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HomeMy WebLinkAboutItem No. 13 One-Cent Transactions Use Tax General Municipal ElectionCity Council Agenda Report City of Lake Elsinore 130 South Main Street Lake Elsinore, CA 92530 www.lake-elsinore.org File Number: ID# 19-688 Agenda Date: 7/28/2020 Status: Approval FinalVersion: 1 File Type: Council Business Item In Control: City Council / Successor Agency Agenda Number: 13) Placement of a One-Cent Transactions and Use Tax on the November 3, 2020 General Municipal Election Ballot Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF LAKE ELSINORE A TRANSACTIONS AND USE TAX (SALES TAX) ORDINANCE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 3, 2020 AS CALLED BY RESOLUTION NO. 2020-35 AND APPROVING THE FORM OF THE ORDINANCE TO BE SUBMITTED TO THE VOTERS. Page 1 City of Lake Elsinore Printed on 7/23/2020 REPORT TO CITY COUNCIL To: Honorable Mayor and Members of the City Council From: Grant Yates, City Manager Prepared by: Nicole Dailey, Assistant to the City Manager Date: July 28, 2020 Subject: Placement of a One-Cent Transactions and Use Tax on the November 3, 2020 General Municipal Election Ballot Recommendation Adopt A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF LAKE ELSINORE A TRANSACTIONS AND USE TAX (SALES TAX) ORDINANCE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 3, 2020 AS CALLED BY RESOLUTION NO. 2020 -35 AND APPROVING THE FORM OF THE ORDINANCE TO BE SUBMITTED TO THE VOTERS. Background Last month, on June 23, 2020, the City Council adopted the Fiscal Year (FY) 2020/21 Annual Operating Budget to ensure the City continued providing existing service levels through June 30, 2021. However, due to the impacts of the COVID-19 pandemic, the City was forced to use its Economic Uncertainty Reserve Fund, which has been maintained at a healthy 17.5%. As a result, the Economic Uncertainty Reserve Fund is expected to decline to approximately 11.36%, or from $8.3 million to $5.4 million for FY2020-21. At this time, it is difficult to know the full impact of COVID-19 on cities. The City estimates it will suffer a $2.3 million deficit in FY2019/20. With so much uncertainty ahead, it is more important than ever that the City explores all possible ways to ensure a balanced FY2021-22 Operating Budget while working toward a sustainable Five (5) Year General Fund Financial Plan. In addition to concerns related to COVID-19, the City faces several looming challenges in the years ahead due to rising public safety costs, State takeaways of local funding, and additional State and Federal requirements with little to no funding support. In the last several years, voters from cities throughout Riverside County have voted in support of Transaction and Use Tax measures, including Wildomar, Menifee, Murrieta, and Temecula, to secure much needed local funding to maintain City services. The City of Lake Elsinore remains one of a few cities in the County without a local sales tax measure. Transactions and Use Tax Page 2 of 4 Since 2016, the City has regularly conducted community opinion surveys to gauge overall community satisfaction with City services and gather opinions, perceptions, and priorities about the City, its services, and future projects or needs. The results from these surveys have provided critical information to assist the City in making sound, strategic decisions in a variety of areas, including prioritization, planning, performance measurement, policymaking, community engagement, and budgeting. Over the last year, the City has been regularly engaging its residents and businesses citywide to have a dynamic discussion as part of Let’s Talk Lake Elsinore to understand better what services and needs are most important to our community. More specifically, this effort is aimed at helping the City better prioritize its limited budget to meet the needs of its residents. Due to Coronavirus (COVID-19), this conversation has quickly shifted to also identifying our own local needs for relief and recovery. To date, there have been more than 850 survey responses received as part of our Let’s Talk Lake Elsinore efforts. Based on this effort and these ongoing community opinion surveys, residents have identified the following spending priorities for the City:  Preparing for any public health or catastrophic emergency  Having adequate 911 emergency capacity  Continuing to address homelessness and supporting residents and families in transition  Improving fire protection and paramedic services  Keeping public areas safe, healthy, and clean  Continuing law enforcement services including effectively staffed neighborhood patrols  Supporting residents and local businesses through our local recovery Looking ahead, the City must remain focused on serving the community’s needs while also planning for the future recovery that will be necessary following COVID-19. The City agrees with our community on the priorities identified. During these unprecedented times, the health and safety of our residents remain our highest priority. We must work together to ensure our community is prepared for any future medical or catastrophic emergency, including adequate, effective public safety, paramedic, fire, 9-1-1 emergency response times. By maintaining a 9-1-1 emergency response capacity, the City will continue to be prepared and self-sufficient for any future emergency or catastrophe. The City must ensure that we have enough law enforcement officers, firefighters, and paramedics to respond effectively to any emergency in the uncertain weeks ahead. The City seeks to keep Lake Elsinore healthy, safe, clean, and well maintained to help protect the community through this pandemic and improve local property values Although the City has made great strides toward maintaining our streets and roads, there are still many of our local streets that have not been repaired or resurfaced in 20 years. Addressing the community’s desires to fix potholes and repave our streets will also improve the ability of our first responders to safely and quickly reach people who need help. While the economy continues to show signs of some improvement and the development activity momentum is building within the City, the Coronavirus (COVID-19) pandemic has added another layer of complexity in meeting these needs in the short and long-term. Transactions and Use Tax Page 3 of 4 During our recovery and as we look toward our future strength, the City we must continue to operate in a fiscally prudent manner, maintain public safety service levels, and provide the critical recovery and relief services that our citizens expect. Because of the uncertainty whether the City will receive any help from the State or Federal governments, Lake Elsinore must continue to be self-reliant through this crisis and in the event of any future state of emergency. Discussion For several years, the City has been creative and strategic in its efforts to remain fiscally prudent while meeting the increasing demands and rising costs to serve our growing community. Since 2005, the City of Lake Elsinore’s population has increased by nearly 67 percent, and the City has continuously been ranked amongst the fastest growing cities in the State and Nation. However, with public safety cost increases reaching unsustainable levels, the State continuing to shift revenues and funding away from cities, and now with conditions worsening due to COVID- 19, the City must look for new ways to increase revenues to provide the services the community needs and deserves well into the future. Therefore, City staff is recommending that the City Council allow the voters to decide during the General Municipal Election on November 3, 2020, whether to support a proposed ordinance (Exhibit B) to impose a local transactions and use tax that, if approved by a majority of the electorate, would be imposed at a rate of one-cent and would be collected by the State Board of Equalization and remitted to the City. Proceeds of the tax would be unrestricted general funds that could be used to pay for any general municipal services, including but not limited to police and fire services, road maintenance, and homelessness solutions. In April 2020, the City assembled a City Manager’s Roundtable to look closely at the City’s challenges and opportunities related to meeting the needs of the community while remaining financially sustainable. At our most recent meeting on July 14, 2020, the Roundtable members recommended to the City Manager that the City allow voters to decide whether they support a sales tax measure to ensure the City can continue to address and meet the needs of our community. Members of the Roundtable include City Staff, the City’s Police and Fire Chief, and the following community and business stakeholders:  Allen Baldwin  Ashlee DePhillippo  Brett Masters  Butch Noll  Heidi Dodd  Kim Joseph Cousins  Michael Lujan  Pauli Tehrani  Rick Morsch During the most recent professional community opinion survey completed in July, as many as 70 percent of respondents indicated they would support this simple majority funding measure. The City’s primary revenue sources include sales and property taxes. The Sales and Use Tax Rate in the City of Lake Elsinore is currently 7.75%. However, the City only receives 1% of these taxes collected in the City. Most of this funding currently goes to the County and State. Other key Transactions and Use Tax Page 4 of 4 sources of revenue for the City include Transient Occupancy Taxes, fees, fines, and special assessments. Cities are struggling financially to meet rising demands due to ongoing State takeaways of critical sales and property tax revenues. The proposed funding measure would generate approximately $10 million per year in new, direct funding to the City. Unlike other tax revenues, all this funding would come to the City to be spent only on local needs. Existing Government Codes place limits on point-of-sale purchases. By allowing the City to capture this new revenue stream, the funds will be protected from future State and County sales tax takes. In addition, local revenue measures approved by the voters, are protected by Proposition 1a and cannot be accessed by the State. Therefore, if approved, all funding generated by the Transactions and Use Tax would be locally controlled and spent to make sure we can maintain the services our residents expect and deserve for years to come. To maintain financial transparency and assure residents that all funds are spent as approved by the voters, an independent Citizens Oversight Committee would be established to oversee the spending and use of these funds as specified in the proposed ordinance (Exhibit B). These efforts would include conducting community opinion surveys every two years to gather critical feedback from the community in determining how best to spend these funds and to ensure they are spent as promised to taxpayers. If the City Council adopts the attached resolution placing the measure on the November 3, 2020 ballot, the City Attorney and City Clerk will submit the required documentation to the Riverside County Registrar of Voters and perform other related tasks by the following deadlines:  Before August 7, 2020 – Submit Resolution and Ordinance for Measure Placement;  August 17, 2020 – Deadline to File Primary Arguments and Impartial Analysis;  August 18 – 27, 2020 – Public Examination Period for Primary Arguments and Impartial Analysis;  August 27, 2020 – Deadline to File Rebuttal Arguments;  August 28, 2020, thru September 6, 2020 – Public Examination Period for Rebuttal Arguments. A supermajority vote of the City Council is required to approve the proposed resolution to place the tax measure on the ballot for the voters. Fiscal Impact Placing the transactions and use tax measure on the ballot will result in expenses related to conducting the election. The County estimates the measure’s election cost to be an additional $15,000 above the costs the City is incurring to conduct Council elections. If the ballot measure is approved, it will result in additional revenues to the City’s general fund in the estimated amount of $10 million annually. Exhibits A - Resolution B – Ordinance (Exhibit A to the Resolution) RESOLUTION NO. 2020- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ORDERING THE SUBMISSION TO THE QUALIFIED ELECTORS OF THE CITY OF LAKE ELSINORE A TRANSACTIONS AND USE TAX (SALES TAX) ORDINANCE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 3, 2020 AS CALLED BY RESOLUTION NO. 2020- 35 AND APPROVING THE FORM OF THE ORDINANCE TO BE SUBMITTED TO THE VOTERS Whereas, by Resolution No. 2020-35 adopted by the City Council on May 12, 2020, the City Council called a General Municipal Election to be held in the City of Lake Elsinore on Tuesday, November 3, 2020; and Whereas, the City Council also seeks to submit to the voters at the November 3, 2020 General Municipal Election a measure relating to a transactions and use tax (sales tax); and Whereas, pursuant to California Elections Code section 9222, the City Council has authority to place measures on the ballot to be considered at a General Municipal Election; and Whereas, California Revenue and Taxation Code section 7285.9 authorizes the City, subject to approval by a majority vote of the qualified voters of the City voting in an election on the issue, to levy a transactions and use tax pursuant to the Transactions and Use Tax Law at a rate of 0.125% or any multiple thereof for general purposes and projects; and Whereas, having the capacity to respond rapidly to 9-1-1 emergencies is critical and additional locally controlled funding is necessary to ensure enough law enforcement officers, firefighters, and paramedics to respond quickly to 9-1-1 emergencies; and Whereas, keeping Lake Elsinore safe, clean, and well-maintained will help protect and improve local property values; and Whereas, securing additional locally controlled funding will provide the City the funding needed to avoid deep cuts in all service areas including police, 9-1-1 emergency response, the maintenance of streets, parks and public facilities, as well as programs for youth and seniors; and Whereas, currently, nearly all of the sales tax generated locally is allocated to the State of California or the County; and Whereas, the proposed transactions and use tax measure will ensure that a higher percentage of sales tax dollars stay in Lake Elsinore; and Whereas, all money raised by the proposed measure will be used to fund essential services and facilities in Lake Elsinore and by law, it cannot be taken away by the State or used for other purposes; and Whereas, the City Council desires to submit to the voters at the November 3, 2020 General Municipal Election a proposed ordinance to establish a Transactions and Use Tax (Sales Tax) that, if approved, would be imposed at a rate of 1% and would be collected by the State Board of Equalization and remitted to the City to pay of the aforementioned services as well as other general municipal services; and CC Reso No. 2020- Page 2 of 4 Whereas, the proposed measure is a general tax as defined in Article XIIIC of the California Constitution and shall not take effect unless and until approved by a vote of at least a majority of the voters voting on the measure at the election. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The City Council hereby finds that the above-referenced recitals are true and correct and material to this Resolution. Section 2. The City Council of the City of Lake Elsinore hereby submits to the qualified voters of the City the following measure relating to the adoption of a transactions and use tax. This measure shall be designated by letter by the Riverside County Elections Department. The election for this measure shall be consolidated with the established statewide general municipal election to be conducted on November 3, 2020. To provide funding for essential city services including:  Reducing gangs, drugs and crime  Providing fire protection, paramedic, and quick 9-1-1 emergency response  Fixing streets and potholes  Addressing homelessness  Keeping public areas safe, healthy, clean and graffiti free  Supporting local businesses shall a City of Lake Elsinore Ordinance establishing a one-cent sales tax be approved, providing approximately $10,000,000 annually for general city services until ended by voters, with citizen oversight, independent audits, and all funds controlled locally? Yes No Section 3. The Ordinance establishing the transactions and use tax to be submitted to the voters for approval pursuant to Section 2 above is as set forth in Exhibit A hereto and incorporated by this reference. The City Council hereby approves the Ordinance, the form thereof, and its submission to the voters of the City at the November 3, 2020 election, as required by Revenue and Taxation Code section 7285.9, subject to approval of a majority of the voters voting on the measure at the election. Section 4. In accordance with Section 12111 of the Elections Code and Section 6061 of the Government Code, the City Clerk is hereby authorized and directed to cause notice of the measure in Section 2 to be published once in a newspaper of general circulation, printed, published, and circulated in the City of Lake Elsinore and hereby designated for that purpose by the City Council of the City of Lake Elsinore. The City Clerk may request that the County of Riverside Elections Department prepare and publish the required notice. Section 5. That in all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections in the City. Section 6. The notice of the time and place of holding the election is g iven and the City Clerk is directed to give further or additional notice of the election in the time, form and manner as required by law. CC Reso No. 2020- Page 3 of 4 Section 7. Pursuant to Elections Code section 9280 et seq., the City Clerk is hereby directed to submit to the City Attorney a certified copy of the ballot measure. The City Attorney is hereby authorized and directed to prepare an impartial analysis of the ballot measure showing the effect of the measure on the existing law and operation of the measure, said analysis to be submitted by the City Attorney to the Registrar of Voters or other appropriate office of the County of Riverside, for printing by the date set by City Clerk for the filing of arguments for and against the measure. The analysis shall not exceed 500 words in length and shall otherwise comply in all respects with the applicable provisions of the Elections Code of the State of California. Section 8. The City Council hereby directs the City Clerk to follow the procedures for arguments in favor or in opposition to the measure and the procedures for rebuttal arguments as set forth in Elections Code section 9280 et seq. The City Clerk shall fix and determine a date for submission of arguments for or against the measure, and said date shall be posted in the Office of the City Clerk. Arguments for and against the measure may be filed in accordance with applicable provisions of law. The City Council does not authorize the City Council as a body or any individual member of the City Council to file a written argument or any rebuttal argument for or against the measure. Section 9. The City Manager is hereby authorized and directed to expend the necessary funds to pay for the City’s cost of placing the measure on the election ballot. Section 10. The adoption of this Resolution is not a "project" subject to the requirements of the California Environmental Quality Act of 1970 (California Public Resources Code § 21000 et seq.) and the state CEQA Guidelines (California Code of Regulations, Title 14, § 15000 et seq.). CEQA Guidelines Section 15378(b)(4) provides that the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to a specific project that may result in a potentially significant physical impact on the environment are not projects subject to the requirements of CEQA. Section 11. If any section, subsection, sentence, clause, phrase or provision of this Resolution or the application thereof to any person or circumstances is held invalid or unconstitutional by any court of competent jurisdiction, such invalidity or unconstitutionalit y shall not affect the validity of any other provision or applications, and to this end the provisions of this Resolution are declared to be severable. The City Council hereby declares that it would have passed this Resolution and each section, subsection, sentence, clause, phrase or provision thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or provisions thereof be declared invalid or unconstitutional. Section 12. Pursuant to California Elections Code section 9295, this Resolution and the attached Ordinance will be available for public examination for no fewer than ten (10) calendar days prior to being submitted for printing in the sample ballot. The examination period will end on the day that is seventy-five (75) days prior to the date set for the election. Section 13. This Resolution shall take effect immediately upon its adoption by a two-thirds vote of the members of the City Council. Section 14. That the City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. CC Reso No. 2020- Page 4 of 4 Passed and Adopted at a regular meeting of the City Council of the City of Lake Elsinore, California, this 28th day of July 2020. Brian Tisdale Mayor Attest: Candice Alvarez, MMC City Clerk STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Candice Alvarez, MMC, City Clerk of the City of Lake Elsinore, California, do hereby certify that Resolution No. 2020- was adopted by the City Council of the City of Lake Elsinore, California, at the Regular meeting of July 28, 2020 and that the same was adopted by the following vote: AYES: NOES: ABSENT: ABSTAIN: Candice Alvarez, MMC City Clerk NOT OPERATIVE UNLESS ENACTED BY VOTERS ORDINANCE NO. 2020 – ____ AN ORDINANCE OF THE PEOPLE OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING TITLE 3, CHAPTER 3.30 OF THE LAKE ELSINORE MUNICIPAL CODE (LEMC) REGARDING A TRANSACTIONS AND USE TAX (SALES TAX) Whereas, Revenue and Taxation Code section 7285.9 authorizes the governing body of any city (i.e. the City Council) to levy a transactions and use tax for general revenue purposes under Part 1.6 of the Revenue and Taxation Code; and Whereas, Revenue and Taxation Code section 7285.9 requires the City Council to adopt an ordinance proposing to levy a general purpose transactions and use tax by a two-thirds vote of the City Council, and to then submit the ordinance to the voters, who must approve the ordinance by a majority of the voters voting on the measure for it to take effect; and Whereas, the City Council and the People of the City of Lake Elsinore desire to adopt a transactions and use tax pursuant to Revenue and Taxation Code section 7285.9 for general revenue purposes; and Whereas, having the capacity to respond rapidly to 9-1-1 emergencies is critical and additional locally controlled funding is necessary to ensure enough law enforcement officers, firefighters, and paramedics to respond quickly to 9-1-1 emergencies; and Whereas, keeping Lake Elsinore safe, clean, and well-maintained will help protect and improve local property values; and Whereas, securing additional locally controlled funding will provide the City the funding needed to avoid deep cuts in all service areas, including police, 9-1-1 emergency response, the maintenance of streets, parks and public facilities, as well as programs for youth and seniors; and Whereas, currently, nearly all of the sales tax generated locally goes to the State of California or the County -- the proposed November 2020 measure will ensure that a higher percentage of sales tax dollars stay in Lake Elsinore; and Whereas, all money raised by the proposed measure will be used to fund essential services and facilities in Lake Elsinore and by law, it can’t be taken away by the State or used for other purposes; and Whereas, the revenues generated from the proposed transactions and use tax would be used by the City to pay for all the aforementioned services, as well as other general municipal services. NOW THEREFORE, THE PEOPLE OF THE CITY OF LAKE ELSINORE, CALIFORNIA, DO ORDAIN AS FOLLOWS: Ord. No. 2020- Page 2 of 8 Section 1: Chapter 3.30, Transactions and Use Tax, is hereby added to Title 3 of the LEMC as follows: Chapter 3.30 TRANSACTIONS AND USE TAX Sections: 3.30.010 Short Title. 3.30.020 Purpose and Intent. 3.30.030 Transactions Tax Rate. 3.30.040 Use Tax Rate. 3.30.050 Independent Annual Audit. 3.30.060 Operative Date. 3.30.070 Termination. 3.30.080 Contract with State. 3.30.090 Place of Sale. 3.30.100 Adoption of Provisions of State Law. 3.30.110 Limitations on Adoption of State Law and Collection of Use Tax. 3.30.120 Permit Not Required. 3.30.130 Exemptions and Exclusions. 3.30.140 Amendments To State law 3.30.150 Enjoining Collection Forbidden. 3.30.160 Citizen Oversight Committee. 3.30.010 Short Title. The Chapter shall be known as the “City of Lake Elsinore Transactions and Use Tax Ordinance” and shall be applicable in the incorporated territory of the City of Lake Elsinore. This chapter shall complement, and not replace or supersede, the city’s existing sales and use tax, as such tax is described in Chapter 3.28 of Title 3 of the Lake Elsinore Municipal Code. 3.30.020 Purpose and Intent. In enacting the City of Lake Elsinore Transactions and Use Tax Ordinance (“Ordinance”), it is the purpose and intent of the People of the City of Lake Elsinore to: A. Impose a retail transactions and use tax in accordance with the provisions of Part 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 of the Revenue and Taxation Code which may be used for general municipal services and all lawful public purposes of the City. B. Adopt a retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as 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. 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 Ord. No. 2020- Page 3 of 8 from, the existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the California State Sales and Use Taxes. D. Adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this Chapter 3.30.030 Transactions Tax Rate. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City, as it exists on the operative date of this Chapter, and in the incorporated territory of the City as it may hereafter be amended through annexation, at the rate of one percent (1%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of the Ordinance codified in this Chapter. 3.30.040 Use Tax Rate. An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the operative date of the Ordinance codified in this Chapter for storage, use or other consumption in the incorporated territory of the City, and in the incorporated territory of the City as it may hereafter be amended through annexation, at the rate of one percent (1%) of the sales price of the property. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made. 3.30.050 Independent Annual Audit. The proceeds resulting from the transactions and use tax imposed by this Chapter shall be deposited into the City’s general fund and shall be subject to the same independent annual audit requirements as other general fund revenue. The independent auditor’s report, which shall include an accounting of the revenues received and expenditures made from the transactions and use tax, will be presented annually to the citizen oversight committee, the City Council and made available for public review. 3.30.060 Operative Date. “Operative Date” shall mean the first day of the first calendar quarter commencing more than 110 days after the adoption of the City of Lake Elsinore Transactions and Use Tax Ordinance. 3.30.070 Termination. The transactions and use tax levied by this Chapter shall commence on the operative date and shall continue until terminated by a vote of the registered voters of the City. 3.30.080 Contract with State. Prior to the operative date, the City shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of this Chapter; provided, that if the City shall not have contracted with the State Board of Equalization prior to the operative date, it shall Ord. No. 2020- Page 4 of 8 nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract. The City Council may make any technical amendments to this Chapter required by the State Board of Equalization, except for any changes affecting the tax rate, tax methodology, or its manner of collection. 3.30.090 Place of Sale. For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his or her agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the state or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization. 3.30.100 Adoption of Provisions of State Law. Except as otherwise provided in this Chapter and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this Chapter as though fully set forth herein. 3.30.110 Limitations on Adoption of State Law And Collection of Use Tax. In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code: A. Wherever the state of California is named or referred to as the taxing agency, the name of the City shall be substituted therefor. However, the substitution shall not be made when: 1. The word “state” is used as a part of the title of the state Controller, state Treasurer, State Board of Control, State Board of Equalization, state Treasury, or the Constitution of the state of California. 2. The result of that substitution would require action to be taken by or against the City or any agency, officer, or employee thereof rather than by or against the State Board of Equalization, in performing the functions incident to the administration or operation of this Chapter. 3. 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 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 otherwise 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 1 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. Ord. No. 2020- Page 5 of 8 4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code. B. The word “city” shall be substituted for the word “state” in the phrase “retailer engaged in business in this state” in Section 6203 and in the definition of that phrase in Section 6203. 3.30.120 – Permit Not Required. If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this Chapter. 3.30.130 – Exemptions and Exclusions. A. There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the state of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any state-administered transactions or use tax. B. 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 principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this state, the United States, or any foreign government. 2. 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 or her agent, or by delivery by the retailer to 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 (commencing 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 b. With respect to commercial vehicles, by registration to a place of business out-of- city and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address. 3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of the Ordinance codified in this Chapter. 4. A lease of tangible personal property which is a 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 the Ordinance codified in this Chapter. Ord. No. 2020- Page 6 of 8 5. For the purposes of subsections (B)(3) and (B)(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. C. There are exempted from the use tax imposed by this Chapter, the storage, use or other consumption in the City of tangible personal property: 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. 2. 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 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. 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 the Ordinance codified in this Chapter. 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 property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of the Ordinance codified in this Chapter. 5. For the purposes of subsections (C)(3) and (C)(4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, 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. 6. Except as provided in subsection (C)(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 under the authority of the retailer. 7. “A retailer engaged in business in the City” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Article 1 (commencing with Section 4000) 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 use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City. D. Any person subject to use tax under this Chapter may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with Ord. No. 2020- Page 7 of 8 respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax. 3.30.150 Amendments To State Law. Subsequent to the effective date of the Ordinance codified in this Chapter, all amendments to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are consistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and 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 Chapter, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this Chapter. 3.30.160 Enjoining 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 or the City, or against any officer of the state or the City, to prevent or enjoin the collection under this Chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected. 3.30.170 Citizen Oversight Committee. A. A citizens’ oversight committee is hereby established to independently review and advise upon the City’s expenditure of proceeds generated by the transactions and use tax. The committee shall meet at least twice each calendar year and more frequently, if necessary, to discharge the responsibilities of the committee. All meetings of the committee shall be held in accordance with provisions of the Ralph M. Brown Act (Cal. Gov. Code Section 54950 et seq.). 1. The committee shall consist of five (5) members, all whom shall be residents of the City of Lake Elsinore. The City shall initially post and publish notice soliciting applications for persons interested in being members of the committee and shall thereafter repost and republish notice soliciting applications as necessary to fill vacancies on the committee. The City Council shall review all applications for eligibility and at a public meeting appoint five (5) eligible applicants to serve as members of the committee. Each member of the committee shall serve for a term of two (2) years and such service shall be at the pleasure of the City Council. Three (3) members of the committee shall constitute a quorum. Members of the committee shall not receive a stipend for their service. Any additional responsibilities and duties of the committee shall be established by resolution of the City Council. 2. The citizens’ oversight committee shall annually review and report on (i) the City’s proposed and actual expenditure of proceeds generated by the transaction and use tax and (ii) the independent annual audit required under this Chapter. The committee’s report shall be submitted to the City Council for review and discussion at a public meeting of the City Council. 3. The City shall provide such staff resources as are reasonably necessary to assist the committee with the discharge of its duties under this Chapter. The committee shall not have authority to hire or retain its own staff, consultants, or contractors. Section 2: CEQA. The adoption of this Ordinance is not a "project" subject to the requirements of the California Environmental Quality Act of 1970 (California Public Resources Ord. No. 2020- Page 8 of 8 Code § 21000 et seq.) and the state CEQA Guidelines (California Code of Regulations, Title 14, § 15000 et seq.). CEQA Guidelines Section 15378(b)(4) provides that the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to a specific project that may result in a potentially significant physical impact on the environment are not projects subject to the requirements of CEQA. Section 2: Severability. If any section, sentence, clause or phrase of this Ordinance is for any reason held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining provisions of this Ordinance. The People of the City of Lake Elsinore hereby declare that they would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof and intends that the invalid portions should be severed and the balance of the Ordinance be enforced. Section 3: Election Required; Effective Date. This Ordinance shall be submitted to the voters at the regular municipal election to be held on Tuesday, November 3, 2020 . This Ordinance shall not become operative unless and until a majority of the electors voting on the measure vote to approve this Ordinance, in which case this Ordinance shall go into effect ten (10) days after the date on which the election results are declared by the C ity Council. Section 4: Certification. The City Clerk shall certify to the passage of this Ordinance and shall cause a synopsis of the same to be published according to law. Passed and Adopted by the People of the City of Lake Elsinore, California, at the General Municipal Election held on November 3, 2020. Brian Tisdale Mayor Attest: Candice Alvarez, MMC City Clerk