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CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION
Subject: An ordinance of the City of San Bemardino
amending Title 3 of the San Bernardino Municipal
Code relating to Utility Users' Taxes for telephone,
electric, gas, and video service
From: Fred Wilson, City Administrator
Dept: City Administrator's Office
Date: January 4, 2000 0 RIG IN A L
Synopsis of Previous Council action:
July 29, 1968:
August 12, 1968:
June 26, 1975:
August 4, 1983:
June 17, 1991:
December 2, 1991:
February 19,1992 :
September 20, 1993:
March 21, 1994:
June 6, 1995 :
July 1, 1998:
Council adopts motion to impose a 5% utility tax effective 9/1/68.
Ordinance No. 2931 imposes the tax on gas, electricity, and water users.
Ordinance No. 3510 increases the UUT rate from 5% to 6%.
Ordinance No. MC-297 increases the UUT rate from 6% to 8%.
Ordinance No. MC-793 adds telephone users provisions.
Ordinance No. MC-814 adds school exemption provisions.
Ordinance No. MC-820 increased the UUT rate from 8% to 8.5%
Ordinance No. MC-885 adds video users provisions.
Ordinance No. MC-899 clarifies definitions.
Ordinance No. MC-939 extends the increased 14% tax until June 30,1998
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.
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Phone: 5122
Contact person: Fred Wilson
Supporting data attached: Staff report Ward: All
FUNDING REQUIREMENTS: Amount: -0-
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Agenda
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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.
Background:
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 Attomey 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 1 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 2 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.
UUT Rebate ProV"am for E'q)andlng Businesses
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:
1st year -75% rebate
2nd year - 50% rebate
3rd year - 25% rebate
4th 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 ordiuance change will be presented to the Council in February
2000.
Financial Impact:
The UUT 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 admiuister and monitor this program.
Recommendation:
It is recommended that the Mayor and Common Council waive the first reading and lay
the ordiuance over for final adoption.
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ORDINANCE NO.
ORDINANCE OF THE CITY OF SAN BERNARDINO
3.44.131 TO THE SAN BERNARDINO MUNICIPAL CODE AN
UTILITY USER'S TAX REBATE PROGRAM.
DING SECTION
STABLISHING A
NOW, THEREFORE, THE MAYOR AND COMMON OUNCIL OF THE CITY
OF SAN BERNARDINO DO ORDAIN AS FOLLOWS:
SECTION 1. Section 3.44.131 is hereby added to t San Bernardino Municipal Code
to read as follows:
"3.44.131
Utility User's Tax Rebate Program
A. Notwithstanding any other provision of this C
provide significant numbers of higher-wage jobs, the r.
is hereby established:
ter, in order to attract new businesses that
owing Utility User's Tax Rebate Program
1. Any new business that creates een 5 to 49 new, permanent full-time jobs within
the City (50% of such new jobs shall pay at leas 25,000 per year in wages and/or commissions)
shall be eligible for a rebate on the amount ofU .. User's Tax, paid by such business on electrical,
gas, and telephone communication services, i posed by this Chapter according to the following
schedule:
a. First year 75% rebate
b. Second y 50"10 rebate
c. Third ye 25% rebate
d. Fourth d subsequent years -- No rebate.
2. Any new business that creates 50 or more new, permanent full-time jobs within
the City (50% of such new jobs shall p y at least $25,000 per year in wages and/or commissions)
shall be eligible for a rebate on the amou t of Utility User's Tax, paid by such business on electrical,
gas, and telephone communication services, imposed by this Chapter according to the following
schedule:
a.
b.
c.
d.
First year 80% rebate
Second year 60% rebate
Third year 40% rebate
Fourth and subsequent years -- No rebate.
IIIII
IIIII
HE/dcm[Ord.UtilityRebateJ
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3. Any new business not included under subsections (1) or (2) above, which provides
at least a 25% increase in assessed valuation of the business' real property over the previous tax year
as shown by the County Tax Assessor's records, or which generates at least $40,000 in sales tax
revenues per year remitted to the City, shall be eligible for a rebate on the amount of Utility User's
Tax, paid by such business on electrical, gas, and telephone conununication services, impo by
this Chapter according to the following schedule:
a. First year 75% rebate
b. Second year 50% rebate
c. Third year 25% rebate
d. Fourth and subsequent years -- No rebate.
4. To claim a rebate under this section, the claimant shall su 't a completed verified
claim form to the Economic Development Agency with such support' 1I0cumentation as may be
required by the Economic Development Agency to determine claim s eligibility and to establish
the amount of utility user's tax paid by claimant on the period claim. , and the conunencement date
of the "first year" as that term is used herein. A claim for a rebate all be submitted annually to the
Economic Development Agency not later than three months er the close of the year for which
such refund is sought. The verified claim must be signed b authorized officer of the claimant.
The rebate shaII be paid at the reconunendation of the Eco mic Development Agency and subject
to approval of the Finance Department.
IIIII
5. "First year" as used in this section,
period immediately following the date of conune
claim for rebate is filed."
mean for a new business, the twelve-month
ement of business at the location for which a
IIIII
IIIII
HE/dcmrOrd,UtilityRebate]
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ORDINANCE OF mE CITY OF SAN BERNARDINO ADDING SECTION
3.44.131... AND ESTABLISHING A UTILITY USER'S TAX REBATE PROGRAM.
I HEREBY CERTIFY that the foregoing ordinance was duly adopte y the Mayor and
Common Council of the City of San Bernardino at a meeting ther f, held on the
_ day of , 2000, by the following vote, to wit:
Council Members:
AYES
NAYS
ESTRADA
LIEN
MCGINNIS
SCHNETZ
SUAREZ
ANDERSON
MILLER
Rachel Clark, City Clerk
The foregoing ordinance is he by approved this _ day of
,2000.
Judith Valles, Mayor
City of San Bernardino
Approved as to form
and legal content:
JAMES F. PENMAN,
City Attorney
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