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HomeMy WebLinkAbout34-Finance e e e CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION From: Barbara Pachon, Finance Director Subject: Resolution authorizing the execution of agreements with the State Board of Equalization for implementation of a local transactions and use tax. Dept: Finance Date: 1/22/07 Synopsis of Previous Council Action: 8/07/2006 - Resolution Nos. 2006.86, 2006-288, 2006,287, and 2006-89 adopted: ,. Declaring an emergency pursuant to Section 2(B) of Article XIIIC of the California Constitution necessitating submission of a General Transactions and Use Tax measure on the November 7,2006 Special Election ballot placing ageneral transaction and use tax, and advisory question on the ballot for the November 7, 2006 consolidated special municipal election, and advisory election; "" Calling a Special Election and an Advisory Election in the City to be held on Tuesday, November 7,2006; ,. Placing a General Transactions and Use Tax and an Advisory Question on the ballot for the November 7,2006 consolidated Special Municipal Election and Advisory Election; and "" Appropriating any proceeds of a General Transactions and Use Tax. 9/05/2006 - Ordinance No. MC 1229 was adopted imposing a General Transactions and Use Tax to be administered by the State Board of Equalization pursuant to Revenue & Taxation Code Sections 7251 et seq., subject to voter approval, and providing for sunset of the tax and the creation of a Citizens Oversight Committee. Recommended motions: Adopt Resolution "0:_1 /,) ~ .c)(CCI.'r;'ff"__l/. t:tc ~ Signature . Contact person: Barbara Pachon, Director of Finance Phone:S242 Supporting data attached: S~ff Report, Attachments Ward: All FUNDING REQUIREMENTS: Amount: Source: Finance: Council Notes: Al!;enda Item No. .31 I/~;t./Of CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION STAFF REPORT e SUBJECT: Resolution authorizing the execution of agreements with the State Board of Equalization for implementation of a local transactions and use tax. BACKGROUND: On November 7, 2006, San Bernardino voters approved Measures Z and YY, creating a new .25% local transactions and use tax increase effective April I, 2007. In order for the State Board of Equalization (BOE) to administer and collect this increased transactions and use tax for the City of San Bernardino a resolution needs to be approved by the Mayor and Council which authorizes the City to enter into a "Preparatory Agreement" and an "Administration Agreement" with the BOE prior to implementation of the increased tax. The Agreement for Preparation to Administer and Operate the City's Transactions and Use Tax ordinance is attached as Exhibit A to the Resolution. This agreement authorizes the BOE to do the work necessary to set up the City's new tax and that the City of San Bernardino will pay the BOE for the start up costs. The maximum preparatory costs shall not exceed $175,000 per the agreement. However, in discussions with the BOE staff the most they were aware of any entity actually paying was $50,000. Since the start up costs are going to be shared between all cities that have new taxes being implemented on April I, 2007 and there are 13 new taxes per the BOE, the City of San Bernardino's.actual start up costs are not anticipated to be more than $50,000. The BOE accounting department will invoice each City for their share of the costs and these costs can be paid for from the new tax revenue. e The Agreement for State Administration of City Transactions and Use Taxes is attached as Exhibit B to the Resolution. This agreement authorizes the BOE to do the on going administration of the new transactions and use tax just like they currently do the City of Ban Bernardino's Sales Tax. The City of San Bernardino agrees to pay the BOE the on going administrative costs, which the BOE will subtract these costs from the tax revenue collected. This is the. same procedure that is followed by the BOE for the Sales Tax administration. The actual on going administrative costs for the City of San Bernardino will vary from year to year depending on the BOE's costs and the number of cities that will share paying the costs. The estimated on going administrative costs are about $50,000 annually. FINANCIAL IMPACT: In order for the City's new .25% local transactions and use tax (Measure Z) to be implemented the resolution and agreements with the BOE must be approved. If the resolution and agreements are not approved then the BOE will not begin to collect the new tax for the City of San Bernardino. RECOMMENDATION: Adopt Resolution. e 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 RESOLUTION NO. RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AGREEMENTS WITH THE STATE BOARD OF EQUALIZATION FOR IMPLEMENTATION OF A LOCAL TRANSACTIONS AND USE TAX. WHEREAS, on September 5, 2006, the City Council approved Ordinance No. MCI229 amending the City of San Bernardino Municipal Code and providing for a local transactions and use tax; and WHEREAS, the State Board of Equalization (Board) administers and collects the transactions and use taxes for all applicable jurisdictions within the state; and WHEREAS, the Board will be responsible to administer and collect the transactions and use tax for the City; and WHEREAS, the Board requires that the City enter into a "Preparatory Agreement" and an "Administration Agreement" prior to implementation of said taxes, and WHEREAS, the Board requires that the City Council authorize the agreements; NOW, THEREFORE BE IT RESOLVED by the City Council of the City of San Bernardino that the "Preparatory Agreement" attached as Exhibit A and the "Administrative Agreement" attached as Exhibit B are hereby approved and the Mayor is hereby authorized to execute each agreement. /1// /1// 1/1/ 1/1/ /1// 1/1/ 1/1/ No. 3<{- f/;;J.~/07 1 2 3 4 5 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO AUTHORIZING THE MAYOR TO EXECUTE AGREEMENTS WITH THE STATE BOARD OF EQUALIZATION FOR IMPLEMENTATION OF A LOCAL TRANSACTIONS AND USE TAX. I HEREBY CERTIFY that the foregoing resolution was duly adopted by the Mayor and Common Council of the City of San Bernardino at a joint regular meeting thereof, held 6 onthe_dayof , 2007, by the following vote, to wit: 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 AYES ABSTAIN ABSENT NAYS COUNCILMEMBERS ESTRADA BAXTER BRINKER DERRY KELLEY JOHNSON McCAMMACK Rachel Clark, City Clerk The foregoing resolution is hereby approved this _ day of 2007. Patrick J. Morris, Mayor City of San Bernardino Approved as to form: JAMES F. PENMAN City Attorney 2 Exhibit A AGREEMENT FOR PREPARATION TO ADMINISTER AND OPERATE CITY'S TRANSACTIONS AND USE TAX ORDINANCE In order to prepare to administer a transactions and use tax ordinance adopted in accordance with the provision of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code, the City of San Bernardino, hereinafter called City, and the STATE BOARD OF EQUALIZATION, hereinafter called Board, do agree as follows: I. The Board agrees to enter into work to prepare to administer and operate a transactions and use tax in conformity with Part 1.6 of Division 2 of the Revenue and Taxation Code which has been approved by a majority of the electors ofthe City and whose ordinance has been adopted by the City. 2. City agrees to pay to the Board at the times and in the amounts hereinafter specified all of the Board's costs for preparatory work necessary to administer the City's transactions and use tax ordinance. The Board's costs for preparatory work include costs of developing procedures, progranuning for data processing, developing and adopting appropriate regulations, designing and printing forms, developing instructions for the Board's staff and for taxpayers, and other appropriate and necessary preparatory costs to administer a transactions and use tax ordinance. These costs shall include both direct and indirect costs as specified in Section I 1256 of the Government Code. 3. Preparatory costs may be accounted for in a manner which conforms to the internal accounting and personnel records currently maintained by the Board. The billings for costs may be presented in summary form. Detailed records of preparatory costs will be retained for audit and verification by the City. 4. Any dispute as to the amount of preparatory costs incurred by the Board shall be referred to the State Director of Finance for resolution, and the Director's decision shall be final. 5. Preparatory 'costs incurred by the Board shall be billed by the Board periodically, with the final billing within a reasonable time after the operative date of the ordinance. City shall pay to the Board the amount of such costs on or before the last day of the next succeeding month following the month when the billing is received. 6. The amount to be paid by City for the Board's preparatory costs shall not exceed one hundred seventy-five thousand dollars ($175,000) (Revenue and Taxation Code Section 7272.) 7. Communications and notices may be sent by first class United States mail. Communications and notices to be sent to the Board shall be addressed to: STATE BOARD OF EQUALIZATION P. o. BOX 942879 SACRAMENTO, CALIFORNIA 94279-0073 ATTENTION: EXECUTIVE DIRECTOR Communications and notices to be sent to City shall be addressed to: CITY OF SAN BERNARDINO 300 NORTH "D" STREET SAN BERNARDINO, CA 92418-0001 ATTENTION: DIRECTOR OF FINANCE 8. The date of this agreement is the date on which it is approved by the Department of General Services. This agreement shall continue in effect until the preparatory work necessary to administer City's transactions and use tax ordinance has been completed and the Board has received all payments due from City under the terms of this agreement. CITY OF SAN BERNARDINO STATE BOARD OF EQUALIZATION By By (Signature) (Executive Director) Patrick J. Morris (Typed Name) Mavor (Title) Approved as to form: JAMES F. PENMAN City Attorney 2 ....! Exhibit B AGREEMENT FOR ST ATE ADMINISTRATION OF CITY TRANSACTIONS AND USE TAXES The City Council of the City of San Bernardino has adopted, and the voters of the City of San Bernardino (hereafter called "City" or "District") have approved by the required majority vote, the City of San Bernardino Transactions and Use Tax Ordinance (hereafter called "Ordinance"), a copy of which is attached hereto. To carry out the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code and the Ordinance, the State Board of Equalization, (hereinafter called the "Board") and the City do agree as follows: ARTICLE I DEFINITIONS Unless the context requires otherwise, wherever the following terms appear in the Agreement, they shall be interpreted to mean the following: I. "District taxes" shall mean the transactions and use taxes, penalties, and interest imposed under an ordinance specifically authorized by Revenue and Taxation Code Section 7285.9, and in compliance with Part 1.6, Division 2 of the Revenue and Taxation Code. 2. "City Ordinance" shall mean the City's Transactions and Use Tax Ordinance referred to above and attached hereto, Ordinance No. MC 1229, as amended from time to time, or as deemed to be amended from time to time pursuant to Revenue and Taxation Code Section 7262.2. ARTICLE II ADMINISTRATION AND COLLECTION OF CITY TAXES A. Administration. The Board and City agree that the Board shall perform exclusively all functions incident to the administration and operation of the City Ordinance. B. Other Applicable Laws. City agrees that all prOVISions of law applicable to the administration and operation of the State Sales and Use Tax Law which are not inconsistent with Part 1.6 of Division 2 of the Revenue and Taxation Code shall be applicable to the administration and operation of the City Ordinance. City agrees that money collected pursuant to the City Ordinance may be deposited into the State Treasury to the credit of the Retail Sales Tax Fund and may be drawn from that Fund for any authorized purpose, including making refunds, compensating and reimbursing the Board pursuant to Article IV of this Agreement, and transmitting to City the amount to which City is entitled. C. Transmittal of money. 1. For the period during which the tax is in effect, and except as otherwise provided herein, all district taxes collected under the provisions of the City Ordinance shall be transmitted to City periodically as promptly as feasible, but not less often than twice in each calendar quarter. 2. For periods subsequent to the expiration date of the tax whether by City's self-imposed limits or by final judgment of any court of the State of California holding that City's ordinance is invalid or void, all district taxes collected under the provisions of the City Ordinance shall be transmitted to City not less than once in each calendar quarter. 3. Transmittals may be made by mail or electronic funds transfer to an account of the City designated and authorized by the City. A statement shall be furnished at least quarterly indicating the amounts withheld pursuant to Article IV of this Agreement. D. Rules. The Board shall prescribe and adopt such rules and regulations as in its judgment are necessary or desirable for the administration and operation of the City Ordinance and the distribution of the district taxes collected thereunder. E. Preference. Unless the payor instructs otherwise, and except as otherwise provided in this Agreement, the Board shall give no preference in applying money received for state sales and use taxes, state-administered local sales and use taxes, and district transactions and use taxes owed by a taxpayer, but shall apply moneys collected to the satisfaction of the claims of the State, cities, counties, cities and counties, redevelopment agencies, other districts, and City as their interests appear. Rev. 1105 2 F. Security. The Board agrees that any security which it hereafter requires to be furnished by taxpayers under the State Sales and Use Tax Law will be upon such terms that it also will be available for the payment of the claims of City for district taxes owing to it as its interest appears. The Board shall not be required to change the terms of any security now held by it, and City shall not participate in any security now held by the Board. G. Records orthe Board. When requested by resolution of the legislative body of the City under section 7056 of the Revenue and Taxation Code, the Board agrees to permit authorized personnel of the City to examine the records of the Board, including the name, address, and account number of each seller holding a seller's permit with a registered business location in the City, pertaining to the ascertainment of transactions and use taxes collected for the City. Information obtained by the City from examination of the Board's records shall be used by the City only for purposes related to the collection of transactions and use taxes by the Board pursuant to this Agreement. H. Annexation. City agrees that the Board shall not be required to give effect to an annexation, for the purpose of collecting, allocating, and distributing District transactions and use taxes, earlier than the first day of the calendar quarter which commences not less than two months after notice to the Board. The notice shall include the name of the county or counties annexed to the extended City boundary. In the event the City shall annex an area, the boundaries of which are not coterminous with a county or counties, the notice shall include a description of the area annexed and two maps of the City showing the area annexed and the location address of the property nearest to the extended City boundaiy on each side of every street or road crossing the boundary. ARTICLE III ALLOCATION OF TAX A. Allocation. In the administration of the Board's contracts with ail districts that impose transactions and use taxes imposed under ordinances, which comply with Part 1.6 of Division 2 of the Revenue and Taxation Code: 1. Any payment not identified as being in payment of liability owing to a designated district or districts may be apportioned among the districts as their interest appear, or, in the discretion Rev. 1105 3 of the Board, to all districts with which the Board has contracted using ratios reflected by the distribution of district taxes collected from all taxpayers. 2. All district taxes collected as a result of determinations or billings made by the Board, and all amounts refunded or credited may be distributed or charged to the respective districts in the same ratio as the taxpayer's self-declared district taxes for the period for which the determination, billing, refund or credit applies. B. Vehicles, Vessels, and Aircraft. For the purpose of allocating use tax with respect to vehicles, vessels, or aircraft, the address of the registered owner appearing on the application for registration or on the certificate of ownership may be used by the Board in determining the place of use. ARTICLE IV COMPENSATION The City agrees to pay to the Board as the Board's cost of administering the City Ordinance such amount as is provided for by law. Such amounts shall be deducted from the taxes collected by the Board for the City. ARTICLE V MISCELLANEOUS PROVISIONS A. CommunIcations. Communications and notices may be sent by first class United States mail to the addresses listed below, or to such other addresses as the parties may from time to time designate. A notification is complete when deposited in the mail. Rev. 1105 4 Communications and notices to be sent to the Board shall be addressed to: State Board of Equalization P.O. Box 942879 Sacramento, California 94279-0073 Attention: Executive Director Communications and notices to be sent to the City shall be addressed to: City of San Bernardino 300 North "D" Street San Bernardino, CA 92418-0001 Attention: Director of Finance Unless otherwise directed, transmittals of payment of District transactions and use taxes will be sent to the address above. B. Term. The date ofthis Agreement is the date on which it is approved by the Department of General Services. The Agreement shall take effect on April I, 2007. This Agreement shall continue until December 31 next following the expiration date of the City Ordinance, and shall thereafter be renewed automatically from year to year until the Board completes all work necessary to the administration of the City Ordinance and has received and disbursed all payments due under that Ordinance. C. Notice of Repeal of Ordinance. City shall give the Board written notice of the repeal of the City Ordinance not less than 110 days prior to the operative date of the repeal. Rev. 1/05 5 ARTICLE VI ADMINISTRA nON OF TAXES IF THE ORDINANCE IS CHALLENGED AS BEING INVALID A. Impoundment of funds. I. When a legal action is begun challenging the validity of the imposition of the tax, the City shall deposit in an interest-bearing escrow account, any proceeds transmitted to it under Article II. C., until a court of competent jurisdiction renders a final and non-appealable judgment that the tax is valid. 2. If the tax is determined to be unconstitutional or otherwise invalid, the City shall transmit to the Board the moneys retained in escrow, including any accumulated interest, within ten days of the judgment of the trial court in the litigation awarding costs and fees becoming final and non- appealable. B. Costs of administration. Should a final judgment be entered in any court of the State of California, holding that City's Ordinance is invalid or void, and requiring a rebate or refund to taxpayers of any taxes collected under the terms of this Agreement, the parties mutually agree that: I. Board may retain all payments made by City to Board to prepare to administer the City Ordinance. 2. City will pay to Board and allow Board to retain Board's cost of administering the City Ordinance in the amounts set forth in Article IV of this Agreement. 3. City will pay to Board or to the State of California the amount of any taxes plus interest and penalties, if any, that Board or the State of California may be required to rebate or refund to taxpayers. Rev. 1/05 6 4. City will pay to Board its costs for rebating or refunding such taxes, interest, or penalties. Board's costs shall include its additional cost for developing procedures for processing the rebates or refunds, its costs of actually making these refunds, designing and printing forms, and developing instructions for Board's staff for use in making these rebates or refunds and any other costs incurred by Board which are reasonably appropriate or necessary to make those rebates or refunds. These costs shall include Board's direct and indirect costs as specified by Section 11256 of the Government Code. 5. Costs may be accounted for in a manner, which conforms to the internal accounting, and personnel records currently maintained by the Board. The billings for such costs may be presented in summary form. Detailed records will be retained for audit and verification by City. 6. Any dispute as to the amount of costs incurred by Board in refunding taxes shall be referred to the State Director of Finance for resolution and the Director's decision shall be final. 7. Costs incurred by Board in connection with such refunds shall be billed by Board on or before the 25th day of the second month following the month in which the judgment of a court of the State of California holding City's Ordinance invalid or void becomes final. Thereafter Board shall bill City on or before the 25th of each month for all costs incurred by Board for the preceding calendar month. City shall pay to Board the amount of such costs on or before the last day of the succeeding month and shall pay to Board the total amount of taxes, interest, and penalties refunded or paid to taxpayers, together with Board costs incurred in making those refunds. CITY OF SAN BERNARDINO STATE BOARD OF EQUALIZATION By By (Signature) (Executive Director) Patrick J. Morris. Mavor (Typed Name and Title) Approved as to fonn: JAMES F. PENMAN City Attorney .~ 7 Adopted: August 21, 2006 Effective: November 8, 2006 (If approved by voters on November 7, 2006) 1 ORDINANCE NO. KC-1229 2 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF 3 EQUALIZATION PURSUANT TO REVENUE AND TAXA nON CODE SECTIONS 7251 ET SEQ., SUBJECf TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE 4 TAX, AND THE CREA nON OF A CITIZEN'S OVERSIGHT COMMITTEE. 5 BE IT RESOLVED THE MAYOR AND COMMON COUNCIL OF THE CITY OF 6 SAN BERNARDINO DO ORDAIN AS FOLLOWS: 7 SECTION 1. Title. This ordinance shall be known as the City of San Bernardino 8 Transactions, and Use Tax Ordinance. The City of San Bernardino hereinafter shall be called "City." 9 This ordinance shall be applicable in the incorporated territory of the City. 10 SECTION 2. Ooerative Date. "Operative Date" means the first day ofthe first calendar 11 quarter commencing more than 110 days after November 7, 2006. 12 SECTION 3. Purnose. This ordinance is adopted to achieve the following, among other 13 purposes, and directs that the provisions hereof be interpreted in orderto accomplish those purposes: 14 IS 16 17 To impose a retail transactions, and use tax in accordance with the provisions of Part A. 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2, that authorize the City to adopt this tax ordinance, which shall be operative only if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that 18 19 20 purpose. B: To adopt a retail transactions and use tax ordinance that incorporates provisions 21 identical to those of the Sales and Use Tax Law of the State of California insofar as 22 23 24 25 26 27 28 those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code. C. To adopt a retail transactions and use tax ordinance that imposes a tax, and provides a measure therefore that can be administered, and collected by the State Board of Equalization in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from the existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the DHC/js IOrdinances\GenmlTransactions.Use Tax.Ord) Revised SnJ06 KC-1229 1 2 3 AN ORDlNANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTIONS 7251 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 California State Sales and Use Taxes. D. To adopt a retail transactions and use tax ordinance that can be administered in a 7 manner that will be, to the greatest degree possible, consistent with the provisions of 8 Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of 9 collecting the transactions and use taxes, and at the same time, minimize the burden 10 of record keeping upon persons subject to taxation under the provisions of this 11 ordinance. 12 SECTION 4. Contract With State. Prior to the operative date, the City shall contract with 13 the State Board of Equalization to perform all functions incident to the administration and operation 14 of this transactions and use tax ordinance; provided, that if the City shall not have contracted with 15 the State Board of Equalization prior to the operative date, it shall nevertheless so contract and in 16 such a case the operative date shall be the first day of the first calendar quarter following the 17 execution of such a contract. 18 SECTION S. Transactions Tax Rate. For the privilege of selling tangible personal 19 property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City 20 at the rate Of 0.25% of the gross receipts of any retailer from the sale of all tangible personal property 21 sold at retail in said territory on and after the operative date of this ordinance. 22 SECTION 6. Place of Sale. For the purposes of this ordinance, all retail sales are 23 consummated at the place of business of the retailer unless the tangible personal property sold is 24 delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery 25 to an out-of-state destination. The gross receipts from such sales shall include delivery charges, 26 when such charges are subject to the state sales and use tax, regardless of the place to which delivery 27 is made. In the event a retailer has no permanent place of business in the State or has more than one 28 III DHCljs [OrdieancC$\GencraITransactions.Use Tax.Old} z Revised 8n106 KC-1229 1 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL 2 TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITfEE. 4 5 place of business, the place or places at which the retail sales are consummated shall be detennined 6 under rules and regulations to be prescribed and adopted by the State Board of Equalization. 7 SECTION 7. Use Tax Rate. An excise tax is hereby imposed on the storage, use or other 8 consumption in the City of tangible personal property purchased from any retailer on, and after the 9 operati ve date of this ordinance for storage, use or other consumption in said territory at the rate of IO 0.25% of the sales price of the property. The sales price shall include delivery charges when such II charges are subject to state sales or use tax regardless of the place to which delivery is made. 12 SECTION 8. Adoption of Provisions of State Law. Except as otherwise provided in this 13 ordinance. and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 14 of the Revenue and Taxation Code, all of the provisions of Part I (commencing with Section 6001) 15 of Division 2 of the Revenue and Taxation Code are hereby adopted, and made a part of this 16 ordinance as though fully set forth herein. 17 SECTION 9. Limitations on Adoption of State Law and Collection of Use Taxes. In 18 adopting the provisions of Part I of Division 2 of the Revenue and Taxation Code: 19 20 21 22 23 24 A. Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when: l. The word "State" is used as a part of the title of the State Controller, State Treasurer, State Board of Conlrol, State Board of Equalization, State 25 26 27 28 III 2. Treasury, or the Constitution of the State of California; The result of that substitution would require aclion to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the State Board of Equalization, in perfonning the functions incident to the DHCljs [Ordinances\GenerarI'ransactions:. Use Tax.Ord] 3 Revised snl06 KC-1229 AN ORDINANCE OF THE CITY OFSAN BERNARDINO IMPOSING A GENERAL 2 TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 7 3. administration or operation of this ordinance. In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the 8 9 10 11 12 13 14 IS 16 17 18 19 substitution would be to: a. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otheIWise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part I of Division 2 of the Revenue and Taxation Code, or; b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code. 4. In Sections 6701, 6702 (except in the last sentence thereof,) 6711, 6715, 6737,6797 or 6828 of the Revenue and Taxation Code. 20 B.c' The word "City" shall be substituted for the word "State" in the phrase "retailer 21 engaged in business in this State" in Section 6203, and in the definition of that phrase 22 in Section 6203. 23 SECTION 10. Permit Not ReQuired. If a seller's permit has been issued to a retailer under 24 Section 6067 of the Revenue and Taxation Code, an additional transaction's permit shall not be 25 required by this ordinance. 26 SECTION 11. Exemptions and Exclusions. 27 28 There shall be excluded from the measure of the transactions tax and the use tax the A. amount of any sales tax or use tax imposed by the State of California or by any city, DHC/js [Ordinances\Gencrarrransactions.Use Tax.Ord} Re....ised 817106 4 KC-1229 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL 2 TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXA nON CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREA TION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 7 8 9 10 city and county, or county pursuant to the Bradley-Bums Uniform Local Sales and B. Use Tax Law or the amount of any state-administered transactions or use tax. There are exempted from the computation of the amount of transactions tax the gross receipts from: 1. Sales of tangible personal property. other than fuel or petroleum products, to operators of aircraft to be used or consumed principall y outside the county in which the sale is made and directly and exclusively in the use of such aircraft 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 II I as common carriers or persons or property under the authority of the laws of 2. this State, the United States, or any foreign government. Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent. or by delivery by the retailerto a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the City shall be satisfied: a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (connecting with Section 9840) of the Vehicle Code by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and DHClj$ (Ordinanccs\OenerarrraDSlctions.Use Tax.Ord] 5 Revised Sm06 HC-1229 I AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL 2 TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 With respect to commercial vehicles, by registration to a place of business out-of-City, and declaration under penalty of peIjury, signed by the buyer, that the vehicle will be operated from that address. The sale of tangible personal property if the seller is obligated to furnish the b. 7 8 9 10 11 12 13 14 15 16 17 18 19 3. property for a fixed price pursuant to a contract entered into prior to the 4. operati ve date of this ordinance. A lease of tangible personal property which is continuing sale of such property. for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this ordinance. 5. For the purposes of subparagraphs (3), and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. 20 C:' There are exempted from the use tax imposed by this ordinance, the storage, use or 21 other consumption in this City of tangible personal property: 22 23 24 25 26 27 28 1. The gross receipts from the sale of which have been subject to a transactions tax under any state-administered transactions, and use tax ordinance. Other than fuel or petroleum products purchased by operators of aircraft, and used or consumed by such operators directly, and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience, and necessity issued pursuant to the laws of this State, the United States, or any foreign 2. DHOjs [Ordioanccs\GcoeraITransacliOlls. Use Tu.Ord) Revised &n106 6 HC-1229 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL 2 TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTlOl'iS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 7 government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California. 8 9 3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of thi s ordinance. 10 II 12 13 4. If the possession of, or the exercise of any right or power over. the tangible personal property arises under a lease which is a continuing purchase of such 14 property for any period oftime for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of this ordinance. 15 16 17 5. For the purposes of subparagraphs (3) and (4) of this section, storage, use. or other consumption. or possession of, or exercise of any right or power over, 18 19 20 21 22 23 tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period oftime for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon 6. notice, whether or not such right is exercised. Except as provided in subparagraph (7), a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City 24 25 26 27 28 DHC/js (Ordinances\GcneralTransaclions.Usc: Tax.Oedl 7 Revised 817/1XJ HC-1229 2 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF EQUALlZA TlON PURSUANT TO REVENUE Al'rD TAXATION CODE SECTIONS 7251 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 3 4 5 6 7 8 9 10 under the authority of the retailer. 7. "A retailer engaged in business in the City" shall also include any retai]erof any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 40(0) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect 11 12 use tax from any purchaser who registers or licenses the vehicle, vessel, or 13 aircraft at an address in the City. 14 D. Any person subject to use tax under this ordinance may credit against thai lax any transactions tax or reimbursement for transactions lax paid to a district imposing, or retailer liable for a transactions lax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of lhe property the storage, use or other consumption of which is subject to the use tax. SECTION 12. Amendments To State Law. All amendments subsequent to the effective ]5 16 17 18 19 20 date of this.ordinance to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales, and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and 21 22 23 24 25 26 27 28 Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this ordinance, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this ordinance. SECTION 13. Enioinin2 Collection Forbidden. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State orthe City, or against any officer of the State orlhe City, to prevent or enjoin the collection under this ordinance, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount DHC/js [Ordinances\GeneraITransactioos.Usc Tax.Ord) Revised 8f1J06 s KC-1229 AN ORDINANCE OFTHE CITY OF SAN BERNARDINO IMPOSING A GENERAL TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF 2 EQUALIZATION PURSUAlIlJ TO REVENUE AND TAXATION CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMlTI'EE. 4 5 6 of tax required to be collected. SECTION 14. Severabilitv. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby. SECTION 15. Effective Date. and Submission To Voters. This ordinance relates to the levy and collection of City transactions and use taxes and shall take effect immediately upon its approval by the voters of the Ci ty. SECTION 16. Amendment. and Termination Date. The authority to levy the tax imposed by this ordinance shall expire 15 years after the Operative Date defined in Section 2 of this ordinance. However, as required by Article XIIlC of the California Constitution, no amendment to 7 8 9 10 11 12 13 14 15 this ordinance may increase the rates of the taxes above 0.25% without voter approvaL SECTION 17. Declaration. The proceeds of the taxes imposed by this ordinance may be used for any lawful purpose of the City, as authorized by ordinance, resolution or action of the Mayor and Common Council. These taxes are not special taxes within the meaning of Section l(d) of Article XIIIC of the California Constitution, but are general taxes imposed for general government 16 17 18 19 purposes. . 20 21 SECTION 18. Citizen's Advisorv Committee. The Mayor and Common Council shall create a Citizen's Oversight Committee, which shall review the expenditure of proceeds of the taxes imposed by this ordinance and report on those expenditures to the voters of the City at least once a 22 23 24 year. SECTION 19. Execution. The Mayor and City Clerk are authorized to subscribe this 25 26 27 28 Ordinance where indicated below to evidence its approval by the voters of the City. 11/ 1/1 DHC/js {Ordinances\GeneraITransactions.Use Tu.Ordl 9 Revised snlO6 KC-1229 AN ORDINANCE OF THE CITY OF SAN BERNARDINO IMPOSING A GENERAL TRANSACTIONS AND USE TAX TO BE ADMINISTERED BY THE STATE BOARD OF 2 EQUALIZATION PURSUANT TO REVENUE AND TAXATION CODE SECTIONS 7251 3 ET SEQ., SUBJECT TO VOTER APPROVAL, AND PROVIDING FOR SUNSET OF THE TAX, AND THE CREATION OF A CITIZEN'S OVERSIGHT COMMITTEE. 4 5 6 7 8 I HEREBY CERTIFY that the foregoing Ordinance was duly adopted by the Mayor and Common Council of the City of San Bernardino at a j oint regular meeting thereof, held on the 21st day of AURust ,2006, by the following vote, to wit: COUNCIL MEMBERS: AYES NAYS ABSTAIN ABSENT ESTRADA 9 BAXTER 10 VACANT 11 DERRY 12 KELLEY 13 JOHNSON 14 MCCAMMACK 15 16 -L- -L- x x ~ ~ 17 18 19 20 21 22 23 ~~~I!Ci~ The foregoing Ordinance is hereby approved this ~y of ,2006. August ~' r- ~~ Pat ckJ. Mom, a 1 y of San Bernardmo Approved as to Form: , Michael G. Colantuono, Special Counsel 24 25 By: /'-- / '--..... . / / .:, 8 ? /cx.., 26 27 28 DHC/js IOrdinances\GcneralTransaclions. Use Tax.Ord] Revised 8n/06 10