RPVCCA_CC_SR_2014_07_04_01_UUTCrTYOF RANCHO PALOS VERDES
MEMORANDUM
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM:
DATE:
CAROL W. LYNCH, CITY ATTORNEY
JULY 4, 2014
SUBJECT: ADDITIONAL AGENDA ITEM FOR THE JULY 15, 2014 CITY
COUNCIL MEETING REGARDING THE CITY'S UTILITY USERS
TAX
REVIEWED: CAROLYNN PETRU, ACTING CITY MANAGER(@
RECOMMENDATION
Direct staff to place an item on the July 15th City Council agenda so the City
Council can determine whether to call a Special Election to be held on November
4, 2014, regarding the reduction of the 3% rate and modernization of the City's
Utility Users Tax.
BACKGROUND
In 1993, the City Council adopted the City's Utility Users Tax ("Tax" or "UUT").
The amount of the Tax is 3%. It is imposed on the customers who use telephone
service, electricity, co-generated electricity, natural gas, and water.
Subsequently, the voters of the State of California adopted Proposition 218.
Even though the City's Tax had been in effect prior to the adoption of Proposition
218, in order for the City to continue to collect the Tax legally, voter approval was
required. Accordingly, in 2004, the City Council placed the Tax on the ballot, and
the voters ratified the existing Tax at the same 3% rate that had been adopted by
the City Council.
DISCUSSION
Since 2004, many changes have occurred with respect to telephone services that
have caused the definitions in the UUT to become somewhat outdated.
Accordingly, some types of telephone services currently are not subject to the
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tax, such as voice over internet protocol, while others are. This is not completely
fair to individuals who use telephone services and currently are subject to the
City's UUT. Staff proposes placing an ordinance on an upcoming ballot that will
modernize the City's Code to address that issue. In addition, at the last City
Council meeting, Council Member Campbell suggested that the City Council
should consider reducing the rate of the City's UUT. The ordinance that would
be placed on an upcoming ballot also could reduce the rate City's UUT below the
current rate of 3%.
If the City Council wants to discuss and consider placing a ballot measure on the
November 2014 election, there is very limited time to do so, in order for the City's
measure to be added to the ballot for the consolidated election that will be
conducted by the County. The City Council would need to take action to call a
special election on this issue at the Council meeting on July 15th.
CONCLUSION
If the City Council would like to discuss whether to call an election on November
4, 2014 at the July 15th City Council meeting to potentially reduce the rate and
modernize the City's UUT Ordinance; the Council should direct Staff to place an
item on that agenda.
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