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Resolution No. 2017-002RESOLUTION NO. 2017-02 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON, CALIFORNIA, SUBMITTING TO THE VOTERS OF THE CITY AT THE CITY'S APRIL 11, 2017 GENERAL ELECTION A UTILITY USERS' TAX MEASURE WHEREAS, the City has historically operated with a deficit in its general fund that has been alleviated via a transfer of funds from the electric utility each fiscal year, which transfers have been necessary for the City to provide essential services to its businesses and residents; and WHEREAS, while this is a common practice amongst public agencies with their own utilities, it is not viewed in a favorable light by rating agencies and regulatory bodies, and as a result, it is a practice that is currently under review by the California State Supreme Court; and WHEREAS, the City remains committed to its Good Governance reforms, including fiscal accountability and financial transparency; and WHEREAS, the City Council of the City (the "City Council") has determined that, without additional sources of revenues, it will be necessary for the City to make substantial reductions in the City's municipal services and projects; and WHEREAS, to address the City's revenue shortfall, there has been proposed to the City Council the submission to the voters of the City an increase to the utility users' tax pursuant to this Resolution (the "Utility Users' Tax"); and WHEREAS, the proposed increase in the City's Utility Users' Tax would eliminate the electric utility operating transfers and replace them with an equivalent amount of Utility Users' Tax revenues; the Utility Users' Tax revenues would go directly to the City's general fund and serve to finance general City services; and WHEREAS, by its Resolution No. 2016-62, adopted on November 1, 2016, the City Council called a general municipal election in the City to be held on April 11, 2017, by mail ballot only; and WHEREAS, Section 2(b) of Article XIII C of the California Constitution permits the vote on a general tax measure to be consolidated with a regularly scheduled general election for members of the governing body of the local government; and WHEREAS, the April 11, 2017 general municipal election is a regularly scheduled general election at which there will be elected one member of the City Council; and WHEREAS, the City Council desires to submit to the voters of the City, at the City's April 11, 2017 general municipal election, a measure to increase the Utility Users' Tax; and WHEREAS, the City Council finds it is in the public interest to exempt from the Utility Users' Tax certain categories of persons who are more likely to experience economic hardship from the imposition of the Utility Users' Tax; and WHEREAS, the proposed Utility Users' Tax is more completely described in the ordinance attached hereto as Exhibit A and incorporated herein by reference (the "Tax Ordinance"). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds - 2 - that this action is exempt under the California Environmental Quality Act (CEQA), because it is an administrative activity of government that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378. SECTION 3: Proposal. The City Council hereby proposes the Utility Users' Tax as described in the Tax Ordinance. SECTION 4: Election. Pursuant to Section 9222 of the California Elections Code (the "Elections Code"), the City Council hereby orders that the Tax Ordinance be submitted to the voters of the City at the City's April 11, 2017 general municipal election. SECTION 5: Ballot Question. The measure submitted by Section 4 of this Resolution (the "Measure") shall appear on the ballot as follows: MEASURE Q: Shall an ordinance be adopted to authorize the levy of a 6o utility users' tax on YES electricity, gas, telecommunications, video and water utility services, with exemptions for residential services provided to persons NO with disabilities and low income households? SECTION 6: Approval. Pursuant to Section 2(b) of Article XIII C of the California Constitution, the Measure requires approval by a majority vote of those casting ballots on the Measure. SECTION 7: Conduct of Election; Consolidation. (a) The Measure shall be submitted to the voters of the City at the City's April 11, 2017 general municipal election and shall be - 3 - consolidated with the election for a member of the City Council and any other measures to be submitted to the voters on such election date. The City Clerk designated as the elections official (the "Elections Official"), shall conduct such election and is required, and is hereby requested, to take all steps to hold the election in accordance with law for the holding of a general municipal election in the City. (b) The Elections Official shall render all services to the City relating to the election. The Elections Official is hereby authorized, instructed and directed to procure and furnish any and all official ballot notices and printed matter and all supplies and equipment that may be necessary to prepare and lawfully conduct the general municipal mail ballot only election, including the preparation of the ballot. The Elections Official shall take all steps necessary to place the Measure on the ballot and to cause the Measure to be printed, and shall act as the filing authority for arguments. The full text of the Measure shall not be printed in the ballot, but a statement shall be printed in the ballot pursuant to Section 9280 of the Elections Code advising voters that they may obtain a copy of the Measure upon request made to the Elections Official. (c) Pursuant to Section 4101 of the Elections Code, the Elections Official shall mail the mail ballot materials not sooner than 29 days before the election date and not later than 10 days before the election date. (d) At the next meeting of the City Council occurring after the returns of the election have been canvassed and certified by the Elections Official, the City Council shall adopt a resolution reciting the fact of the election and a statement of the results of the election. - 4 - SECTION 8: Arguments and Analysis; Public Examination. (a) The last day for submission of direct arguments for or against the Measure shall be by 5:00 p.m. on January 24, 2017. Direct arguments shall be submitted to the Elections Official, shall not exceed 300 words and shall be signed by not more than five persons. (b) The last day for submission of rebuttal arguments for or against the Measure shall be by 5:00 p.m. on February 6, 2017. Rebuttal arguments shall be submitted to the Elections Official, shall not exceed 250 words and shall be signed by not more than five persons. Those persons may be different persons than the persons who signed the direct arguments. (c) Pursuant to Section 9285 of the Elections Code, when the Elections Official has selected the arguments for and against the Measure, which shall be printed and distributed to the voters, the Elections Official shall send a copy of the argument in favor of the Measure to the authors of any argument against the Measure, and a copy of the argument against the Measure to the authors of any argument in favor of the Measure, immediately upon receiving the arguments. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. (d) Pursuant to Section 9280 of the Elections Code, the City Attorney is hereby requested to prepare an impartial analysis of the Measure showing the effect of the Measure on the existing law and the operation of the Measure. Said analysis shall not exceed 500 words and shall be submitted to the Elections Official by January 24, 2017. Said analysis shall be printed preceding the arguments for and against the Measure. - 5 - (e) Pursuant to Section 9295 of the Elections Code, the Elections Official shall make a copy of the arguments and analysis referred to in this Section available for public examination in the Election Official's office for a period of ten calendar days immediately following the filing deadline for the submission of such arguments and analysis. The Elections Official may charge a fee to any person obtaining a copy of such materials, but such fee may not exceed the actual cost incurred by the Elections Official in providing the copy. SECTION 9: Notice of Election. The Elections Official is hereby requested to publish or post notice of the election, including notice to file arguments and of the public examination period, as required by law. - 6 - SECTION 10: The City Clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk, or Deputy City Clerk, of the City of Vernon shall cause this resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED and ADOPTED this loth day of January, 2017. EST: aria E j yala City Jerk / APPROVED AS TO FORM: -�- Brian tyirf, Deputy City Attorney - 7 - Name: William J. Davis Title: Mayor / - STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) I, Maria E. Ayala ss , City Clerk / Depute of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. 2017-02, was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, January 10, 2017, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: ABSTAIN: Councilmembers: Mayor Davis, Mayor Pro-Tem Woodruff -Perez, Lopez, Martinez, Ybarra None None None And thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this Of" day of January, 2017, at Vernon, California. (SEAL) - 8 - -C� M ria E. A la City Clerk / De u: iy Gity G erl EXHIBIT A ORDINANCE NO. AN ORDINANCE OF THE CITY OF VERNON AMENDING SECTIONS 5.113, 5.114, 5.115, 5.116, 5.117, 5.118, 5.122 AND 5.138 OF ARTICLE VII OF CHAPTER 5 OF THE VERNON MUNICIPAL CODE RELATING TO UTILITY USERS' TAX THE PEOPLE OF THE CITY OF VERNON HEREBY ORDAINS AS FOLLOWS: SECTION 1: Section 5.113 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: Section 5.113. Effective Date; Maximum Rate; Sunset Date. (a) The taxes imposed by this Article shall become effective upon certification by the City Council of the adoption by the electorate of the ordinance adding amending this Article to the Code (the "Effective Date"). As soon after the Effective Date as reasonably practicable, the Tax Administrator shall submit written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, requesting that the Utility Users' Tax be collected. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to install and implement necessary billing changes to effect the collection of the Utility Users' Tax, but in no event to exceed 90 days from the date of receipt of such written notification or, if 90 days from the date of receipt of such written notification is not the first day of a month, then the first day of the month following the month in which such 90th day occurs. / L. \ ml, 4 ,. T -4- 4 .. l - -. .- A 4- L... rT4- . -1 � 4. , TT---- I m nethiImo- herein shall prehibit the City frem taking any aetie-n. autherized under the Artiele-after sueh time —and date e—eelleet any Utility UsTax aeer-ued and ewed as of sueh time ate. SECTION 2: Section 5.114 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: Section 5.114. Electricity Users' Tax. (a) There is hereby imposed a tax upon every Person using electrical energy in the City at the rate of -6.0o of the Electrical Charges made for such electrical energy. The Electricity Users' Tax shall be paid by the Person paying for such electrical energy. (b) As used in this Section, the term "using electrical energy" shall not be construed to mean (i) the storage of electrical energy by a Person in a battery that such Person owns or possesses for use in an automobile or other machinery or device apart from the premises upon which the electrical energy was received; provided, however, that the term "using electrical energy" shall include the receiving of such electrical energy for the purpose of using it in the charging of batteries, (ii) the mere receiving of electrical energy by an Electrical Corporation or governmental agency within the City for resale, or (iii) the use of electrical energy in the production or distribution of water, gas or other utility by a public utility or a governmental agency. (c) The Electricity Users' Tax shall be collected from the Service User by the Service Supplier providing the electrical energy or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the Electricity Users' Tax shall be remitted on or before the next business - 2 - day thereafter. The Electricity Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. and eelleeted in eaeh Fiseal Year 'Ehe Bleetrieity Users' Tax is in - �g / / r_®in S e e b® e . 'i 3 O s-ai—CiiTeTAr t i e l e. SECTION 3: Section 5.115 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.115. Gas Users' Tax. (a) There is hereby imposed a tax upon every Person using gas, including natural or manufactured gas or any alternative hydrocarbon fuel which may be substituted therefor, in the City which is delivered through mains, pipes or mobile transport at the rate of -16.0% of the Gas Charges made for such gas. The Gas Users' Tax shall be paid by the Person paying for such gas. (b) There shall be excluded from the base on which the Gas Users' Tax is computed charges made for gas which is to be resold and delivered through mains, pipes or mobile transport, and charges made for gas used by a Nonutility Supplier to generate electrical energy for its own use or for sale to others, provided the electrical energy so generated is subject to tax under Section 5.114 of this Article. (c) The Gas Users' Tax shall be collected from the Service User by the Service Supplier providing the gas or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs - 3 - on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Gas Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. () T ti, F•Year ti n U ff } �.�.�rx v�� rrTr� C�the v'Fa H3�z-r�ti c SECTION 4: Section 5.116 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.116. Water Users' Tax. (a) There is hereby imposed a tax upon every Person using water in the City at the rate of -16.00-o of the Water Charges made for such water. The Water Users' Tax shall be paid by the Person paying for such water. (b) The Water Users' Tax shall be collected from the Service User by the Service Supplier providing the water or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Water Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. �s-ear the Water sers—r-in e�eet Users' Tax - 4 - SECTION 5: Section 5.117 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.117. Telecommunication Users' Tax. (a) There is hereby imposed a tax upon every Person using Telecommunications Services at the rate of -16.0% of the Telecommunications Charges made for such Telecommunications Services. The Telecommunications Users' Tax shall be paid by the Person paying for such Telecommunications Services. There is a rebuttable presumption that Telecommunications Services, which are billed to a Billing Address or Service Address in the City, are used, in whole or in part, within the City's boundaries and such services are subject to the Telecommunications Users' Tax. If the Billing Address of the Service User is different from the Service Address, the Service Address of the Service User shall be used for purposes of the Telecommunications Users' Tax. (b) Mobile Telecommunications Service shall be sourced in accordance with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124). The Tax Administrator may issue and disseminate to Service Suppliers of Telecommunications Services, which are subject to the tax collection requirements of this Section, sourcing rules for the taxation of other Telecommunications Services, including, but not limited to, Postpaid Telecommunications Services, Prepaid Telecommunications Services and Private Telecommunications Services; provided, that, such rules are based upon custom and common practice that further administrative efficiency and minimize multi -jurisdictional taxation. - 5 - (c) To prevent actual multi -jurisdictional taxation of Telecommunications Services subject to the Telecommunications Users' Tax, any Service User, upon proof to the Tax Administrator that the Service User has previously paid the same tax in another state or local jurisdiction on such Telecommunications Services, shall be allowed a credit against the Telecommunications Users' Tax to the extent of the amount of such tax legally imposed in such other state or local jurisdiction; provided, however, that the amount of credit shall not exceed the Telecommunications Users' Tax owed to the City. (d) The Tax Administrator may issue and disseminate to Service Suppliers of Telecommunications Services that are subject to the tax collection requirements of this Section, an administrative ruling identifying those telecommunications services, or charges therefor, that are subject to or not subject to the Telecommunications Users' Tax. (e) The Telecommunications Users' Tax shall be collected from the Service User by the Service Supplier providing the Telecommunications Services or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Telecommunications Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. SECTION 6: Section 5.118 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: - 6 - SECTION 5.118. Video Users' Tax. (a) There is hereby imposed a tax upon every Person using Video Services in the City at the rate of--16.0% of the Video Charges made for such Video Services. The Video Users' Tax shall be paid by the Person paying for such Video Services. There is a rebuttable presumption that Video Services, which are billed to a Billing Address or Service Address in the City, are used, in whole or in part, within the City's boundaries and that such Video Services are subject to the Video Users' Tax. If the Billing Address of the Service User is different from the Service Address, the Service Address of the Service User shall be used for purposes of the Video Users' Tax. (b) The Tax Administrator may issue and disseminate to Service Suppliers of Video Services that are subject to the tax collection requirements of this Section, an administrative ruling identifying those video services, or charges therefor, that are subject to or not subject to the Video Users' Tax. (c) The Video Users' Tax shall be collected from the Service User by the Service Supplier providing the Video Services or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Video Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. SECTION 7: Section 5.122 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: - 7 - SECTION 5.122. Rate of Utility Users' Tax; Termination, Reduction or Suspension of Utility Users' Tax. (a) The City Council may, by ordinance or resolution, adjust any of the rates of the Utility Users' Tax; provided, however, that such rate shall not exceed -16.0% unless approved by the voters. Upon any such adjustment in tax rate, the Tax Administrator shall submit, as soon thereafter as reasonably practicable, written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, of such adjustment in tax rate. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to implement such change in tax rate, but in no event to exceed 60 days from the date of receipt of such written notification or, if 60 days from the date of receipt of such written notification is not on the first day of a month, then the first day of the month following the month in which such 60th day occurs. (b) The City Council may, by ordinance or resolution, terminate or suspend the Utility Users' Tax. Upon any such termination or suspension, the Tax Administrator shall submit, as soon thereafter as reasonably practicable, written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, of such termination or suspension. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to implement such termination or suspension, but in no event to exceed 60 days from the date of receipt of such written notification or, if 60 days from the date of receipt of such written notification is not on the first day of a month, then the first day of the month following the month in which such 60th day - 8 - day occurs. SECTION 8: Section 5.138 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby deleted in its entirety. SECTION 9: Any ordinance or parts of ordinances in conflict with this Ordinance are hereby repealed. SECTION 10: 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. SECTION 11: Book of Ordinances. The City Clerk, or Deputy City Clerk, shall attest and certify to the adoption of this Ordinance and shall cause this Ordinance and the City Clerk's, or Deputy City Clerk's, certification to be entered in the Book of Ordinances of the Council of this City. The City Clerk, or Deputy City Clerk, shall cause this ordinance to be published or posted as required by law. - 9 - SECTION 12: This Ordinance was approved and adopted by the People of the City of Vernon at the City's April 11, 2017, general municipal election. ATTEST: City Clerk / Deputy City Clerk APPROVED AS TO FORM: Brian Byun, Deputy City Attorney Name: Title: Mayor / Mayor Pro-Tem - 10 - TRANSMITTAL COMMUNICATION CITY CLERK'S OFFICE INTEROFFICE MEMORANDUM DATE: January 17, 2017 TO: Maria E. Ayala, City Clerk Carlos Fandino, City Administrator Hemp Patel, City Attorney FROM: Deborah Juarez, Records Management Assistant k1l RE: Resolution No. 2017-02 — A Resolution of the City Council of the City of Vernon, California, Submitting to the Voters of the City at the City's April 11, 2017 General Election a Utility Users' Tax Measure Transmitted herewith is a copy of Resolution No. 2017-02 referenced above, which was approved by City Council on January 10, 2017. Thank you. Attachment Matthew Ceballos Resolution No. 2017-02 STAFF REPORT 40 STAFF REPORT CITY ADMINISTRATION DATE: January 10, 2017 JAN 0 5 2017 CITY CLERK'S OFFICE TO: Honorable Mayor and City Council FROM: Carlos R. Fandino Jr., City Administrator Y(of Originator: Lilia Hernandez, Executive Assistant to the City Administrator RE: Increase to Utility Users' Tax Recommendation A. Find that adoption of the proposed resolution is exempt from California Environmental Quality Act ("CEQA") review, because it is an administrative activity of government that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378; and B. Adopt a resolution calling for a Utility Users' Tax Measure ("Measure Q") to be placed on the ballot for the General Municipal Election of April 11, 2017. Backy-round The City of Vernon (the "City") has historically operated with a deficit in its general fund that has been alleviated via a transfer of funds from the electric utility each fiscal year. These transfers have been necessary in order for the City to provide essential services to its businesses and residents. While this is a common practice amongst public agencies with their own utilities, it is not viewed in a favorable light by rating agencies and regulatory bodies. As a result, it is a practice that is currently under review by the California State Supreme Court. As the City remains committed to Good Governance, it is important that the City exercises more fiscal accountability and financial transparency. The proposed increase in the City's Utility Users' Tax ("UUT") would eliminate the electric utility operating transfers and replace them with an equivalent amount of UUT revenues. UUT revenues would go directly to the City's general fund and serve to finance general City services. The attached resolution grants authorization for a Utility Users' Tax Measure to be submitted to the voters of the City at the City of Vernon's April 11, 2017 General Election. Specifically, the attached resolution calls for a UUT Measure that would increase the City's UUT from 1 % to 6% for all utility customers. Page 1 of 2 As long as general fund revenues remain significantly lower than expenditures the City's general fund will continue to have a deficit potentially necessitating significant budget cuts for major municipal services offered by the City. In order to avoid such cuts, and to preserve the high standards under which the City of Vernon operates, the City will need to obtain an additional source of revenue for fiscal year 2017-18 and subsequent years. If the proposed Measure is approved by a majority of the voters at the General Election and the Utility Users' Tax is increased to a rate of 6.0%, the Utility Users' Tax dollars collected would then provide the City with sufficient general fund revenues to offset the general fund deficit. Effectually, greater stability in the general fund would be attained, eliminating the requirement for a fund transfer from the City's electric utility. Procedures If the City Council desires to submit Measure Q to the voters of the City at the next General Election, the attached resolution must be adopted by the City Council. The elections official would be responsible for seeing that the Election is conducted as provided by law, including the provision of all requisite publication and notice. Pursuant to subsection (b) of Section 2 of Article XIII C of the California Constitution and Section 53720 et. seq. of the California Government Code, the increase in the Utility Users' Tax would not take effect, and the Utility Users' Tax increase would not be levied, unless and until the proposed Measure is approved by a majority of the votes cast by the voters of the City voting at the General Election. At the next regular meeting of the City Council occurring after the returns of the General Election have been canvassed and certified by the elections official, the City Council will need to adopt a resolution reciting the fact of the General Election and a statement of the results of the General Election. If the proposed measure is approved by a majority of the votes cast by the voters of the City voting at the General Election, the Utility Users' Tax increase would take effect upon the adoption of such resolution. Fiscal Impact If the Proposition is approved by a majority of the voters at the General Election and the Utility Users' Tax is increased to a rate of 6.0%, the Utility Users' Tax would provide the City with approximately $10.2 million in general fund revenues in fiscal year 2017-2018 and eliminate the need for an operating transfer from the electric utility. Attachment(s) 1. Proposed Resolution Page 2 of 2 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON, CALIFORNIA SUBMITTING TO THE VOTERS OF THE CITY AT THE CITY'S APRIL 11, 2017 GENERAL ELECTION A UTILITY USERS' TAX MEASURE WHEREAS, the City has historically operated with a deficit in its general fund that has been alleviated via a transfer of funds from the electric utility each fiscal year, which transfers have been necessary for the City to provide essential services to its businesses and residents; and WHEREAS, while this is a common practice amongst public agencies with their own utilities, it is not viewed in a favorable light by rating agencies and regulatory bodies, and as a result, it is a practice that is currently under review by the California State Supreme Court; and WHEREAS, the City remains committed to its Good Governance reforms, including fiscal accountability and financial transparency; and WHEREAS, the City Council of the City (the "City Council") has determined that, without additional sources of revenues, it will be necessary for the City to make substantial reductions in the City's municipal services and projects; and WHEREAS, to address the City's revenue shortfall, there has been proposed to the City Council the submission to the voters of the City an increase to the utility users' tax pursuant to this Resolution (the "Utility Users' Tax"); and WHEREAS, the proposed increase in the City's Utility Users' Tax would eliminate the electric utility operating transfers and replace them with an equivalent amount of Utility Users' Tax revenues; the Utility Users' Tax revenues would go directly to the City's general fund and serve to finance general City services; and WHEREAS, by its Resolution No. 2016-62, adopted on November 1, 2016, the City Council called a general municipal election in the City to be held on April 11, 2017, by mail ballot only; and WHEREAS, Section 2(b) of Article XIII C of the California Constitution permits the vote on a general tax measure to be consolidated with a regularly scheduled general election for members of the governing body of the local government; and WHEREAS, the April 11, 2017 general municipal election is a regularly scheduled general election at which there will be elected one member of the City Council; and WHEREAS, the City Council desires to submit to the voters of the City, at the City's April 11, 2017 general municipal election, a measure to increase the Utility Users' Tax; and WHEREAS, the City Council finds it is in the public interest to exempt from the Utility Users' Tax certain categories of persons who are more likely to experience economic hardship from the imposition of the Utility Users' Tax; and WHEREAS, the proposed Utility Users' Tax is more completely described in the ordinance attached hereto as Exhibit A and incorporated herein by reference (the "Tax Ordinance"). NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS: SECTION 1: The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct. SECTION 2: The City Council of the City of Vernon finds - 2 - that this action is exempt under the California Environmental Quality Act (CEQA), because it is an administrative activity of government that will not result in direct or indirect physical changes in the environment, and therefore does not constitute a "project" as defined by CEQA Guidelines section 15378. SECTION 3: Proposal. The City Council hereby proposes the Utility Users' Tax as described in the Tax Ordinance. SECTION 4: Election. Pursuant to Section 9222 of the California Elections Code (the "Elections Code"), the City Council hereby orders that the Tax Ordinance be submitted to the voters of the City at the City's April 11, 2017 general municipal election. SECTION 5: Ballot Question. The measure submitted by Section 4 of this Resolution (the "Measure") shall appear on the ballot as follows: MEASURE Q: Shall an ordinance be adopted to authorize the levy of a 6% utility users' tax on YES electricity, gas, telecommunications, video and water utility services, with exemptions for residential services provided to persons NO with disabilities and low income households? SECTION 6: Approval. Pursuant to Section 2(b) of Article XIII C of the California Constitution, the Measure requires approval by a majority vote of those casting ballots on the Measure. SECTION 7: Conduct of Election; Consolidation. (a) The Measure shall be submitted to the voters of the City at the City's April 11, 2017 general municipal election and shall be - 3 - consolidated with the election for a member of the City Council and any other measures to be submitted to the voters on such election date. The City Clerk designated as the elections official (the "Elections Official"), shall conduct such election and is required, and is hereby requested, to take all steps to hold the election in accordance with law for the holding of a general municipal election in the City. (b) The Elections Official shall render all services to the City relating to the election. The Elections Official is hereby authorized, instructed and directed to procure and furnish any and all official ballot notices and printed matter and all supplies and equipment that may be necessary to prepare and lawfully conduct the general municipal mail ballot only election, including the preparation of the ballot. The Elections Official shall take all steps necessary to place the Measure on the ballot and to cause the Measure to be printed, and shall act as the filing authority for arguments. The full text of the Measure shall not be printed in the ballot, but a statement shall be printed in the ballot pursuant to Section 9280 of the Elections Code advising voters that they may obtain a copy of the Measure upon request made to the Elections Official. (c) Pursuant to Section 4101 of the Elections Code, the Elections Official shall mail the mail ballot materials not sooner than 29 days before the election date and not later than 10 days before the election date. (d) At the next meeting of the City Council occurring after the returns of the election have been canvassed and certified by the Elections Official, the City Council shall adopt a resolution reciting the fact of the election and a statement of the results of the election. - 4 - SECTION 7: Arguments and Analysis; Public Examination. (a) The last day for submission of direct arguments for or against the Measure shall be by 5:00 p.m. on January 24, 2017. Direct arguments shall be submitted to the Elections Official, shall not exceed 300 words and shall be signed by not more than five persons. (b) The last day for submission of rebuttal arguments for or against the Measure shall be by 5:00 p.m. on February 6, 2017. Rebuttal arguments shall be submitted to the Elections Official, shall not exceed 250 words and shall be signed by not more than five persons. Those persons may be different persons than the persons who signed the direct arguments. (c) Pursuant to Section 9285 of the Elections Code, when the Elections Official has selected the arguments for and against the Measure, which shall be printed and distributed to the voters, the Elections Official shall send a copy of the argument in favor of the Measure to the authors of any argument against the Measure, and a copy of the argument against the Measure to the authors of any argument in favor of the Measure, immediately upon receiving the arguments. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. (d) Pursuant to Section 9280 of the Elections Code, the City Attorney is hereby requested to prepare an impartial analysis of the Measure showing the effect of the Measure on the existing law and the operation of the Measure. Said analysis shall not exceed 500 words and shall be submitted to the Elections Official by January 24, 2017. Said analysis shall be printed preceding the arguments for and against the Measure. - 5 - (e) Pursuant to Section 9295 of the Elections Code, the Elections Official shall make a copy of the arguments and analysis referred to in this Section available for public examination in the Election Official's office for a period of ten calendar days immediately following the filing deadline for the submission of such arguments and analysis. The Elections Official may charge a fee to any person obtaining a copy of such materials, but such fee may not exceed the actual cost incurred by the Elections Official in providing the copy. SECTION 8: Notice of Election. The Elections Official is hereby requested to publish or post notice of the election, including notice to file arguments and of the public examination period, as required by law. - 6 - SECTION 9: The City Clerk, or Deputy City Clerk, of the City of Vernon shall certify to the passage, approval and adoption of this resolution, and the City Clerk, or Deputy City Clerk, of the City of Vernon shall cause this resolution and the City Clerk's, or Deputy City Clerk's, certification to be entered in the File of Resolutions of the Council of this City. APPROVED and ADOPTED this loth day of January, 2017. ATTEST: City Clerk / Deputy City Clerk APPROVED AS TO FORM: r Brian un, Deputy City Attorney - 7 - Name: Title: Mayor / Mayor Pro-Tem STATE OF CALIFORNIA ) ) ss COUNTY OF LOS ANGELES ) I, , City Clerk / Deputy City Clerk of the City of Vernon, do hereby certify that the foregoing Resolution, being Resolution No. , was duly passed, approved and adopted by the City Council of the City of Vernon at a regular meeting of the City Council duly held on Tuesday, January 10, 2017, and thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon: AYES: Councilmembers: NOES: Councilmembers: ABSENT: Councilmembers: ABSTAIN: Councilmembers: And thereafter was duly signed by the Mayor or Mayor Pro-Tem of the City of Vernon. Executed this day of January, 2017, at Vernon, California. (SEAL) - 8 - City Clerk / Deputy City Clerk EXHIBIT A ORDINANCE NO. AN ORDINANCE OF THE CITY OF VERNON AMENDING SECTIONS 5.113, 5.114, 5.115, 5.116, 5.117, 5.118, 5.122 AND 5.138 OF ARTICLE VII OF CHAPTER 5 OF THE VERNON MUNICIPAL CODE RELATING TO UTILITY USERS' TAX THE PEOPLE OF THE CITY OF VERNON HEREBY ORDAINS AS FOLLOWS: SECTION 1: Section 5.113 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: Section 5.113. Effective Date; Maximum RaterB ate. (a) The taxes imposed by this Article shall become effective upon certification by the City Council of the adoption by the electorate of the ordinance adding amending this Article to the Code (the "Effective Date"). As soon after the Effective Date as reasonably practicable, the Tax Administrator shall submit written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, requesting that the Utility Users' Tax be collected. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to install and implement necessary billing changes to effect the collection of the Utility Users' Tax, but in no event to exceed 90 days from the date of receipt of such written notification or, if 90 days from the date of receipt of such written notification is not the first day of a month, then the first day of the month following the month in which such 90th day occurs. /L.1 ml..:.. T 4- ..l .. -A 4-1... r74-4 l 4 4-.. r7.. .. .....i m nething herein shall prehib-rtt SECTION 2: Section 5.114 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: Section 5.114. Electricity Users' Tax. (a) There is hereby imposed a tax upon every Person using electrical energy in the City at the rate of -1-6.0% of the Electrical Charges made for such electrical energy. The Electricity Users' Tax shall be paid by the Person paying for such electrical energy. (b) As used in this Section, the term "using electrical energy" shall not be construed to mean (i) the storage of electrical energy by a Person in a battery that such Person owns or possesses for use in an automobile or other machinery or device apart from the premises upon which the electrical energy was received; provided, however, that the term "using electrical energy" shall include the receiving of such electrical energy for the purpose of using it in the charging of batteries, (ii) the mere receiving of electrical energy by an Electrical Corporation or governmental agency within the City for resale, or (iii) the use of electrical energy in the production or distribution of water, gas or other utility by a public utility or a governmental agency. (c) The Electricity Users' Tax shall be collected from the Service User by the Service Supplier providing the electrical energy or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the Electricity Users' Tax shall be remitted on or before the next business - 2 - day thereafter. The Electricity Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. effeet pursuant te this 8 Users' a Persen shall be as set Tam impesed aand eelleetedv €-erg-i-n Seetien 5.9:38 e = this Artiele. SECTION 3: Section 5.115 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.115. Gas Users' Tax. (a) There is hereby imposed a tax upon every Person using gas, including natural or manufactured gas or any alternative hydrocarbon fuel which may be substituted therefor, in the City which is delivered through mains, pipes or mobile transport at the rate of 4.6.0% of the Gas Charges made for such gas. The Gas Users' Tax shall be paid by the Person paying for such gas. (b) There shall be excluded from the base on which the Gas Users' Tax is computed charges made for gas which is to be resold and delivered through mains, pipes or mobile transport, and charges made for gas used by a Nonutility Supplier to generate electrical energy for its own use or for sale to others, provided the electrical energy so generated is subject to tax under Section 5.114 of this Article. (c) The Gas Users' Tax shall be collected from the Service User by the Service Supplier providing the gas or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs - 3 - on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Gas Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. (d) in eaeh Fiseal Year the Gas Users' Tax is in eff this Artiele, the maximum ameunt ef the Gas Users' Tax pursuant te frem, Persen shall impesed en, and eelleeted Seetien5 , mo o f thisAVM a SECTION 4: Section 5.116 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.116. Water Users' Tax. (a) There is hereby imposed a tax upon every Person using water in the City at the rate of 1-6.0o of the Water Charges made for such water. The Water Users' Tax shall be paid by the Person paying for such water. (b) The Water Users' Tax shall be collected from the Service User by the Service Supplier providing the water or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Water Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. Users' Tam - 4 - SECTION 5: Section 5.117 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: SECTION 5.117. Telecommunication Users' Tax. (a) There is hereby imposed a tax upon every Person using Telecommunications Services at the rate of -16.0% of the Telecommunications Charges made for such Telecommunications Services. The Telecommunications Users' Tax shall be paid by the Person paying for such Telecommunications Services. There is a rebuttable presumption that Telecommunications Services, which are billed to a Billing Address or Service Address in the City, are used, in whole or in part, within the City's boundaries and such services are subject to the Telecommunications Users' Tax. If the Billing Address of the Service User is different from the Service Address, the Service Address of the Service User shall be used for purposes of the Telecommunications Users' Tax. (b) Mobile Telecommunications Service shall be sourced in accordance with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124). The Tax Administrator may issue and disseminate to Service Suppliers of Telecommunications Services, which are subject to the tax collection requirements of this Section, sourcing rules for the taxation of other Telecommunications Services, including, but not limited to, Postpaid Telecommunications Services, Prepaid Telecommunications Services and Private Telecommunications Services; provided, that, such rules are based upon custom and common practice that further administrative efficiency and minimize multi -jurisdictional taxation. - 5 - (c) To prevent actual multi -jurisdictional taxation of Telecommunications Services subject to the Telecommunications Users' Tax, any Service User, upon proof to the Tax Administrator that the Service User has previously paid the same tax in another state or local jurisdiction on such Telecommunications Services, shall be allowed a credit against the Telecommunications Users' Tax to the extent of the amount of such tax legally imposed in such other state or local jurisdiction; provided, however, that the amount of credit shall not exceed the Telecommunications Users' Tax owed to the City. (d) The Tax Administrator may issue and disseminate to Service Suppliers of Telecommunications Services that are subject to the tax collection requirements of this Section, an administrative ruling identifying those telecommunications services, or charges therefor, that are subject to or not subject to the Telecommunications Users' Tax. (e) The Telecommunications Users' Tax shall be collected from the Service User by the Service Supplier providing the Telecommunications Services or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Telecommunications Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. SECTION 6: Section 5.118 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: - 6 - SECTION 5.118. Video Users' Tax. (a) There is hereby imposed a tax upon every Person using Video Services in the City at the rate of--16.09. of the Video Charges made for such Video Services. The Video Users' Tax shall be paid by the Person paying for such Video Services. There is a rebuttable presumption that Video Services, which are billed to a Billing Address or Service Address in the City, are used, in whole or in part, within the City's boundaries and that such Video Services are subject to the Video Users' Tax. If the Billing Address of the Service User is different from the Service Address, the Service Address of the Service User shall be used for purposes of the Video Users' Tax. (b) The Tax Administrator may issue and disseminate to Service Suppliers of Video Services that are subject to the tax collection requirements of this Section, an administrative ruling identifying those video services, or charges therefor, that are subject to or not subject to the Video Users' Tax. (c) The Video Users' Tax shall be collected from the Service User by the Service Supplier providing the Video Services or its billing agent. The amount of tax collected in each month shall be remitted by the Service Supplier or its billing agent to the Tax Administrator on or before the last day of the following month, unless the due date occurs on a weekend or a holiday, in which case the tax shall be remitted on or before the next business day thereafter. The Video Users' Tax shall be deemed remitted on the date received by the Tax Administrator, or on the date postmarked if remitted by first class United States mail with postage fully prepaid. SECTION 7: Section 5.122 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby amended to read as follows: - 7 - SECTION 5.122. Rate of Utility Users' Tax; Termination, Reduction or Suspension of Utility Users' Tax. (a) The City Council may, by ordinance or resolution, adjust any of the rates of the Utility Users' Tax; provided, however, that such rate shall not exceed 16.00-. unless approved by the voters. Upon any such adjustment in tax rate, the Tax Administrator shall submit, as soon thereafter as reasonably practicable, written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, of such adjustment in tax rate. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to implement such change in tax rate, but in no event to exceed 60 days from the date of receipt of such written notification or, if 60 days from the date of receipt of such written notification is not on the first day of a month, then the first day of the month following the month in which such 60th day occurs. (b) The City Council may, by ordinance or resolution, terminate or suspend the Utility Users' Tax. Upon any such termination or suspension, the Tax Administrator shall submit, as soon thereafter as reasonably practicable, written notification to the Service Suppliers, in accordance with procedures established by the Service Suppliers, of such termination or suspension. The Service Suppliers responsible for collecting and remitting the Utility Users' Tax shall have a reasonable period of time to implement such termination or suspension, but in no event to exceed 60 days from the date of receipt of such written notification or, if 60 days from the date of receipt of such written notification is not on the first day of a month, then the first day of the month following the month in which such 60th day - 8 - day occurs. SECTION 8: Section 5.138 of Article VII of Chapter 5 of the Vernon Municipal Code is hereby deleted in its entirety. SECTION 9: Any ordinance or parts of ordinances in conflict with this Ordinance are hereby repealed. SECTION 10: 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. SECTION 11: Book of Ordinances. The City Clerk, or Deputy City Clerk, shall attest and certify to the adoption of this Ordinance and shall cause this Ordinance and the City Clerk's, or Deputy City Clerk's, certification to be entered in the Book of Ordinances of the Council of this City. The City Clerk, or Deputy City Clerk, shall cause this ordinance to be published or posted as required by law. - 9 - SECTION 12: This Ordinance was approved and adopted by the People of the City of Vernon at the City's April 11, 2017, general municipal election. ATTEST: City Clerk / Deputy City Clerk APPROVED AS TO FORM: Brian Byun, Deputy City Attorney Name: Title: Mayor / Mayor Pro-Tem - 10 -