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HomeMy WebLinkAbout22- City Administrator's Office CITY OF SAN BERNARDINO - REQUEST FOR COUNCIL ACTION .m: Fred Wilson, City Administrator Subject: An ordinance of the City of San Bernardino Dept: City Administrator's Office amending Title 3 of the San Bernardino Municipal Code relating to Utility Users' Taxes for telephone, Date: January 4, 2000 OUT LI electric, gas, and video service Synopsis of Previous Council action- July LI 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 1/2% 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: JAcct. No.) Acct. Description) Council Notes: Finance: STAFF REPORT Sabject, Ordinance adding Section 3.44.131 to the San Bernardino Municipal Code to establish a Utility User's Tax Rebate Program for new businesses. Backgrou°d• 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 modifications and business demographics. These incentives consisted of a requested 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 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. M Rebate Program for Expanding 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: 1s` year—75% rebate 2"d year—50% rebate 3rd year—25% rebate 41h 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. Finapcial 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. i ORDINANCE NO. 2 3 ORDINANCE OF THE CITY OF SAN BERNARDINO ADDI.NG SECTION 3.44.131 TO THE SAN BERNARDINO MUNICIPAL CODE AND ESTABLISHING A 4 UTILITY USER'S TAX REBATE PROGRAM. 5 NOW, THEREFORE, THE NLAYOR AND COMMON COUNCIL OF THE CITY 6 OF SAN BERNARDINO DO ORDAIN AS FOLLOWS: 7 SECTION L Section 3.44, t3 I is hereby added to the San Berardino �Iuniripal 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-wage jobs, the following 11 is hereby established Utility tiger's Tax Rebate Program : 12 1 Any new business that creates between 5 to 49 new, permanent full-time jobs within 13 the City (50;0 of such nevv jobs shall pay 11 as, and telephone communication sery 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 15 schedule such business on electrical. ices, imposed by this Chapter according to the following _ j 16 a. First year 75% rebate 17 I b. Second year rebate c Third year 35°,u rebate 181 I d Fourth and subsequent years -- No rebate. 19 2 Any new business that creates 50 or more new, permanent full-time jobs within the City(50% of such new jobs shall pay at least 525,000 per year in wages and/or commissions) 20 shall be eligtae for a rebate on the amount of Utility User's Tar, paid by such business on electrical, 2] gas, and telephone communication services, imposed by this Chapter according to the following schedule: 22 23 a. First year 80;0 rebate b Second year -- 60;0 rebate 24 c Third year 40eio rebate 25 d Fourth and subsequent years -- No rebate. 26 27 28 ME/dcaCcrd.Uti[ityRebate] 1 # o1 0a_"t / - /o - oo o� %7100 1 Any new business not ircluded 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 tax year as shown by the County Tax 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 Tax, paid by such business on electrical, gas, and telephone communication services, imposed by 4 this Chapter according to the following schedule: 5 a. First year 75'u -ebate 6 b. Second year -- 50% rebate 7 c Third vear 25°Na rebate 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 sou ht. ency a ht. 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 Anal subject 13 to approval of the Finance Department. g a14 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." 16 17 18 19 // 20 i 21 22 23 24 25 26 27 28 HE/dcm Ord.Utitityqebatel 2 I I 1 ORDINANCE OF THE CITY OF SAN BERVARDINO ADDING SECTION C 2 3.44.131 . . . AND ESTABLISHING A UTILITY USER'S TAX REBATE PROGRAM. i 3 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 day of meeting thereof, held on the 5 2000, by the following vote, to wit: 6 Council Members: AYES iv.aYS ABSTAl� r 7 :�BSEN". 8 ESTRADA 9 LIEN 10 MCGIN^IIS 11 SCHN-ETZ 12 SUAREZ 13 ANDERSON © 14 i 15 MILLER 16 i li I i 18 Rachel Clark, City Clerk j I 19 The foregoing ordinance is hereby approved this_ day of ''000. 20 21 Judith Valles, Mayor 22 City of San Bernardino 23 Approved as to form 24 and legal content: 25 JAMES F. PENMAN, City Attorney 26 27 1HE/dcbC01d.UtiLityR,q.t,3 3