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ORDINANCE 2002 <br />ORDINANCE OF THE TOWN OF LOS GATOS <br />AMENDING ARTICLE III, CHAPTER 25 OF THE TOWN CODE TO EXPLICITLY <br />ESTABLISH A PUBLIC TRUST ON TRANSIENT OCCUPANCY TAXES COLLECTED <br />BY HOTEL AND MOTEL OPERATORS <br />THE TOWN COUNCIL OF THE TOWN OF LOS GATOS DOES ORDAIN AS <br />FOLLOWS: <br />SECTION I <br />Current Federal Bankruptcy law is unclear on when an ordinance establishes that a public <br />trust is established over monies collected by a hotel or motel operator as transient occupancy taxes. <br />This means that an operator may convert those tax monies to personal use and a Bankruptcy trustee <br />can recover a subsequent repayment to the Town if made within designated periods before the filing <br />r <br />of a bankruptcy petition. The Council - asserts - that the existing ordinance and State law establishes <br />that transient occupancy taxes collected by a hotel or motel operator are public monies and not <br />property of the operator. This ordinance is intended to make that ordinance more explicit with <br />regard to the ownership of the monies. <br />SECTION II <br />Section 25.30.060(a) is amended to read as follows: <br />Sec. 25.30.060. Collection of Tax <br />(a) Actions to collect. Any tax required to be paid by any transient under the provisions of <br />this article shall be deemed to be a debt owed by the transient to the Town. The amount of the tax <br />collected by the operator shall be held to be a special fund in trust for the Town of Los Gatos and <br />shall be deemed to be public monies upon collection. Upon proper notice, the Town may require <br />the person collecting the tax to deposit such amount in a separate account in a federally or state <br />chartered bank located in California and keep the amount of such taxes in that account until payment <br />over to the Town; however, whether the collected taxes are placed in a separate account or not shall <br />