Group says Constitutional rights violated by Yates County bed tax law
A Canandaigua Lake property owner, three vacation rental agencies and a Penn Yan Bed and Breakfast Inn have filed a lawsuit against Yates County and Yates County Treasurer Bonnie Percy over the recently adopted 4 percent occupancy tax.
Yates County Legislature Finance Committee Chairman Taylor Fitch says he does not expect the county to stop charging the tax while the lawsuit is pending, and he didn't have much to say about the legal challenge when contacted March 17.
"There's really not much to say. We've been sued and we'll just have to wait and see how the lawsuit plays out," he says.
According to court documents filed in Yates County Supreme Court, the group, represented by an attorney with Harris Beach law firm, is seeking a decision that sections of the law are unconstitutional. Aside from asking for the law to be declared unconstitutional and annulled, the group is not seeking damages other than court costs.
Listed as plaintiffs are:
Dr. Jerid M. Fisher, a Pittsford resident who owns a Canandaigua property at 1041 South Lake Road, Middlesex.
Finger Lakes Premier Properties, Inc. an agency that manages rental properties. This company is owned by Brian Zerges, who also operates the Best Western Vineyard Inn and Suites in Penn Yan, which is also subject to the occupancy tax law. Zerges explains he has never opposed the tax being levied on room rentals at the Best Western Vineyard Inn and Suites, but adds he feels the tax on vacation rentals places a hardship on the owners of vacation rental property.
"There are a lot of false perceptions out there. These rental property owners are just trying to hold onto their properties," Zerges says.
ReMax Diversified Rental, another Penn Yan company that manages rental properties.
Finger Lakes Getaways, also a local company that manages rental properties.
The Fox Inn Bed and Breakfast, located in Penn Yan.
The lawsuit was filed the day after Richard Testa, a spokesperson from the newly formed YatesOUCHtax Advocacy group spoke to the Yates County Legislature on March 10, asking them to rescind the law which was adopted in November and went into effect in January. Testa's wife's family owns a cottage on Canandaigua Lake in the Town of Middlesex that is sometimes rented.
Under the Occupancy Tax Law, Yates County can levy a 4 percent sales tax on facilities that provide overnight lodging, including hotels, motels, bed and breakfast inns, cabins, condominiums, cottages, campgrounds, lodges, tourist homes, convention centers and vacation rentals.
A portion of the revenue from the tax, which is charged to the people renting the rooms, cottages, lodges or facilities, will be allocated to tourism promotions.
Until this year, tourism promotion funds have come from the real property taxes paid by all property owners in Yates County.
According to the summons filed in the Yates County Clerk's office, the group says the law is "unconstitutionally vague under the fifth and fourteenth amendments of the federal constitution and Articles 1 and 6 of the New York State Constitution."
"It's important for people to know this violates our constitutional rights," said Fisher in a telephone interview on March 13.
Fisher says as a resident of Pittsford, he was not aware of the discussions county lawmakers were having over the past several months about the tax. He says although he understands the law was advertised in public notices in the county's official newspapers and news articles were written about the tax, he was not aware of the tax until he received a letter from Yates County informing him of the new law and his responsibility to register his property.
"We're all struggling," he says, explaining property owners are concerned about the burden of real property taxes. "And now this tax," he adds.
Testa argues while the tax might not seem to add a large amount to the total bills, Yates County rental property owners are concerned the additional tax will encourage customers to look for rental property in other counties that don't charge the tax.
Specific sections of the law that the group says are unconstitutional are:
Section 20, which says in its entirety: "Reference to Tax: Wherever reference is made in placards or advertisements or in any other publications to this tax, such reference shall be substantially in the following form: 'Occupancy Tax', except that in any bill, receipt, statement or other evidence of memorandum of occupancy or rent charge issued or employed by the operator, the word 'tax' will suffice."
The group says this section is overbroad, vague and infringes on the freedom of speech.
Section 21, which lists penalties, interest and violations, which includes a penalty of 5 percent of the amount of tax due plus 1 percent interest for failure to file a return or pay a tax.
This section also includes a list of acts, such as failure to register, failure to file documents or failure to charge the tax, which could result in misdemeanor charges resulting in a fine of up to $1,000 or one year in jail.
The group says the punishment authorized here is excessive and grossly disproportionate to the offenses.
Section 19, which outlines the powers of the county treasurer's office to subpoena witnesses and the production of documents to enforce the law.
Section 9, which requires operators to keep records of every occupancy for at least three years. These records must be available for inspection by the treasurer upon demand.
The YatesOUCHTax Advocacy group sent letters and petitions to lakefront property owners throughout Yates County in late February, soliciting support and contributions for legal costs. It also operates a Website that includes information generated by members and people responding on a forum. However, the group is not registered as a charity.