Sec. 5-22.04.  Cash deposit, bond, or letter of credit exemption.
   A cash deposit, bond, or letter of credit shall not be required if the City determines upon written request and assurances, under penalty of perjury, that the health club is eligible for an exemption based upon any one of the following criteria:
   (a)   The health club is a nonprofit organization eligible for a tax exemption pursuant to California Revenue and Taxation Code Section 23701d;
   (b)   The health club does not and will not allow prepayment of more than one month’s service fee or membership charge and charges all members or consumers on a monthly fee basis only.  However, a one-time charge as an initiation fee in an amount no greater than three (3) times the amount of the monthly fee may be charged;
   (c)   The health club has (1) been in the business of providing health club services continuously during the three (3) year period immediately prior to that date; (2) unsecured and unencumbered assets in excess of Five Hundred Thousand and no/100ths ($500,000.00) Dollars; and (3) warranted and obligated to the City, on a form approved by the City Attorney:
   (i)   That any subsequent sale of the business; or
   (ii)   Any transfer (or sale) of the equipment to a new tenant or owner of the building used by the health club, which equipment is left in place, shall be conditioned upon the health club either providing membership prepayment fee refunds to the consumers, or requiring the successor of such business or transferred assets to honor, in full, the terms and conditions of all existing health club contracts.
   An applicant qualifying for an exemption pursuant to this subsection shall annually file, concurrent with its business license renewal, a statement certifying that the applicant continues to maintain unsecured and unencumbered assets in excess of Five Hundred Thousand and no/100ths ($500,000.00) Dollars, or a cash deposit.
   (d)   The health club (1) has provided health club services within the City continuously during the three (3) year period immediately prior to that date; (2) at all times will offer the option of paying a membership fee on a monthly basis with a one-time initiation fee in an amount no greater than three (3) times that monthly fee; (3) shall, for any prepaid membership in excess of one month, obtain a signed acknowledgment of the member as to the risks of early closure of the health club and the possible refund benefits from other health club providers as required under this ordinance; and (4) is obligated and warrants to the City, on a form approved by the City Attorney:
   (i)   That any subsequent sale of the business; or
   (ii)   Any transfer (or sale) of the equipment to a new tenant or owner of the building used by the health club, which equipment is left in place, shall be conditioned upon the health club either providing membership prepayment fee refunds to the consumers, or requiring the successor of such business or transferred assets to honor in full the terms and conditions of all existing health club contracts.
(§ 1, Ord. 1110-NS, eff. July 18, 1991, as amended by part 16, Ord. 1437-NS, eff. July 7, 2005)