Ordinance No. 1209ORDINANCE NO. 1209
AN ORDINANCE OF THE CITY OF VERNON,
CALIFORNIA ADDING SECTION 5.46 TO ARTICLE IV
OF CHAPTER 5 OF THE CODE OF THE CITY OF
VERNON REGARDING A PUBLIC SAFETY SPECIAL
PARCEL TAX
THE PEOPLE OF THE CITY OF VERNON DO ORDAIN AS FOLLOWS:
Section 1. Adoption of Special Parcel Tax. The
Code of the City is hereby amended to .add Section 5.46 to
Article IV of Chapter 5 to read as follows:
Section 5.46. Public Safety Special Parcel Tax.
(a) Definitions. As used in this Section 5.46,
the following terms have the meanings indicated:
(1) "Assessor's Parcel Map" means an
official map of the Assessor of the County of Los
Angeles designating parcels by assessor's parcel
numbers.
(2) "CPI" means the Consumer Price Index
for All Urban Consumers (CPI-U), All Items Index,
Los Angeles -Riverside -Orange County, California
Area (1982-84=100) published by the United States
Department of Labor, Bureau of Labor Statistics.
(3) "Fiscal Year" means the fiscal year of
the City, which is the period starting July l and
ending on the following June 30.
(4) "Maximum Rate" means the maximum rate
of the Special Parcel Tax as calculated pursuant
to Subdivision (d) of this Section.
(5) "Non -Residential Parcel" means any
Parcel other than a Parcel that is improved
solely with a residential structure.
(6) "Parcel" means a lot or parcel shown on
the current applicable Assessor's Parcel Map with
an assigned assessor's parcel number.
(7) "Special Parcel Tax means the special
parcel tax to be levied pursuant to this Section.
(8) "Taxable Parcel Area" means, with
respect to a Parcel of Taxable Property and a
Fiscal Year, the square footage of that Parcel,
excluding square footage that has been
apportioned a share of the Warehouse Tax for that
Fiscal Year. For purposes of this definition,
"square footage that has been apportioned a share
of the Warehouse Tax for that Fiscal Year" shall
be calculated for the applicable Fiscal Year by
dividing the amount of the Warehouse Tax levied
against a Parcel by the rate per square foot of
the Warehouse Tax. For example, if the amount of
the Warehouse Tax levied against a Parcel is
$10,000.00 in a given Fiscal Year, and the
applicable rate of the Warehouse Tax in that
Fiscal Year is $0.10 per square foot, then
100,000 square feet of the area of that Parcel is
square footage that has been apportioned a share
of the Warehouse Tax for that Fiscal Year.
(9) "Taxable Property" means all of the
Non -Residential Parcels within the boundaries of
the City other than Non -Residential Parcels that
(i) are exempt from the Special Parcel Tax
pursuant to the Constitution or the laws of the
United States or of the Constitution or the laws
of the State of California, or (ii) are exempt
from the ad valorem property tax or have an ad
valorem property tax liability of zero.
(10) "Warehouse Tax" means the special
parcel tax levied by the City pursuant to Section
5.45 of Article IV of Chapter 5 of this Code.
(b) Levy of Special Parcel Tax. An annual
special tax is hereby levied by the City on all
Parcels of Taxable Property.
(c) Duration. The Special Parcel Tax shall
first be collected for Fiscal Year 2013-14. The final
year for which the Special Parcel Tax shall be
collected is Fiscal Year 2022-23.
(d) Tax Rate. (1) For Fiscal Year 2013-14, the
Maximum Rate of the Special Parcel Tax shall be $0.03
per square foot of Taxable Parcel Area.
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(2). For Fiscal Year 2014-15 and each subsequent
Fiscal Year through and including Fiscal Year 2022-23,
the Maximum Rate of the Special Parcel Tax shall be
automatically adjusted based upon changes in CPI. For
any Fiscal Year in which the CPI for the month of
March of the immediately preceding Fiscal Year is
greater than the CPI for March, 2013, the Maximum Rate
for such Fiscal Year shall be equal to the product of
(i) the Maximum Rate for Fiscal Year 2013-14
multiplied by (ii) a fraction, the numerator of which
is the CPI for the applicable month of March and the
denominator of which is the CPI for March, 2013. For
each Fiscal Year in which the CPI for the month of
March of the immediately preceding Fiscal Year is not
higher than the CPI for March, 2013, the Maximum Rate
for .such Fiscal Year shall not be adjusted and such
Maximum Rate shall be equal to the Maximum Rate for
Fiscal Year 2013-14. If, in the future, the CPI is
changed so that the CPI for March, 2013 differs from
the CPI for such month used as of the effective date
of this Section, the CPI for such month shall be
converted in accordance with the conversion factor
published by the United States Department of Labor,
Bureau of Labor Statistics. The City Clerk shall
submit a written report to the City Council each
Fiscal Year setting forth the adjustments to the
Maximum Rate calculated in accordance with this
paragraph.
(e) Annual Proceedings. For each Fiscal Year,
the City Council shall determine, by ordinance or
resolution, the amount of the Special Parcel Tax to be
imposed on each Parcel of Taxable Property. The tax
amounts determined by the City Council for. a Fiscal
Year shall be calculated based on the applicable
Maximum Rate for such Fiscal Year but may, at the
discretion of the City Council, be determined based on
lower rates. The ordinance or resolution shall list
each taxed Parcel by assessor's parcel number. The
ordinance.or resolution shall constitute the official
record of the assessment of the Special Parcel Tax,
and a copy thereof, together with any other pertinent
data, shall be transmitted to the appropriate County
officials to facilitate collection of the Special
Parcel Tax.
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(f) Collection of Special Parcel Tax. The
Special Parcel Tax shall be collected by the County
Treasurer and Tax Collector in the same manner and
subject to the same penalty and procedure as ad
valorem property taxes collected by the County
Treasurer and Tax Collector. Unpaid Special Parcel
Taxes shall bear interest at the same rate as the rate
for unpaid ad valorem property taxes until paid.
(g) Special Parcel Tax not an Ad Valorem Tax.
The Special Parcel Tax is not an ad valorem tax. The
amount of the Special Parcel Tax to be imposed on a
Parcel is not calculated or measured based on the
value of that Parcel.
(h) Statement of Specific Purpose of Special
Parcel Tax; Proceeds to be Applied only to such
Specific Purpose. The proceeds of the Special Parcel
Tax, together with any interest and penalties thereon,
shall be applied only to the payment of the costs of
(i) City fire protection services and projects, (ii)
City health services and projects, and (iii) City
police services and projects. Services and projects
include, but are not limited to, salaries, benefits,
equipment and capital improvements.
(i) Accountability Measures. The proceeds of
the Special Parcel Tax shall be deposited in a special
account, to be created and maintained by the City.
For so long as proceeds of the Special Parcel Tax
remain unexpended, the Finance Director of the City
shall file an annual report with the City Council no
later than January 1 of each year, commencing January
1, 2014, stating (i) the amount of Special Parcel Tax
funds collected and expended, and (ii) the status of
any project required or authorized to be funded
pursuant to this Section. Such annual report shall
relate to the Fiscal Year most recently ended, and may
be incorporated into or filed with the annual budget,
audit or other appropriate routine report to the City
Council.
(j) Amendment. The City Council may, by
ordinance, amend, repeal, renumber or recodify any or
all of the provisions of this Section; provided,
however, that no ordinance extending or increasing the
Special Parcel Tax shall be effective unless submitted
to, and approved by, the voters of the City as
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required pursuant to the applicable law at the time of
such action.
Section 2. Severability. If, for any reason, any
portion of this Ordinance is rendered or declared invalid
or unenforceable by a court or an administrative body of
competent jurisdiction or by reason of any .preemptive
legislation, the remaining portions of this Ordinance
shall remain in full force and effect.
This Ordinance was approved and adopted by the People of
the City of Vernon at the City's April 9, 2013 general municipal
election.
d, Interim City Clerk
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Michael McCormick, Mayor
CITY CLERK'S OFFICE
INTEROFFICE MEMORANDUM
DATE: May 1, 2013
TO: Daniel Calleros, Police Chief
Kristen Enomoto, Assistant to the City Administrator
Carlos Fandino, Director of Light & Power
William Fox, Finance Director
Leonard Grossberg, Director of Health & Environmental Control
Masami Higa, Assistant Finance Director
David Kimes, Interim Fire Chief
Alex Kung, Assistant to the City Administrator
Joaquin Leon, Deputy City Treasurer
Teresa McAllister, Director of Human Resources
Zaynah Moussa, Deputy City Attorney
Scott Porter, Deputy City Attorney
Dana Reed, Interim City Clerk
James Rodino, Police Captain
Nicholas Rodriguez, City Attorney
Mark Whitworth, City Administrator
S. Kevin Wilson, Director of Community Services & Water
FROM: Deborah Juarez, Records Management Assistant R
RE: Ordinance No. 1209 — An Ordinance of the City Council of the City of Vernon, California
Adding Section 5.46 to Article IV of Chapter 5 of the Code of the City of Vernon Regarding
a Public Safety Special Parcel Tax
Transmitted herewith is a copy of Ordinance No. 1209 referenced above, which was approved by the
People of the City of Vernon at the City's general municipal election held April 9, 2013.
Thank you.
Attachment
c: Ana Barcia
.Ordinance No. 1209
REC
l rVED
""a'ti±TsLi)y
REPORT
CLERK'SCITY
ADMINISTRATION
DATE: January 3, 2013
TO: Honorable Mayor and City Council
FROM: Mark C. Whitworth, City Administrator M �IY�
RE: Proposed Tax Measures for the April 9, 2013 General Municipal Election —
Business License Tax (Measure K); Special Parcel Tax (Measure L); Utility
Users' Tax (Measure M)
Recommendation
It is recommended that the City Council find that adoption of the resolutions proposed in this
staff report are exempt under the California Environmental Quality Act (CEQA) in accordance
with Section 15061(b)(3), the general rule that CEQA only applies to projects that may have an
effect on the environment.
It is recommended that the City Council adopt the following resolutions (attached) to place the
respective General Fund tax measures on the April 9, 2013 ballot:
I. RESOLUTION NO.2013-01 —A RESOLUTION Of THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A MEASURE REGARDING
THE CITY'S BUSINESS LICENSE TAXES
2. RESOLUTION NO.2013-02 —A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A SPECIAL PARCEL TAX
MEASURE
3. RESOLUTION NO.2013-03 —A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY
AT THE CITY'S APRIL 9, 2013 GENERAL ELECTION A UTILITY USERS' TAX
MEASURE
Background
In line with the good governance reforms respecting the City's budgeting policies and practices,,
City staff has been working diligently in recent years to develop a long-term solution to the
General Fund's structural deficit. After significant participation and input from the business and
residential communities, the City has developed a viable, long-term solution in the form of the
three -pronged tax proposal explained in this staff report. Simultaneously, the City has drastically
reduced its operating costs to reduce the deficit that needs to be met through additional revenues.
The structural deficit has existed for decades, exceeding $20 million in certain years. Previously,
the City was able to meet its General Fund needs through transfers from the City's Light &
Power Fund and one-time stop gap measures, such as the sale of real estate and other assets. Due
to a depressed economy, depleted assets, and bond covenant restrictions, those options are no
longer available, nor are they long-term solutions.
The City receives no or significantly less in General Fund revenues from sources traditionally
experienced by other cities (i.e. hotel tax, gas tax, vehicle license fees, sales and use tax, and
property tax). As a prime example, Vernon receives only 7% of its property tax revenues
collected by the County in comparison to the 20+% received by cities like Los Angeles,
Pasadena, Long Beach, South Pasadena, and Pomona. With limited ability to increase revenues
from these sources, Vernon must seek alternative sources of revenue and levy them amongst its
taxpayers in the most equitable manner.
Recognizing that cost-cutting measures are of supreme importance in the City's efforts to
address the General Fund's structural deficit and achieve a balanced budget each fiscal year, over
the last three years, the City has reduced its current operating expenditures by over $6 million
and continues to seek ways to further reduce costs. The City is currently in the process of
implementing an early retirement incentive program that would further reduce costs by $8.1
million over the next five fiscal years.
With the anticipated success of the early retirement program, as of July 1, 2013, the City will
have reduced its workforce by 25% (81 employees) over the last five years. Through these
reductions, along with reductions to employee retirement and health care costs, and significant
reductions in consultant and outside legal costs, the City is saving $10 million annually. The
City is operating at its leanest possible staffing levels and continues to reevaluate and reorganize
in order to provide the most efficient and cost-effective service model.
Following are summaries of the three tax measures proposed in the attached resolutions.
Because of the "Exclusively Industrial" nature of the City, public safety services are uniquely
designed to meet such needs. In order to ensure the appropriate distribution of General Fund
costs among residential and non-residential uses, the City commissioned a cost -benefit analysis
study from NBS. The study concluded that non-residential properties and uses account for more
than 99% of all police and fire calls for service and General Fund expenditure allocations. As
such, the proposed Special Parcel Tax and Utility Users' Tax would be levied on non-residential
uses only.
Measure K — Business License Tax (Resolution No. 2013-01
Measure K proposes to the voters adoption of an ordinance to increase the City's existing
Business License Tax rates in accordance with Exhibit A of the resolution. The proposed
ordinance would also modify the method for calculating business license taxes on additional
square footage, multiple business activities at one location, and for contractors. Additionally, the
ordinance clarifies that leasing of real property by the owner of that property, absent some other
business activity, does not constitute a business that is subject to this tax.
The proposed increases to the Business License Tax rates are expected to generate an additional
$4.5 million in revenues.
Measure L — Special Parcel Tax (Resolution No. 2013-02
Measure L proposes to the voters adoption of an ordinance to levy an annual Special Parcel Tax
on non-residential parcels at a rate of $0.03 per square foot to fund public safety services and
projects. The proposed tax would be levied only on those parcels or portions thereof not subject
to the City's existing Warehouse Parcel Tax. The tax is proposed to sunset in 10 years (Fiscal
Year 2022-23).
The proposed Special Parcel Tax is expected to generate $1.9 million to fund essential Fire,
Health, and Police services and projects.
Measure M — Utility Users' Tax (Resolution No. 2013-03)
Measure M proposes to the voters adoption of an ordinance to levy a 1% Utility Users' Tax on
non-residential electricity, gas, telecommunications, video and water utility services. The
proposed tax would sunset 10 years after the date it takes effect.
The proposed Utility Users' Tax is expected to generate $1.6 million.
Fiscal Impact
The three -pronged tax proposal presented in this staff report is expected to generate
approximately $8 million in additional General Fund revenues to fund essential governmental
services, including public safety and health services.
Conclusion
The General Fund deficit is a decades -long problem that can only be resolved through
comprehensive, long-term revenue solutions and strict cost reductions and controls.
City staff has thoroughly examined all available options to reduce expenditures and generate
revenues. The expenditure reductions discussed in this staff report, along with additional
projected reductions to outside legal costs, represent a 22% decrease in General Fund operating
costs over a five to six -year period. The tax measures proposed in this staff report represent what
we believe to be an appropriate distribution of the revenue burden among Vernon's various
industries and taxpayers.
RECEIVED
RECEIVEL AP.R 10 2013
APR 1 1 20113 CITY ADMINISTRATION,
C►TYCCERWSOMUE STAFF REPORT
City Clerk Department
DATE: April 16, 2013
TO: Honorable Mayor and City Council
FROM: Dana Reed, Interim City Clerlc'D46
RE: A Resolution of the City Council of the City of Vernon, California, Reciting
the Fact of the General Municipal Election held on April 9, 2013, Declaring
the Result and Such Other Matters as Provided by Law
Recommendation
It is recommended that the City Council:
1. Accept the Certificate of Canvass.
2. Adopt a Resolution declaring the results of the General Municipal Election held April 9,
2013, declaring that William J. Davis is elected to the office of member of the City
Council and that Measures K, L, and M are approved; and
3. Authorize the Interim City Clerk to deliver the Certificate of Election and administer the
oath of office to William J. Davis, and
4. Elect a Mayor and a Mayor Pro -'rem.
Background
On April 9; 2013, a General Municipal Election was held for the purpose of electing one member
to the City Council for the full term of five (5) years, and to submit to the voters of the City of
Vernon the following Measures:
Measure K:
PNO
ES
Shall an ordinance be adopted to increase the rates of the
City's existing business license taxes and to modify the
method for calculating such taxes?
Shall an ordinance be adopted to authorize, for a period of YES
ten years, the levy of an annual special parcel tax on non-
residential parcels at the rate of $0.03 per square foot
(adjusted annually for inflation) to fund (i) City fire
protection services and projects, (ii) City health services and NO
projects, and (iii) City police services and projects?
Measure M:
YES
Shall an ordinance be adopted to authorize, for a period of
ten years, the levy of a I % utility users' tax on electricity,
gas, telecommunications, video and water utility services,
with exemptions for residential services provided to persons NO
with disabilities and low income households?
As of the closing of the nomination period on January 14, 2013, at 5:30 p.m., William J. Davis
was the only official candidate. As of March 26, 2013, there were no requests for a write-in
candidate.
On March 18, 2013, seventy-three (73) vote -by -mail ballots were mailed. Subsequently, two
provisional ballots were issued, one for a new registered voter, and one as a duplicate to replace
a lost ballot.
Forty-two (42) ballots were received, verified for signature verification, and canvassed on April
9, 2013. The results of said canvassing are summarized in the City Clerk's Certification of
Canvass, and are to be incorporated as part of the proposed Resolution.
Fiscal Impact
There is no negative fiscal impact. An increase to the City's, General Fund revenue will result
from the approval of the tax measures.
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