HomeMy WebLinkAbout15- City Administrator Office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
From: Fred Wilson, City Administrator subject: An ordinance of the City of San Bernardino
amending Title 3 of the San Bernardino Municipal
Dept: City Administrator's Office Code relating to Utility Users' Taxes for telephone,
Date: January 4, 2000 Do pv electric, gas, and video service
Synopsis of Previous Council action:
July 29, 1968: Council adopts motion to impose a 5% utility tax effective 9/1/68.
August 12, 1968: Ordinance No. 2931 imposes the tax on gas, electricity, and water users.
June 26, 1975: Ordinance No. 3510 increases the UUT rate from 5% to 6%.
August 4, 1983: Ordinance No. MC-297 increases the UUT rate from 6% to 8%.
June 17, 1991: Ordinance No. MC-793 adds telephone users provisions.
December 2, 1991: Ordinance No. MC-814 adds school exemption provisions.
February 19, 1992 : Ordinance No. MC-820 increased the UUT rate from 8% to 8.5%
September 20, 1993: Ordinance No. MC-885 adds video users provisions.
March 21, 1994: Ordinance No. MC-899 clarifies definitions.
June 6, 1995 : Ordinance No. MC-939 extends the increased %z% tax until June 30, 1998
July 1, 1998: UUT increase is not placed on the ballot; rate is reduced to 8%
Recommended motion:
That first reading of said Ordinance be waived, and it be laid over for final adoption.
` Signature
Contact person: Fred Wilson Phone: 5122
supporting data attached: Staff report Ward: All
FUNDING REQUIREMENTS: Amount: -0-
Source: (Acct. No.)
LAcct. Description)
Council Notes: Finance:
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Agenda Item No. 1,57
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STAFF REPORT
Subject:
Ordinance adding Section 3.44.131 to the San Bernardino Municipal Code to establish a
Utility User's Tax Rebate Program for new businesses.
a kground•
On October 28, 1999, the Legislative Review Committee recommended that a set of
business recruitment incentives be referred in concept to the full Council, along with the
requested modifications and business demographics. These incentives consisted of a
development impact fee program that reduces these fees when a business proposes to
occupy a previously-developed property, and a Utility User's Tax (UUT) rebate program.
On November 15, the Council directed the City Attorney to prepare the appropriate
resolutions and ordinances implementing these incentives. On December 22, the Council
adopted a resolution implementing the development impact fee portion of the incentive
package. The ordinance proposed in this agenda item implements the Utility User's Tax
rebate program for new businesses.
As outlined in the December 22 staff report, the rebate program is designed as an
incentive for new businesses to locate in the city of San Bernardino. Businesses will
qualify for a 3-year rebate as follows:
• Part I applies to businesses creating between 5 and 49 new, permanent full-time jobs.
At least 50%must pay at least$25,000 per year in wages and/or commissions.
• Part 1 provides a larger rebate to businesses creating 50 or more new, permanent full-
time jobs. Again, at least 50% must pay at least $25,000 per year in wages and/or
commissions.
• Part 3 grants rebates to new businesses that do not qualify under Part 1 or Part 2, but
bring other valuable benefits to the City in terms of increased property tax valuations
and/or significant sales tax revenues.
The ordinance defines "significant sales tax" as at least $40,000 in sales tax remitted
to the City. . Since the City receives 1% of the sales tax, a business would need to
have at least $4 million in sales to meet this requirement. This sales volume would
place the business in the top 100 sales tax generating businesses in San Bernardino.
Upon adoption of the ordinance, the UUT rebate program will be administered in
partnership between the Economic Development Agency and the City's Finance
Department. A set of administrative procedures will be developed so that consistent,
objective criteria are used to determine eligibility for the rebates, and to ensure that the
program is administered as required by the ordinance. These procedures and requirements
will also be made available to the business community.
UiJT Rebate Program for Expanding Bucineccrc
At the November 15, 1999 meeting, the Mayor and Council also requested that a similar
program be developed that would encourage existing San Bernardino businesses to
expand. A draft of this program has been developed and reviewed by staff, and has
recently been sent to the Chambers of Commerce and members of the Mayor's Business
Advisory Council for comments.
In its draft form, an existing San Bernardino business would be eligible if it meets one of
the following criteria:
1. The business undertakes new construction at an additional San Bernardino
location, or occupies an additional facility in San Bernardino.
2. The business expands at its current location, resulting in an increase of at least
25%of the current construction valuation of the existing building.
3. The business relocates within the City of San Bernardino, and the relocation
is to a facility with at least 25%more floor area than the previous location.
If it meets the criteria, the business would receive a rebate of UUT paid on electricity,
gas, and telephones at the expanded or additional site address on the following scale:
I St year— 75%rebate
2nd year—50%rebate
3rd year—25%rebate
4`h and subsequent years—no rebate
The 25% increase in valuation would be determined through the use of valuation tables
adopted by the Development Services Department. The business will need to provide
some basic information concerning the floor area of the building, type of construction
(i.e. wood frame, concrete tilt-up, etc.), and use of the building. An application form will
be developed for this purpose.
It is anticipated that this ordinance change will be presented to the Council in February
2000.
Finan_ eial impact:
The WT rebate program will impact the growth of General Fund revenues, but the
amount of impact cannot be calculated until the program is in place for some time. The
amount of impact would be based on the number of rebates granted. There will also be
administrative costs in terms of staff time to administer and monitor this program.
Recommendation
It is recommended that the Mayor and Common Council waive the first reading and lay
the ordinance over for final adoption.
1 ORDINANCE NO.
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3 ORDINANCE OF THE CITY OF SAN BERNARDINO ADDING SECTION
4 3.44.131 TO THE SAN BERNARDINO MUNICIPAL CODE AND ESTABLISHING A
UTILITY USER'S TAX REBATE PROGRAM.
5 NOW, THEREFORE, THE 6LAYOR AND COMMON COUNCIL OF THE CITY
6 OF SAN BERNARDINO DO ORDAIN AS FOLLOWS:
7 SECTION 1. Section 3.44. li I is hereby added to the San Bernardino Municipal Code
8 to read as follows:
9 "3.44.131 Utility User's Tax Rebate Program
10 A. Notwithstanding any other provision of this Chapter, in order to attract new businesses that
provide significant numbers of higher-%vage jobs, the following Utility Users Tax Rebate Pr cgrar.
II is hereby established: - -
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1. Any new business that creates between 5 to 49 new, permanent full-timejobs within
13 the City (50% of such new jobs shall pay at least $35,000 per year in wages and/or commissions)
shall be eligible for a rebate on the amount of Utility User's Tax, paid by such business on electrical.
cal,
14 gas, and telephone communication services, imposed by this Chapter according to the following
15 schedule: =
16 a. First year 7P0 rebate
17 b. Second year -- 50% rebate
c Third year 35°,n rebate
13 d. Fourth and subsequent years -- No rebate.
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19 ' Any new business that creates 50 or more new, permanent full-time jobs within
the City (50e1u of such new jobs shall pay at least $35,000 per year in wages and/or commissions)
20 shall be eligibe for a rebate on the amount of Utility User's Tar, paid by such business on electrical.
21 gas, and telephone communication services, imposed by this Chapter according to the following
schedule:
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a. First year 800'0 rebate
23 b. Second year -- 60 0.n rebate
24 c Third year 400/' rebate
25 d. Fourth and subsequent years -- No rebate.
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28 XE/dcarCrd.Ut40tyRebate3
1 Any new business not included under subsections(1)or(2) above, which provides
2 at least a 25% increase in assessed valuation of the business' real property over the previous tar year
as shown by the County Tar Assessor's records, or which generates at least $40,000 in sales tar
3 revenues per year remitted to the City, shall be eligible for a rebate on the amount of Utility User's
Tar, paid by such business on electrical, gas, and telephone communication services, imposed by
4 this Chapter according to the following schedule:
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a. First year 75 0:o rebate
6 b. Second year -- 50;o rebate
c Third year 25°'o rebate
7 d Fourth and subsequent years -- No rebate.
8 4. To claim a rebate under this section, the claimant shall submit a completed verified
9 claim form to the Economic Development Agency with such supporting documentation as may be
required by the Economic Development Agency to determine claimant's eligibility and to establish
10 the amount of utility user's tax paid by claimant on the period claimed, and the commencement date
11 of the "first year" as that term is used herein. A claim for a rebate shall be submitted annually to the
Economic Development Agency not later than three months after the close of the year for which
12 such refund is sought. The verified claim must be signed by an authorized officer of the claimant.
The rebate shall be paid at the recommendation of the Economic Development Agency and subject
13 to approval of the Finance Department.
14 5. "First year" as used in this section, shall mean for a new business, the twelve-month
15 period immediately Following the date of commencement of business at the location for which a
claim for rebate is filed."
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HEMcarOrd.UtitityRebatel 2
1 ORDINANCE OF THE CITY OF SAN BERNARDINO ADDING SECTION
2 3.44.131 . . . AND ESTABLISHING A UTILITY USER'S TAX 74EBATE PROGRANT.
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I HEREBY CERTIFY that the foregoing ordinance was duly adopted by the Mayor and
4 Common Council of the City of San Bernardino at a meeting thereof, held on the
5 _ day of 2000, by the following vote, to wit:
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Council Members: AYES ;NAYS ABSTAIN ABSENT
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8 ESTRADA
9 LIEN
10 MCGrNNIS
11 SCHNETZ
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S L AREZ
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14 IN'DERSON
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15 MILLER
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13 Rachel Clark, City Clerk I
19 The foregoing ordinance is hereby approved this_ day of 2000.
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21
Judith Valles, Mayor
22 City of San Bernardino
23 Approved as to form
24 and legal content:
25 JAMES F. PENMAN,
City Attorney
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28 By:
R"e/de6tord.Ut UityRebate7 3