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HomeMy WebLinkAbout02-Public Hearing . o C I T Y o o F SAN B ERN A R DIN 0 INTEROFFICE MEMORANDUM CITY CLERK'S OFFICE DATE: January 16, 1992 TO: Honorable Mayor and Members of the City Council FROM: Rachel Krasney, City Clerk SUBJECT: Registration Fee Increases COPIES: Shauna Clark, City Administrator; James Penman, City Attorney --------------------------------------------------------------- The Business Registration Division of this office has explored some revenue enhancement possibilities and I offer the following suggestions for your consideration. 1. Entertainment Tax: (Estimated Revenue: $356,073) I realize that you will be considering imposing an entertainment tax; however, I would like to suggest that if you decide to impose such a tax, that you also include video rentals. Videos are a form of entertainment and even at a 10% increase it would be much less expensive to rent a video than to purchase a movie ticket. We currently have 32 video stores in the City. Based on their gross receipts, a 10% increase would bring in an estimated amount of $356,073. This estimate does not include potential revenue from such retailers as, for example the record stores which also rent videos (i.e., The Wherehouse) . 2. Contractors' Fees: (Estimated Revenue: $200,000) At the January 9, 1992 Council meeting, Barbara Sky raised the issue about increasing our contractors' rates, so I felt compelled to survey other cities. Seventeen cities were surveyed and results indicate that there are as many rate structures as there are cities. The Business Registration Supervisor believes our rates are comparable; however, given our current situation, if the Council wishes to consider an increase, you may wish to consider increasing from $150 to $200 for general contractors and from $100 to $150 for subs. 3. Vendina Machines: (Estimated Revenue: $70,000) The current rate is $60.00 plus $2.00 for each machine over 25. If we changed the fees to that charged for game machines, the fee would be $60.00 per year per machine. 2. o 0 Honorable Mayor and Common Council January 16, 1992 page Two Please keep in mind that if any of these recommendations are approved, projected revenues would not be flowing in fully until after July 1, 1992 since such changes would require gradual phasing in due to registration of new businesses and the varying renewal periods for the respective business categories. In support of item 2, I have attached a memorandum from Roger Davis, Business License Inspector, reporting on his survey of business license fees for contractors. Lee Gagnon, Business Registration Supervisor, will be available to answer any questions you may have on these suggestions. a~~ Rachel Krasney City Clerk Attachment o C I T Y o F o SAN BERNARDINO INTEROFFICE MEMORANDUM TO: Lee Gagnon, Business License supervisor FROM: Roger Davis, Business License Inspector DATE: January 14, 1992 SUBJECT: survey of Business License Fees for Contractors - - - - - - - - - - - - - - - - - - - - - - - - -. -_. - - - - -- -- _._+ I surveyed the following cities regarding business license fees charged to contractors/subcontractors: CITY/TELEPHONE NUMBER/CONTACT COMMENTS colton, (714)370-5046, Josie corona, (714)736-2275, Laura Fontana, (714)350-7675, Pam Grand Terrace, (714)824-6621 LaVonne Huntington Beach (714)536-5451, Joe Lakewood, (213)866-9771, Patti Cooper Flat rate charged quarterly and annually--general and engineering contractors $100 annually and $35 quarterly, subcontractors $75 annually and $25 quarterly. All pay a $25 administrative fee. Flat rate of $136 annually plus $26 application fee. Gross receipts, $75 up to $75,000, $0.75 per $1,000 thereafter. $35 application fee for the first application, $15 for each subsequent application. Flat rate $110 general contractors, $55 subcontractors. Flat rate $65 for contractors with 1 vehicle & 3 employees, $80 for subcontractors with unlimited number vehicles & employees, $132 for general contractors with unlimited number of vehicles & employees. Flat rate. General & engineering contractors $120 anually, $40 quarterly + $5 for each employee. Plumbing, heating, air conditioning & electrical contractors $100 annually, $33 quarterly + $5 per employee. All other subcontractors o o Los Anqeles, (213)485-9120, City Clerk's Office $85 annually, $25 quarterly + $5 per employee. Gross receipts $177.38 for $60,000 or less, $1.18 for each additional $1,000. Flat rate, $85 annually/$25 quarterly Montclair, (714)626-8571, Liz Moreno Valley, (714)243-3395, Irene Gross receipts, $47.20 for $35,000 or less, up to maximum of $440.00 for $4,000,000. $440 plus 0.035t of qross receipts over $4,000,000. $125 processinq fee for all. Ontario, (714)391-2519, Larry Gross receipts. $24 for $25,000 or less up to $5,650 for $22,400,000. Rancho CUcamonqa (714)989-1851, Lisa Pomona, (714) 620-2091, Farrah $39 + 30t of permit fee for subcontractors. $65.50 + lOOt of permit fee for qeneral contractors for first $10,000. $0.75 per thousand over $10,000 + 30t surcharqe of total license fees. Gross receipts. $20 base fee plus $0.90 per $1,000 up to $100,000 + $0.40 per $1,000 for amounts over $100,000 up to $650,000 + $0.25 per $1,000 for amounts over $650,000 for maximum of up to $750,000. Redlands, (714)798-7544, Jean Flat rate. $100 for qeneral contractors, $50 for subcontractors. Rialto, (714) 820-2517, Denise Flat rate $79 for all on calendar year basis January - December plus first-time-only $96 administrative fee. Riverside, (714)782-5466, Liz Gross receipts. $20 + $5 adminis- trative fee + $0.40 per $1,000 of estimated qross receipts per quarter. Those with offices located in city limits must pay an annual fee (four times the above amounts). Upland, (714)982-1352, Dot Gross receipts. $36 for first $20,000 up to a maximum $576 for $1,500,000 in qross receipts plus one-time application fee of $15. Victorville, (619)245-3411, Flat rate. $100 per year for o o general contractors, $50 per year for subcontractors. All representatives were asked the question, "Do you charge a different rate if they live in your city as opposed to coming in from another city?" The answer was no, with the exception that'the cities of Lakewood and Riverside require contractors and subcontractors with offices located in the city limits to obtain-a business license based on the yearly fee. They cannot obtain a business license at the quarterly rate. .-' ~ ~'aViS Business License Inspector o o C I T Y 0 F SAN B ERN A R DIN 0 INTEROFFICE MEMORANDUM CITY ADMINISTRATOR'S OFFICE DATE: January 16, 1992 TO: Honorable Mayor and Common Council FROM: Peggy Ducey SUBJECT: contracting of Animal Control services COPIES: Shauna Clark, Debi Biggs Per the Council request, staff contacted the County of San Bernardino Animal Control for an estimate to provide animal control services for the city of San Bernardino. Ms. Jeane Kroeger, Project Manager of County Animal Control estimated a net cost to the City of $350,000 - 400,000 annually for all animal control services. Gross cost would be reduced because the County would coll,ect all licensing and redemption revenue. The cost of the city's Animal Control operations to the general fund is currently $390,879. I have requested that the county calculate estimated contract cost for shelter services only, as well as comprehensive animal control services. They will respond in writing within a week. P J)ttc,f} Peggy Ducey Assistant 0 the city Administrator 2-. . o o =--~ "A Tradilion of Service 10 Theatrical Exhibilion" NtJ/ionol A.uacUtllon of ThetJ/,.. awn." JEROME A. FORMAN Chairman of 1M Board TIMC. WARNER PruIdmt and ChUf Executiw OjJ/t:er HERBERT R. BURTON ExeClllI". Director. Sho Wut LAURA L ROONEY Adminlnrator ART SANBORN Firat Yicc-Pruldent NEAL MEYER &eretary JOHN S. TEGTMEIER Trca.rurcr EXECUTWE COMMI7TEE Bruff C. Corwin Joe Crolly Jerome A. Forman Stephen A. GIluJa Allm Mlchaan Jack MyhiU Art Swam BOARD OF DIRECTORS Bruce C. Corwin Joe Crolly Jame. Edwards III Jerome A. Forman Stephen A. GIlu/4 Neal Meyer Allm Mlchaan Jack MyhU/ Gregory RUlkow.ki Art Sanbom John S. Tegtmeier . TIm C. Warner ADYlSORY COUNCIL Nate llIu1M1Ifeld Irving M. Levin Homer TegtllVMr STATE COMMITTEE Dak Davison Jam.. Edwards III John lIMa J. R. Erdman Karen Gold Chari.. Goodsell Robert Gran Phil Ha"is William F. Hertz Bruce Jo.... Jame. Keenan Robert Lacmmk Richard Landis Ralph Martin Gary Meyer Gregory RUlkow.ki Bruce Sanbom Robert W. Selig George Vogan lIfNORTH ROURTSON MJUUl/f..uw.srnm '.LOS ANG6UrS. CAUFORNLt _. ZUt m 'Hz January 16, 1992 The Honorable James Penman City Attorney 300 North "0" street San Bernardino, CA 92418 Dear City Attorney Penman: I am writing to you on behalf of the National Association of Theatre owners of California and its members. It is my understanding that the City of San Bernardino is considering an Entertainment Tax or an Admission Tax as a revenue source. For your information, I am enclosing a summary letter that outlines our successful legal challenges to such a tax and an information sheet on the current legal status of the various admission taxes that have been passed and repealed in the State of California. We anticipate that based on this summary and a closer review of the cases, the city of San Bernardino will not proceed with the enactment of such a tax. If I can provide further information on the subject, please feel free to contact me. TCW: mc Enclosures cc: The Honorable W.R. Holcomb, Mayor Andrew Green, Finance Director r' _ r - -. -,~ ~ .._-. NATO of California Executive Comm1ttee (n\penman.ltr) Ff I~ ~/~ 1 . '. - . '. " . . . . . C .ro C 1(0 LILLICK & CHARLES FILE COpy . "..~ ":~: .;; '-\{(lIrnc:~s.f( L~IU' CaNes L1LUCKCHS T\\o Embarcadero Cmter Son fnadsco, CA 94111-3996 .15 -9M-8200 November ~4, ~990 T<kx T\{!' 18-1983 Facsimik m. ill..799 Writ<r's [);..a 0i:lI Numb<< (415) 984-8303 stan Yamamoto, Esq. City Attorney city Hall 801 H'street Modesto, CA 95353 Dear Mr. Yamamoto: This letter. responds to your request to Mr. Tim Warner of the "Nat;tQnal,':.Association of Theatre owners of california for a S1....m.;;;''*'Yiof'thelegal authority on which the proposed challenge to the';aamis~ioIl!'l tax recently enacted by the City of Modesto is basl!di'Hr.:warner has asked us to provide the requested summary. We ahticipate. that, based on this summary and a closer review of the cases discussed below, the city of Modesto will repeal its recently enacted admissions tax. As discussed below, admissions taxes similar to that recently enacted in Modesto have been declared unconstitutional in several cities in California. The authority on which the admissions taxes in qUestion have been declared unconstitutional is Minneapolis star & Tribune Co. v. Minnesota commissioner of Revenue~ 460 U.S. 575 (1983). In Minneapolis Star, the U.S. supreme Court ruled that a tax levied solely on activities protected by the First Amendment,l} even though enacted solely for revenue and not for censorial purposes, is unconstitutional unless the taxing authority satisfies the stringent burden of s~owing that the tax (~) is justified by a compelling state interest and (2) the interest cannot be achieved through other means less intrusive on First Amendment rights. Minneapolis 1/ Under the Fourteenth Amendment, the First Amendment guarantee of freedom of speech applies to state as well as federal governmental entities. Uouqlas v. Jeannette, 3~9 U.s. ~57, 162, reh'q denied, 319 U.s. 782 (1943). In addition, the California Constitution, article I, section 2(a) provides even broader protection than the First Amendment. People v. Glaze, 27 Cal. 3d 841, 614 P.2d 291, 166 Cal. Rptr. 859 (1980)1 Wilson v. Superior Court, 13 Cal. 3d 652, 658, 532 P.2d 116, 119 Cal. Rptr. 468 (1975). San Francisco Loac Beach Sacnm<n<o .: # . o( o d..'O stan Yamamoto, Esq. November 14, 1990 Page 2 ~, 460 U.S. at 585: see also United States v. Lee, 455 U.S. 252 (1982): United States v. O'Brien, 391 U.S. 367 (1968). More- over, the Court held that the taxing authority, there the State of Minnesota, could not justify at all a tax which fell entirely on a small group of taxpayers engaged in protected speech. 460 U.S. at 591-92. The first California case in which Minneaoolis Star was applied was Citv of Alameda v. Premier communications Network. ~, 156 Cal. App. 3d 148, cert. denied, 469 U.S. 1073 (1984). In premier Communications, the Court of Appeal held unconstitu- tion!ll an ordinance imposing an annual business license tax of three percent of gross receipts on businesses providing television subscription services and emergency communication and alarm systems. Although the business license tax itself applied to many businesses, only the latter two categories were subj ect to taxon a percentage-of-qross receipts basis. The Court of Appeal found this special tax rate for First Amendment businesses unconstitutional: Since the tax imposed by Ordinance No. 1991 places a differential burden upon television subscription service businesses unjustified by any compelling interest of the city, that ordinance, as applied to premier [dba Home Box Office], violates the First Amendment to the United States Constitution. . [156 Ca1. App. 3d at 157.] In Premier Communication, the court struck down a broad based tax as it applied to one taxpayer, because of a differential tax rate. In several cases involving broadly worded admissions taxes, courts have declared the taxes unconstitutional even if the same tax rate applies to all taxpayers, if in fact the tax in question applies solely or primarily to First Amendment activities. The first admissions tax to be declared unconstitutional in california on the basis of Minneaoolis Star involved a tax enacted by the City of Pleasant Hill. The Pleasant Hill tax was a five-percent tax on the admission fees charged for certain events including, but not limited to, motion picture theaters, sporting events, circuses, carnivals, ice or roller skating shows, museums, and theaters. Although the ordinance was broadly worded to apply to a wide variety of entertainment, the plaintiffs' movie theaters were the only businesses to which the tax was expected to apply. ,- ci 0 ((0 stan Yamamoto, Esq. November 14, 1990 Page 3 The First District Court of Appeal held that because the plaintiff theater owners were expected to bear the entire burden of the tax, the tax was discriminatory and therefore unconstitutional. Festival Enterorises. Inc. v. citv of P1easant lUll, 182 Cal. App. 3d 960 (1986). The court noted that the gravamen of differential tax treatment upon protected activity is the threat that discriminatory taxes may be used to censor unpopular expression. ~. at 964-965. The court held that an admissions tax which in effect singles out movie theaters for discriminatory treatment cannot stand unless the state asserts a counterbalancing interest of compelling importance that could not be achieved without differential taxation. lsl. at 964. As did the United states Supreme Court in Minneanolis star, the court in Festival Enterorises expressly rejected the government's contention that its interest in raising revenue was sufficient to justify a tax which fell exclusively upon First Amendment protected activities. Zsi. The california Supreme Court denied review in this case on september 26, 1986. Subsequently, in March of 1989, the Fourth District Court of Appeal declared unconstitutional a similar admissions tax enacted by the City of Montclair. United Artists Communications. Inc. v. Citv of Montclair, 209 Cal. App. 3d 245 (1989). The tax was a six-percent tax on the price of admission to any event, including, but not limited to, motion pictures, theatrical and musical performances, athletic contests, fairs, and circuses. Although the Montclair tax ordinance was broadly worded, 90 percent of the tax was borne by two theaters and two adult book stores, businesses which were engaged in protected activities. The tax was held to discriminate against those businesses and, accordingly, was unconstitutional. The California Supreme Court denied review in this case on May 24, 1989, and the United States supreme Court denied certiorari on October 16, 1989. Three months later, the Fourth District Court of Appeal declared unconstitutional an admissions tax enacted by the City of Rancho Cucamonga. Edwards Theatres Circuit. Inc. v. citv of Rancho cucamonqa! No. OCV 39736 (Cal. ct. App. June 13, 1989) (copyattached).-' This tax was a ten-percent tax on every patron who paid an admission price for admission to any event in the city, including, but not limited to, motion pictures, fairs, 2J Because Edwards Theatres Circuit is not published, we do not submit it as controlling authority. Rather, we submit it only as an example of the consistency in the admissions tax rulings. . . .. fn C),O (-tTo :"; ., stan Yamamoto, Esq. November 14, 1990 Page 4 meetings, and dances. The only entities subject to the tax were the plaintiff's six-screen movie theater, a roller skating rink, and two small nightclubs. The Court of Appeal concluded that the tax was invalid because, in practice, it singled out activities protected by the First Amendment. The rationale behind the court's holding was that any tax which affects only a small group of businesses engaged in First Amendment activities may have a chilling effect on such activities because of the implicit threat that the tax may be raised with impunity if the activities of those businesses do not meet with governmental approval. Isl., slip Ope at 5. Again, the threat of censorship is sufficient to invalidate a tax that falls primarily on. activities protected by the First Amendment. The California Supreme Court denied review in this case on August 30, 1989. I look forward to hearing from you regarding the City of Modesto's decision with respect to its admissions tax. Please call me if you have questions concerning the cases summarized above. NATO of California would like to avoid litigation in this matter and is willing to meet with you in an effort to have the tax repealed. Very truly yours, LILLICK & CHARLES !!~9~ Barry J. London 046:244:NAT25.901270 Enclosure cc: Tim Warner NATO of California o (0 ADMISSIONS TAX SUMMARY Montclair · Tax declared unconstitutional. Review and certiorari denied. · Broadly worded ordinance. Applied to two theatres and two adult book stores (both protected by First Amendment). · $377,579 (tax + prejudgment and postjudgment interest) paid by the City of Montclair to the theatre owners. Rancho Cucamom~a · Tax declared unconstitutional. · Broadly worded ordinance. Applied to plaintiff's theatre, a roller skating rink, and two nightclubs. · $636,669 (tax + prejudgment and post judgment interest) paid by the City of Rancho Cucamonga to the sole theatre owner. PlpJllalnt Hill · Tax declared unconstitutional; review denied. · Broadly worded ordinance. Applied only to two theatres. · $54,043 in attorneys' fees awarded. Fresno · Repealed its admissions tax ordinance effective July I, 1991. · $100,000 in attorneys' fees paid by the City of Fresno. Modesto · Rescinded a newly enacted admissions tax ordinance (March 1991). Monterev Park · Decided not to repeal an exemption that applies to movie theatres (February 1991). Chico · Repealed its admissions tax ordinance (1990). San Francisco · Does not have an admissions tax.