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Home My WebLink About38-City Clerk CITY OF SAN BERNC)RDINO - REQUEST OR COUNCIL ACTION From: Rachel Krasney, City Clerk Subject: Policies and practices relating to calculation of business registration fees for apartment complexes - V. Alan Swensen - Hill Williams Mavor and Common Council Meetine of June IS, 1992 Dept: City Clerk's Office D.: June 10, 1992 Synopsis of Previous Council action: April 20, 1992 - The Mayor and Common Council continued the matter for 30 days (May 18, 1992) and referred it to the Legislative Review Committee. May 18, 1992 - The Mayor and Common Council continued the item to June IS, 1992. Recommended motion: That the matter concerning policies and practices followed by the Business Registration Division, relating to-calculation of business registration fees for apartment complexes, be continued to July 6, 1992. ~.e.i (.,(.. 1:t.. I "'-'~ Signature Contact person: Rachel Krasnev, City Clerk Phone: 5102 Supporting data attached: VAG Ward: FUNDING REQUIREMENTS: Amount: N/A Source: (Acct. No.) (Acct. DescriDtion) Finance: Council Notes: 75.0262 Agenda Item No '3 g o o REO U EST FOR C 0 U N C I L ACT ION . STAFF REPORT . SUBJECT: Business registration fees for commercial properties and apartment complexes MEETING: Mayor and Common Council Meeting of June 15, 1992 The Legislative Review Committee (LRC) met on May 7, 1992 at which time the Committee recommended a full review of the ordinance identifying all of the problems and recommending solutions. On Wednesday, May 13, City Clerk's staff met with Dennis Barlow, Senior Assistant City Attorney, to review the existing ordinance. Staff began to draft a report identifying all of the problems and recommending options for LRC to consider. On June 2, 1992, Cindy Buechter, Business Registration Inspector, completed a Residential Rental Tax Analysis Report, which will be presented to the LRC Committee at its meeting on June 18, 1992. RECOMMENDATION: It is recommended that this matter be continued until the July 6, 1992 Council meeting to give staff an opportunity to present its report and recommendation to LRC. Dated: June 10, 1992 ~<<~ '}(~~c-y Rach Krasney City Clerk Page 2 of 2 /l o o ': I T Y 0 f. REC'~. ~ ..:.;-, "..: ...._- ~..' , . San l)ernardino ~,':.i', _ I - n. h I I ,...... j: ...,;,,:. RACHEL K R A S N E Y c .. Y C L :: I:l K March 31, 1992 Mr. V. Alan Swensen Director of Commercial Income Properties Hill Williams 175 Riverview Drive, Suite 200 Anaheim Hills, California 92808 Dear Mr. Swensen: I am responding to your letter of March 27, 1992 wherein you asked to be placed on the City Council agenda for the purpose of addressing the Council concerning the business registration fees for commercial rental properties. \ By copy of this letter, I am forwarding your correspondence to the City Administrator's Office so that your letter can be placed on the City Council Agenda for April 20, 1992. The agenda should be ready for public release on the afternoon of Thursday, April 16. Therefore, I suggest that you call this office, at 384-5102, on Friday morning, April 17, to find out what agenda number your item has been designated. Council meetings begin at 9:30 a.m. in the Council Chambers of City Hall, 300 North "0" Street, San Bernardino; however, I cannot guarantee exactly what time your item will be heard. Since the matter you wish to address concerns the fees collected for commercial rental properties, I thought it might be helpful to provide you with the enclosed copy of Ordinance No. MC-700. Adopted in January 1990, the ordinance requires a business license for leasing for renting residential/commercial. If you have any questions, please do not hesitate to call me at 384- 5102. Sincerely, (~~s~ City Clerk \ Enclosure PA~,'tIICJIl:J ""'1.()-1~ Il,., ~cc: Shauna Clark, City Administrator POST OFFICE lOX 131', SAN BERNARDINO. CALIFORNIA 12402 .. 300 NORTH 0 STREET SAN BERNARDINO CAll"'QP.NIA 92418.0001 71413'..5002 7141384-5102 PRIDE .f .IN PROGRESS ~-- .4 3*1' UILT ~.J.. ~ - ;:l~LLIP.JvfS . C7 Ii; RIVERVIEW DRIVE. sum 200 . "AHEIM HILLS. CAUFORNIA 92808 '4l 282.2400 . FAX, 1iI4) 283.2334 o o March 27, 1.992 ~El"-!""''''' .....v :..... ~r"': K.: . ~~..,. 'r-i ..~ "0. n7'1:;8 .... . .1\ _ " 'J Ms. Rachel Krasney city Clerk City of San Bernardino P.O. Box 1.318 San Bernardino, CA 92402 Re: 2055 North Central Avenue San Bernardino, California Dear Ms. Krasney: We desire to be placed on the agenda for the City Council meeting to be held on April 20, 1992 for the purpose of addressing the Council regarding policies and practices currently followed by the Business License Division as they relate to calculation of business license fees for apartment complexes. By way of backqround information leading to this request I am enclosing copies of correspondence between the Business License Division and Hill Williams Development Corp. Please advise us at your earliest convenience if this matter can be heard at the April 20th meeting so that we may notify other interested parties in a timely matter. Thank you for your cooperation in this regard. sal V. Alan e Director of Income Properties Enclosures cc: Mr. Lee Gaqnon, Business Supervisor Mr. Frank Spina, Esq. Registration HILL WILLIA1\1S .(7 175 RMRVIEW DaM, Sum 200 ANAHEIM Hn.Ls. CulEoRNIA 92808 (714) 282.24COoFAX: (714) 283.2334 o o February 19, 1992 Mr. Lee Gagnon City of San Bernardino City Qerk's Office Business license Division P.O. Box 1318 San Bernardino, CA 92402 . Re: Summerwind Apartments 2055 North Central Avenue San Bernardino, California Dear Lee: I appreciated the opportunity to meet with you and Roger Davis last week and discuss the licensing requirements that were the subject of Roger's letter dated February 6, 1992. At your suggestion I will set forth hereafter our response to that letter and contentions regarding the licensing requirements set forth in Ordinance MC-700. Hill WilliAm. Development Corp.'s business activity at the referenced property since receiving an occupancy permit on April 9, 1991 has been that of renting apartments on a month-to-month basis. We have mistakenly operated under the assumption that the business licensing requirement for the apartment complex was being satisfied through our property manager's business license. Understanding the requirement as we do now we are anxious to comply and pay reasonable business license fees. While we appreciate the fact that municipalities throughout Southern California are scrambling for income, we view the City of San Bernardino's attempt to require 180 business licenses to rent an apartment complex shooting as well beyond the mark. Based upon the schedule of fees set forth in Municipal Code Chapter 5.04, our gross receipts of $553,550 for 1991 and projected gross receipts of $992,000 for 1992, yield a business license fee of $1,093.00 for that period. In stark contrast, Roger's letter of February 6, 1992 requests payment of fees in the amount of $21,600.00 for the same two year period. o o February 19, 1992 Mr. Lee Gagnon Page Two You have proffered the explanation that based upon Ordinance No. MC-700 and the city attorney's interpretation thereof, 180 business licenses are required. We are unable to get this to square either with logic or precedent. A manufacturing plant under one entity's ownership would pay business license fees based upon gross receipts regardless of the number of buildings within that plant let alone departments within those buildings. Logic would dictate that an apartment complex: under one ownership would pay license fees simiIarly based upon gross receipts regardless of the number of buildings within the complex or the number of apartments within those buildings. As regards precedent, we are aware of other apartment owners who pay their business license fees based upon total gross receipts for their respective multi-building complex as a whole and not by building. Your di!m'liqal of this objection with the comment that they have been "grandfathered" is nothing short of discrimination. We hope this matter can be resolved efficiently at this level so that we need not resort to our other forms of remedy. Thank you for your cooperation in this regard. Sincerely, Hll..L Wll.LIAMS DE v:44 ( v. Alan swe~ Director of Commercial Income Properties cc: Dennis Barlow, Assistant City Attorney Marvin L. Christensen, Esq. :,... ..' ..... ....... -- . ,., O/n. ...'...... . ." c."o. ~ o o /6(' -; CITY OF San Bernardino CITY CLERK'S OFFICE BUSINESS LICENSE DIVISION March 10, 1992 Hill Williams Development corporation 5500 East Santa Ana Canyon Road Anaheim Hills, cA 92807 RE: FZHAL NOTZCB - Summerwind Condominiums, .2055 North Central Avenue Dear Sir/Madam: This letter is a final notice to obtain a business registration for each condominium as specified in my letter to you dated February 6, 1992. The City Attorney's Office has affirmed our position that each condominium parcel number must be issued a sepa~ate business registration certificate per City of San Bernardino M~icipal Code (SBMC) 5.04.525F (please see contents of the enclosed ~o from Deputy City Attorney Dennis A. Barlow); however, as an alternative, it has been suggested that if you are able to file a new map or revert the parcels to acreage, we could then issue a business registration certificate for each building instead of each separate condominium p~rcel number per SBMC 5.04.525F. If you opt to change the designation of your condominiums to apartments, we will postpone the collection of business registration fees until that has been accomplished. Please contact Ms. Valerie Ross, City of San Bernardino Planning & Building Services Department, telephone (714) 384-5071, 300 North "0" Street, Jrd Floor, San Bernardino, regarding procedures to follow regarding re-designation of your condominiums to apartment buildings. If you are unsuccessful in re-designating these condominiums as apartments and eliminating the parcel numbers for each (wherein they may not be disposed of separately), your fees totalling $21.100 will become due and payable immediately with an effective date of January 1. 1992, for your business registration certificates. In any event, your business registration fees will necessarily be collected from the date beginning January 1, 1992. Please forward your business registration applications and payment of $21.100, or proof that you have bequn the process of re- desiqnating your condominiums to apartments as explained above, Dot later than Karch 31. 1992. to avoid any penalties/legal action. ~OIT OFFICE .ox '311, SAN .."HARDING. CALIPORNIA '2"02 PRIDE ~ ~RESS 300 NOATH 0 STREET SAN BEFlNAROINO CALIFORNIA 92418.0001 7'.'3'..1302 71./3'C.IO,. o o March 10, 1992 ~2 If you have any questions regarding this matter, please do not hesitate to contact me or Mr. Roger Davis at (714)384-5035, Monday through Friday, 7:30 a.m. until 4:30 p.m. Sincerely, ~., Lee Gagnon Business Registration Supervisor cc: Mr. Dennis Barlow, City Attorney's Office Ms. Valerie Ross, Department of Planning and Building Services ....ClP,.ItE'/~.1ut1, '.., Oti~"";' / "'u.. 1)/ ~...... _. 'J,,' ........,.. "''''Ibis ~. (cF ... " ." ~,.....lr",,~ o .~ ....,1 I! 6J' C i ":' Y C F -' t'-.... ! _~ ", ~~/u.;- /';"~..-J . ,/ I v' ... L.t!.v"'~" -' ," , . ." .A;..........l'~ .-, , GN"""'w...-..,V - ,7 r"""--7 ~ - t....... ~ -r ...._ '. ........ ..v"'f~' ,-I+s... ~J-~' .7 .' '".... _ ...A c.t........u.~ . ~.._;....{.t" - San Bernardino CITY CLERK"S OFFICE BUSINESS LICENSE DIVISION February 6, 1992 Summerwind Condominiums c/o Hill Williams Development Corporation 5500 East Santa Ana Canyon Road Anaheim Hills, CA 92807 RE: Business License, 2055 North Central Avenue Dear Sir/Madam: I have been informed that you are currently conductinq the business of property rental/leasinq in the City of San Bernardino. Our records to not indicate that you have been issued a business license as of this date. SBMC 5.04.005 requires you to obtain a business license in order to conduct business in the City of San Bernardino. A business license fee is deemed a debt to the City of San Bernardino per SBMC 5.04.010 (please see enclosure 1). SBMC 5.04.075 requires that a business license be obtained on or before the start of business (please see enclosure 2). I am tasked by SBMC 5.84.010 with enforcinq the provision of SBMC Chapter 5. SBMC 5.84.015 states that it is a misdemeanor to violate certain portions of Chapter 5, and SBMC 5.84.020 requires me, as a representative of the City Clerk, to ascertain the name of any person, firm, or corporation or association enqaqed in or carryinq on any business in the City of San Bernardino, and to require that a business license be obtained and the appropriate fee or tax be paid (please see enclosure 3). Per SBMC 1.112.010, the penalties that can be imposed for a misdemeanor violation of SBMC Chapter 5 is imprisonment in the county jail not exceedinq six months and a fine not exceedinq $1,000 (please see enclosure 4). I have been instructed to determine who owns property at 2055 North Central Avenue and the appropriate business license fee to be as- ses.ed for property rental as required by SBMC 5.04. 525F. Based on public records available from the county of San Bernardino Asses- sor's Office, I have determined that Hill Williams Development Cor- poration is the owner of residential property beinq rented/leased at 2085 North Central Avenue in the City Limits of San Bernardino. 'OST OFFICE lOX 1"'. SAN BERNARDINO CALIFORNIA "402 PRIDE .I "W PROGRESS .....l ~ 300 NORTH O' 5TFt!E"i' SAN BERNARDINO CAL.IFORNIA 92418.0001 714/3'4.1102 :/ ~... .// o o /' .... February 6, 1992 The County of San Bernardino Assessor's Office has..classified this property as consisting of 180 condominiums used for apartments. The business license fee due is governed by SBMC 5.04.525F, which was amended by Ordinance No. MC-700 (adopted January 8, 1990, and effective February 8, 1990), and states: "For the leasing or renting of dwelling units a separate license shall be required for each building unless the ownership of the building is divided as provided in Government Code section 66426 and section 66427 as a condominium, community apartment project or stock cooperative project, and then a separate license shall be required for each such division. Said license shall be good for two (2) years. Buildings with even number street addresses shall renew on even numbered years and buildings with odd number street addresses shall renew on odd numbered years." Therefore, I have determined that each condominium must be licensed separately as set by ordinance. Any Change to this determination will require City Council action. Since the street address of the condominiums is Odd-numbered, each condominium must be licensed for two years, and the licenses will expire on odd-numbered years. These licenses are based on gross receipts. The on-site manager, Ms. Karen oien, informed me that the highest rents being charged per unit is $635 per month which equates to a maximum of $7,620 in gross receipts per unit per year. The minimum fee for the first $25,000 in gross receipts is $60 per year, making your business license fee $120 for each unit. The total business license fees due for the period January 1, 1992, through December 31, 1993, is $21,600. These licenses will expire on December 31, 1993. By law, the City of San Bernardino may collect business license fees for the current year and up to the date Ordinance No. MC-700 became effective, provided you have, in fact, conducted business here that long. At this point in time, it would be counter- productive to demand these fees, issue a citation, and/or charqe you a 50 percent penalty (minimum $5,400) for beginning business without first having obtained a business license to do so: however, these are options still available to the City of San Bernardino. As a matter of expediency, I have been instructed to deliver the required business license application forms to your on-site manager, Ms. Karen oien, so that you may begin completing the necessary paperwork in obtaining the required business licenses from the City of San Bernardino. We will require your application for a business license for property rental/leasing and payment of $21,600 made payable to the "City of San Bernardino" not later than February 28, 1"2, to prevent any penalties and/or appropriate legal action which will necessarily revert back to the date you actually began conducting business in the City of San Bernardino. - " ." o o ./ ..... February 6, 1992 Thank you for your immediate attention to this matter. If I may be of assistance to you, please do not hesitate to contact me at (714)384-5015 between 7:30 a.m. and 4:30 p.m., Monday through Friday. Sincerely, /! - Jf~~, 71, lr:.:./v........ Roger N. Davis Business License Inspector " \ ,-, . / ,/ o o /1t8 C I T Y 0 F SAN B ERN A R DIN 0 INTEROFFICE MEMORANDUM .-..--. ,--' - TO: Rachel Krasney, City Clerk FROM: Lee Gagnon Dennis A. Barlow, Sr. Asst. City Attorney -~ , :""I - " -:: . ~' ATTN: DATE: HE: March 4, 1992 Village ....av forwarded a package of material relating totlllllllr Apartments. The question is whether the City 's bus ness registration certificate ordinance applies to this property as separate units or as an apartment complex. Condominiums'are divided into separate units pursuant to the Subdivision Map Act (Government Code 566410 et seq., see specifically Government Code 5566424 and 66427). As with standard subdivisions, such units may not be offered for sale unt11 a Subdi v1sion Report is issued (Business and Professions Code 5511018.2 and 11018.5) . But in addition they do not become completed subdivisions until at least one unit is sold (see County of Los Anqeles v Hartford Acc. & Indem. Co. (1970) 3 CA 3d 809, 814-815; City of West Hollywood v Beverly Towers, Inc. (1991) 52 C3d 1184, 1190; and Civil Code 51352) Finally, there must also be f11ed a condom1nium plan pursuant to C1vil Code 51350 et seq. However the requirement for a Business Registration Certificate 1s imposed by San Bernardino Municipal code 55.04.525.F as follows: "Every person, firm or corporation conducting, managing or carrying on the business of...leasing or renting any residential dwelling units including single family homes shall obtain a business registration certificate and pay a fee established by resolution of the Mayor and Common Council. DAB/ses/Racquet.mem "The intent of this Section is to require a license [Business Registration Certificate] for the business of. .. leasing or renting dwelling units. For the leasing or renting of dwelling units a separate license [certificate] shall be required for each building unless the ownership of the building is divided as provided in Government Code Section 66426 and Section 66427 as a condominium...and then a separate license shall be required for each such division. .. Certainly the property in question has been divided pursuant to the Government Code Sections cited. Even if it is not separate condominiums pursuant to the other provisions of state law it has met the test outlined by the ordinance and must be taxed as individual units. The argument may be made that such a taxing scheme treats an owner of a whole condominium project differently from the owner of an apartment project, which are seemingly similarly situated. However the significant difference is that the units are separate parcels so that they could be sold individually, presumably at a profit, if other laws are met. Apartment units could not be so conveyed. If an owner enters into agreements with other agencies or individuals to restrict the use of the property, this should not affect the status for Business Registration Certificate purposes. Treating these condominium units as individual residential units for Business Registration Certificate purposes is the same thing as requiring an owner of several single family detached homes to obtain a separate certificate for each home. Just because the separate units are gathered together in one building does not mean that they should be treated differently. ~~u .,./l>~NN;[S A. ARLOW DAB/ses/Racquet.mem .Q.,!O.. "-~=.~a'!!I o o i?J6J CITY OF San Bernardino CITY CLERK'S OFFICE BUSINESS LICENSE DIVISION March 10, 1992 Hill Williams Development Corporation 5500 East Santa Ana Canyon Road Anaheim Hills, cA 92807 RE: PZ~ NOTZCE - summerwind Condominiums, 2055 North Central Avenue Dear Sir/Madam: This letter is a final notice to obtain a business registration for each condominium as specified in my letter to you dated February 6, 1992. The City Attorney's Office has affirmed our position that each condominium parcel number must be issued a separate business registration certificate per City of San Bernardino Municipal Code (SBMC) 5.04.525F (please see contents of the enclosed memo from Deputy City Attorney Dennis A. Barlow): however, as an alternative, it has been suggested that if you are able to file a new map or revert the parcels to acreage, we could then issue a busin..s registration certificate for each buildinq instead of each separate condominium p~rcel number per SBMC 5.04.525F. If you opt to chanqe the desiqnation of your condominiums to apartments, we will postpone the collection of business reqistration fees until that has been accomplished. Please contact Ms. Valerie Ross, city of San Bernardino Planninq & Building Services Department, telephone (714)384-5071, 300 North "D" street, 3rd Floor, San Bernardino, reqardinq procedures to follow regarding re-desiqnation of your condominiums to apartment buildings. If you are unsuccessful in re-desiqnatinq these condominiums as apartments and eliminating the parcel numbers for each (wherein they may not be disposed of separately), your fees totalling $21,100 will become due and payable immediately with an effective date of JaDuary 1, 1"2, for your business registration certificates. In any event, your business registration fees will necessarily be collected from the date beginning January 1, 1992. Please forward your business registration applications and payment of $21,100, or proof that you have begun the process of re- desiqnatinq your condominium,!! to apartments as explained above, Dot later than Karch 31, 1"2, to avoid any penalties/legal action. 'OIT OFFICE lOX "1'. SAN I.RNARDINO. CALIFORNIA 12402 PRIDE ~ ~RESS 300 NORTH O. STREET. SAN BERNARDINO CALIFORNIA 92.'8.0001 714/114_1102 714/"4-"" ""'- o o March 10, 1992 Rlge 2 If you have any questions regarding this matter, please do not hesitate to contact me or Mr. Roger Davis at (714)384-5035, Monday through Friday, 7:30 a.m. until 4:30 p.m. Sincerely, ~ " Lee Gagnon Business Registration Supervisor cc: Mr. Dennis Barlow, City Attorney's Office Ms. Valerie Ross, Department of Planning and Building Services " \ ~. ~.,,- o o UF~ATE PROSPECTS J.NDE;': STATUS CLASS 01868 COMPLA S005 IC NOTICE DATE NOTICEfI APi\! C 0267-023~Ol CONTACT: LAST HILDEBRANDT FIRST KAY OWNER: LAST FIRST KAREN PHONE BUSINESS NAME (LINE 1 AND 2) (714) 425-0115 SUMMERWIND CONDOMINIUMS BUSINESS A[:o[)RESS MAILING ADr)RESS STF:EET PREFn,: 3TREET SUFFD< ApT/STE ZIP NO 2055 N CENTF:AL AV i9I HIGHLAND. CA '3'2346 STREET PREFD< STREET SUFFn,: AF'T /STE ZIP NO 5500 E 3ANTA ANA CANYON RD ANAHEIM, CA '3'2807 COMMENTS <CR>=FWD B=BACK D=DELETE I=INSERT R=REPLACE I=EXIT OPTION: 001 02/03/92 DISCOVERED DURING SITE VISIT TO ANOTHER LOCATION AND BASED ON 002 COMPLAINT. CALLED NUMBER LISTED AND LEFT MESSAGE FOR INDIVIDUAL TO RETURN 003 MY CALL. 004 02/03/92 RECIEVED CALL FROM KAREN WHO STATED THAT KAY HILDEBRAND OF REAL ,)v:. ::::::;H'TE l'IHhlHi:li:::jTiEJ~T ::;, t'-STEi'lE." "."" .l."":'} c<:'.~-:r3-r.:'.:'~ =::: '~;'~E r;;Cq:::=:r;:T";' ;,~r~l\lAGr::R. CALLED 006 KAY HILI:'EBRAND ANI) INFORMED HEF: THAT A BUSINESS LICENSE IS NECESSARY AND 007 THAT THEY NEED TO COME INTO THE CITY CLERK'S OFFICE TO PIO::UP APPLICATIONS. 008 02/13/92 MET WITH MR. ALAN SWENSON AND LEE '"AGNON. BUSINESS REGISTRATION 009 SUPERVISOR. REGARDING CLASSIFICATION OF THESE BUILDINGS AS APARTMENTS OR 010 CONDOMINIUMS. MR. SWENSON CLAIMS THEY SHOULD BE CLASSIFIED AS APARTMENTS. 011 MR. GAGNON REQUESTED MR. SWENSON PUT HIS CONCERNS IN WRITING PRIOR TO THE 012 DUE DATE OF THE BUSINESS LICENSES FOR CONDOMINIUMS. MR SWENSON STATED THAT 013 HE WOUL[) DO SO AND I)EPARTED THE OFFICE. 014 03/06/92 RECEIVED DETERMINATION FROM CITY ATTORNEY'S THAT SUSTAINS MY ORI- 015 GINAL REQUEST--EACH CONDOMINIUM MUST BE LICENSED SEPARATELY. HOWEVER, 016 WILL WORK WITH DEPARTMENT OF PLANNING AND BUILNNG SERVICES TO SEE IF THEY 017 CAN BE I)ESIGNATEI:' APARTMENTS INSTEAD OF CONI)OMINIUMS, AND LICENSE EACH BY 018 BUILDING. IF NOT, WILL REQUESTC8~MEN~$NG AT CONDOMINIUM SINGLE FAMILY <CR>=FWD B=BACK D=DELETE I=INSERT R=REPLACE I=E:'UT OPTION: 01':; RATE. TALKED TO VALERIA ROSS, PLANNING ANI) BUILDINI" SERVICES, WHO WILL LET o~'o tilE I<NOW THE PROCEDURE FOR THE OWNERS TO FOLLOW TO '"ET THEM REGISTERED AS APARTMENTS. REG!UIRES: CHANGE n) PARCEL MAP FILES;. , ~ 03/10/92 SENT CERTIFIED LETTER REQUESTING PAYMENT OF BUSINESS REGISTRATION 023 NOT LATER THAN MARCH 31, 1992.