is 180.

774
01:14:56,000 --> 01:14:59,000
There's a negative loss of 60,000 a month.

775
01:14:59,000 --> 01:15:00,000
Is this...

776
01:15:00,000 --> 01:15:07,040
This is your first venture in hotel business. No, sir. Have you run into the same problem in other hotels,

777
01:15:07,040 --> 01:15:14,640
collecting TOTs? No. It's the first time. Yeah. Okay. And it's been going on for like, three,

778
01:15:14,640 --> 01:15:21,360
three or four, three plus years. What have you done to change the method of collecting the TOT and

779
01:15:21,360 --> 01:15:30,480
setting aside? To be, we've been trying to seek financing. We've been trying to work with it,

780
01:15:30,480 --> 01:15:36,480
but there's an influx of room capacity in town. So, we don't, our argument isn't where it is.

781
01:15:38,400 --> 01:15:43,360
How we're supposed to, I mean, revenues and where it used to be over half, we, we already explained

782
01:15:43,360 --> 01:15:47,600
we're going to 3.3 million dollars per dollar down to less than 1.9 million.

783
01:15:51,920 --> 01:16:05,040
What's up, okay? Do you have a, I just, yes, I just respectfully say, you, you, you collected

784
01:16:05,040 --> 01:16:12,240
the TOTs that wasn't your money, but you used it for your needs. To me, that's fraud. It isn't that you're

785
01:16:12,240 --> 01:16:18,160
not a nice person and that you're not working very hard to save a business, but it seems to me,

786
01:16:18,160 --> 01:16:26,560
the business may be more gone than you think anyway, but that's not our issue today. The issue is,

787
01:16:26,560 --> 01:16:33,760
you collected TOTs that was, to which we were entitled at the city of Woodland and you didn't give

788
01:16:33,760 --> 01:16:39,760
it to the city of Woodland. You instead converted that money for other purposes. I don't know, but to me,

789
01:16:39,760 --> 01:16:45,920
that's fraud. So, that's all I have to say and it isn't that it wouldn't like to help you, but the fact of

790
01:16:45,920 --> 01:16:53,200
the matters, we've already gone way, way too long. We have issues here too to fund the city,

791
01:16:53,200 --> 01:16:59,360
meet the needs of all of the residents here and things real tight for us too. So, we have to depend

792
01:16:59,360 --> 01:17:07,280
that TOTs collected is TOTs delivered and it wasn't delivered. It was converted to other purposes.

793
01:17:07,280 --> 01:17:12,800
Now, you're, however you're accounting, you have to own up to that. That's your business, but the

794
01:17:12,800 --> 01:17:18,960
fact of matter is the city was entitled this money month by month by month and now we're pushing

795
01:17:18,960 --> 01:17:27,840
three years. So, I feel like we cannot extend more good will to you. We have to give us what the law

796
01:17:27,840 --> 01:17:33,280
and TOTs us too and that's how I intend to vote today. Anybody else want to speak?

797
01:17:33,280 --> 01:17:42,160
Now, Mara, I had the same question. So, those taxes were collected in, from what I understand,

798
01:17:42,160 --> 01:17:48,800
were to be held in trust and that clearly was not happening. So, they were, they were divided and used

799
01:17:48,800 --> 01:17:59,280
for another purpose, which in my mind comes across this fraud. All right, are you ready for motion?

800
01:17:59,280 --> 01:18:06,720
David? Well, to add on to everybody. But why the delay in communication, it seems like it was patchy.

801
01:18:07,280 --> 01:18:12,720
And there's a disconnect of you saying that you were, you know, providing these reports but staff is

802
01:18:12,720 --> 01:18:17,920
letting us know that you weren't providing this information and that could have prevented

803
01:18:18,960 --> 01:18:25,360
this from escalating here. So, aside from myself, there was a mentoring team,

804
01:18:25,520 --> 01:18:31,360
management team, that was operating now. That's no longer there. That's correct. That took over October

805
01:18:31,360 --> 01:18:37,760
2025. October. Okay. Thank you. My wife, Dad, sorry.

806
01:18:42,160 --> 01:18:43,440
We have a question for staff.

807
01:18:43,680 --> 01:18:58,160
Okay. The, the business owed the city besides the TOT reports. Correct.

808
01:19:01,360 --> 01:19:09,840
Could the appellant have submitted reports on a regular basis as they're due without paying the tax?

809
01:19:09,840 --> 01:19:16,560
Yes, absolutely. And you failed to pay even filed a report. Correct. I mean, and as I mentioned a

810
01:19:16,560 --> 01:19:21,760
number of times in here, we have received no reports from February through June so far this year either.

811
01:19:22,480 --> 01:19:29,680
I'm going to turn to council. Please explain why the appellant did not file reports when they were due.

812
01:19:29,680 --> 01:19:35,280
It looks like there were quite a few that were due late and not at all.

813
01:19:36,240 --> 01:19:41,280
Because the city sued my client prematurely before allowing the public hearing.

814
01:19:42,640 --> 01:19:48,320
And so the reports were submitted through council as part of the litigation process and as part of the

815
01:19:48,320 --> 01:19:54,800
discovery process. So, one of the things we're dealing with right now in this superior court is why

816
01:19:54,800 --> 01:20:00,720
did the city sue my client before exhausting its remedies and allowing this public hearing. We have

817
01:20:00,720 --> 01:20:05,440
the motion to dismiss pending before the court right now because the city did what it was not supposed

818
01:20:05,440 --> 01:20:10,880
to do, which was sue my client before giving it the right to a public hearing. So the reports were submitted

819
01:20:10,880 --> 01:20:15,120
to council who submitted them to council for the city. That explains the delay.

820
01:20:16,080 --> 01:20:18,080
Good.

821
01:20:27,760 --> 01:20:28,560
Ms. McKinney?

822
01:20:31,520 --> 01:20:38,400
I still believe that our council has not received reports for the last six months either.

823
01:20:38,400 --> 01:20:42,240
So even if it's what he said is true that council is submitted to council.

824
01:20:42,320 --> 01:20:45,120
I don't believe that they have submitted the most recent reports either.

825
01:20:45,840 --> 01:20:48,800
Even if there was a delay, we'd be happy to receive them but we have not.

826
01:20:48,800 --> 01:20:53,360
All right. So we have a conflict of perspective on that issue.

827
01:20:56,080 --> 01:21:01,920
Mason, we need at this point, it's time to make a decision. I've tipped my hand. I think

828
01:21:02,560 --> 01:21:06,400
one of us has as well. Someone want to make a motion.

829
01:21:07,600 --> 01:21:11,680
I move that we uphold the tax of administrative determination and divide this appeal.

830
01:21:12,640 --> 01:21:14,640
Thank you.

831
01:21:16,640 --> 01:21:22,800
Madam, our legal council does that motion accommodate the objective here?

832
01:21:24,640 --> 01:21:30,080
Yes, that's the motion that is attached to the staff report by way of resolution. So yes, that's.

833
01:21:30,080 --> 01:21:31,760
All right. Thank you. That's the motion for today.

834
01:21:31,760 --> 01:21:33,200
Thank you. Is there a second?

835
01:21:35,200 --> 01:21:39,360
Oh, you have a second. I'd like a second and then we'll have further discussion.

836
01:21:39,920 --> 01:21:44,720
I'll second that motion. Oh, we have a motion on the floor to sustain the staff's action at

837
01:21:44,720 --> 01:21:47,520
the in this matter. And now we're going to have further discussion.

838
01:21:49,520 --> 01:21:56,160
The former mayor. Thank you. Regarding the fraud portion of the

839
01:21:57,120 --> 01:22:08,560
170,000 dollars in fraud fees, is there a way to stay that pending payment?

840
01:22:09,920 --> 01:22:15,840
That is due for TOT penalties and interest.

841
01:22:17,120 --> 01:22:21,120
Yes. So that could be part of the motion that you make today. It could be a motion to approve the

842
01:22:21,120 --> 01:22:28,000
resolution with that addition. That could be included in the resolution. It could be reviewed by the

843
01:22:28,000 --> 01:22:34,320
city attorney's office before adoption. And as far as I don't want to come back here in the

844
01:22:34,320 --> 01:22:41,840
year to be in the same situation, can there be a requirement in any resolution that the

845
01:22:41,840 --> 01:22:47,120
appellant be timely with his payments as well as his reports?

846
01:22:48,960 --> 01:22:52,480
We can include that in the resolution. However, it would be up to a

847
01:22:52,480 --> 01:22:54,480
appellant to be timely with the payments.

848
01:22:56,320 --> 01:23:00,480
Can you stand in my concern council? Absolutely. How could we address that?

849
01:23:01,200 --> 01:23:12,160
Well, frankly, with regard to a agreement to have the timely reports submitted, the payments

850
01:23:12,240 --> 01:23:23,440
submitted, and particularly in making, for example, stay the fraud penalty subject to compliance.

851
01:23:23,440 --> 01:23:27,680
And if there is non-compliance, then have that reinstated?

852
01:23:27,680 --> 01:23:32,960
Yes. And lastly, council, I'm very concerned about your client's answers.

853
01:23:33,680 --> 01:23:38,800
Do my questions about how to remedy this in the future? I didn't get a good answer.

854
01:23:39,760 --> 01:23:46,560
Other hotels do it every day. They set that money aside. They must have an accountant or a

855
01:23:46,560 --> 01:23:53,520
bookkeeper or some method of doing that. And then you take care of business at the end of the month.

856
01:23:54,240 --> 01:24:02,400
I didn't hear anything solid or that assures me that this is going to occur again.

857
01:24:03,360 --> 01:24:08,880
Well, we can say is that the renovations that it caused all the distress and the issues are

858
01:24:08,880 --> 01:24:15,280
complete at this point, that the funds will be used to further strengthen the business.

859
01:24:15,280 --> 01:24:20,480
And I will tell you that I will be working with my client to ensure that we avoid this sort of thing going forward.

860
01:24:21,680 --> 01:24:23,440
So, one of the renovations get done.

861
01:24:23,600 --> 01:24:27,600
They're incomplete.

862
01:24:27,600 --> 01:24:29,600
Well, they're incomplete.

863
01:24:29,600 --> 01:24:31,600
They're incomplete.

864
01:24:31,600 --> 01:24:35,280
Well, the 22 rooms. Yeah, those are incomplete. That's right.

865
01:24:35,280 --> 01:24:37,440
What is your current occupancy rate?

866
01:24:38,640 --> 01:24:39,840
My current occupancy.

867
01:24:41,840 --> 01:24:43,360
30 to 50 percent.

868
01:24:44,960 --> 01:24:47,280
Pretty low. Pretty low. Yeah.

869
01:24:47,280 --> 01:24:49,280
And you have an explanation why?

870
01:24:50,160 --> 01:24:58,800
Over supply, both ends, you know, a varies, but I think supply has a lot to do with it.

871
01:25:03,040 --> 01:25:08,800
Okay. All right. There's a motion on the floor. It's been seconded. We've had some further

872
01:25:08,800 --> 01:25:12,240
discussion. Is there any one else a whistle to weigh in?

873
01:25:13,200 --> 01:25:16,000
I read a devote on the basic motion.

874
01:25:18,800 --> 01:25:22,320
All in favor, say aye. I pose.

875
01:25:24,720 --> 01:25:30,320
We can only wish you the best as you go forward, but I would suggest the whole's bigger

876
01:25:30,960 --> 01:25:38,560
than you may think it is. And you may have to pursue other remedies for your situation.

877
01:25:38,560 --> 01:25:44,800
But the city of Woodland, the people who depend on this revenue have it are entitled to have it.

878
01:25:44,800 --> 01:25:50,640
It was not given to them in timely fashion. And now we're worth the end of the road.

879
01:25:50,640 --> 01:25:53,760
So we're doing what we need to do. You can do what you need to do.

880
01:25:54,480 --> 01:25:59,680
And I apologize for all the hassle, but we didn't create the situation. Okay.

881
01:26:00,560 --> 01:26:04,480
With that, anybody have a moral German or anything else?

882
01:26:05,280 --> 01:26:06,320
All right. We're adjourned.