Loading...
HomeMy WebLinkAboutIRC recommended position on legislation - SBX6 2 - Transien Council/Agency Meeting Held: Deferred/Continued to: App oved ❑ Conditionally Approved ® Denied JA v:'Cil Ie Ws ignatu e Council Meeting Date: 03/15/2010 Department ID Number: AD 10-008 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: Honorable Mayor and City Council Members SUBMITTED BY: Mayor Pro Tern Jill Hardy, Chair on behalf of the Intergovernmental Relations Committee Members, Council Members Joe Carchio and Devin Dwyer PREPARED BY: Patricia Dapkus, Department Analyst, Senior9*1� SUBJECT: APPROVAL OF A CITY COUNCIL POSITION ON LEGISLATION, A REGULATION, OR BUDGET ISSUE PENDING BEFORE A FEDERAL, STATE, OR REGIONAL GOVERNMENT AS RECOMMENDED BY THE CITY COUNCIL INTERGOVERNMENTAL RELATIONS COMMITTEE (IRC) Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis, Environmental Status,Attachment(s) Statement of Issue: Approval of a City Council position on legislation, a regulation, or budget issue pending before a federal, state, or regional government as recommended by the City Council Intergovernmental Relations Committee (IRC). Funding Source: N/A Recommended Action: Motion to: 1. OPPOSE SBX6 2 (Calderon) Transient Occupancy Tax: Assessment and Collection 2. AUTHORIZE the Mayor to send a letter to our Federal Legislators asking that any stimulus bill include additional funding for programs such as the Community Development Block Grant (CDBG) and the Energy Efficiency and Conservation Block Grant (EECBG) and other programs like these that distribute the funding directly to local governments. (Sample Letter attached.) Alternative Action(s): Do not take the recommended action on one or all of the above and provide direction to staff on a possible city position. REQUEST FOR COUNCIL ACTION MEETING DATE: 03/15/2010 DEPARTMENT ID NUMBER: AD 10-008 Analysis: 1. OPPOSE SBX6 2 (Calderon) Transient Occupancy Tax: Assessment and Collection SBX6 2 would create a special exemption to the "pay first" rule for various online travel companies seeking to challenge a disputed amount of transient occupancy tax (TOT) that is owed to the local jurisdictions. The "pay first" requirement is imbedded in Article XIII, Section 32, of the state Constitution - and is a well established legal principle throughout the country -that requires that those who seek to contest the validity of a tax shall first pay the tax before they seek judicial remedy. To do otherwise would expose public revenue streams to uncertainty and potentially impede the delivery of public services. SBX6 2 is based, in part, on recent litigation over the application of the "pay first" rule in City of Anaheim v. Superior Court of Los Angeles County, (Cal, 2nd Dist.). The Court ruled that because the city did not have a "pay first" clause in its local ordinance, it could not enforce this requirement. The Court also held that Article XIII, Section 32, only applied to state revenues. But another court recently enforced local "pay first" provisions in similar litigation involving the city of San Francisco. The Anaheim case represents just a sliver in a much broader legal dispute between local agencies and online travel companies throughout the nation. The crux of this dispute is the concern that these companies are collecting TOT from customers who purchase rooms over the Internet, but then fail to fully remit the proceeds of those taxes to local agencies. Courts in Texas, Georgia and South Carolina have held in favor of local agencies in this dispute. The Intergovernmental Relations Committee is recommending that the City Council oppose SBX6 2. 2. AUTHORIZE the Mayor to send a letter to our Federal Legislators asking that any stimulus bill include additional funding for the Community Development Block Grant (CDBG) Program and the Energy Efficiency and Conservation Block Grant (EECBG) Program. (Sample Letter attached.) Our Washington, D.C. lobbying firm has requested that we write to our Federal legislators to let them know that local governments are in the best position to direct federal resources to create jobs in communities. As the Senate considers new legislation to create jobs and stimulate the U.S. economy, it is important that this measure adequately address the needs of local governments. Local governments have the best understanding of their individual community needs, and therefore, are in the best position to direct federal resources and create jobs in their communities. Huntington Beach like many communities across the country is facing an uphill battle weathering the financial crisis. The task of building, operating and maintaining infrastructure, as well as providing every day services such as police and fire protection, falls upon local governments. Reductions in state and local revenue and the tightening of the credit markets are hampering our ability to meet these needs. -2- 2/25/2010 2:06 PM REQUEST FOR COUNCIL ACTION MEETING DATE: 03/15/2010 DEPARTMENT ID NUMBER: AD 10-008 The Federal Legislature is currently evaluating options for a jobs creation bill. In order to be most effective in creating jobs at the local level, this legislation should include funding for the HUD's Community Development Block Grant (CDBG) Program, the DOE's Energy Efficiency and Conservation Block Grant (EECBG) Program, and the EDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs. The CDBG Program moves flexible funds quickly to local governments through pre-established formulas. Local governments, for example, can use CDBG funds for initiatives ranging from creating low-interest loan pools to generate private sector investment to rehabilitating park and recreation infrastructure. Not only should CDBG funding be included in the new jobs bill, but these funds should remain free of burdensome restrictions that limit flexibility of use. Like CDBG, the EECBG Program directs formula funds to local governments, which can be spent quickly and result in significant energy savings. Funding should also be included for the EDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs, which solely fund projects that create or retain jobs. The House jobs bill passed in December recognized the importance of creating jobs that strengthen infrastructure by funding highway and bridge programs. In order for this funding to achieve the greatest impact, the Senate should distribute 100 percent of any highway infrastructure funding through the Surface Transportation Program, which flows directly to regional and metropolitan planning organizations. The Intergovernmental Relations Committee is recommending the Mayor send such a letter.. Strategic Goal: The above actions meet the following strategic goals: ® Maintain, improve and obtain funding for public improvements ® Maintain and enhance public safety Environmental Status: NA Attachment(s): a - o - a S - e o 1. SBX6 2 (Calderon) Transient Occupancy Tax: Assessment and Collection 2. League of California Cities Analysis and letter on SBX6 2 3. Request from the Ferguson Group 4. Sample Letter to our Federal legislators -3- 2/25/2010 2:06 PM r>y < wv <w.�««< �s � _ - .y ,v TCT c- a d �- � :« » © a z. . \. - w:� \ ƒ 2 » \ � \( . \\v : : :< . » . k s_ « � 5 - � y � �\ \/\ y >� 2 : \ \ d . ./» . �a z a . �� �\ �a\ � «_ �. .�� ������m����( : � ��>��� BILL NUMBER: SBX6 2 INTRODUCED BILL TEXT INTRODUCED BY Senator Calderon NOVEMBER 24, 2009 An act to add Section 7283 .52 to the Revenue and Taxation Code, relating to taxation. LEGISLATIVE COUNSEL'S DIGEST SB 2, as introduced, Calderon. Transient occupancy taxes: assessment and collection. Existing law authorizes the legislative body of a city or county to impose an excise tax for the privilege of occupying a room or other living space in a hotel, inn, tourist home or house, motel, or other lodging, as provided. The California Constitution prohibits injunctive or other relief in the case of collection of any tax, but permits a suit to recover tax after payment of the tax, as may be provided by the Legislature. Existing income tax law does, however, allow for prepayment judicial relief with respect to a taxpayer who claims to be a nonresident of California under specified circumstances. This bill would allow prepayment judicial relief with respect to disputed transient occupancy taxes for a travel agent or intermediary, as described. The California Constitution authorizes the Governor to declare a fiscal emergency and to call the Legislature into special session for that purpose. The Governor issued a proclamation declaring a fiscal emergency, and calling a special session for this purpose, on December 19, 2008. This bill would state that it addresses the fiscal emergency declared by the Governor by proclamation issued on December 19, 2008, pursuant to the California Constitution. Vote: majority. Appropriation: no. Fiscal committee: yes. State-mandated local program: no. THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS: SECTION 1. Section 7283 .52 is added to the Revenue and Taxation Code, to read: 7283 .52 . (a) Notwithstanding Section 7283, a travel agent or intermediary, after complying with procedures established by ordinance or resolution of a local legislative body to appeal a notice of deficiency assessment issued because of the imposition of the tax authorized by this chapter, may, within 60 days after the action of the local legislative body becomes final, commence an action against the local legislative body, on the grounds set forth in its appeal, to determine whether it is subject to the tax authorized by this chapter during the period or periods set forth in the notice of deficiency assessment. No tax authorized by this chapter shall be collected from the travel agent or intermediary until 60 days after the action of the local legislative body becomes final and, if the travel agent or intermediary commences an action pursuant to this section, during the pendency of the action. (b) For purposes of this section: (1) "Local legislative body" means the legislative body of the city, county, or city and county, that imposed the tax authorized by this chapter. (2) "Travel agent or intermediary" includes, but is not limited to, a business or person that arranges transportation or accommodation through direct contact or contact over the Internet. SEC. 2 . The Legislature finds and declares that the provisions of this act fulfill a statewide purpose and must apply to all jurisdictions within the state to ensure consistency in the administration, collection, and challenges of taxes, imposed by either the state or local government, within the state. SEC. 3 . This act addresses the fiscal emergency declared by the Governor by proclamation on December 19, 2008, pursuant to subdivision (f) of Section 10 of Article IV of the California Constitution. A y ��� \ ��s, �< '�\ ,\ \ { �' �� \- : , , !� �� \ � - � Z « � �. . . . ,- v - ° \<��� �. : >a�s:: . . .� : . v<y-: � . , . :�»d«2�iwr���I'll. Article from City Advocate Weekly Page 1 of 2 Article from City Advocate Weekly (http_//newsletter.cacities.org/e_Articl(a01665766.cfm?x=bgy5FTp,b9.8gydD5) February 5, 2010 League Opposes One Transient Occupancy Tax Ball, Another May Be Introduced Soon The League recently opposed SBX6 2 (Calderon), a bill that would create a special exemption to the"pay first" rule for various online travel companies seeking to challenge a disputed amount of transient occupancy tax (TOT)that is owed to the local jurisdictions. Another related piece of legislation is under development. The"pay first" requirement is imbedded in Article XIII, Section 32, of the state Constitution—and is a well established legal principle throughout the country—that requires those that seek to contest the validity of a tax shall first pay the tax before they seek judicial remedy. To do otherwise would expose public revenue streams to uncertainty and potentially impede the delivery of public services. SBX6 2 is based, in part, on recent litigation over the application of the"pay first" rule in City of Anaheim v. Superior Court of Los Angles County, (Cal, 2nd Dist.). The Court ruled that because the city did not have a "pay first"clause in its local ordinance, it could not enforce this requirement. The Court also held that Article XI11, Section 32, only applied to state revenues. But another court recently enforced local "pay first" provisions in similar litigation involving the city of San Francisco. The Anaheim case represents just a sliver in a much broader legal dispute between local agencies and online travel companies throughout the nation. The crux of this dispute is the concern that these companies are collecting TOT from customers who purchase rooms over the Internet, but then fail to fully remit the proceeds of those taxes to local agencies. Courts in Texas, Georgia and South Carolina have held in favor of local agencies in this dispute. The League is opposed to this legislation for three reasons: The policy behind this bill is fundamentally flawed. While the Anaheim case may have surprisingly interpreted a state Constitutional provision to only apply to state revenues, it makes no policy sense for local agencies to be subject to a different legal standard. In fact, the legislation that is needed would be to clarify that the local standard should be identical to that of the state. This bill is drafted much more broadly than the holding in the Anaheim case, so that it seeks to apply the Court's holding to all"pay first" provisions that would apply to this industry, even in instances where the local ordinance contains a separate"pay first"provision. This is contrary to the Court's holding. This legislation establishes a very bad policy precedent. If approved, any other industry that wishes to challenge a local tax will, no doubt, seek a legislative exemption to the"pay first" rule before commencing litigation. This is not the time to adopt legislation that further disrupts local revenue streams. It is unclear if SBX6 2 will be heard in the current special session or if a similar bill may be introduced in the next regular session. This bill is not currently set for a hearing. Recently, the League also became aware of another potential piece of legislation by Senator Rod Wright that would benefit online travel companies by restricting the ability of local agencies to collect TOT from online rental of hotel rooms is being considered for introduction soon. This measure has not yet been introduced in bill form. Take Action Now City officials are urged to draft a letter of opposition for SBX6 2 and send it to the author with copies to their state senator's capitol office. Closely monitor this legislation, and remain alert for other related legislation that may be introduced in the coming weeks that will undermine local TOT collection authority. A sample opposition letter can be found on the League's Web site at www.cacities_org/billsearch. Type"SBX6 2" into the search function to pull up the letter. http://www.imakenews.com/eletra/mod_print_view.cfm?this id=1665766&u=priorityfocus... 2/5/2010 Article from City Advocate Weekly Page 2 of 2 Published by League of California Cities Copyright© 2010 League of California Cities. All rights reserved. Powered by IMN http://www.imakenews.com/eletra/mod_print_view.cfin?this id=1665766&u=priorityfocus... 2/5/2010 'r tCAL.I FC)RN 1400 K Street, Suite 400 o Sacramento, California 95814 � t ap , Phone: 916.658.8200 Fax: 916.658.8240 www.cacities.org January 26, 2010 Senator Ronald S. Calderon State Capitol, Room 5066 Sacramento, CA 95814 RE: SBX6 2 (Calderon) Transient Occupancy Taxes: collection Notice of Opposition Dear Senator Calderon: I regret to inform you that the League of California Cities is opposed to your SBX6 2. This measure creates a special exemption to the "pay first" rule for various online travel companies seeking to challenge a disputed amount of transient occupancy tax(TOT)that is otherwise owed to the local jurisdiction. The "pay first" requirement is imbedded in Article XIII, Section 32, of the Constitution—and is a well established legal principle throughout the country—that requires those that seek to contest the validity of a tax shall first pay the tax before they seek judicial remedy. To do otherwise would expose public revenue streams to uncertainty and potentially impede the delivery of public services. It is our understanding that this legislation is based, in part, on recent litigation over the application of the "pay first" rule in City of Anaheim v. Superior Court of Los Angles County, (Cal, 2nd Dist.). The Court ruled that because the city did not have a"pay first" clause in its local ordinance, it could not enforce this requirement. The Court also held that Article XIII, Section 32, only applied to state revenues. But another court recently enforced local "pay first"provisions in similar litigation involving the City of San Francisco. The Anaheim case represents just a sliver in a much broader legal dispute between local agencies and online travel companies throughout the nation. The crux of this dispute is the concern that these companies are collecting TOT from customers who purchase rooms over the Internet,but then fail to fully remit the proceeds of those taxes to local agencies. Courts in Texas, Georgia and South Carolina have held in favor of local agencies in this dispute. Thus, we oppose this legislation for three reasons: 1) The policy behind this bill is fundamentally flawed. While the Anaheim case may .have surprisingly interpreted a Constitutional provision to only apply to state revenues, it makes no policy sense for local agencies to be subject to a different legal standard. In fact,the legislation that is needed would be to clarify that the local standard should be identical to that of the state. 2) This bill is drafted much more broadly than the holding in the Anaheim case, so that it seeks to apply the Court's holding to all "pay first"provisions that would apply to this industry, even in instances where the local ordinance contains a separate"pay first"provision. This is contrary to the Court's holding. 3) This legislation establishes a very bad policy precedent. If approved, any other industry that wishes to challenge a local tax will, no doubt, seek a legislative exemption to the "pay first" rule before commencing litigation. This is not the time to adopt legislation that further disrupts local revenue streams. Therefore we would advocate that the Legislature oppose this legislation that favors a specific industry, and either clarify—as a matter of good public policy—the "pay first" standard so that applies equally to both the state and local agencies, or let the Anaheim decision stand and allow local agencies to adjust their local ordinances accordingly. For the above reasons,the League opposes your SBX6 2. If you have any questions, please contact me at (916) 658-8222. Sincerely, Daniel Carrigg Legislative Director d3� w \ :y: « ld« � . �2v\ y�y ��r < � ' R ��/ � : \ / «» � .>, : - TT _% ? �� «� > m . - �\ \2 ^ � � « t�\\ - «, . . . . . _ .� : . . < (- �. �� �C � �° \ \$ ^ �'\ �\ / 2�y ` . . . . �����\2 \������~� From: The Ferguson Group [mailto:The_Ferguson_Group@mail.vresp.com] Sent: Wednesday, January 27, 2010 9:38 AM To: Dapkus, Pat Subject: Action Alert: Senate considering jobs bill Contact Your Senators, Voice Your Support for Jobs Legislation There is a growing effort in the Senate to take up a jobs bill in the next few weeks. A draft outline has been circulated, but the proposal has not been formally agreed to and there are still many issues under consideration. Now is the time to contact your Senator to let them know that local governments are in the best position to direct federal resources to create jobs in communities. Below is the text of an example letter that you could copy, paste, and customize to send to your Senator. Local governments need to express their desire to bring federal resources to their communities to create jobs. You can also visit our JobsNow blog to send a letter to your senator. Visit www.fergusongroup.us/iobsno . Thank you for your consideration. Example letter: As the Senate considers new legislation to create jobs and stimulate the U.S. economy, I write to request that this measure adequately address the needs of local governments. Local governments have the best understanding of their individual community needs, and therefore, are in the best position to direct federal resources and create jobs in their communities. My community, like many communities across the country, is facing an uphill battle weathering the financial crisis. The task of building, operating and maintaining infrastructure, as well as providing every day services such as police and fire protection, falls upon local governments. Reductions in state and local revenue and the tightening of the credit markets are hampering our ability to meet these needs. I understand that the Senate is currently evaluating options for a jobs creation bill. In order to be most effective in creating jobs at the local level, the Senate should include funding for the HUD's Community Development Block Grant (CDBG) Program, the DOE's Energy Efficiency and Conservation Block Grant(EECBG) Program, and the EDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs. HUD's CDBG Program moves flexible funds quickly to local governments through pre-established formulas. Local governments, for example, can use CDBG funds for initiatives ranging from creating low-interest loan pools to generate private sector investment to rehabilitating park and recreation infrastructure. Not only should CDBG funding be included in the new jobs bill, but these funds should remain free of burdensome restrictions that limit flexibility of use. Like CDBG, DOE's EECBG Program directs formula funds to local governments, which can be spent quickly and result in significant energy savings. Funding should also be included for the EDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs, which solely fund projects that create or retain jobs. The House jobs bill passed in December recognized the importance of creating jobs that strengthen infrastructure by funding highway and bridge programs. In order for this funding to achieve the greatest impact, the Senate should distribute 100 percent of any highway infrastructure funding through the Surface Transportation Program, which flows directly to regional and metropolitan planning organizations. My community is ready to work cooperatively with federal and state agencies to ensure that we maximize stimulus funding for our local economies. For more detailed information on these and other programs that benefit local governments, please visit http://fer lug son r�roup.us/documents/jobs now white paper.pdf. Thank you for your support of this priority request. If you no longer wish to receive these emails,please reply to this message with"Unsubscribe"in the subject line or simply click on the following link: Unsubscribe Melissa Hyman Partner The Ferguson Group 1130 Connecticut Ave.NW Suite 300 nailed SY Washington,District of Columbia 20036 @rfica 6 ib mhyman@tfgnet.com J TFi�-ITFflT€ a t (202)331-8500 _ Read the VerticaIResponse marketing policy. .M-XE- WC, 2w.��.? %P;,�\ � . . . . . SAMPLE LETTER As the Senate considers new legislation to create jobs and stimulate the U.S. economy, I write to request that this measure adequately address the needs of local governments. Local governments have the best understanding of their individual community needs, and therefore, are in the best position to direct federal resources and create jobs in their communities. Huntington Beach like many communities across the country is facing an uphill battle weathering the financial crisis. The task of building, operating and maintaining infrastructure, as well as providing every day services such as police and fire protection, falls upon local governments. Reductions in state and local revenue and the tightening of the credit markets are hampering our ability to meet these needs. I understand that the Senate is currently evaluating options for a jobs creation bill. In order to be most effective in creating jobs at the local level,the Senate should include funding for the HUD's Community Development Block Grant(CDBG)Program,the DOE's Energy Efficiency and Conservation Block Grant(EECBG)Program, and the FDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs. RUD's CDBG Program moves flexible funds quickly to local governments through pre- established formulas. Local governments, for example, can use CDBG funds for initiatives ranging from creating low-interest loan pools to generate private sector investment to rehabilitating park and recreation infrastructure.Not only should CDBG funding be included in the new jobs bill,but these funds should remain free of burdensome restrictions that limit flexibility of use. Like CDBG, DOE's EECBG Program directs formula funds to local governments,which can be spent quickly and result in significant energy savings. Funding should also be included for the EDA's Public Works and Infrastructure and Economic Adjustment Assistance Programs, which solely fund projects that create or retain jobs. The House jobs bill passed in December recognized the importance of creating jobs that strengthen infrastructure by funding highway and bridge programs. In order for this funding to achieve the greatest impact,the Senate should distribute 100 percent of any highway infrastructure funding through the Surface Transportation Program,which flows directly to regional and metropolitan planning organizations. My community is ready to work cooperatively with federal and state agencies to ensure that we maximize stimulus funding for our local economies. Thank you for your support of this priority request. CA ROUTING T INITIATING DEPARTMENT: Administration SUBJECT: Intergovernmental Relations Recommendations COUNCIL MEETING DATE; March 15, 2010 RCA 1`TACH EN STATUS Ordinance (w/exhibits & legislative draft if applicable) Attached ❑ Not Ap licable Resolution (w/exhibits & legislative draft if applicable) Attached ❑ Not Applicable Tract Map, Location Map and/or other Exhibits Attached ❑ Not Applicable Contract/Agreement (w/exhibits if applicable) Attached ❑ (Signed in full by the City Attorney) Not Applicable Subleases, Third Party Agreements, etc. Attached E]Applicable (Approved as to form by City Attorney) Certificates of Insurance (Approved by the City Attorney) Attached ❑ Not Applicable Fiscal Impact Statement (Unbudgeted, over $5,000) Attached ❑ Not Applicable Bonds (If applicable) Attach El Not A educable Staff Report (If applicable) Attached cchei NAp icable Commission, Board or Committee Report (If applicable) Attached ❑ Not Applicable Findings/Conditions for Approval and/or Denial Attached ❑ Not Applicable EXPLANATION FOR MISSING ATTACHM8NTS REVIEW ,RETURNED FOR A Administrative Staff ) ) Assistant City Administra r (Initiall., City Administrator (Initial) City Clerk FNVI � EXPLANATION FOR RETUR ; EM: - o a RCA Author: Dapkus