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HomeMy WebLinkAboutAdministrative Hearing - appeal Filed by GTE Telephone Opera THE COUNTY COUNSEL G* COUNTY OF ORANGE �<r 333 W.SANTA ANA BLVD.,SUITE 407 SANTA ANA,CA 92701 Laurie A.Shade MAILING ADDRESS:P.O.BOX 1379 Senior Deputy ' SANTA ANA,CA 92702-1 379 Q" (714)834-3300 (714)834-6297 9l7FOR�ti FAX:(714)834-2359 Laurie.shade n"coco.ocgov.com February 11, 2014 NICHOLAS S.CHRISOS d COUNTY COUNSEL JACK W.GOLDEN City Clerk/City Manager CHIEFASSISTANT City of Huntington Beach JEFFREY M.R{CHARD SENIOR ASSISTANT City Hall WANDA S.FLORENCE 2000 Main St. SENIOR ASSISTANT Huntington Beach, CA 92648 ADRIENNE SAURO HECKMAN KAREN R.PRATHER GEOFFREYK HUNT CHRI H ABBOTT MILLER H.0HN ABBOT Re: Verizon California Inc. v. State Board of Equalization, et al. � 1 ANELLE E. PRICE Sacramento County Superior Court Case No. 34-2014-00157245 ANN E.FLETCHER MARGARET E.EASTMAN MARK R.HOWE AAI.STITS NEV MARIANNE VAN RIPER Dear City Clerk/City Manager: JAMES C.HARMAN JULIE 1,AGIN LAURIEA.SHADE DANIEL H.SHEPHARD This letter is to notify you of the above-referenced lawsuit that has been filed y JOYCE RILEY THOMAS A.MILLER Verizon California Inc. against the State Board of Equalization, the County of Orange, an STEVEN C.MILLER CAROLYN S.FROST thirty-seven other California counties. The complaint seeks a refund of state-assessed ROBERT N.ERVAIS LAURA D.KNAPP unitary taxes for the January 1, 2009 lien date. Please note that this lawsuit is different NICOLE A.SIMS NI KHI L G.DAFTARY from the lawsuit you were notified of in April 2013 as it is for a different tax year. JEANNIE SU JAMES C.HARVEY WENDY 1.PHILLIPS - - TER]L.MAKSOUDIAN Under the relevant statute, the County is required to-give�notice�of this action to all LEON J.PAGE ANGELICA cities on whose behalf taxes were collected. Any city receiving notice of the action may, MICHKAREN L CHRISTENSEN ' RYAN M.ABARO ERT within 30 days of the receipt of the notice, intervene in the action. (Cal. Rev. &Tax. Code BRADRYAN M.F.BARON SAUL R POSIN § 5 1 48 (b) SAUL REVES. � J L O UJ ) - AURELIO TORRE MARK D SERVINO DEBBIETORREZ Please be advised that the Attorney General's Office will be defending the action JACQUELINE GUZMAN ANDREA COLLER PAUL M.ALBARIAN on behalf of the State Board of Equalization and in effect, the counties since the NDUNN LORI A.TORRISI assessments at Issue were not done at the local level. LORI A. MASSOUD SHAMEL SHARON VICTORIA DURBIN NICOLEREBECCAM. ALSH If you have any questions about this, please feel free to contact the undersigned. NICOLE M.WALSH LAURE C. PER If you are interested in a copy of the lawsuit please let me know or you car.access the GABRLAUREN C.BAUER LI.BOWNE JULIA C W00 pleadings for free at the Court's website www.saccourt.ca.gov. IULiA C. LAUREL M.TIPPE17 MARK A.BATARSE ADAM C CLANTON KRISTEN K Very trulyOUTS, .LECONO -- - 'J y ERICA DIVINE JAMES D.P.STEINMANN SUZANNEVANESSA .SHOA1ATKIN NICHOLAS S. CHRISOS DEBORASUZANNE E.SHOAI - HB.MORSE MATTHEWSSPRISS LER COUNTY COUNSEL -.KAYLA N.MARTIN CAROLYN M-KHOUZAM „ ANNIE J.COO .. RONALDT.MAGSAYSAY DEPUTIES By La rie A.` Shade, Senior Deputy LAS:po i 07/01/96 - City Council/Redevelopment Agency Minutes - Page 17 (City Council) Final Tract Map Nos. 15034-37 And 15081-86 - Subdivision Agreements - Portions Of Tentative Tract Map No. 14700 - Peninsula II - PLC - s/o Summit Drive Between Seapoint And Goldenwest Streets -Approved (420.60) -Approved the final Tract Map Nos. 15034, 15035, 15036, 15037, 15081, 15082, 15083, 15084, 15085 and 15086; accepted the offer of dedication and improvements and bonds pursuant to the following findings and requirements shown on the tentative map; that Final Tract Map Nos. 15034, 15035, 15036, 15037, 15081, 15082, 15083, 15084, 15085, and 15086, are in conformance with the California Subdivision Map Act, the City of Huntington Beach Subdivision Ordinance, and Tentative Tract Map No. 14700 conditions of approval as approved by the Planning Commission; and instructed the City Clerk to file the associated bonds with the City Treasurer, that Requirements 3(a) through 3(d) have been complied with; approved and authorized execution of the Subdivision Agreement; and further instructed the City Clerk not to affix her signature to the map nor release it for preliminary processing by the County of Orange or for recordation until the aforementioned conditions have been met. (City Council) Subgrantee Loan Agreement Between City And Huntington Beach Community Clinic For Community Development Block Grant (CDBG) Funds -Approved (600.10) - Approved and authorized the Mayor and City Clerk to execute the Subgrantee Loan Agreement between the city and the Huntington Beach Community Clinic for a maximum of $100,000 in Community Development.Block Grant Funds. (City Council) Resolution No. 96-55 -Adopted - Findings Of Fact-And Conclusions Of Law -Appeal Of A Late Charge To GTE For Late Payment Of Utility Taxes -Approved (340.50) -Adopted Resolution No. 96-55 - 'A Resolution Of The City Council Of The City Of Huntington Beach Granting /n Part The Appeal Of GTE Of A Penalty Assessment For Late Submittal Of The Utility User Tax." Imposition of a penalty in the reduced amount of the interest the city would have collected on its investments in the amount of$192.90. (City Council) Resolution No. 96-56 - Designates Persons Authorized To Execute Financial Transactions - City Treasurer Shari Freidenrich - Deputy City Treasurer Patricia Lovelace And Finance Director Dan Villella -Approved (630.50) - Adopted Resolution No. 96-56 - "A Resolution Of The City Council Of The City Of Huntington.Beach Authorizing The Manual And/Or Facsimile Signatures Of Shari L. Freidenrich, Patricia Lovelace, And Dan T. Villella" Designates the aforementioned persons to execute financial transactions. (`City Council) Contract - Rod Gunn And Assoc. - Financial Advisor Services - Issuance Of Lease Revenue Bonds - Funding Shortfalls - Pier Plaza Project And 800 MHz Project Costs Approved (600.10) - Approved the contract with Rod Gunn and Associates for Financial Consulting Services for alternative funding methods to finance portions of the $4,000,000,800 MHz Police, Fire, and Public Works Communication System (County-Wide System) and from $2,000,000 to $3,000,000 for the Pier Plaza Project. 414 Page 18 - Council/Agency Minutes - 06/1V96 The City Administrator spoke regarding the importance of community support for this project in order to give the best we can to the children. He believed it should be very specific and stated that he would have liked to have a year to prepare; however he believes this proposal does address some questions and is more specific. He stated that the amounts on the ballot are maximum. For the record, Mayor Sullivan read from Page No. 5, of the Huntington Central Park Sports Fields and Facilities - Revised. On motion by Harman, second by Bauer, Council approved the Council Committee recommendation that an advisory vote be placed on the November 5, 1996, ballot for a city-wide assessment district for sports facilities improvement projects, along with two City Charter Section 612 (Measure C) ballot measures for sports fields on an undeveloped portion of Huntington Central Park and a gymnasium at Murdy Community Center. The motion carried by unanimous vote. (City Council) General Municipal Election Resolutions - Election Of City Officers - Submission Of City Measures - Continued To July 1, 1996 (620.20) The City Council considered a communication from the City Clerk transmitting resolutions for the conduct of the November 5, 1996, General Municipal Election and requesting the Board of Supervisors of the County of Orange to consolidate the city's election with the State-wide Election. (Election of three City Councilmembers, a ''sty Clerk, a City Treasurer and for the submission of th.-Be city measures.) G-nsiderable discussion was held regarding the proposed ballot language and how the projects v --ild be affected if the voters voted differently on the measures. Councilman Harman stated what he believed would be the effect. Councilman Garofalo recommended a lottery method for Council to write arguments. A motion was made by Garofalo, second Harman, to continue consideration of the General Municipal Election resolutions to the July 1, 1996 Council meeting. The motion carried unanimously. 'ity Council) Administrative Hearing -Appeal Filed By GTE Telephone Operations - Penalty -sseesment Late Payment - Utility User Tax -Appeal Granted (340.50) he City Council considered a communication from Deputy City Administrator Franz transmitting an appeal filed by GTE to the Hearing Officer's decision denying GTE's request for relief from the penalty imposed for late payment of the August 15, 1995 utility users tax collections. This is an Administrative Hearing agenda item. The only testimony to be taken by the Council during the hearing will be from city staff and the appellant. The Brown Act provides for members of the public who wish to speak to this item to do so during the public comments portion of the meeting which is reserved for members of the public to speak to non-public hearing items on the agenda. 385 06/17/96 - City Council/Redevelopment Agency Minutes - Page 19 Deputy City Administrator Franz presented a staff report and distributed a document titled Administrative Hearing Late Charge - GTE Agenda Item F-5. The City Attorney's memorandum dated June 12, 1996 regarding the Procedure for Conducting the GTE Appeal was included in the Council Agenda packet. Mayor Sullivan declared the administrative hearing open. Lou Bangs, representing GTE, presented background information on how their late payment occurred and presented reasons why he believed the appeal should be granted. Councilman Leipzig stated that it was not at all clear to him that Council had the ability to modify the late charge. The City Attorney stated that the existing ordinance does not provide due process and that an ordinance is being prepared with input from the utility companies and will be returned to Council. Councilman Leipzig stated that this opinion was worrisome and gave reasons. The City Attorney reported further on the matter. A motion was made by Garofalo, second Harman, to reject the recommendations and Findings of Fact of the Hearing Officer dated April 15, 1996, and waive penalty imposed on GTE for late payment of the Utility User Tax collection for August, 1995, and to charge GTE for loss to city of interest for five days, with findings and conditions to be submitted at next meeting. The motion carried unanimously. Council Leipzig requested that Huntington Beach Municipal Code Section 3.36.230 be addressed. Council Garofalo requested that a mechanism be employed such as a bond (optional) to avoid this situation in the future. Mayor Sullivan stated that he believed rules for citizens and GTE should be the same. (City Council) Legislation Authorization Process Options -Deferred to July 1, 1996 (100.10) The City Council considered a communication from Brian Smith, Management Assistant, regarding modifying the process for gaining City Council authorization to act on legislative issues to meet varying time constraints. A motion was made by Garofalo, second by Green, to defer the agenda item on Legislation Authorization Process Options to the Council meeting of July 1, 1996. The motion carried by the following roll call vote: AYES: Leipzig, Bauer, Sullivan, Dettloff, Green, Garofalo NOES: Harman ABSENT: None 386 Council/Agency Meeting Held: Deferred/Continued to: ❑Approved O Conditionally Approved 0 Denied City Clerk's Signature Council Meeting Date: _ 06/03/96 Department ID Number: AS 96-020 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR-AND CITY COUNCIL MEMBERS D SUBMITTED BY: MICHAEL T. UBERUAGA, City Administra PREPARED BY: ROBERT J. FRANZ, Deputy City Administrator ' SUBJECT: ADMINISTRATIVE HEARING - LATE CHARGE (GTE) Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachme Statement of Issue- To conduct a hearing on the appeal of a late charge applied pursuant to the Municipal Code, Funding Source: General Fund. Recommended Action: Upon conclusion of the Administrative Hearing, approve the Hearing Officer's Recommendations and Findings of Fact dated April 15, 1996 upholding the assessment of a penalty for late payment of utility taxes. Alternative Action(s): Modify the penalty assessment. Analysis: The City's Administrative Services Department assessed the 15% penalty required by the Huntington Beach Municipal Code for the late payment of utility taxes by GTE. An appeal was filed by GTE. Following presentations by staff and GTE, Hearing Officer Rich Barnard recommended upholding the assessment of the penalty. The Hearing Officer's report dated April 15, 1996, provides an analysis of the appeal, Recommendations, Findings of Fact, and 16 attachments. �7 ;j3 33V REQUEST FOR COUNCIL ACTION MEETING DATE: 06/03/96 DEPARTMENT ID NUMBER: AS 96-020 Environmental Status: Not applicable. Attachment(s)• - 1. Appeal to City CitYC Council dated Ma y 31 996 <: + 2. Hearing Officer notice dated April 9, 1996 3. Hearing Officer Report dated April 15, 1996 ti • 0018919.01 -2- 05/22/96 11:03 AM ATTACHMENT # 1 3 l_I: I i 1!t•1 10-27-199S 3:249M FP0M 21d 7197010 P 1 y w G 44 ov'>�. .36 _ zoo CL.CA.,- ;, CITY OF HUNTING TON E3EACH LOLV 2OW MAIN STREET CALIFORNIA 9260 October 5, 1995 Poew Fax Note 7571 a"'10 I;L 1 =' Tax Department PtWW' lof 33 °"0°'ff.?14 1-7►5-8052- GTE Telephone OperationsTips-- Y35- ,IVO ' ty 7 - v0 P.O.Box 152205 Irving. Tama 75015-2205 - Sales&Use Tax Department Rt: Delinquent Utility Tax Remittance For The Month of August 1995 Dear Sirs: GTE California's Utility tax payment to the city of Huntington Beach cowering the month of August 1995 failed to conform to City requirements governing timely Porksd remittance aad is now subject to a penalty of IS%or S75,257.52 (Sec Attachments). The City's Ordinance does not allow us any discretion in this matter. We would suggest that a remittance for the above be forwarded without further dtlay and that necessary steps be taken to avoid future repetition. Thanking you in advance for your imme InMtion to this item. Sincerely/ ARNOLD ROSS t)� Sr. Accountant GTE Telephone Operations October 31, 1995 Mr. Ray Silver Assistant City Administrator City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Ray: Per our conversation earlier today, I am enclosing a copy of Arnold Ross' letter to our Tax Department in Irving, Texas. As I explained to you, our August utility user tax payment were delayed in mailing to cities due to the fact that our entire billing section that deals with these issues was being moved from Westfield, Indiana to Irving. This is the first time in my years of dealing with utility users' taxes that a late payment penalty has been assessed against GTE. I do not know the specifics of the ordinance referred to by Mr. Ross, but we believe this penalty to be harsh and unfair due to our extenuating circumstances and ask for your review of this matter. If you have any questions, please call me at (310) 696-4645. Sincerely, Lou Banas Public Affairs Manager cc Milton Jackson, Irving, TX Ilona Smith, Thousand Oaks, CA ® GTE Telephone Operations Bo'. ,iDecember 1, 1995 Gail Hutton, City Attorney City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Gail: In follow-up to our conversation of Nov. 16 and my letter of Oct. 31 (enclosed) to Ray Silver, I am formally requesting that GTE Corp. be forgiven the $35, 257 . 52 penalty on the delayed receipt of the August utility users' tax payment. As I explained in the Oct. 31 letter, our August payment to cities was unfortunately delayed by a few days due to the fact that the GTE billing unit, which handles these payments for thousands of cities and counties throughout the country, was in the process of being relocated from Westfield, Indiana to Irving, Texas. The complexity of this relocation caused our Huntington Beach payment, of $235, 050. 12 , to arrive on Sept. 25, just five days behind the prescribed deadline. As your own Finance Dept. can verify, GTE has a long history of timely tax payments in all of our communities, a record that needs to be taken into consideration before a penalty of this magnitude is applied. I know that both Council and staff have asked for your interpretation of the ordinance in this matter. I hope that a clear understanding of the circumstances that caused this delay will allow you to exercise the flexibility required. If you have questions, you can contact me at (310) 696-4645. Sincerely, �C I � Lou Banas -Public Affairs Manager cc Milton Jackson - Irving, TX Ken Okel - Thousand Oaks, CA Bob Wright - Covina, CA Ilona Smith, Thousand Oaks, CA Councilman David Garfalo, Huntington Beach, CA GTE Telephone Operations P.O. Box 4007 Whittier. CH 90607-L.-07 January 9, 1996 To: Mayor, Councilmembers, City of Huntington Beach City Administrator Michael T. Uberuaga Deputy City Administrator Robert Franz Subject: Utility Users' Tax Fine on GTE Attached you will find a copy of the correspondence that has been exchanged between the City of Huntington Beach and GTE Corp., beginning with the Oct.5 letter initiated by Arnold Ross of your Finance Dept. OVERVIEW On Oct. 31, 1 became aware of the fact that GTE was being fined $35,257.52 for a delayed payment on the August 1995 utility users tax paid by the residents of your city. In conversations with both Mr. Ross and Ray Silver, I explained that the delays in remittances of this tax to a number of cities was delayed due to the physical move of our tax department from Westfield, Indiana to Irving, Texas, a major undertaking. To our knowledge, this is the first and only time such a delay has occurred since GTE began collecting utility users tax for this city. In addition, to these conversations, I also contacted Councilman Garofalo to seek his advice. In mid-November, I was advised that the issue had still not been resolved and that I needed to write a letter of appeal to City Attorney Gail Hutton, so that a review of the ordinance can be brought before council. As of this date, I have not received a reply from Ms. Hutton to my letter of Dec.1, 1995, but I have received a second Arnold Ross letter (dated Dec.26) stating that while we were actively seeking a resolution of this issue, the meter was still running and we now owed the city a fine of nearly $42,000. GTE Fine Appeal Page 2 ISSUES There are basically two. First, because there was a reasonable extenuating circumstance involved in the five day late payment, should the fine have been levied? We think not, especially in light of GTE's extensive on-time payment record and its record of service to this community. Secondly, is a fine of $35,257,52 (now $41,762.53) a fair and just levy for a five-day payment delay? We feel that this is an issue the Council and City Staff should review before the issue comes up again with any of the utilities that provide service to the city. It is our opinion that the fine is exorbitant and out of line with traditional late payment practices employed by the business community. CONCLUSION It's GTE's wish that the City resolve this matter as quickly as possible, either through administrative channels or by Council action. We stand ready to assist you in any way to bring this matter to a successful conclusion. Sincerely, Lou.Banas Public Affairs Manager cc Milton Jackson, Irving,TX Ken Okel, Thousand Oaks,CA Ilona Smith, Thousand Oaks,CA HCITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH TO: Michael T. Uberguaga, City Administrator FROM: Gail Hutton, City Attorney DATE: January 16, 1996 SUBJECT: Procedure for Collecting Penalty for Delinquent Payment of Utility User Tax The Tax Administrator has levied a 15%penalty on GTE for late remittance of its utility user tax. GTE has requested reconsideration of the penalty. uestion: What discretion, if any, is permitted under the Municipal Code in the assessment of delinquency penalties against GTE? Answer: GTE is entitled to a hearing before the City Council at which time the Council has the authority to confirm or modify the penalty assessment. Summary of the Facts: The utility users tax is due 20 days after the end of the month. In this case, when GTE paid its tax five days late, the Tax Administrator imposed a 15% penalty. When GTE failed to pay the penalty, the Administrator imposed an additional fee of$5,984.08. According to Senior Accountant, Arnie Ross, the additional fee was determined by applying a 15%penalty on the 15% penalty, and then adding a 1-1/2% late charge imposed by the Treasurer. Discussion 1. Collection of Utility User Tax. The utility user tax is set forth at Chapter 3.36 of the Municipal Code. Section 3.36.160 requires each"service supplier" (e.g., the telephone company) to file a tax return with the Tax Administrator on or before the 20th of each month. Taxes not filed by this date are delinquent. (Section 3.36.170.) The Code imposes a 15% penalty on any tax delinquency. (Section 3.36.180.) The Administrator may imposes an additional penalty of 15% in cases of "fraud or negligence." The penalty is then merged back into the tax required to be paid. (Section 3.36.200.) 1 s1As:G:Taxpen-2 2. Assessment of Tax by Administrator, and Council Hearing to Review the Assessment Section 3.36.230 provides that in the case of unpaid taxes, the Administrator may assess the tax and penalty due and then submit the amount to the City Council to be confirmed or modified at a hearing. Specifically, Section 3.36.230 provides that the Tax Administrator may administratively make: "an assessment for taxes not paid or remitted by persons required to pay or remit." This Section is somewhat ambiguous in that it refers to"assessing" a"person', and not a"service supplier." The definition at Section 3.36.010 of a"person' includes any business corporation, and does not expressly exclude or include"service suppliers." Since GTE is a corporation, presumably it could be considered a person, even though it is also a service supplier. More importantly, because the procedure applies to any person required to"remit" the tax and only a service supplier can "remit" the tax, it follows that the administrative assessment procedure is available to service suppliers. On the other hand, this procedure is only available in connection with"assessments." An assessment can include not only taxes but penalties because Section 3.36.230 states that the: "notice of the assessment . . . shall refer briefly to the amount of the taxes and penalties imposed." Section 3.36.230 further provides that the Administrator"may make an assessment for taxes not paid or remitted by a person required to pay or remit." This means that if either the individual tax payer or the service supplier fails to pay the tax, the Administrator may assess what he believes to be the amount of the tax, inclusive of all penalties. This is then submitted to the City Council for confirmation at a hearing. Pursuant to Section 3.36.240, at the assessment hearing, the City Council may: "confirm or modify the assessment by motion." However, is the Administrator also making an assessment when he merely imposes penalties, but does not make an assessment of the tax owed because the service supplier ultimately paid the tax, albeit late? A reasonable definition of "assess" is to ascertain, fix the value of. or impose. Absent any past precedent to the contrary, this includes fixing a penalty. Consequently, we conclude that the assessment of a penalty, like the assessment of the tax, is subject to a Council hearing. However, in the past, the Tax Administrator has administratively interpreted the utility user tax to not allow for an appeal of penalties. There is some support for this conclusion. Section 3.36.180 provides that penalties for delinquencies"shall attach" at the rate of 15%. It could be argued that although there is generally a hearing right on tax assessments, because the Administrator has no discretion in imposing the 15% penalty, there is no need for a hearing when the only issue is the penalty. However, as discussed below, because there is a general constitutional right to a hearing, the issue must be resolved in favor of offering the service supplier a hearing in all circumstances, including penalty assessments. 2 sMs:o7axpen-2 3. The City is Constitutionally required to permit the service supplier to contest the penalty assessment at a hearing. The due process clause of the Federal Constitution requires a hearing be permitted before the tax is irrevocably fixed. There is a long line of tax cases holding generally that due process (notice and an opportunity to be heard) requires that at some stage before a tax becomes fixed, the tax payer must be given the right to contest the validity or amount of tax. For example, in People v Sonleitner(1960) 8 Cal.Rptr. 528, at issue was the assessment of the tax, along with interest and costs, against an individual selling motor fuel without paying the required license taxes. The court held that the due process clause required that some type of administrative hearing be provided before the tax, including the penalties and interest, became fixed. There are many other cases generally upholding this proposition in the property tax area as well as other tax areas. This is not to say that it would be clearly unconstitutional not to allow for a hearing in this circumstance. There may be exceptions to the general rule that the due process clause requires a hearing. On the other hand, where the ordinance may be ambiguous in terms of providing for a hearing, any ambiguity should be resolved to insure its constitutionality. Consequently, while it was past administrative practice not to allow a hearing, given both Section 3,36.230, which allows for a hearing?, and the Constitutional requirements of due process. GTE should be provided a hearine. Additional Recommendations 1. It should also be noted that the calculation of penalties against GTE is inconsistent with the Code in any event. The utility user tax provides that the Tax Administrator may impose an additional 15% penalty upon the original amount in cases of"negligence or fraud." However, there is no provision for interest. Nevertheless, the Administrator has been imposing a 15% _fpenalty on the 15% for every month the supplier fails to pay the penalty after it is initially ;imposed. In addition, the Treasurer Department has been imposing a late fee based upon his authority to impose interest on"miscellaneous late receivables." (Section 3.48.020.) To the contrary, there is no authority in the Code for either of these practices. 2. The penalty procedures of the utility users tax should be revised. For example, it is recommended that the Code require that the tax be paid before the service provider proceed to a hearing. The Code should also provide for interest on the past due amount. a Gail Hutton City Attorney c: Ray Silver, Assistant City Administrator Robert Franz, Deputy City Administrator/Administrative Services Arnold Ross, Senior Accountant 3 sN:c:Taxpen-2 r �a City g of Huntington Beach INTER-DEPARTMENT COMMMUNICATION HUNTWGTON BEACH TO: HEARING OFFICER Rich Barnard FROM: Acting TAX ADMINISTRATOR/FINANCE DIRECTOR Robert J. Franz " SUBJECT: DELINQUENT UTILITY TAX PAYMENT -- GTE i" DATE: March 15, 1.996 Background Utility Tax payment requirements are documented in 3.36.160 of the City's Municipal Code (copy attached). Under this Section, payments to the City from the Utility Companies such as GTE (Service Suppliers) are to be delivered by or postmarked on or before the 20th of each month for the preceding months' taxes collected by the Service Supplier. The penalty for delinquent payments is 15% of the total tax, also established by Municipal Code (3.36.170 & .180). GTE was required to remit the utility tax it had collected for August 1995 by no later than September 20, 1995. However, the GTE letter of September 12, 1995 delivering the August taxes in the amount of $235,050.12 was not postmarked until September 25, 1995. Therefore, the 15% penalty was imposed in the amount of $35,257.52. The City had no discretion in this matter. Section 3.36.180 provides that penalties for delinquencies "shall attach." Subsequently, the City imposed additional penalties and interest on the delinquency totaling $5,984.08. However, based on the City Attorney's review (attached) of the additional penalties and interest, the City is withdrawing the additional assessments. Therefore, the original 15% penalty of $35.257.52 is the total penalty that is due from GTE. Appeal Process Staff has not allowed the appeal of penalties in the past. Although the City Attorney has indicated that there is support for this conclusion (no appeals), the attached City Attorney opinion concludes that Federal law permits the service supplier to contest the penalty assessment at a hearing. The City Council subcommittee that was formed on this subject approved the City Attorney's recommendation that a hearing officer hear the case and submit a recommendation to the City Council at a subsequent City Council hearing on the appeal. The City Council may "confirm or modify the assessment by motion." DELINQUENT UTILITY TAX PAYMENT GENERAL TELEPHONE On October 31, 1995 GTE appealed the penalty assessment by way of a letter from Mr. Lou Banas to Mr. Ray Silver, Assistant City Administrator. The grounds for the appeal are brief and are as follows: " As I explained to you, our August utility tax payment were (sic) delayed in mailing to cities due to the fact that our entire billing section that deals with these issues was being moved from Westfield, Indiana to Irving. This is the first time in my years of dealing with utility users' taxes that a late payment penalty has been assessed against GTE. I do not know the specifics of the ordinance referred to by Mr. Ross, but we believe this penalty to be harsh and unfair due to our extenuating circumstances and ask for your review of this matter." Subsequently, GTE repeated its request for review by way of letters dated December 1, 1995 to the City Attorney and January 9, 1996 to the Mayor and City Council. . These letters repeat the same grounds for appeal, specifically that the delay was due to the relocation of GTE's billing operation, and that the late payment should be excused because of GTE's past history of prompt payment. City Staff position • GTE has cited the move of their billing operation as the reason for the late payment. We believe GTE could have and should have made the utility tax payment to the City earlier in the month of September. Attached is a copy of the form letter from the Wakefield, Indiana office of GTE (submitted with their late payment for August). The letter confirms that GTE had calculated and prepared a payment to the City at least as early as September 12, 1995 (eight days before the tax was due to the City) in the amount owed to the City for August 1995 utility taxes. Even so, the GTE check for these taxes was dated 10 days later on September 22, 1995 and mailed 13 days later on September 25, 1995. • If some extraordinary circumstance -- such as an act of God -- prohibited payment, then we would recommend waiver of the penalties. The movement of a billing operation does not fall in this category. GTE should have planned on how to make their tax payments in a timely manner, just as they must have planned all of the other various details of the move of their tax department, a move they have described as a "major undertaking". Moving a business office is not the type of activity that should be allowed to disrupt other business activities, including payment of utility taxes. • It should be noted that GTE is not paying this tax out of its own money, but is merely remitting City money that it had previously collected from customers. GTE.DOC -2- 03/15/96 8:00 AM DELINQUENT UTILITY TAX PAYMr_NT GENERAL TELEPHONE • In the past, the City has consistently and uniformly applied the provisions of the Municipal Code and has collected the penalty whenever late payments occurred. All utility tax service suppliers have complied and paid the penalty when applied. Following is a partial list of prior penalties collected: Company Date Penalty Paragon Cable November, 1994 10,957.27 Air Touch November, 1993 1,628.16 L.A. Cellular August, 1993 1,614.60 L.A. Cellular June, 1993 1,505.21 U.S. Sprint March, 1993 2,753.95 U.S. Sprint January, 1993 2,310.87 Paragon Cable January, 1992 11,871.30 So. Cal. Edison July, 1987 45,698.87 • Utility tax payments to the City are comparable to property tax payments, income tax payments to IRS, and mortgage/loan payments to lenders. All of these payments to government and private institutions result in penalties if payments are late, with few exceptions granted. • Utility Tax payments are particularly important to be received on time due to our cash flow needs. Over$1 million in revenue is projected to be received by the 20th of each month from Utility Tax. Late payments can cause problems for the City meeting its payment obligations to vendors/banks/payroll etc. • The City of Pomona (Ray Harton, Revenue Manager) has advised us that GTE paid their utility tax on time by September 20, 1995 (same due date as Huntington Beach). for Pomona's August utility taxes. Recommendation GTE be required to pay the 15% penalty of$35,257.52. Attachments GTE.DOC -3- 03/15/96 8:00 AM DELINQUENT UTILITY TAX PAYIh,cNT GENERAL TELEPHONE List of Attachments Documentation of Late Payment: • Letter dated 9/12/95 from GTE • Copy of Check from GTE dated 9/22/95 • Certified Letter Envelope postmarked 9/25/95 City Attorney opinion dated Jan. 16, 1996 Related Municipal Code sections Correspondence from GTE • 1/9/96 Letter • 12/1/95 Letter • 10/31/95 Letter Documentation of penalties paid by other Service Suppliers GTE.DOC 4- 03/15/96 8:00 AM ` MAR t ®, CITY OF HUNTINGTON BEACH �2000 MAIN STREET CALIFORNIA 92648 February 28, 1992 KBLCOM, Inc. 800v Gessner, Suite 700 J14ti- 91 7"O Houston, Texas 77024 Re: Delinquent Cable Utility Tax Remittance for the month of January 1992. Dear Sirs: KBLCOM's Utility Tax payment to the City of Huntington Beach covering the month of January 1992 failed to conform to the City requirements governing timely Postmarked remittance and is now subject to a penalty of 15%or $11, 871. 30. (See Attachments) . The city's Ordinance does now allow us any discretion in this matter. We would suggest that you take any necessary actions to avoid a future repetition. If you have questions, call Robert Sedlak at (714) 536 5907 . Sincerely, 75G BATCH N0: 11 � QQ U/5 Ba.KH GATE: "'- .3 .VENDOR CODE: 1 f ENTERED EY: AN T. VILLELLA, ['t ax Administrator CALCULATIONS OK: HOLD CODE: Enclosure MGMT.APPROVAL DATE t PROJECT NUtl;BER ASSET CODE: 11 a CITY CITY OF HUNTINGTON 6EACH CHK eAYMENT N:-I" 186486 3/ 11/92 1 I:BLCONI INCORPORATED VOICE 4 ESCRIPTION DATE PO 4 GROSS AMOUNT DISCOUNTI NET AMOUN ------------------------------------------------=-------------------- ----------- N-92TAX OOI OELIWjUENT TAX 01 2/28/92 UTILITY 11. 871 .30 .00 11 •871 .3 i i i I I i I I TOTALS 119871 .30 .00 119871 .3 TT_7�T_/�l11► R 1�1�—V1V1 First Interstate Bank I l O I: r n It!.T F.U of Jacksonville PARAGON CABLE — ORANGE COUNTY P.O.Drawer101 8648 6 Jeckscnvrie,Te■as75766 Melmorini Ci:r Plata One DATE CHECK NO. AMOUNT 3Co Gessner,Suitt 7011 1louston,Tr\as 71(0 I 713182-74,,9'a 3/11/92 186486 $119871.30 ?AY ELEVEN THOUSAND, EIGHT . HUNDRED SEVENTY ONE AND 30/100 DOLLARSYYYYYY.`r::� '".+-'vv 'OTHE CITY OF HUNTINGTON BEACH .WRDER 2000 MAIN STREET VOID 90 DAYS AFTER ISSUE DATE OF ATTN: FINA14CE DEPT. - HUNTINGTON BEACH, CA 92648 11' 18648Plus I: 1 13 1 15 2061: 1120 4 1 500 1288119 jam/ r. Southem Ca/Ifbm/a Edson Company 7333 BOLSA AVENUE WESTMINSTER.CALIFORNIA 92663 July 28 , 1987 M. D. MARTIN T'EL.Ev.0.1E MANAGER.HUNTINGTON BEACH (714)095-0295 C:W. Thompson , City Administrator City of Huntington Beach P.O. Box 190 Huntington Beach , Calif. 92648 Dear Charles , The Southern California Edison Company has reviewed the 15 percent penalty applied to the May, 1987 Utility Users Tax payment postmarked June 22 , 1987 . After some consideration, Edison is submitting to the City of Huntington Beach , the enclosed check in the amount of $45, 698 . 87 under protest. Although we realize City Ordinance # 2211 states that the payment date for the City' s Utility Users Tax must be postmarked on or before the 20th of each month , the 20th of June happened to occur on a weekend (Saturday) . Under standard practice for payment remittance to state and federal agencies , we are afforded a remittance grace period to the next regular working day should the payment date occur on a weekend or legal holiday. Recognizing that Edison does all the city tax program accounting of the city (programming, postage , billing, collecting, exemptions, etc. ) with no charge to the city , we believe a standard grace period, with the city is reasonable. In light of the above , we are requesting the following modifications to the Utility Users Tax Ordinance (Sections 3 . 36 . 160 and 3 . 36 . 170) : `. Section 3 . 36 . 160 : Filing Return and Payment " . . .on or before the 20th of each month . Should the 20th occur on a weekend or legal holiday, the return can be postmarked on the first regular working day following a Saturday Sunday, or legal holiday. " Section 3 .36 . 170 : Delinquent When "Taxes collected from a service user which are not f ter postmarked on or before the due dates provided in thie-chapter Section 3 . 36 . 160 are delinquent. " I would be glad to meet with you and your staff to further discuss our proposed modification . Sincerely, cc : W. Hall G. Hutton .T. '"Villella H'1"1'H1:171.1JJLV'1' lb '11,&&o &gnv s&eae/f. ' Cl�anr6er oJFCenanerce n Jullrl5, 1996 Mr. Richard Barnard Deputy City Administrator City Hall P.O. Box 190 Huntington Beach, Ca. 91648 Dear Rich: The Chamber of Commerce-Board of Directors at their last meeting were made aware of the ongoing issue with GTE and the penalty that has been assessed as the result of their utility users tax late payment. We also understand that this same issue has occurred several years ago with Southern California Edison and in both cases the current city ordinance does not provide for an appeal process. Our Board recommends that the existing ordinance be revised so that an appeal process be available with final authority resisting with the City Council to address these unusual situations. A penalty could be assessed to collect lost interest to the city, however,a penalty of$30,000+ for GTE and$50,000+for SCE for several days is exorbitant. And, in both cases,the late payment was due to causes beyond the company's control. In the interest of maintaining good business relationships with our utility providers,that perform a service to the city in collecting these taxes at no cost to the city, the Chamber strongly encourages your cooperation in drafting an ordinance that provides for the above stated process. Your consideration of this recommendation will be appreciated. Sincerely, c ddell, CCE resident JR/sj cc: Mayor and City Council Uberuaga Banas Dominguez Woolen 2100 Main Street,Suite 200 Huntington Beach,CA 92648 • 7141536-8888 (FAX)714/960-7654 •ceaeo�eo , JJ CITY OF HUNTINGTON BEACH ® INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH •�A»��/��, /lOJf Fj Ia T0:1 Gail Hutton, City Attorney Mike Uberuaga, City Administrator FROM: Connie Brockway, City Clerk SUBJECT: Letter Received 519/96 From GTE Appealing Late Payment Penalty DATE: 5/10/96- The City Clerk's Office was not informed until 5/8/96 that GTE had been advised.they may _.. write a letter of appeal to-the City Clerk's Office regarding the Hearing Officer's (Deputy City Administrator) decision regarding GTE's appeal of the late penalty assessed to their company. Please provide the City Clerk's Office with written directions as to the authority or city code - which authorizes the City Clerk to accept this appeal and to set it for public hearing before the - City Council. - Please include in your directive, instructions as to any future appeals of this nature. The City Clerk's Office must be provided with procedures to follow including time frames for such appeals so timeliness can be ascertained, also whether the appeal is to be published with a fve or ten day notice time, appeal fee if any, etc. I will keep GTE's letter pending until I receive direction. cc: Honorable Mayor and City Council Attachments: (1) Letter of appeal to City Clerk from GTE dated 5/3/96 (2) Letter from Finance Department(Accounting) dated 5/8/96 (3) Letter to GTE from Administration dated 4/9/96 (4) Letter to City Council from Deputy City Administrator Barnard dated 4/15/96 f,H L 0 _ �J CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH I: TO: Gail Hutton, City Attorney - Mike Uberuaga, City Administrator FROM: Connie Brockway, City Clerk SUBJECT: Letter Received 5/9/96 From GTE Appealing Late Payment Penalty DATE: 5/10/96 4 The City Clerk's Office was not informed until 5/8/96 that GTE had been advised they may write a letter of appeal to the City Clerk's Office regarding the Hearing Officer's (Deputy City Administrator) decision regarding GTE's appeal of the late penalty assessed to their company. Please provide the City Clerk's Office with written"directions as to the authority or city code which authorizes the City Clerk to accept this appeal and to set it for public hearing before the City Council. Please include in your directive, instructions as to any future appeals of this nature. The City Clerk's Office must be provided with procedures to follow including time frames for such appeals so timeliness can be ascertained; also whether the appeal is to be published with a five or ten day notice time, appeal fee if any, etc. I will keep GTE's letter pending until I receive direction. cc: Honorable Mayor and City Council Attachments: (1) Letter of appeal to City Clerk from GTE dated 5/3/96 (2) Letter from Finance Department (Accounting) dated 5/8/96 (3) Letter to GTE from Administration dated 4/9/96 (4) Letter to City Council from Deputy City Administrator Barnard dated 4/15/96 Lj, a CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH $' TO: Gail Hutton, City Attorney -_ Mike Uberuaga, City Administrator - FROM: Connie Brockway, City Clerk SUBJECT: Letter Received 5/9196 From GTE Appealing Late Payment Penalty DATE: 5/10/96 The City Clerk's Office was not informed until 5/8/96 that GTE had been advised they may write a letter of appeal to-the City Clerk's Office regarding the Hearing Officer's (Deputy City Administrator) decision regarding GTE's appeal of the late penalty assessed to their company. Please provide the City Clerk's Office with written directions as to the authority or city code r _ - which authorizes the City Clerk to accept this appeal and to set it for public hearing before the City Council. Please include in your directive, instructions as to any future appeals of this nature. The City Clerk's Office must be provided with procedures to follow including time frames for such _ appeals so timeliness can be ascertained; also whether the appeal is to be published with a five or ten day notice time, appeal fee if any, etc. -- will keep GTE's letter pending until I receive direction. cc: Honorable Mayor and City Council Attachments: (1) Letter of appeal to City Clerk from GTE dated 5/3/96 (2) Letter from Finance Department(Accounting) dated 5/8/96 (3) Letter to GTE from Administration dated 4/9/96 (4) Letter to City Council from Deputy City Administrator Barnard dated 4/15/96 lt�r d� _ hd-2 IA (49W7 � �� Ar CITY OF HUNTINGTON BEACH LeOJL-�j INTER-DEPARTMENT COMMUNICATION HUNnNGTON BEACH To: Connie Brockway From: Arnie Ross City.Clerk Sr. Accountant Re: Timeliness of GTE Appeal Date May. 8, 1996 to Hearing on Late Charge Connie: Pursuant to the attached April 9, 1996 correspondence, would appreciate it if you could let me know if you have received a Letter from GTE appealing the decision of the City's Hearing-Officer. Over four weeks has transpired since then.....or more than sufficient time, one might reasonably surmise, if'an Appeal were to be lodged. Please advise. Many thanks! 7d �96 �az &14- �� -----------'----' - "'y GTE California Incorporated Post Office Box 292O , Pomona, California 917G9'292O CONNIE BROCKWAY CITY CLERK ^ CITY OF HUNTINGTON BEACH 2000 MAIN STREET HUNTINGTON BEACH CA 92648 , + ` UH�`s\`\]\,`''J\o`m\`'\`,\]',,J `U^^DooJ�] � � ! ' i /9 � f1 7 r� d Gam.. R ESOAOTION NO.9 6- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH GRANTING IN PART THE APPEAL OF GTE OF A PENALTY ASSESSMENT FOR LATE SUBMITTAL OF THE UTILITY USER TAX WHEREAS, on June 17, 1996, the City Council of the City of Huntington Beach conducted a hearing to consider GTE's appeal of a penalty assessment imposed against it for failure to submit utility user tax receipts within the time specified pursuant to Huntington Beach Municipal Code, Chapter 3.36, Utilities Tax, Section 3.36.160; and The City Council directed the City Attorney's Office to prepare these findings and facts and conclusions of law following the hearing; NOW, THEREFORE, the City Council of the City of Huntington Beach hereby resolves as follows: Section 1. In reference to the appeal by GTE of a penalty assessment of fifteen percent (15%) imposed against it for failure to submit tax receipts within the time specified in Huntington Beach Municipal Code, Chapter 3.36, Utility Tax, Section 3.36.160, the City Council makes the following findings of facts and conclusions of law: 1. Under City of Huntington Beach Municipal Code, Chapter 3.36, all utility tax receipts are due and payable to the City by the service supplier (in this case GTE) on or before the twentieth (20th) of each month for the amount of taxes billed by the service supplier during the preceding month. 2. GTE's tax department, located in Westfield, Indiana, prepared a form letter on September 12, 1995, eight (8) days before the payment was due the City for August 1995 tax receipts. This form letter indicated that the City was due the amount of $235,050.12. The Westfield, Indiana office then requested GTE's San Angelo, Texas office to issue the check. 3. The San Angelo office prepared a check in the amount of S235,050.12, and forwarded it to the Westfield, Indiana office in a mail pouch, which also included checks for 56 other California utility tax cities. However, unbeknownst to the San Angelo office personnel, by this time, GTE had already relocated its Westfield, Indiana office to Dallas, Texas. The mail pouch sat in the Westfield, Indiana office for approximately five (5) days until GTE staff realized what had happened. 4. The mail pouch was subsequently retrieved and new checks were issued by GTE and distributed to all 57 cities. Ultimately, the Huntington Beach check was prepared by GTE on September 22, 1995, two days after the actual due date of the payment to the City. The envelope was not postmarked until September 25, 1995, five (5) days after payment was due the City. 9:r@s Oluti-ulititax 5. The City of Huntington Beach, Tax Administrator, imposed a fifteen percent (15%) penalty against GTE for failing to comply with Section 3.36.160 of the City municipal code. GTE subsequently appealed that assessment. The City Council then referred the matter to a hearing officer to take evidence and make a recommendation. The City Council then conducted a hearing on the appeal on June 17, 1996. 6. The Council concludes that based upon the evidence, GTE's failure to promptly pay the utility user tax receipts to the City was due to excusable neglect, and, on that basis, the City Council imposes a penalty in the.reduced amount of the interest the City would.have collected on its investments had the check been properly received. 7. The evidence shows that the interest rate the City received on its investments for the month of September 1995 was 5.991%. Consequently, the interest due on five (5) days of an investment of S235,050.12 is $192.90. 8. The City Council hereby imposes a penalty assessment against GTE in the amount of S192.90. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the G t day of Ju 1 y , 1996. Mayor ATTEST: APPROVED AS TO FORM: City Clerk f,,� City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator � -City Attorney g:resotuti:utilitac Res. No. 96-55 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) I, CONNIE BROCKWAY, the duly elected, qualified City Clerk of the City of Huntington Beach, and ex-officio Clerk of the City Council of said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing resolution was passed and adopted by the affirmative vote of at least a majority of all the members of said City Council at an regular meeting thereof held on the 1st day of July, 1996 by the following vote: AYES: Harman, Leipzig, Bauer, Sullivan, Dettloff, Green, Garofalo NOES: None ABSENT: None L City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California G/resoluti/resbkpg/97-39 To Date 14a F: PLEASE REPLY TO Sign } % 3 t �F t Date Signed Red ifpnn ":- 4S 465 SEND PARTS 1 AND 3 WITH CARBONS INTACT. Poly Pak 150 sers14P465 PART 3 WILL BE RETURNED WITH REPLY. 1 - Date/Time 6/19/97 3:37:42 PM City of Huntington Beach I Q /� /� &�e ") 0 Office of the City Clerk Records Ref Category Subject Entered Status Document Expires Box ID . Label 120.25 2/16/96 Active 8173 Council Committee to Study GTE Billing Issues- 1996 340.50 7/22/96 Active 8455 Administrative Hearing - appeal Filed by GTE Telephone Operations- Penalty Assessment Late Payment- Utility User Tax 6/17/96 GE 600.10 1/4/93 Active CC 761 3400 GENERAL TELEPHONE ELECTRIC (GTE) OF CALIFORNIA-Bill of Sale Main Street Alley Improvements CC-761 1/4/93 Total Records Detailed: 3 0 1610. �o 3�a -d °a ' _' �,o'llt-cam o..���a�-.,�✓ �Qi.�c� ,� /`� .�--5 (13) 6/17/96 - Council/AL .icy Agenda - Page 13 (b) Adopt Resolution No. 96-49 as amended to not give Council first priority to file written arguments but to direct the preparation of impartial r� analyses, OR (c) Do not adopt any part of Resolution No. 96-49 which would result in no impartial analyses nor Councilmembers authorized to file arguments. [Continued to 711196 -- 7-0] F-5. -This is an Administrative Hearing agenda item. The only testimony to be taken by the Council during the hearing will be from City Staff and the appellant, GTE. The Brown Act requires that any members of the public who wish to speak to this item may do so. The time to address this appeal is during the public comments portion of the meeting which is reserved for members of the public to speak to non-public hearing items on the agenda. F-5. (City Council) Administrative Hearing -Appeal Filed by GTE Telephone Operations (GTE) - Penalty Assessment Late Payment- Utility User Tax (340.50) Communication from Deputy City Administrator Franz. Administrative Hearing to consider the appeal to the hearing officers decision denying their request for relief from the penalty imposed for late payment of the August, 1995, utility users tax collections. O-P (City Attorney's memorandum dated 6/12/96 regarding Procedure For Conducting GTE appeal attached) Recommended Action: Motion to: Apr#4-5, -Q96,-upholding-floe-assessmen€-af-a-penalty-€oNa€e payR4en"f vW4y4ax_-s. [Rejected staff recommendation; waived penalty except change. GTE for loss to City of interest for 5 days - Findings and conditions to be submitted at next meeting - 7-0 -- Leipzig request Huntington Beach Municipal Code 3.36.230 be addressed] F-6. (City Council) Legislation Authorization Process Options (100.10) Communication from Brian Smith, Management Assistant, relative to the process for gaining City Council authorization to act on legislative issues be modified to meet varying time constraints. f Recommended Action, Motion to: a. Approve the use of a modified authorization process to act on pending legislative issues in a timely manner, And, b. Approve the use of the "Abbreviated" and "Fast Track" authorization models when demonstrated time constraints do not allow the full City Council to act upon pending legislative issues in a timely manner. [Continued to 711196 -- 6-1 (Harman -- NO)] (13) (9) 07/01/96 - Counc,. gency Agenda - Page 9 ' E-12. (City Council) Final Tract Map Nos. 15034-37 and 15081-86 - Subdivision Agreements - Portions of Tentative Tract Map No. 14700 - (Peninsula II) PLC - S/Summit Drive Between Seapoint & Goldenwest Streets (420.60) - Approve Final Tract Map Nos. 15034, 15035, 15036, 15037, 15081, 15082, 15083, 15084, 15085 and 15086; accept the offer of dedication and improvements and bonds pursuant to the following findings and requirements shown on the tentative map; that Final Tract Map Nos. 15034, 15035, 15036, 15037, 15081, 15082, 15083, 15084, 15085 and 15086, are in conformance with the California Subdivision Map Act, the City of Huntington Beach Subdivision Ordinance and Tentative Tract Map No. 14700 conditions of approval as approved by the Planning Commission; and to instruct the City Clerk to file the associated bonds with the City Treasurer, and that Requirements 3(a) through 3(d) have been complied with; approve and authorize execution of the Subdivision Agreement; and to further instruct the City Clerk not to affix her signature to the map nor release it for preliminary processing by the County of Orange or for recordation until the aforementioned conditions have been met. Prepared by Community Development (Approved 7-01 E-13. (City Council) Subgrantee Loan Agreement Between City and Huntington Beach Community Clinic For Community Development Block Grant (CDBG) Funds - Approve and authorize the Mayor and City Clerk to execute the Subgrantee Loan Agreement Between the City and the Huntington Beach Community Clinic for a maximum of $100,000 in Community Development Block Grant Funds. Prepared by the Economic Development Director [Approved 7-0] E-14. (City Council) Resolution No. 96-55 -Adopting Findings of Fact & Conclusions of Law - Re: Appeal of a Late Charge To GTE For Late Payment of Utility Taxes (340.50) - "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH GRANTING IN PART THE APPEAL OF GTE OF A PENALTY ASSESSMENT FOR LATE SUBMITTAL OF THE UTILITY USER TAX." - (Imposition of a penalty in the reduced amount of the interest the City would have collected on its investments - $192.90) Prepared by the City Attorneys Office [Approved 7-0] E-15. (City Council) Personnel Commission Appointments/Re-appointments - Approve the re-appointment of Michael Harden to a four-year term to expire 6/30/2000, and approve the appointment of Flint Morrison to a four-year term to expire 6/30/2000, approve the appointments of Myron Bogen and James Aldridge to fill vacancies with terms to expire 6/30/97, approve the appointment of Richard James Shaeffer to a vacancy to expire 6/30/98 and approve the appointment of Warren Ward to a vacancy to expire 6/30/99. Prepared by the Personnel Director (//D , a0.) [Approved 7-0] E-16. Deleted. (9) RECEIVED CITY CLEZh: GTE Telephone .'!TY OF Operations 9 IO 33 May 3, 1996 Connie Brockway, City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Ms. Brockway: This is in reference to Richard Barnard's letter to me, dated April 9, 1996, denying GTE's appeal for relief from the penalty imposed for late payment of the August, 1995 utility users tax collections. As the next step in this process, I would like to appeal the hearing officer's decision to the City Council. We would like to have the matter heard at the earliest date you are able to agendize it after receipt of this letter. Please notify me of the council meeting date during which you will hear this issue at my new address: P.O. Box 2920, Pomona, CA 91769-2920 or call me at (800)483-8676. Sincerely, Lou Banas Public Affairs Manager cc Milton Jackson - Irving, TX Ken Okel - Thousand Oaks, CA Mayor Sullivan Members of the City Council Michael Uberuaga, City Administrator Richard Barnard, Hearing Officer ATTACHMENT #2 s CITY OF HUNTINGTON BEACH 2000 MAIN STREET Office of Public Information CALIFORNIA 92648 (714) 536-5511 April 9, 1996 GTE Telephone Operations 13925 E. Whither Boulevard Whittier,CA 90605 - Attu.: Lou Banas, Public Affairs Manager Dear Mr. Banas: Please find enclosed,my report and recommendation to&,e Mayor and City Council regarding GTE's appeal of the financial penalty imposed by the city of Huntington Beach for late payment of urilir%.tax proc'e—eds. 1 would request you read the report, and after doing so,if you wish to appeal my decision to the City Council for farther consideration,a letter of appeal should be addressed to: City of Huntington Beach 2000-Main Sheet Huuting-on Beach,C.�.92648 Attu.: Cormie Brockway,City Clerk The letter should clearly stair that you wish to appeal the d-vision of the hearing oEcer and have the appeal scheduled on the City Coumcil agenda. Also,you should copy your appeal letter to both the City.?dminist+ator and Ci-,Cow-ucil. I realize this is a change from our initial discussion,but a-�,er talking with the City Administrator I believe this process gives you more time to review my report and then decide what court se of action you want to pursue. Due to the chaiage in process,the matter will not be scheduled for the April 15, 1996,City Council me`ti*tg2 but:gill be held until we receive a lever from you requesting an appeal before the full City Council. If you have any questions,please call me at(714) :6-65 ii. Sincerely, i � I I � 11 Richard Barnard �r Hearing Oiitcer RB djb !/ cc: Michael liberuaea. Cin•Administrator Honorable Mavor and City Council Robert Franz, Deputy City Administrator/AdministratiN-e Services Soon Field, Deputy Cite Anomey ATTACHMENT #3 .7 J4"Je CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH TO: Vonbl or and tyCouncil FROM: amard, He ' g Officer SUBJACT: GTE Appeal of Penalty Assessment for Late Submittal of Utility Tax Proceeds DATE: April 15, 1996 INTRODUCTION In response to a request by Lou Banas, GTE Public Affairs Manager, an appeal hearing was scheduled and held on March 15, 1996, in City Administrative Conference Room#1. The hearing addressed a financial penalty imposed by the city of Huntington Beach against GTE for failing to submit Utility Tax Proceeds in accordance with city Ordinance 2211 adopted Augur: 1, 1977, and published within the Huntington Beach Municipal Code, Chapter 3.36. Representing the city of Huntington Beach at the hearing was Robert Franz,Deputy City Administrator&Director of the Administrative Services Department; Scott Fields,Deputy City Attorney-, and Dan Villella, City Treasurer. Representing GTE was Lou Banas, Public Affairs Manager. A City Council Committee comprised of Councilmembers Leipzig,Harman and Garofalo was invited to observe the proceeding. Councilmember Garofalo was the only member of the Council to attend the hearing.. ANALYSIS The purpose of the hearing was to address GTE's appeal to actions taken by the city of. Huntington Beach to assess a 15 percent penalty against GTE for failure to submit Utility Tax Receipts within the specified time requirement of Huntington Beach Municipal Code, Chapter 3.36, Utilities Tax, Section 3.36.160. This section reads as follows: "3.36.160 Filing return and 13alMent. Each service supplier shall make a return ` to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. The full amount of the tax collected shall be included with the return and filed with the Tax Administrator. The*Tax Administrator is authorized to require such further information as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance.with this i chapter. Returns must be postmarked with prepaid postage and properly addressed, _ or personally delivered to the Tax Administrator on or before the 20th of each month. Returns are due immediately upon cessation of business for any reason." Page 2 April 15, 1996 The evidence submitted by Mr. Franz on behalf of the city clearly shows that GTE failed to comply with Section 3.3.6.160. The Check(No. 931500762)was not prepared by GTE until September 22, 1995, two days after the payment was due to the city. The postmark on the envelope in which the check arrived at the city was dated September 25, 1995, clearly five(5) days after the due date as provided for in the City Municipal Code. Lastly, the form letter which accompanied the check was dated September 12, 1995. These facts are not disputed by GTE. Further, it should be kept in mind that both the payment due dates and penalty provisions of the city Ordinance have been in place since October 1970, when the City Council first enacted Ordinance No. 1598. Mr. Franz also pointed out that the city has consistently enforced the penalty provisions of the Utility Tax Code related to late payments by service providers. In addition, Mr. Franz indicated that if the delay was caused by an act of god or some-other unforeseen occurrence, then consideration for a waiver would have been considered and most likely recommended by staff. The foundation for GTE's appeal is based upon a plea for the city to put on its "humanistic face" and show some understanding of the circumstances surrounding a major relocation of GTE's Tax Department from Westfield, Indiana to Dallas, Texas during the months of August and September 1995. According to testimony at the hearing, GTE personnel in San Angelo, Texas were unaware that the Tax Department vacated their facilities in Westfield, Indiana. The Tax Department in Westfield, Indiana calculates the amount of utility tax owed to the city. A request to prepare the Utility Tax check is sent to the GTE facilities in San Angelo, Texas where the actual check is prepared. After the check is drawn, it is sent to Westfield, Indiana (where the request originated) at which point GTE staff match-the prepared check against. the amount requested (an internal control check). Apparently, GTE staff in San Angelo were not made.aware of either the move nor the timing of the move since they sent a mail pouch containing 57 Utility Tax checks for 57 cities, having a total value of$850,000, to GTE's former office address in Westfield, Indiana. The Utility Tax check for the city of Huntington Beach was included in the mail pouch. The mail pouch sat in the vacated office building for approximately 5 days until GTE staff realized what had happened. The mail pouch was retrieved and new checks were issued by GTE and distributed to the 57 cities. It is GTE's testimony that none of the other 56 cites have imposed a late penalty for their internal miscommunication problems. In their testimony, GTE also pointed out that from the time the Utility Tax was implemented by the city, GTE has made over 300 on-time payments and the only blemish on their payment record is the September 1995 payment delay. GTE went on to point out that it is their belief that the current 15 percent penalty is excessive. Their position is that the Utility Tax Ordinance needs to be amended to reflect Page 3 April 15, 1996 a penalty that would be limited to the city's lost interest earnings and 1 1/2 percent late penalty. They site the 1 1/2 percent standard as being consistent with what the Public Utility Commission allows California utility companies to charge their customers for late payments, Documents were submitted and limited discussion did occur which addressed possible changes to the Utility Tax Ordinance. However, possible changes to Chapter 3.36, Utility Tax, will come before the City Council at a later date. While consideration of changes regarding Chapter 3.36 are important, the issue before us is whether there is adequate and reasonable justification for waving the 15 percent penalty assessed against GTE for the late arrival to the City of the Utility Tax Proceeds. This consideration needs to be based upon the facts, circumstances and law that is currently in place, not on new rules or laws still awaiting discussion and consideration. While suggested modifications to the existing law were welcomed during the testimony, they had little influence in the development of my recommendation. CONCLUSION AND RECOM MNDATION ' It is unfortunate that GTE experienced internal communication problems within their organization which led to the late payment to the city. It appears from the testimony that better planning and coordination of the GTE move could have prevented the misdirection of the mail pouch. It is clear from the testimony that the city has an ordinance that has been in place for some 35 years and has been consistently enforced over time. The question of whether a 15 percent penalty is reasonable or whether it should be calculated in some other fashion goes beyond the scope of the appeal. The focus of the appeal is a request to wave the penalty because of the circumstances. The testimony presents circumstances that were controllable and could have been prevented had steps been taken to insure a smooth transition from the GTE Westfield, Indiana facilities to Dallas, Texas. The Ordinance which governs the Utility Tax is the law of the city. City staff and City Council have an obligation to treat everyone equally and fairly under the law. The city has consistently enforced the provisions of the penalty section of the Utility Tax law. Furthermore, there existed knowledge and experience within GTE regarding the consequences of submitting Utility Tax Proceeds beyond the 20th of the month. If circumstances existed that went beyond a person's control, or in this case an organization's control, such as "an act of god" or a plane crash (as was used as an example in the testimony), then the basis for an exception to the ordinance could be made and a finding to wave the penalty would be appropriate. Unfortunately, the circumstances surrounding this particular appeal do not give rise for such occurrences and; therefore, the request to wave the penalty should not be granted. .1 Page 4 April 15, 1996 RECOMMENDATIONS 1. Uphold the actions of the City's Administrative Services Department to enforce city of Huntington Beach Municipal Code, Chapter 3.36, Section 3.36.180., the assessment of a 15 percent penalty. 2. Provide direction to the.City Administrator to review the provisions of Chapter 3.36, Utility Tax and provide the City Council with recommended modifications for future consideration. FINDINGS OF FACT 1. Under the city of Huntington Beach Municipal Code, Chapter 3.36, all Utility Tax proceeds are due and payable to the city by the service supplier(in this case GTE) on or before the 20th of each month for the amount of taxes billed by the service supplier during the preceding month. 2. GTE prepared a form letter September 12, 1995, eight days before the payment was due to the city. This form letter indicated the amount of dollars to be transmitted to the city. 3. The check(No. 931500762)in the amount of$235,050.12 was prepared by GTE on September 22, 1995,two days after the actual due date for payment to the city (SECTION 3.36.160). 4. The envelope in which the payment was received by the city was postmarked September 25, 1995, 5 days after payment was due to the city. 5. The city of Huntington Beach, Accounting Division, imposed a 15 percent penalty against GTE for failure to comply with Section 3.36.1 60 of the city Municipal Code. 6. GTE was fully aware of the requirements of the Huntington Beach Municipal Code regarding late payments and the associated penalty and could have taken steps to prevent the payment from being late. 7. The city of Huntington Beach has consistently enforced the late penalty section of Huntington Beach Municipal Code, Chapter 3.36, Utility Tax. LIST OF ATTACHMENTS 1. Huntington Beach Municipal Code Chapter 3.36-Utilities Tax 2. Huntington Beach Ordinance No. 1598-Amending Chapter 17 of the Huntington Beach Ordinance Code by adding Article 176 pertaining to a Utilities Tax 3. Huntington Beach Ordinance No. 2211 -Amending the Huntington Beach Municipal Code Sections 3.36.160 through 3.36.210 pertaining to payment of Utilities Tax - 4. Letter to GTE California Incorporated from Robessie Cornner dated September 12, 1995 5. GTE Check No. 931500762 in the amount of$235,050.12 to the order of the City of Huntington Beach dated September 22, 1995 6. Certified Mail envelope from GTE dated September 25, 1995 7. Letter to Tax Department of GTE Telephone Operations from Arnold Ross, Sr.Accountant, City of Huntington Beach dated October 5, 1995 8. Letter to Ray Silver,Assistant City Administrator, City of Huntington Beach from Lou Banas, Public Affairs Manager,GTE dated October 31, 1995 9. Letter to Gail Hutton, City Attorney,City of Huntington Beach from Lou Banas,Public Affairs Manager, GTE dated December 1, 1995 10. Letter to Mayor, Councilmembers,Michael Uberuaga, and Robert Franz,City of Huntington Beach from Lou Banns,Public Affairs Manager, GTE dated January 9; 1996 11.' City of Huntiington-Beach Inter-Department Communication to Michael Uberuaga; City Administrator, from Gail Hutton, City Attorney dated January 16, 1996 • 12. City of Huntington Beach Inter-Department Communication to Rich Barnard,Hearing Officer, from Robert Franz,Acting Tax Administrator/Finance Director dated March 15, 1996 13. Letter to KBLCOM, Inc. from Dan Villella,Tax Administrator,City of Huntington Beach dated February 28, 1992 14. KBLCOM Incorporated Check No. 186486 in the amount of$11,871.30 to the order of the City of Huntington Beach dated March 11, 1992 15. Letter to C. W.Thompson, City Administrator, City of Huntington Beach from Mike Martin, Manager, Southern California Edison Company dated July 28, 1987 16. Letter to Richard Barnard,Deputy City Administrator, City of Huntington Beach from Joyce Riddell, President,Huntington Beach Chamber of Commerce dated March 15, 1996 Huntington Beach Municipal Co. 3.36.010-3.36.010(d) Chapter 3.36 UTILITIES TAX (1598-10f70,2211-8n7,2452-10/80,2470-2/81,2886-12/86, 2933-8/88, 3095-4/91, 3096-4/91. 3118-7/91,3162-9/92) Sections: >.36.010 ' Definitions 3.36.020 Telephone tax--Imposed 3.36.030 Telephone tax--Charges 3.36.040 Telephone tax--Intrastate use 3.36.059- Electricity tax 3.36.060 Use of electrical energy 3.36.070 Gas tax--Imposed 3.36.080 Gas tax--Exclusions 3.36.090 Water tax--Imposed 3.36.100 Water tax--Exclusions 3.'6.110 Cable Television Users Tax 3.36.120 Exemptions 3.36.130 Collection of tax 3.36.140 Collection--When made - - 3.36.150 Collection--Commencement 3.36.160 Filing return and payment 3.36.170 Delinquent when 3.36.180 Penalty--Effect 3.36.190 Penalty--Imposed by administrator 3.36.200 Penalty--Combining nature 3.36.210 Actions to collect 3.36.220 Failure to pay--Administrative remedy 3.36.230 Assessment--Administrative remedy 3.36.240 Assessment--Hearing 3.36.250 Records 3.36.260 Refunds 3.36.270 City exempt 3.36.280 Senior citizens--Exemption 3.36.290 Application required 3.36.300 Notification to-service supplier 3.36.310 Service supplier--Duty of 3.36.320 Exemption automatic 3.36.330 Tax billing exemptions--Effective when 3.36.340 Violation--Penalty 3.36.010 Definitions. Except ,vhere the context otherwise requires, the definitions given in this Section govern the construction of this chapter: (a) "City" means the City of Huntington Beach. (b) "Month" means a calendar month. (c) "Person" means any domestic or foreign corporation, firm, association, syndicate,joint stock company, partnership of any kind,joint venture, club, Massachusetts business or common law trust, society, individual or municipal corporation. (d) "Service supplier" means any entity which receives taxes paid and remits same as imposed by this chapter. 9/92 3.36.010(e)-3.36.060 Huntington Beach Municipal Code (e) "Service user" means a person required to pay a tax imposed by this chapter. (f) "Tax Administrator" means the Finance Director of the City. (g) "Telephone corporation, electrical corporation, gas corporation, and water corporation" shall have the same meanings as defined in Sections 234, 218, 222, and 241 respectively, of the Public Utilities Code of the State of California, as said Sections existed on January 1, 1970. "Electrical corporation" and "water corporation" shall be construed to include any organization, municipality or agency engaged in the selling or supplying of electrical power or water to a service user; however, as specified by Public Utilities Code Section 218, does not include a corporation or person employing cogeneration technology or producing power from other than a conventional power source for the generation of electricity. (1598-10n0, 2933-8/88) 3.36.020 Telephone tax--Imposed. There is imposed a tax upon every person in the City, other than a telephone corporation, using international, interstate, and intrastate telephone communication services in the City. The tax imposed by this Section shall be at the rate of five (5%) percent of all charges made for such services. (1598-10n0, 3096-4/91) 3.36.030 Telephone tax--Charges. As used in this Section, the tern "charges" shall not include charges for services paid for by inserting coins in-coin-operated telephones except that where such coin-operated telephone service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall.the term "telephone-communication services" include maritime-mobile services as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, or as that section may be amended from time to time. (.1598-10n0,3162-9/92) 3.36.040 Telephone tax--Intrastate use. Nomithstanding the provisions of Section 3.36.020, the tax imposed under this chapter shall not be imposed upon any person for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed by Section 4251 of Title 26 of the United States ode, as such Section existed on January 1, 1970, without regard to Section 3.36.020. (1598-10n0) 3.36.050 Electrici1y tax. There is imposed a tax upon every person in the City using electrical energy in the City. The tax imposed by this Section shall be at the rate of five (5%) percent of the charges made for such energy and shall be paid by the person paying for such energy. "Charges" as used in this Section shall include charges made for: (a) Metered energy; and (b) Minimum charges for service, including customer charges, service charges, demand charges, standby charges and annual and monthly charges. In the case of a service user employing cogeneration technology the tax imposed by this Section shall be based upon the legal rate per kilowatt cogenerated, as charged by the applicable public Utility. (1598-10n0, 2933-8/88) 3.36.000 Use of electrical energy. As used in this Section, the term "using electrical energy" shall not be construed to mean the storage of such energy by a person in a battery ovmed or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the energy was received; provided, however, that the term shall include the receiving of such energy for the purpose of using it in the charging of batteries. The term shall not include electricity used in water pumping by water corporations; nor shall the term include the mere receiving of such energy by an electrical corporation or governmental agency at a point within the City for resale. (1598-tOnO) l9192 Huntington Beach Municipal Codt 3.36.070--3.36.150 3.36.070 Gas tax--Imposed. There is imposed a tax upon every person in the City using gas in the City which is delivered through mains or pipes. The tax imposed by this Section shall be at the rate of five (5%) percent of the charges made for such gas. (1598-1ono) 3.36.080 Gas tax--Exclusions. There shall be excluded from the base on which the tax imposed in this Section is computed: (a) Charges made for gas which is to be resold and delivered through mains or pipes; (b) Charges made for gas to be used in the generation of electrical energy by an electrical corporation; (c) Charges made by a gas public utility for gas used and consumed in the conduct of the business of gas public utilities; and (d) Charges for gas used in water pumping by water corporation. (1598-10/70) 3.36.090 Water tax—Tmposed. There is imposed a tax upon every person in the City using water in the City which is delivered through mains or pipes. The tax imposed by this Section shall be at the rate of five(5%) percent of the charges made for such water and shall be paid by the person paying for such water. (1598-1ono) - 3.36.100 W2ter tax—Exclusions. There shall be excluded from the base on which the tax imposed in this Section is computed charges made for water which is to be resold and delivered through mains or pipes; and charges made by a municipal water department, public utility or a county or municipal water district for water used and consumed by such department, utility or - district in the conduct of the business of such department, utility or district. (1598-Iono) 3.36.110 Cable Television Users Tax. (3118-7191) (a) There is hereby imposed a tax upon every person in the City using cable television service. The tax imposed by this section shall be at the rate of Five Percent (5%) of the charges made for such service and shall be paid by the person paying for such services. (3118-7/91) (b).The Tax imposed in this section shall be collected from the service user by the person furnishing the cable television service. (3118-7/91) 3.36.120 Ezemptiou. Nothing in this chapter shall be construed as imposing a tax upon any person if imposition of such tax upon that person would be in violation of the Constitution of the United States or the Constitution of the State of California. (1598-lono) 3.36.130 Collection of tax. The amount of tax imposed by this chapter shall be collected from the service user by the service supplier. (1598-10n0,2933-8/88) 3.36.140 Collection--When made. The tax shall be collected insofar as practicable at the same time as and along»7th the collection of charges made in accordance \%ith the regular billing practice of the service supplier. (1598-10no) 3.36.150 Collection--Commencement. The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to that person which shall begin as of January 1, 1971, or at the beginning of the first regular billing period thereafter xvhich would not include service prior to January 1, 1971. Where a person receives more than one billing, one or more being for different periods than another, the duty to collect shall arise separately for each billing period. (1598-1ono) 9192 3.36.160-3.36.230 Huntington Beach Municipal Code 3.36.160 Filing return and payment. Each service supplier shall make a return to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. The full amount of the tax collected shall be included with the return and filed with the Tax Administrator. The Tax Administrator is authorized to require such further information as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance with this chapter. Returns must be postmarked with prepaid postage and properly addressed, or personally delivered to the Tax Administrator on or before the 20th of each month. Returns are due immediately upon cessation of business for any reason. (1598-10n0,2211-8n7) 3.36.170 Delinquent vyhen. Taxes collected from a service user which are not filed with the Tax Administrator on or before the due dates provided in this chapter are delinquent. (1598-1ono, 2211-8177) 3.36.180 Penaltyv----Effect. Penalties for delinquency in payment of any tax collected or any deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of fifteen (15%) percent of the total tax collected or imposed herein. (1598-10170, 2211-8n7) 3.36.190 Penalty—Imposed-by administrator. The Tax Administrator shall have power to impose additional penalties upon persons required to.collect taxes under the provisions of this chapter for fraud or negligence in reporting or paying at the rate of fifteen (15%) percent of the amount of the tax collected or as recomputed by the Tax Administrator. (1598-10n0,2211-8n7) 3.36.200 Penalty--Combining nature. Every penalty imposed under the provisions of this chapter shall become apart of the tax required to be paid. (1598-10n0, 2211-8r777) 3.36.210 Actions to collect. Any tax required to be paid by a service user under the provisions of this chapter shall be deemed a debt owed by the service user to the City. Any such tax collected from a service user which has not been paid to the Tax Administrator shall be deemed a debt owed to the City by the person required to collect and pay. Any person owing money to the City under the provisions of this chapter shall be liable to an action brought in the name of the City for the recovery of such amount. (1598-10n0,2211-8I77) 3.36.220 Failure topay--Administrative remedy. Whenever the Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by him from the amounts remitted to a service supplier, or that a service user has failed to pay the amount of the tax for a period of t-,ti,o or more billing periods, or whenever the Tax Administrator deems it in the best interest of the City, he may relieve the service supplier of the obligation to collect taxes due under this chapter from certain named service users for specified billing periods. The Tax Administrator shall notify the service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was made by the service supplier; or should the service user have changed his address, to his last known address. If a service user fails to remit the tax to the Tax Administrator within fifteen days from the date of the service of the notice upon him, which shall be the date of mailing if service is not accomplished in person; a penalty of twenty-five (25%) percent of the amount of the tax set forth in the notice shall be imposed but not less than five dollars. The penalty shall become part of the tax herein required to be paid. (1598-lono) 3.36.230 Assessment--Administrative remedy. The Tax Administrator may make an assessment for taxes not paid or remitted by a person required to pay or remit. A notice of the assessment which shall refer briefly to the amount of the taxes and penalties imposed and the time 1 b 9192 Huntington Beach Municipal Cod 3.36.230-3.36.300 and place when such assessment shall be submitted to the City Council for confirmation or modification. The Tax Administrator shall mail a copy of such notice to the person selling the service and to the service user at least ten days prior to the date of the hearing and shall post such notice for at Ieast five continuous days prior to the date of the hearing on the chamber doors of the City Council. Any interested party having any objections may appear and be heard at the hearing provided his objection is filed in writing with the Tax Administrator prior to the time set for the hearing. (159a-lono) 3.36.240 Assessment--Hearing. At the time fixed for considering the assessment, the City Council shall hear the same together with any objection filed as aforesaid and thereupon may confirm or modify the assessment by motion. (1598-1on0) 3.36.250 Records. It shall be the duty of every person required to collect and remit to the City any tax imposed by this chapter to keep and preserve,for a period of thiee years, all records as. may be necessary to determine the amount of such tax as he may have been liable for the collection of and remittance to the Tax Administrator,which records the Tax Administrator shall- have the right to inspect at all reasonable times. (1598-iono) 3.36.260 Refunds. Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this chapter, it may be refunded as provided in this Section. (a) A person required to collect and remit taxes imposed under this chapter, may claim a refund or take as credit against taxes collected and remitted the amount overpaid,paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Tax Administrator that the service user from whom the tax has been collected did not owe the tax; provided, however,that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the person required to collect and remit. (b) No refund shall be paid under the provisions of this Section unless the claimant established his right thereto by written records showing entitlement thereto. (1598-1ono) 3.36.270 City exempt. The taxes imposed by this chapter shall not apply to the City. .(1598-1 ono) 3.36.280 Senior citizens--Exemption. The tax imposed by this chapter shall not apply to any individual service user sixty-two years of age or older who uses telephone, electric, water or gas services, in or upon any premises occupied by such individual, provided the combined adjusted gross income as used for federal income tax reporting purposes of all members of the household in which such service user resides does not exceed the "HUD Income Guidelines - Very Low Income Category" currently on file at the City's Office of the Housing Rehabilitation Administrator, for the calendar year prior to the fiscal year (July 1 through June 30) for which the exemption provided by this chapter is applied. (2452-10i80,2886-12186,3095-4/91) 3.36.290 Application required. Any service user, meeting the requirements for exempt status, may file a verified application with the Director of Finance on a form furnished by him. The Director of Finance, or his designee, shall review all applications and certify those service users as exempt,,vho meet the requirements for the exemption provided by this chapter. (2452-10180) 3.36.300 Notification to service supplier. The Director of Finance, or his designee shall compile a list of all exempt service users, together xvith the addresses, account numbers, if any, of such users, and such other information as may be necessary for service suppliers to remove exempt service users from their tax billings. (2452-10180) 9192 ) y 3.36.310-3.36.340 untington Beach Municipal Code 3.36.310 Service supplier—Duty of. No service supplier shall be required to bill any exempt service user for any tax imposed by this chapter after receipt of notice from the Director of Finance that such service user has met the requirements for exempt status established by the provisions of this chapter. (2452-10180,2470-2/81) 3.36.320 Exemption automatic. The exemption provided for in this'chapter shall continue and be renewed automatically from year to year except as hereinafter provided. No exempt service user shall fail to notify the Director of Finance within ten (10) days of a change of address, or of any other fact or circumstance which might disqualify him or otherwise affect his exempt status. All exempt service users shall file with the Director of Finance new verified applications in order to receive exempt service at a new address or location. (2452-10/80) _ 3.36.330 Tax billing exemptions—Effective when. All service suppliers shall remove exempt service users from their tax billings for the first regular full billings dated on or before October 15, 1980, and thereafter NNithin sixty (60) days after notice from the Director of Finance to do so. (2452-10/80) 3.36.340 Violation—Penalo% It is unlawful and a'misdemeanor for any person knowingly to receive the exemption provided by this chapter when such person has not met the requirements on which such exemption is based, or when such person can no longer meet the requirements on which such exemption is based, and upon conviction thereof shall be subject to a fine of five hundred dollars ($500) or imprisonment in the county jail for a period not to exceed six (6) months, or by both such fine and imprisonment. Each such person shall be guilty of a separate offense for each and every day or portion thereof during which a violation is committed or continued. (2452-10/80) 9/92 ORDINANCE NO . 1598 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING CHAPTER 17 OF THE HUNTINGTON BEACH ORDINANCE CODE BY ADDING ' THERETO ARTICLE 176 PERTAINING TO A UTILITIES TAX. The City Council of the City of Huntington Beach does ordain as follows : SECTION 1. The Huntington Beach Ordinance Code is hereby amended by adding to Chapter 17 Article- 176, being Section 1760 through 1769, to read as follows : ARTICLE 176 UTILITIES TAX ``- 1760. DEFINITIONS . Except where the context otherwise requires , the definitions given in this section govern the con- struction of this article . (a) Person means any domestic or .foreign corporation, firm, association, syndicate, ,joint -stock company, partnership of any kind, joint venture, _club, Massachusetts business or common- law trust , society, individual, or municipal corporation. (b) City shall mean the City of Huntington Beach. a (c) Telephone Corporation, Electrical Corporation, Gas Corporation Water Corporation and Cable Television Corporation shall have the same meanings as defined in Section 234, 218, 222, 2411, and 215. 5, respectively, of the Public Utilities Code of the State of California, as said sections existed on January 1 , 1970. "Electrical corporation" and "water corporation" shall be construed to include any organization,- municipality or agency engaged in the selling or supplying of electrical power or water to a service user. (d) Tax Administrator shall mean the Finance Director of the City of Huntington Beach. (e) . Service Supplier shall mean a person required to t collect and remit a tax imposed by this article. Cf) Servi-ce User shall mean a person. required to pay a tax imposed by this article . (g) Month shall mean a calendar month. 1761 . TELEPHONE TAX. (a) _ There is hereby imposed a tax upon every person in the city, other . than a telephone corporation, using intrastate telephone communication services in the city . The tax -imposed by this section shall be at the rate of five per cent (5%) of all charges made for such services and shall be paid by the person paying for such services . (b) As used in this section, the term "charges" shall not include charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated telephone service is furnished for a guaranteed amount , the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due ; nor shall the term "telephone-communication services" include land-mobile services or maritime-mobile services as defined in Section 2 .1 of Title 47 of the Code of Federal Regula- tions , as such section existed on January 1, 1970 . (c) Notwithstanding the provisions of subsection (a) the tax imposed under this section shall not be imposed upon any - ' person for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed by Section 4251 of Title 26 of the United States Code, as such section existed on January 1, -1970,- without regard to subsection (b). thereof. . 1762 . ELECTRICITY TAX. (a) There is hereby imposed a tax upon every person in the city using electrical energy in the city . The tax. imposed by this section shall be at the rate of five per cent (5%) of the charges made for such energy and shall be paid. by the person paying for such energy. "Charges" , as used in this section, shall include charges made for (1) metered energy, and (2) minimum charges for service , including customer charges , service charges , demand charges , standby charges , and annual and monthly charges . (b) As used in this section, the term "using electrical energy" shall not be construed to mean the storage of such energy by a person in a battery owned or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the energy was. received, provided however, that the term shall include the receiving of such energy *2;D 2 . for the purpose of using it in the charging of batteries . The term shall not include electricity used in water. pumping by water corporations; nor shall the term include the mere receiving of such energy by an electrical corporation or governmental agency at a point within the City of Huntington Beach for resale . 1763 . GAS TAX. (a) There is hereby imposed a tax upon every person in the City of Huntington Beach using gas in the city which is delivered through mains or' pipes . The tax imposed by this section . shall be at the rate of five per cent (5%) of the charges made for such gas and shall be paid by the person paying for such gas . (b). There shall be excluded from the base on which the tax imposed in this section is computed (1) charges. made for gas which is to be resold and delivered through mains or pipes ; (2) charges made for gas to be used in the generation of electrical energy by an electrical corporation; (3) charges made by a gas public utility for gas used and consumed in the conduct of the business* of gas public utilities ; and (4) charges for gas used in water pumping by water corporations . `_1764 . WATER -TAX.- (a) There is hereby imposed a tax upon every person using in the city water which is delivered through mains or pipes . The tax imposed by this . section shall be at the rate of five per cent (5%) of the charges made for such water and shall 'be paid by the person paying for such water. (b) There shall be excluded from the base on which the t_ax imposed in this section is computed charges made for water which is to be• resold and delivered through mains or pipes; and charges made by a municipal water department, public utility or a county or municipal water district for water used and consumed by such department, utility or district in the conduct of the business of such department, utility or district : 1765 : CABLE TELEVISION TAX. There is hereby imposed a tax upon every person in the city using cable television service . The tax imposed by this section shall be at the rate of five per cent (5%) of the charges made for such service and shall be paid by the person paying for such service . 1766 . EXEMPTIONS. Nothing in this article shall be construed as imposing a tax upon any person if imposition of such tax upon that person would be in violation of the Constitution of the United States or the Constitution of the State of California. 3 . 21 — 1767 . COLLECTION OF TAX. (a) Every person receiving payment of charges from a service user shall collect the amount of tax imposed by this article from the service user. (b) The tax shall be collected insofar as practicable at the same time as and along with the collection of -charges made in accordance with the. regular billing practice of the service supplier . (c) The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to that person which shall begin as of January 1 , 1971, or at the beginning of, the first regular. billing period thereafter which would not include service prior to January 1, 1971. Where a person receives more than one (1) billing, one or more being for different periods- than another, the duty to collect shall arise separately for each billing period. 1767 . 1. REPORTING AND REMITTING. Each service supplier shall, on or before the 20th of each month, make a return to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. The Tax Administrator is authorized to require such further infor- mation as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance with this article . Returns and remittances are due immediately upon cessation of business for any reason. -1767 .2 . PENALTY . . (a) Taxes collected from a service user which are not remitted - to the Tax Administrator on or before the due dates provided in this article are delinquent . (b) Penalties for delinquency in remittance of any tax collected or any deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of fifteen per cent (15%) of the total tax collected" or imposed herein. (c) The Tax Administrator shall have power to impose additional penalties upon persons required to collect and remit taxes under .the provisions of this article for fraud or negligence . in reporting or remitting at the rate of fifteen per cent (15%) of the amount of the tax_ collected or as recomputed by the Tax Administrator . 4 . (d) Every penalty imposed under the provisions of this section shall become a part of the tax required to be remitted .. 1767 . 3. ACTIONS TO COLLECT. Any tax required to be paid by a service user under the provisions of this article shall be deemed. a debt owed. by the service user to- the City . Any such tax collected from a service user which has not been. remitted to the Tax Admini- strator shall be deemed a debt owed to the city by the person re- quired to collect and remit . Any person owing money to the city under the provisions of this article shall be liable to an action brought in the name of the city for the recovery of such amount . 1767 . 4 . FAILURE TO PAY TAX. ADMINISTRATIVE REMEDY . Whenever the Tax `Administrator' determines that a service user has deliberately withheld the amount of the tax owed by him from the amounts remitte-d to a service supplier, or that a service user has failed to pay the amount of the tax for a period of two (2) or more billing periods, or whenever the Tax Administra- tor deems it in the best interest of the city, he may relieve the service supplier of the obligation to. collect taxes due under this article from certain named service users for specified billing periods . The Tax Administrator shall notify the. service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes . The notice shall be served on the service user by' handing it to. him personally or by deposit of the notice in the United States mail, postage' prepaid thereon, . addressed to the service user at the address - to which billing was made by the service supplier; or should the service user have changed his :address , to his last known address . If a service user fails to remit the tax to the Tax Administrator within fifteen (15) days from the date of the service of. the '.notice _ upon him, which shall be the date of mailing if service is not accomplished in person, a penalty. of twenty-five per cent (25%) of the 'amount of the tax set forth in the notice shall be- imposed, but not less than Five Dollars' ($5 . 00) . The penalty .shall become part of the tax herein required to be paid. 1767 .5 . ASSESSMENT. ADMINISTRATIVE REMEDY . (a) The Tax Administrator may make an assessment for taxes not paid or remitted by a person required to pay or remit . A notice of the assessment which shall refer briefly to the amount of the taxes and penalties imposed and the time and place when such assessment shall be submitted to the City Council for confirmation or modification. The Tax Administrator shall mail a copy of such notice to the person selling the service and to the service user at least ten (10) days prior to 5. the date of the hearing and shall post such notice for at least five (5) continuous days prior to the date of the hearing on the chamber door of the City Council . Any interested party having any objections may appear - and be heard at the hearing provided his objection is filed in writing with the Tax Administrator prior to the time set for the hearing. At the time fixed for considering said assessment, the City Council shall hear the same together with any objection filed as aforesaid and thereupon. may confirm or modify said assessment by motion. 1767 . 6. RECORDS . It shall be the duty of every person required to collect and remit to the city any tax imposed by this article to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and remittance to the Tax Administrator, which--records the Tax Administrator shall have the -right to inspect at all reasonable times . 1767 .7. REFUNDS. (a) Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this article, it may be refunded as provided in this section. (b) A person required to collect and remit taxes imposed under this article may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid . more than once or erroneously or illegally collected or received i,hen it is established in a manner prescribed by the Tax Administra- tor that - the - service user from whom the. tax has been collected did not owe the tax; provided, however, that neither a refund--nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charge , subsequently payable by the service user to the person required to collect and remit . (c) No .refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records showing entitlement thereto . 1768 . The taxes imposed by this article shall not apply to the City of Huntington Beach. 1769. SEVERABILITY . If any section, subsection, subdivi- sion, paragraph, sentence, clause or phrase of this article or any part thereof is for any reason held to be unconstitutional , such decision shall not affect the validity of the remaining portions of this article or any part thereof . The City Council hereby 6 . declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections , subsec- tions , subdivisions , paragraphs, sentences , clauses or phrases be declared unconstitutional . SECTION 2 . This ordinance shall take effect thirty days after its adoption. The City Clerk shall certify to the passage of this ordinance and cause same to be published within fifteen days after adoption in the Huntington Beach News , a weekly newspaper of general circulation, printed and published in Hunting- ton Beach, California. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 8th day -of -. September , 1970 . f' } Mayor ATTEST: C R"e City erk APPROVED AS TO FORM: ' City Attorney 7 . , � � ' Ord. No. STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss : y ; CITY OF HUNTINGTON BEACH ) I , PAUL C. JONES, the duly elected, qualified, .and acting- City .Clerk of the City of Huntington Beach and ex- officio Clerk of the City Council of the said City, do hereby certify that the whole number of members of the City Council of* the City of Huntington Beach is• seven; that the foregoing ordinance was read to said. City Council at a regular ad.iourned meeting thereof held on the 18th day. of August , 19 70 , and was again read to said City Council at. a regular meeting thereof held on the 8th day of September, .19 70 . , and was passed and adopted by the affirmative vote of more- than .a. majority of all :.the members of said City Council. AYES; Councilmen: Green,- Gibbs , •Matney, Shirley NOES: Councilmen: Bartlett , McCracken. ABSENT: Councilmen: Coen • awe City Clerk and -officio Clerk of .the City Council of the City of Huntington Beach, California 1, PAUL C. JONES, CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council,.do hereby certify that this ordinance has been pubs' th ington Beach News on ,z�Hunt..,l40............I 19252.. In a lordance with the City Charter of said City. PAUL C, Joa& .. ....: .... •... .. . .......................a..�L Cl y Clerk • - Deputy City Clerk j ORDINANCE NO. .. 2211 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING THE HUNTINGTON BEACH MUNICIPAL CODE BY AMENDING SECTIONS 3. 36 .160 THROUGH 3. 36.210 PERTAINING TO THE PAYMENT OF UTILITIES TAX The City Council of the City of Huntington Beach does ordain as follows : SECTION 1. The Huntington Beach Municipal Code is hereby amended by amending Sections 3. 36.160 through 3. 36. 210 to read as follows : 3. 36. 160 Filing return and payment. Each service supplier shall make a return to . the tax administrator, on forms provided by him, stating the amount of taxes billed by the service- sup- plier during the preceding month. The full amount of the tax collected shall be included with the return and filed with . the tax administrator. The tax administrator is authorized to require such further information as he deems necessary to "determine ' properly if the tax here imposed is being levied and collected in accordance with this chapter. Returns must be postmarked with prepaid postage and properly addressed, ..or personally delivered to the tax administrator on or before the 20th of. each month. Returns are due immediately upon cessation of business for any reason. 3. 36. 170 Delinquent when. Taxes collected from a service user which are not filed with the tax administrator on or before the due dates provided in this chapter are delinquent . 3. 36. 180 Penalty--Effect. Penalties for delinquency in payment of any tax collected or any deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of 15 percent of the total tax collected or imposed herein. 3. 36. 190 Penalty--Imposed by administrator. The tax ad- ministrator shall have power to impose additional penalties upon Persons required to collect taxes under the provisions of this chapter- for fraud or negligence in reporting or .paying at the _ . rate of 15 percent of the amount of the tax collected or as recomputed by the tax administrator. JG:ahb 1. �. --- 3. 36 . 200 Penalty--Combining nature. Every penalty im- posed under the provisions of this chapter shall become -a part of the tax required to be paid. 3. 36 . 210 Actions .to collect. Any tax required. to be paid by a service user, under the provisions of this chapter shall be deemed a debt owed by the service user to the city. Any such tax collected from a service user which has not been paid to the tax, administrator shall be deemed a debt owed to the city by the . person required to collect and pay.. Any person owing money to the city under the provisions of this chapter shall be. liable to an action brought in the 'name of the city for the recovery of such amount . SECTION 2. This ordinance shall take effect thirty days after its adoption. The City Clerk shall .certify to the passage of this ordinance and cause same to be published within fifteen days after adoption in the Huntington Beach News, a weekly news- paper of general circulation, printed and published in Huntington Beach, California. PASSED AND ADOPTED by the City Council of the City of `f Huntington Beach at a regular meeting thereof held. on the. 1st F day of August , 1977. 1 } ATTEST: 4 Alicia M. Wentworth City Clerk Mayor TFES T- APPROVED -AS TO FORM By Deputy City Clerk C ty Att6rney INITIATED AND APPROVED. r City Administrator GTE Telephone Operations P O. Box-1007 Nhittier.CA 00607•=:,07 January 9, 1996 To: Mayor, Councilmembers, City of Huntington Beach City Administrator Michael T. Uberuaga Deputy City Administrator Robert Franz Subject: Utility Users' Tax Fine on GTE Attached you will find a copy of the correspondence that has-been exchanged between the City of Huntington Beach and GTE Corp., beginning with.the Oct.5 letter initiated by Amold Ross of your Finance Dept. OVERVIEW On Oct. 31, 1 became aware of the fact that GTE was being fined $35,257.52 for a delayed payment on the August 1995 utility users tax paid by the residents of your city. In conversations with both Mr. Ross and Ray Silver, I explained that the delays in remittances-of this tax to a number of cities was delayed due to the physical move of our tax department from Westfield, Indiana to Irving, Texas,-a major undertaking. To our knowledge, this is the first and only time such a delay has occurred since GTE began collecting utility users tax for this city. In addition, to these conversations, I also contacted Councilman Garofalo to seek his advice. In mid-November, 1 was advised that the issue had still not been resolved and that I needed to write a letter of appeal to City Attorney Gail Hutton, so that a review of the ordinance can be brought before council. As of this date, I have not received a reply from Ms. Hutton to my letter of Dec.1, 1995, but I have received a second Arnold Ross letter (dated Dec.26) stating that while we were actively seeking a resolution of this issue, the meter was still running and we now owed the city a fine of nearly $42,000. GTE Telephone Operations December 1, 1995 Gail Hutton, City Attorney City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Gail: In follow-up to our conversation of Nov. 16 and my letter of Oct. 31 (enclosed) to Ray Silver, I_ am formally requesting that GTE Corp. be forgiven the $35, 257 . 52 penalty on the delayed receipt of the August utility users' tax payment. As I explained in the Oct. 31 letter, our August payment to cities was unfortunately delayed by a few days due to the fact that the GTE billing unit, which handles these payments for thousands of ~� cities and counties throughout the country, was in the process of being relocated from Westfield, Indiana to Irving, Texas. The complexity of this relocation caused our Huntington Beach payment, of $235, 050 . 12, to arrive on Sept. 25, just five days . behind the prescribed deadline. As your own Finance Dept. can verify, GTE has a long history of timely tax payments in all of .our communities, a record that needs to be taken into consideration before a penalty of this magnitude is applied. I know that both Council and staff have asked for your 'interpretation of the ordinance in this matter. I hope that a clear understanding of the circumstances that caused this delay will allow you to exercise the flexibility required. If you have questions, you can contact me at (310) 696-4645. Sincerely, Lou Banas •Public Affairs Manager cc Milton Jackson - Irving, TX. Ken Okel - Thousand Oaks; CA `r. Bob Wright - Covina, CA Ilona Smith, Thousand Oaks, CA Counci-lman David Garfalo, Huntington Beach, CA S GTE Telephone Operations October 31, 1995 Mr. Ray Silver Assistant City Administrator City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Ray: Per our conversation earlier today, I am enclosing a copy of Arnold Ross' letter to our Tax Department in Irving, Texas. As I explained to you, our August utility user tax payment were delayed in mailing to cities due to the fact that our entire billing section that deals with these issues was being moved from Westfield, Indiana to Irving. This is the first time in my years of dealing with utility users' taxes that a late payment penalty has been assessed against GTE. I do not know the specifics of the ordinance referred to by Mr. Ross, but we believe this penalty to . be harsh and unfair due to our extenuating circumstances and ask for your review of this matter. If you have any questions, please call me at (310) 696-4645. Sincerely, Lou Banas Public Affairs Manager cc Milton Jackson, Irving, TX Ilona Smith, Thousand Oaks, CA 1=FJ—1•+•�5 lJ: 1 i tlf•i Y I-{�Jf•I Y'. G 18-27—�995 3:24Pf•1 FROM 2)4 7197010 P. 1 yWc cd ovti. CITY C F UNITING MN BEACH Lei- 2000 MAIN STREET CALIFORN(A 9ZSaa Uctobcr 5, 1995,- post-IV Fax Nose 7671 °'ft 1019'1 ► T' fgipryt. iic. Aft co. ,Tz /TAX Tax Depadff=t Ptv*• to! 6ra3~ 33 ;141718-9052- GTE Telephone Operations �� '�3S-�3rlp a• 14 7 - 00 P.O.Box 152205 Iz vira Texas 75015-2205 Sales&Use Tax Departrntm Rt. Delinquent Utility Tax Remittance For The Month of August 1995 Dear Sirs: GTE California's Utility tax paytrum to the city ofAuntiroon Bench cavcting the month of August 1995 failed to conform to City require nems governing timely Postmarked remittuwv and is now subject to a penalty of I S%or 535,257.52 (See Attachments). The City's Ordinance dot*not allow us any discretion in this nwtcr, we would suggest that a remittunce for the above be forwarded without further delay and that ncctssnry steps be taken to avoid future repetition. Thanking you in advance for your imm2diate jZMlio to this item. sinomly, ARNOLD ROSS Sr. Accountant F.rtclosura k . �3 Tax DepadmeM ti;.vnsT�f. ; a+ GTE Telephone Operations dons Z® 265 687 1.08 SEP 2 $ '9 S :`�i...• _ 1 P.O.BOX 152205 , Ir ft.TX 75015-2209 \• ' (__ _� , y A MIT 16 . fit \\, ,�(�\ • �� �ri;'�C�����a��,�>�1.��, �-�1� �� 1 y ' I� FOR ANY QUESTIONS, PLEASE CALL 915-844-6143 235,050.12 ' r: 931500762 GTE TELEPHONE OPERATIONS WEST AREA-GTE CALIFORNIA 2701 SOUTH JOHNSON POST OFFICE BOX NUMBER 27240 -SAN ANGELO.TEXAS 76902 7240 VENDOR NO. GTE TELEPHONE OPERATIONS ': "`r" CHECK NO. H U N B E A 711 • • WEST AREA-GTE CALIFORNIA 931500762 500762 /1RiT;MT(MTAT[AIAMK', Of TEA" 1 1 •. .' ... .• ..L:.a:• -o: �; .�� M-1 S2�/1111 I I PAY EXACTLY *******235, 050 DOLLARS.,.-::AND:'.1'2`:1 CENTS,. **:" }? ' .1•�_ ..y �f."_ .:• �•;.r".tr _•:r .'!.ca :'�.C•• :1;�'i•f ;�.,'� 1: — ^ •: -4 �t ,A•. r �.�� ir. � �..; '.d'r••'t'p".. VOID AFTER I �� �• ,: ,.,_.,;, t .i �•,: r•,=: DATE Ora9%22195 . 00DAYS TO THE "' ' • CITY OF HU-NTINGTONI BEACN.�: ' I i h� ORDER OF• ATTN CITY 7REASUR �.r.�r tf�,`�Y"t:'5Il:fi�.~�'i: �• ,„•tyC=, rr I I 1 1 PO BOX 711.t ` '• '`•••,.ti•. -r'. :•r�t;'��;;.`� '�r ,,:' 1 I HUNTINGTON BEACH,- , CA 01 1 ~���. .. r .i•� >. .,r :y;? ..^,`• .t+,: ..�1 K y. r'v+ ,j'% ti . � '�s '��' :A�r�'7 k.4' • 31SOO76 2u' 1: 1119096341: u'430960 299Sul 1 L J L J i GTE CALIFORNIA INCORPORATED P 0 BOX 407 19845 NORTH US 31 WESTFIELD, IN 46074 ?2-Sep-95 Dear Sir: Enclosed is our check for 235, 050.12 for Utility Users. Tax for HUNTINGTON BEACH This reflects taxable billing to our subscribers for the month ending August, 1995. Sincerely, -_ Robessie Cornner Associate Accountant • Sales & Use Tax DeT)artment (214) 718-8051 enclosure (s) �D _ Ird. No. 2211 STATE OF CALIFORNIA ) - COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) i I,. ALICIA M. WENTWORTH, the duly elected, qualified City -. Clerk of the City of Huntington Beach and ex-officio Clerk of the City Council of the said City, do hereby certify, that the whole number of membere of the City Council of the City. of Huntington Beach is seven; that. the foregoing ordinance was -read to said City Council at a regular meeting thereof held on the .18th day of July 19 77 , and was again read to said City Council at a regular meeting-thereof held on the 1st - day of August 19 77 and . . was passed and adopted by the affirmative vote of more than a 'majority of - all 'the members of said City Council. AYES: Councilmen: Bartlett, Wieder, Coen, Gibbs, Siebert, Shenkman, Pattinson +; NOES: Councilmen: None ABSENT: Councilmen: None Alicia M. Wentworth City Clerk and ex-officio Clerk- of the City Council of the City of Huntington Beach', -California By Deputy City Clerk I, Alicia M. Wentworth CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City. Council, do hereby certify that this ordinance has been puA ished in tha Huntington Beach Nows on ......, >�7 . In accordance %;. h i.`,a City C;ura• cf said City. ALICIA M. IYFNTWORTH _=-- .._ .._................................ ...................`........y......... Ca Clerk 2 • — .. ............ ... De put ity Clerk GTE Fine Appeal Page 2 ISSUES There are basically two. First, because there was a reasonable extenuating circumstance involved in the five day late payment, should the fine have been levied? We think not, especially in light of GTE's extensive on-time payment record and its record of service to this community. Secondly, is a fine of $35,257,52 (now $41,762.53) a fair and just levy for a five-day payment delay? We feel that this is an issue the Council and City Staff should review before the issue comes up again with any of the utilities that provide service to the city. It is our opinion that the fine is exorbitant and out of line with traditional late payment practices employed by the business community. CONCLUSION It's GTE's wish that the City resolve this matter as quickly as possible, either through administrative channels or by Council action. We stand ready to assist you in any way to bring this matter to a successful conclusion. } Sincerely, Lou Banas Public Affairs Manager . cc Milton Jackson, Irving,TX Ken Okel, Thousand Oaks,CA Ilona Smith, Thousand Oaks,CA . 37 J, CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH TO: Michael T. Uberguaga, City Administrator FROM: Gail Hutton, City Attorney DATE: January 16, 1996 SUBJECT: Procedure for Collecting Penalty for Delinquent Payment of Utility User Tax The Tax Administrator has levied a 15% penalty on GTE for late remittance of its utility user tax. GTE has requested reconsideration of the penalty_. ueition: What discretion, if any, is permitted under the Municipal Code in the assessment of delinquency penalties against GTE? ` Answer: GTE is entitled to a hearing before the City Council at which time the Council has the authority to confirm or modem the penalty assessment. Summary of the Facts: The utility users tax is due 20 days after the end of the month. In this case, when GTE paid its tax five days late, the Tax Administrator imposed a 15% penalty. When GTE failed to pay the penalty, the Administrator imposed an additional fee of$5,984.08. According to Senior Accountant, Arnie Ross, the additional fee was determined by applying a 15% penalty on the 15% penalty, and then-adding a 1-1/2% late charge imposed by the Treasurer. Discussion 1. Collection of Utility User Tax. The utility user taxis set forth at Chapter 3.36 of the Municipal Code. Section 3.36.160 requires each"service supplier" (e.g., the telephone company) to file a tax return with the Tax Administrator on or before the 20th of each month. Taxes not filed by this date are delinquent. (Section 3.36.170.) The Code imposes a 15% penalty on any tax delinquency. (Section 3.36.180.) The Administrator may imposes an additional penalty of 15% in cases of "fraud or negligence." The penalty is then merged back into the tax required to be paid. (Section 3.36.200.) • SN:o:Taxpen-2 2. Assessment of Tax by Administrator, and Council Hearing to Review the Assessment Section 3.36.230 provides that in the case of unpaid taxes, the Administrator may assess the tax and penalty due and then submit the amount to the City Council to be confirmed or modified at a hearing. Specifically, Section 3.36.230 provides that the Tax Administrator may administratively make: "an assessment for taxes not paid or remitted by persons required to pay or remit." This Section is somewhat ambiguous in that it refers to "assessing" a"person", and not a"service supplier." The definition at Section 3.36.010 of a"person" includes any business corporation, and does not expressly exclude or include"service suppliers." Since GTE is a corporation, presumably it could be considered a person, even though it is also a service supplier. More importantly, because the procedure applies to any person required to"remit" the tax and only a service supplier can "remit" the tax, it follows that the administrative assessment procedure is available to service suppliers. On the other hand, this procedure is only available in connection with"assessments." An assessment can include not only taxes but penalties because Section 3.36.230 states that the: "notice of the assessment . . . shall refer briefly to the amount of the taxes and penalties.imposed." -- Section 3.36.230 further provides that the Administrator"may make an assessment for taxes not paid or remitted by a person required to pay or remit." This means that if either the individual tax payer or the service supplier fails to pay the tax, the Administrator may assess what he believes to be the amount of the tax, inclusive of all penalties. This is then submitted to the City Council for confirmation at a hearing. Pursuant to Section 3.36.240, at the assessment hearing, the City Council may: "confirm or modify the assessment by motion." However, is the Administrator also making an assessment when he merely imposes penalties, but does not make an assessment of the tax owed because the service supplier ultimately paid the tax, albeit late? A reasonable definition of "assess" is to ascertain, fix the value of. or impose: Absent any past precedent to the contrary, this includes fixing a penalty. Consequently, we conclude that the assessment of a penalty, like the assessment of the tax, is subject to a Council hearing. However, in the past, the Tax Administrator has administratively interpreted the utility user tax to not allow for an appeal of penalties. There is some support for this conclusion. Section 3.36.180 provides that penalties for delinquencies"shall attach" at the rate of 15%. It could be argued that although there is generally a hearing right on tax assessments, because the Administrator has no discretion in imposing the 15% penalty, there is no need for a hearing when the only issue is the penalty. However, as discussed below, because there is a general constitutional right to a hearing, the issue must be resolved in favor of offering the service supplier a hearing in all circumstances, including penalty assessments. 2 / srv:c:Taxpen-2 3. The City is Constitutionally required to permit the service supplier to contest the penalty assessment at a hearing. The due process clause of the Federal Constitution requires a hearing be permitted before the tax is irrevocably fixed. There is a long line of tax cases holding generally that due process (notice and an opportunity to be heard) requires that at some stage before a tax becomes fixed, the tax payer must be given the right to contest the validity or amount of tax. For example, in People v. Sonleitner(1960) 8 Ca1.Rptr. 528, at issue was the assessment of the tax, along with interest and costs, against an individual selling motor fuel without paying the required license taxes. The court held that the due process clause required that some type-of administrative hearing be provided before the tax, including the penalties and interest, became fixed. There are many other cases generally upholding this proposition in the property tax area as well as other tax areas. This is not to say that it would be clearly unconstitutional not to allow for a hearing in this circumstance. There may be exceptions to the general rule that the due process clause requires a hearing. On the other hand, where the ordinance may be ambiguous in terms of providing for a ` hearing, any ambiguity should be resolved to insbre its constitutionality. Consequently. while it was past administrative practice not to allow a hearing given both Section 3,36.230, which allows for a hearing?, and the Constitutional requirements of due process. GTE should be provided a hearin . Additional Recommendations 1. It should also be noted that the calculation of penalties against GTE is inconsistent with the Code in any event. The utility user tax provides that the Tax Administrator may impose an additional 15% penalty upon the original amount in cases of"negligence or fraud." However, there is no provision for interest. Nevertheless, the Administrator has been imposing a 156/6 penalty on the 15% for every month the supplier fails to pay the penalty after it is initially imposed. In addition, the Treasurer Department has been imposing a late fee based upon his authority to impose interest on"miscellaneous late receivables." (Section 3.49.020.) To the contrary, there is no authority in the Code for either of these practices. 2. The penalty procedures of the utility users tax should be revised. For example, it is recommended that the Code require that the tax be paid before the service provider proceed to a hearing. The Code should also provide for interest on the past due amount. Gail Hutton City Attorney c: Ray Silver, Assistant City Administrator Robert Franz, Deputy City Administrator/Administrative Services Arnold Ross, Senior Accountant 3 srv:c:Taxpen-2 .t City g of Huntington Beach INTER-DEPARTMENT COMMMUNICATION HUNTINGTON BEACH TO: HEARING OFFICER Rich Barnard FROM: Acting TAX ADMINISTRATOR/ANANCE DIRECTOR Robert J. Fran SUBJECT: DELINQUENT UTILITY TAX PAYMENT -- GTE DATE: March 15, 1996 Background Utility Tax payment requirements are documented in 3.36.160 of the City's Municipal Code (copy attached). Under this Section, _payments to the City from the Utility Companies such as GTE (Service Suppliers) are to be delivered by or postmarked on or before the 20th of each month for the preceding months' taxes collected by the Service Supplier. The penalty for delinquent payments is 15% of the total tax, also established by Municipal Code (3.36.170 & .180). GTE was required to remit the utility tax it had collected for August 1995 by no later than September 20, 1995. However, the GTE letter of September 12, 1995 delivering the August taxes in the amount of $235,050.12 was not postmarked until September 25, 1995. Therefore, the 15% penalty was imposed in the amount of $35,257.52. The City had no discretion in this matter. Section 3.36.180„ provides that penalties for, delinquencies "shall attach." Subsequently, the City imposed additional penalties and interest on the delinquency totaling $5,984.08. However, based on the City Attorney's review (attached)' of the additional penalties and interest, the City is withdrawing the additional assessments. Therefore, the original 15% penalty of $35.257.52 is the total penalty that is due from GTE. Appeal.Process Staff has not allowed the appeal of penalties in the past. Although the City Attorney has indicated that there is support for this conclusion (no appeals), the attached City Attorney opinion concludes that Federal law permits the service supplier to contest the penalty assessment at a hearing. The City Council subcommittee that was formed on this subject approved the City Attorney's recommendation that a hearing officer hear the case and submit a recommendation to the City Council at a subsequent City,Council hearing on the appeal. The City Council may "confirm or modify the assessment by motion." DELINQUENT UTILITY TAX PAYMENT GENERAL TELEPHONE On October 31, 1995 GTE appealed the penalty assessment by way of a letter from Mr. Lou Banas to Mr. Ray Silver, Assistant City Administrator. The grounds for the appeal are brief and are as follows: As I explained to you, our August utility tax payment were (sic) delayed in mailing to cities due to the fact that our entire billing section that deals with these issues was being moved from Westfield, Indiana to Irving. This is the first time in my years of dealing with utility users' taxes that a late payment penalty has been assessed against GTE. I do not know the specifics of the ordinance referred to by Mr. Ross, but we believe this penalty to be harsh and unfair due to our extenuating circumstances and ask for your review of this matter." Subsequently, GTE repeated its request for review by way of letters dated December 1, 1995 to the City Attorney and January 9, 1996 to the Mayor and City Council. These letters repeat the same grounds for appeal, specifically that the delay was due to the relocation of GTE's billing operation, and that the late payment should be excused because of GTE's past history of prompt payment. City Staff position • GTE has cited the move of their billing operation as the reason for the late payment. We believe GTE could have and should have made the utility tax payment to the City earlier in the month of September. Attached is a copy of the form letter from the Wakefield, Indiana office of GTE (submitted with their late payment for August). The letter confirms that GTE had calculated and prepared a payment to the City at least as early as September 12,-1995 (eight days before the tax was due to the City) in the amount owed to the City for August 1995 utility taxes. Even so, the GTE check for these taxes was dated 10 days later on September 22, 1995 and mailed 13 days later on September 25, 1995. • If some extraordinary circumstance — such as an act of God — prohibited payment, then we would recommend waiver of the penalties. The movement of a billing operation does not fall in this category. GTE should have planned on how to make their tax payments in a timely manner, just as they must have planned all of the other various details of the move of their tax department, a move they have described as a "major undertaking". Moving a business office is not the type of activity that should be allowed to disrupt other business activities, including payment of utility taxes. • It should be noted that GTE is not paying this tax out of its own money, but is merely remitting City money that it had previously collected from customers. �1/ GTE.DOC -2- 03/15/96 8:00 AM ?1': vITY OF HUNTINGTON BEACr MEETING DATE: 07/01/96 DEPARTMENT ID NUMBER: AT 96-09 Council/Agency Meeting Held: 6111111, Deferred/Continued to: ❑Approved ❑ Conditionally Approved "enied City Clerk's Sig ure Council Meeting Date: 07/01/96 Department ID Number: AT 96-09 CITY OF HUNTINGTON BEACH REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS SUBMITTED BY: GAIL HUTTON, City Attorney ' �6Izq� PREPARED BY: GAIL HUTTON, City Attorney `�� 9 6 --sS SUBJECT: ADMINISTRATIVE HEARING - LATE CHARGE (GTE) Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachment(s) Statement of Issue: To adopt findings of fact and.conclusions of law regarding the appeal of a late charge applied pursuant to the Municipal Code. Fundin4 Source: General Fund. Recommended Action: Approve the Resolution adopting findings of fact and conclusions of law imposing a penalty for late payment of utility taxes. Alternative Action(s): Modify the penalty assessment. Analysis: The City's Administrative Services Department assessed the 15% penalty required by the Huntington Beach Municipal Code for the late payment of utility taxes by GTE. An appeal was filed by GTE. The City Council referred this appeal to a hearing officer for a recommendation Following presentations by staff and GTE, Hearing Officer Rich Barnard recommended upholding the assessment of the penalty. The hearing on GTE's appeal was conducted by the City Council at its meeting of June 17, 1996. At the conclusion of that hearing, the Council rejected the recommendation and waived the penalty except for a charge against GTE for the loss to the City of interest for the five (5) days of the late payment. The Council further directed that findings of fact and conclusions of law be submitted at the next council meeting. Attached hereto are the findings of fact and conclusions of law to implement this Council decision. �\ UTILITAX.DOC -2- 06/24/96 4:25 PM kI-QUEST FOR COUNCIL ACT1%,A MEETING DATE: 07/01/96 DEPARTMENT ID NUMBER: AT 96-09 Environmental Status: Not applicable. Attachment(s): City Clerk's Page Number .......... .............. ..... 1. Resolution of City Council adopting findings of fact and conclusions of law \ UTILITAX.DOC -3- 06/24/96 4:25 PM r 'J r Southem Ca//fbmis Ed/son Company 7333 BOLSA AVENUE WESTMINSTER.CALIFORNIA 92663 July 28 , 1987 M. D. 14AR71N TEt�n.paE MANAGER.NVNTINGTON BEACJd 0141 l9SC233 C.W. Thompson, City Administrator City of Huntington Beach P. O. Box 190 Huntington Beach , Calif. 92648 : Dear Charles , The Southern California Edison Company has reviewed the 15 percent penalty applied to the May, 1987 Utility Users Tax payment postmarked June 22, 1987 . After some consideration, Edison is submitting to the City of Huntington Beach , the enclosed check in the amount of $45- 698. 87 under protest. Although we realize City Ordinance 02211 states that the payment date for the City' s Utility Users Tax must be postmarked on or before the 20th of each month , the 20th of June happened to occur on a weekend (Saturday) . Under standard practice for payment remittance to state and . federal agencies , we are afforded a remittance grace period ^ D to the next regular working day should the payment date occur on a weekend or legal holiday. Recognizing that Edison does all the city tax program accounting of the city (programming, postage, billing, collecting, exemptions, etc. ) with no charge to the city, we believe a standard grace period, with the city is reasonable. In light of the above, we are requesting the following modifications to the Utility Users Tax Ordinance (Sections 3 . 36 . 160 and 3 . 36 . 170) : Section 3 . 36. 160 : Filing Return and Payment . .on or before the 20th of each month . Should the 20th occur on a weekend or legal holiday, the return_ can be postmarked on the first regular working day following a Saturday/Sunday , or legal holiday. " Section 3 . 36 . 170 : Delinquent When "Taxes collected from a service user which are not £sled-Kith-the-tax-cdmrr:iatrnter postmarked on or before the due dates provided in this-chnpter Section 3 . 36. 160 are delinquent. " I would be glad to meet with you and your staff to further discuss our proposed modification . i Sincerely, cc : W. Hall 11 G. Hutton �:T.�'Villella' A HTT[i1.n[`!r✓LyT 1r. a` n4` on&eac/i ' C�iam6er oJ`Connneroe -Julyl5, 1996 Mr. Richard Barnard Deputy City Administrator City HaII_ P.O.Box 190 Huntington Beach, Ca. 91648 Dear Rich: The Chamber of Commerce Board of Directors at their last meeting were made aware of the ongoing issue with GTE and the penalty that has been assessed as the result of their utility users tax Iate payment. We also understand that this same issue has occurred several years ago with Southern California Edison and in both cases the current city ordinance does not provide for an appeal process. Our Board recommends that the existing ordinance be revised so that an appeal process be available with final authority resisting with the City Council to address these unusual situations. A penalty could be assessed to collect lost interest to the city,however,a penalty of$30,000+ for GTE and $50,000+for SCE for several days is exorbitant. And, in both cases,the late payment was due to causes beyond the company's control. In the interest of maintaining good business relationships with our utility providers,that perform a service to the city in collecting these taxes at no cost to the city,the Chamber strongly encourages your cooperation in drafting an ordinance that provides for the above stated process. Your consideration of this'recommendation will be appreciated. Sincerely, 'ddell, CCE resident JR/sj cc: Mayor and City Council Uberuaga Banas Dominguez t Woolen 2100 Main Street,Suite 200 Hunti,gton Beach.CA 92648 7141536-8888 (FAX)714/960-7654 ACCREDITED DELINQUENT UTILITY TAX PAMENT GENERAL TELEPHONE List of Attachments Documentation of Late Payment: • Letter dated 9/12/95 from GTE • Copy of Check from GTE dated 9/22/95. • Certified Letter Envelope postmarked 9/25/95 City Attorney opinion dated Jan. 16, 1996 Related Municipal Code sections Correspondence from GTE • 1/9196 Letter • 12/1/95 Letter • 10/31/95 Letter Documentation of penalties paid by other Service Suppliers L GTE.DOC -4- 03/15/96 8:00 AM DELINQUENT UTILITY TAX PAYMENT GENERAL TELEPHONE • In the past, the City has consistently and uniformly applied the provisions of the Municipal Code and has collected the penalty whenever late payments occurred. All utility tax service suppliers have complied and paid the penalty when applied. Following is a partial list of prior penalties collected: Paragon Cable November, 1994 10,957.27 Air Touch November, 1993 1,628.16 L.A. Cellular August, 1993 1,614.60 L.A. Cellular June, 1993 1,505.21 U.S. Sprint March, 1993 2,753.95 U.S. Sprint January, 1993 2,310.87 Paragon Cable January, 1992 11,871.30 .-t So. Cal. Edison July, 1987 45,698.87 • Utility tax payments to the City are comparable to property tax payments, income tax payments to IRS, and mortgage/loan payments to lenders. All of these payments to government and private institutions result in penalties if payments are late, with few. exceptions granted. • Utility Tax payments are particularly important to be received on time due to our cash flow needs.. Over $1 million in revenue is projected to be received by the 20th of each month from Utility Tax. Late payments can cause problems for the City meeting its payment obligations to vendors/banks/payroll etc. • The City of Pomona (Ray Harton, Revenue Manager) has advised us that GTE paid their utility tax on time by September 20, 1995 (same due date as Huntington Beach). for Pomona's August utility taxes. Recommendation GTE be required to pay the 15% penalty of$35,257.52. Attachments GTE.DOC -3- 03/15/96 8:00 AM I -•I TY CITY JF HUNTI NG r—IN BEACH CHX EAYHENT NJR 106486 3./ 11/9. '1 KBLCONI INCORPORATED VOICE JESC< IPTIO'J DATE PO 4 GROSS AMOUNT DISCOUNTI NET A" I --------------------------- --------- ----------'j----------- --------- ------- N-92TAX O0i DEL INQUENT TAX 01 2/28/92 UTILITY 11 , 871 -30 . 00 11 , 8 t . I f 1 i t � I - TOTALS 119871 .30 .00 11 , 87 1tVlFirst fnterstafe Bank I%a•U c r O li.t T F.I) of Jacksonville PARAGON CABLE - ORANGE COUNTY P.0.Draw•er101 1 8 6 4 8 E Jackstiole.Texas 75766 Mcninrint Cifv Phu.a One DATE CHECK NO. AMOUNT SO Gessner.$uil:7p0 lioustnn.Teas 71(0.1 7i1!F?7•t3:1 3/11/92 186486 $11,871.30 ?AY ELEVEN THOUSAND, E IGHT -HUNDRED SEVENTY ONE AND 30/100 DOLLARSYY��'-YY=""w'YY"=° -OTHE CITY OF HUNTINGTON BEACH ORDER 2000 MAIN STREET VOID 90 DAYS AFTER ISSUE DATE q6 ATTN: FINA14CE DEPT. - HUNTINGTJN BEACH, CA 92648 1II 18 G 48 Gn' 1: L 1, 3 11 5 20G1: 11'Q4 I S 0 0 L 28811' ` HAR 0 5 �992 CITY OF HUNTINGTON BEACH 2000 MAIN STREET CALIFORNIA 92648 February 28, 1992 KBLCOM, Inc. 800 Gessner, Suite 700 Jdti-. . Houston, Texas 77024 Re: Delinquent Cable Utility Tax Remittance for the month of January 1992. Dear Sirs: KBLCOM's Utility Tax payment to the City of Huntington Beach covering the month of January 1992 failed to conform to the City requirements governing timely Postmarked remittance and is now subject to a penalty of 15%or $11, 871. 30. (See Attachments) . The City's Ordinance does now allow us any discretion in this matter. We would suggest that you take any necessary actions to avoid a future repetition. If you have questions, call Robert Sedlak at (714) 536 5907 . Sincerely, _ Qi( BATCH NO: /5 BkT.^d Gk1E: M 'T. VILLELLA, VENDOR CODE: [�t�" C' 1 ENTEEED 6Y: a-x Administrator CALCULATIONS OK: 7 HOLD CODE: Enclosure h1GMT.APPROVAL DATE •vel& /ao--i 4,6,0100 S 1I 9r .3v c t PROJECT NUIkBER ASS11 CODE: (13) 6/17/96 - Council/t.,.;ncy Agenda - Page 13 (b) Adopt Resolution No. 96-49 as amended to not give Council first priority to file written arguments but to direct the preparation of impartial analyses, OR (c) Do not adopt any part of Resolution No. 96-49 which would result in no impartial analyses nor Councilmembers authorized to file arguments. [Continued to 711196 -- 7-0] F-5. This is an Administrative Hearing agenda item. The only testimony to be taken by the Council during the hearing will be from City Staff and the appellant, GTE. The Brown Act requires that any members of the public who wish to speak to this item may do so. The time to address this appeal is during the public comments portion of the,meeting which is reserved for members of the public to speak to non-public hearing items on the agenda. F-5. (City Council) Administrative Hearing -Appeal Filed by GTE Telephone Operations (GTE) - Penalty Assessment Late Payment-- Utility User Tax (340.50) Communication from Deputy City Administrator Franz. Administrative Hearing to consider the appeal to the hearing officer's decision denying their request for relief from the penalty imposed for late payment of the August, 1995, utility users tax collections. (City Attorney's memorandum dated 6/12/96 regarding Procedure For Conducting GTE appeal attached) Recommended Action: Motion to: ApW-1-5---1-596-,-upholding-th&-assessment-Gf-a--penalty-4!6F4ate payment--of utWty taxes: [Rejected staff recommendation; waived penalty except charge GTE for loss to City of interest for 5 days - Findings and conditions to be submitted at next meeting - 7-0 -- Leipzig request Huntington Beach Municipal'Code 3.36.230 be addressed] F-6. (City Council) Legislation Authorization Process Options (100.10) Communication from Brian Smith, Management Assistant, relative to the process for gaining City Council authorization to act on legislative issues be modified to meet varying time constraints. Recommended Action: Motion to: a. Approve the use of a modified authorization process to act on pending legislative issues in a timely manner, And, b. Approve the use of the "Abbreviated" and "Fast Track" authorization models when demonstrated time constraints do not allow the full City Council to act upon pending legislative issues in a timely manner. [Continued to 711196 -- 6-1 (Harman -- NO)] (13) RESOLUTION NO. 96- 55 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF HUNTINGTON BEACH GRANTING IN PART THE APPEAL OF GTE OF A PENALTY ASSESSMENT FOR LATE SUBMITTAL OF THE UTILITY USER TAX WHEREAS on June 17, 1996, the City Council of the City of Huntington Beach conducted a hearing to consider GTE's appeal of a penalty assessment imposed against it for failure to submit utility user tax receipts within the time specified pursuant to Huntington Beach Municipal Code, Chapter 3.36, Utilities Tax, Section 3.36.160; and The City Council directed the City Attorney's Office to prep these findings and facts and conclusion of law following the hearing; NOW, THEREFORE; the City Council of the City/of Huntington Beach hereby resolves as follows: / Section 1. In reference to the appeal by GTE of a penalty assessment of fifteen percent (15%) imposed against it for failure to submit tax receipts within the time specified in Huntington Beach Municipal'Code, Chapter 3.36, Utility Tax, Section 3.36.160, the City Council makes the/ e following findings of facts and conclusions of law: 1. Under City of Huntington Beach Municipal Code, Chapter 3.36, all utility tax receipts are due and payable to the Cit\by the service supplier (in this case GTE) on or before the twentieth%(20th) of each month for the amount of taxes billed by the service supplier during/the preceding month\ 2. GTE's tax'department, located in Westfield, Indiana, prepared a form letter on September 12,4995, eight (8) days before the payment was due the City for August 1995 tax receipts. This form letter indicated that the City was due the amount of $235,050.12./The Westfield, Indiana office then requested GTE's San Angelo, Texas office to issue the check. 3. The San Angelo office prepared a check in the amount of $235,050.12, and forwarded it to the Westfield, Indiana office in a mail pouch, which also included checks for 56 other California utility tax cities. However, unbeknownst to . the San Angelo office personnel, by this time, GTE had already relocated its Westfield, Indiana office to Dallas, Texas. The mail pouch sat in the Westfield, Indiana office for approximately five/(5) days until GTE staff realized what had happened. \, 4l The mail pouch was subsequently retrieved and new checks were issued by GTE and distributed to all 57 cities. Ultimately, the Huntington Beach check was prepared by GTE on September 22, 1995, two days after the actual due date of the payment to the City. The envelope was not postmarked until September 25, 1995, five (5) days after payment was due the City. g:resoluti:utilitax 5. The City of Huntington Beach, Tax Administrator, imposed a fifteen percent (15%) penalty against GTE for failing to comply with Section 3.36.160 of the City municipal code. GTE subsequently appealed that assessment. The City CounciNhen referred the matter to a hearing officer to take evidence and make a recommendation. The City Council then conducted a hearing on the appeal on June 17, 1996. 6. The Council concludes that based upon the evidence, GTE's failure to promptly pay the utility user tax receipts to the City was due to excusable neglect, and, on that basis, the City Council imposes a penalty in the reduced amount of the interest the City would have colle ted on its investments had the check been properly received. 7. The evidence shows that the interest rate the City received on its investments for the month of,September 1995 was 5.991%. Consequently, the interest due on five (5) days of an investment of $235,050.12 is $192.90. 8. The City Council hereby imposes a penalty assessment against GTE in the amount of $192.90. PASSED AND ADOPTED by the`City Council of the City of Huntington Beach at a regular meeting thereof held on the �. day of 11996. Mayor ATTEST: APPROVED AS TO FORM: City Clerk City Attorney REVIEWED AND APPROVED: INITIATED AND APPROVED: City Administrator ?-t F /,.-City Attorney g:resoluti:utilitax Council/Agency Meeting Held: Deferred/Continued to: ❑Approved Conditionally Ap ro ed ❑ Denied City Clerk's Sitnature Council Meeting D,at : 06/0 /96 Department ID Number: S 96-020 CL,f Max- t'Brne CITY OF HUNTINGTON BEACH S• 3.3 •�,�+o REQUEST FOR COUNCIL ACTION SUBMITTED TO: HONORABLE MAYOR AND CITY COUNCIL MEMBERS � D SUBMITTED BY: MICHAEL T. UBERUAGA, City Administra PREPARED BY: ROBERT J. FRANZ, Deputy City Administrator SUBJECT: ADMINISTRATIVE HEARING - LATE CHARGE (GTE) Statement of Issue,Funding Source,Recommended Action,Alternative Action(s),Analysis,Environmental Status,Attachme Statement of Issue: To conduct a hearing on the appeal of a late charge applied pursuant to the Municipal Code. Funding Source: General Fund. Recommended Action: Upon conclusion of the Administrative Hearing, approve the Hearing Officer's Recommendations and Findings of Fact dated April 15, 1996 upholding the assessment of a penalty for late payment of utility taxes. Alternative Action(s): Modify the penalty assessment. 11 Analysis: The City's Administrative Services Department assessed the 15% penalty required by the Huntington Beach Municipal Code for the late payment of utility taxes by GTE. An appeal was filed by GTE. Following presentations by staff and GTE, Hearing Officer Rich Barnard recommended upholding the assessment of the penalty. The Hearing Officer's report dated April 15, 1996, provides an analysis of the appeal, Recommendations, Findings of Fact, and 16 attachments. E_ �3h!3�3r REQUEST FOR COUNCIL ACTION MEETING DATE: 06/03/96 DEPARTMENT ID NUMBER: AS 96-020 Environmental Status: Not applicable. Attachmentls): C,ity Clerk's ', Page Num�ber 1. Appeal to City City Council dated May 3, 1996 2. Hearing Officer notice dated April 9, 1996 3. Hearing Officer Report dated April 15, 1996 1 0018919.01 -2- 05/22/96 11:03 AM ADMINISTRATIVE HEARING LATE CHARGE - GTE AGENDA ITEM F-5 RECEIVED FROM f^ L AND MADE APART OF THE R CORD qT THE COUNCIL MEETING OF /i7-S� OFFICE OF THE CITY CLERK CONNIE BROCKWAY,CITY CLERK City Staff Summary: 1. The Municipal Code requires the assessment of a 15% penalty if a utility tax payment is late. 2. City staff has no discretion on whether to assess the 15% penalty if the tax payment is late. 3. The penalty has been assessed on late payments consistently by the City over the years. 4. The September 1995, GTE utility tax payment was five (5) days late. 5. The late payment was due to GTE's moving its billing office and internal (GTE) communications problems. 6. City staff and the Hearing Officer recommend upholding the penalty assessment. 7. The City Council may sustain, modify or reject any or all of the penalty. 0019437.01 06/17/96 3:40 PM r CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION v HUNPNGTON BEACH a TO: Honorable Dave Sullivan, Mayor, and Members of the City Council FROM: Gail Hutton, City Attorney DATE: June 12, 1996 SUBJECT: Procedure for conducting GTE's Appeal of Utility User Tax Penalty Assessment Pursuant to Sections 3.26.230 and 3.26.240 of the Municipal Code, GTE has appealed to the City Council the assessment by the Tax Administrator of a penalty for delinquent payment of its utility user tax. Previously, the City Council,had referred this matter to Deputy City Administrator Richard Barnard to conduct an advisory hearing. Mr. Barnard has conducted that hearing and his report and recommendation are included as part of the Council agenda packet. GTE has appealed from that advisory opinion. Consequently, it is necessary for the Council to conduct a hearing on this matter. The City Council need not conduct the hearing in accordance with technical rules relating to evidence and witnesses but in a manner most conducive to determination of the truth. Any relevant evidence may be'admitted if it is the type of evidence on which responsible persons are accustomed to rely on in the conduct of serious affairs, regardless of the existence of any common law or statutory rules which might make improper the admission of such evidence over objection in civil actions. Hearsay evidence may be used for the purpose of supplementing or explaining any direct evidence but shall not be sufficient in itself to support a finding unleso-it would be admissible over objection in civil actions. The rules dealing with privileges shall be effective to the same extent that they are now or hereafter may be recognized in civil actions, and irrelevant and unduly repetitious evidence may be excluded. Decisions made by the City Council shall not be invalidated by any informality in the proceedings, and the City Council shall not be bound by technical rules of evidence. With these general principles controlling, the following procedures shall apply to conducting the hearing. 1. The City Council shall rule on the admission or exclusion of evidence. 1 SF\s:G:SF-96Memos:Uti1Tax 6/12/96-#2 2. Each party shall have these rights: To be represented by legal counsel or other person of his or her choice; to call and examine witnesses; to introduce evidence; to cross-examine opposing witnesses on any matter relevant to the issues; to impeach any witness regardless of which party first called him or her to testify; and to rebut the evidence against him/her. If the Tax Administrator or Utility does not testify in his or her own behalf, he or she may be called and examined as if under cross-examination. 3. Oral evidence shall be taken only on oath or affirmation. This requirement may be met by the City Clerk administering the oath to all prospective witnesses after the Mayor opens the hearing. 4. The hearing shall proceed in the following order, unless the City Council, through the Mayor, for special reason, otherwise directs: a. The Mayor shall introduce into evidence the hearing officer's report. Either party may rely on that report, in whole or in part, in presenting its case. b. The Tax Administrator shall be permitted to make an opening statement. C. The appealing party shall be permitted to make an opening statement. d. The Tax Administrator shall produce the evidence on his or her part. e. The party appealing from penalty assessment may then open his or her defense and offer his or her evidence in support thereof. f. The parties may then, in order, respectively offer rebutting evidence only, unless the City Council, for good reason, permits them to offer evidence upon their original case. g. Arguments shall be permitted in the discretion of the City Council. The Tax Administrator with the burden of proof shall have the right to close the hearing by making the last argument. 5. The City Council shall determine relevancy, weight, and credibility of testimony and evidence, and shall base its findings on the preponderance of evidence. 6. City Council,prior to or during a hearing, may grant a continuance for any reason it believes to be important to its reaching a fair and proper decision. it �. 2 SF\s:G:SF-96Memos:UUlTax 6/12/96-#2 ti 7. The City Council may sustain, modify or reject any or all of the penalty assessment. The City Council shall render its findings and conclusion as soon after the conclusion of the hearing as possible. The City Council may adopt its findings and conclusions by oral motion, or may direct the City Attorney to prepare written findings and conclusions, which shall be presented at the next City Council meeting for ratification. 8. Within ninety (90) days of the final decision, the Tax Administrator or the Utility may apply to the Superior Court for review of the City Council's decision. Gail Hutton - City Attorney c: Michael T. Uberuaga, City Administrator Ray Silver, Assistant City Administrator Lou Banas, Public Affairs Manager, GTE Richard Barnard, Deputy City Administrator Robert Franz, Deputy City Administrator/Administrative Services Arnold Ross, Senior Accountant 3 SF\s:G:SF-96Memos:UtilTax 6/12/96-#2 .A, n CITY OF HUNTINGTON BEACH INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH TO: Connie Brockway, City Clerk FROM: Gail Hutton, City Attorney DATE: May 29, 1996 SUBJECT: GTE Appeal The Council will be considering at its June 17, 1996, meeting the appeal by GTE of the penalty assessment against it for late payment of its utility user tax. This is intended to be an administrative hearing. Consequently, the only testimony to be taken by the Council during the hearing should be from City Staff and the appellant, GTE. The Brown Act requires that any members of the public who wish to speak to this item may do so. However, in accordance with City practice, the time to address this appeal is during the public comments period, the same time which is reserved for members of the public to speak to any other non-public hearing items on the agenda. 51M 96 fa- Gail Hutton City Attorney Ea _ Cn 1\) <t') T Lv C7-) SFIs:G:SF-96 Memos:GTEAppel �''�5 RECEIVED CITY CI."rZ` ® GTE Telephone ;;!TY HUNT�NGT:.:,": Operations May 9 110 33 `i 'a0 May 3, 1996 Connie Brockway, City Clerk City of Huntington Beach 2000 Main Street Huntington Beach, CA 92648 Dear Ms. Brockway: This is in reference to Richard Barnard's letter to me, dated April 9, 1996, denying GTE's appeal for relief from the penalty imposed for late payment of the August, 1995 utility users tax collections. As the next step in this process, I would like to appeal the hearing officer's decision to the City Council. We would like to have the matter heard at the earliest date you are able to agendize it after receipt of this letter. Please notify me of the council meeting date during which you will hear this issue at my new address: P.O. Box 2920, Pomona, CA 91769-2920 or call me at (800)483-8676. Sincerely, �044 14".k Lou Banas Public Affairs Manager cc Milton Jackson - Irving, TX Ken Okel - Thousand Oaks, CA Mayor Sullivan Members of the City Council Michael Uberuaga, City Administrator Richard Barnard, Hearing Officer A part of GTE Corporation CITY 8F HUNTINGT N BEACH 2000 MAIN STREET Office of Public Information CALIFORNIA 92648 (714) 536-5511 April 9. 1996 GTE Telephone Operations 13925 E. Whittier Boulevard Whittier, CA 90605 Attu.: Lou Banas, Public .Fairs Manager Dear Mr. Banas: Please find enclosed,my report and recommendation to the Mayor and City Council regarding GTE's appeal of the financial penalty imposed by the city of Huntington Beach for late payment of utility tax proceeds. I would request you read the report and after doing so,if you wish to appeal my decision to the City Council for further consideration, a letter of appeal should be addressed to: City of Huntington Beach 2000 Main Street Huntington Beach, CA. 92648 Attn.: Connie Brockway,City Clerk The letter should clearly state that you wish to appeal.the decision of the hearing officer and have the appeal scheduled on the City Council agenda. Also,you should copy your appeal letter to both the City Administ;ator and City Council. I realize this is a change from our initial discussion,but after talking with the City Administrator I believe this process gives you more time to review my report and then decide what course of action,�cu want to pursue. Due to the change in process,the matter will not be scheduled for the April 15, 1996,City Council meeting.but rill be held until we receive a letter, from you requesting an appeal before the full City Council. If you have any questions,please call me at(714) 536-5577. Sincerelv. � / 1 Richard Barnard Hearing Officer ~�2 RB djb (/ cc: Michael L'beruaea. Cin-Administrator Honorable Mayor and Cite Council Robert Franz, Depun Cin•Administrator/.Administrative Services Scott Field, Depute City Attorney [:J,Me CITY OF HUNTINGTON BEACH ile" INTER-DEPARTMENT COMMUNICATION HUNTINGTON BEACH TO: n 1 or and ty Council FROM: 'chard arnard,He " g Officer SUBJECT: GTE Appeal of Penalty Assessment for Late Submittal of Utility Tax Proceeds DATE: April 15, 1996 INTRODUCTION In response to a request by Lou Banas, GTE Public Affairs Manager, an appeal hearing was scheduled and held on March 15, 1996, in City Administrative Conference Room#1. The hearing addressed a financial penalty imposed by the city of Huntington Beach against GTE for failing to submit Utility Tax Proceeds in accordance with city Ordinance 2211 adopted August 1, 1977, and published within the Huntington Beach Municipal Code, Chapter 3.36. Representing the city of Huntington Beach at the hearing was Robert Franz,Deputy City Administrator&Director of the Administrative Services Department; Scott Fields, Deputy City Attorney; and Dan Villella, City Treasurer. Representing GTE was Lou Banas, Public Affairs Manager. A City Council Committee comprised of Councilmembers Leipzig,Harman and Garofalo was invited to observe the proceeding. Councilmember Garofalo was the only member of the Council to attend the hearing. ANALYSIS The purpose of the hearing was to address GTE's appeal to actions taken by the city of. Huntington Beach to assess a 15 percent penalty against GTE for failure to submit Utility Tax Receipts within the specified time requirement of Huntington Beach Municipal Code, Chapter 3.36, Utilities Tax, Section 3.36.160. This section reads as follows: "3.36.160 Filing return and payment. Each service supplier shall make a return to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. The full amount of the tax collected shall be included with the return and filed with the Tax Administrator. The Tax Administrator is authorized to require such further information as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance with this chapter. Returns must be postmarked with prepaid postage and properly addressed, or personally delivered to the Tax Administrator on or before the 20th of each month. Returns are due immediately upon cessation of business for any reason." Page 2 April 15, 1996 The evidence submitted by Mr. Franz on behalf of the city clearly shows that GTE failed to-comply with Section 3.36.160. The Check(No. 931500762)was not prepared by GTE until September 22, 1995, two days after the payment was due to the city. The postmark on the envelope in which the check arrived at the city was dated September 25, 1995, clearly five(5)days after the due date as provided for in the City Municipal Code. Lastly, the form letter which accompanied the check was dated September 12, 1995. These facts are not disputed by GTE. Further, it should be kept in mind that both the payment due dates and penalty provisions of the city Ordinance have been in place since October 1970, when the City Council first enacted Ordinance No. 1598. Mr. Franz also pointed out that the city has consistently enforced the penalty provisions of the Utility Tax Code related to late payments by service providers. In addition, Mr. Franz indicated that if the delay was caused by an act of god or some other unforeseen occurrence, then consideration for a waiver would have been considered and most likely recommended by staff. The foundation for GTE's appeal is based upon a plea for the city to put on its "humanistic face" and show some understanding of the circumstances surrounding a major relocation of GTE's Tax Department from Westfield, Indiana to Dallas, Texas during the months of August and September 1995. According to testimony at the hearing, GTE personnel in San Angelo, Texas were unaware that the Tax Department vacated their facilities in Westfield, Indiana. The Tax Department in Westfield, Indiana calculates the amount of utility tax owed to the city. A request to prepare the Utility Tax check is sent to the GTE facilities in San Angelo, Texas where the actual check is prepared. After the check is drawn, it is sent to Westfield, Indiana (where the request originated) at which point GTE staff match-the prepared check against the amount requested (an internal control check). Apparently, GTE staff in San Angelo were not made aware of either the move nor the timing of the move since they sent a mail pouch containing 57 Utility Tax checks for 57 cities, having a total value of$850,000, to GTE's former office address in Westfield, Indiana. The Utility Tax check for the city of Huntington Beach was included in the mail pouch. The mail pouch sat in the vacated office building for approximately 5 days until GTE staff realized what had happened. The mail pouch was retrieved and new checks were issued by GTE and distributed to the 57 cities. It is GTE's testimony that none of the other 56 cites have imposed a late penalty for their internal miscommunication problems. In their testimony, GTE also pointed out that from the time the Utility Tax was implemented by the city, GTE has made over 300 on-time payments and the only blemish on their payment record is the September 1995 payment delay. GTE went on to point out that it is their belief that the current 15 percent penalty is excessive. Their position is that the Utility Tax Ordinance needs to be amended to reflect Page 3 April 15, 1996 a penalty that would be limited to the city's lost interest earnings and 1 1/2 percent late penalty. They site the 1 1/2 percent standard as being consistent with what the Public Utility Commission allows California utility companies to charge their customers for late payments. Documents were submitted and limited discussion did occur which addressed possible changes to the Utility Tax Ordinance. However, possible changes to Chapter 3.36, Utility Tax, will come before the City Council at a later date. While consideration of changes regarding Chapter 3.36 are important, the issue before us is whether there is adequate and reasonable justification for waving the 15 percent penalty assessed against GTE for the late arrival to the City of the Utility Tax Proceeds. This consideration needs to be based upon the facts, circumstances and law that is currently in place, not on new rules or laws still awaiting discussion and consideration. While suggested modifications to the existing law were welcomed during the testimony, they had little influence in the development of my recommendation. CONCLUSION AND RECOMMENDATION It is unfortunate that GTE experienced internal communication problems within their organization which led to the late payment to the city. It appears from the testimony that better planning and coordination of the GTE move could have prevented the misdirection of the mail pouch. It is clear from the testimony that the city has an ordinance that has been in place for some 35 years and has been consistently enforced over time. The question of whether a 15 percent penalty is reasonable or whether it should be calculated in some other fashion goes beyond the scope of the appeal. The focus of the appeal is a request to wave the penalty because of the circumstances. The testimony presents circumstances that were controllable and could have been prevented had steps been taken to insure a smooth transition from the GTE Westfield, Indiana facilities to Dallas, Texas. The Ordinance which governs the Utility Tax is the law of the city. City staff and City Council have an obligation to treat everyone equally and fairly under the law. The city has consistently enforced the provisions of the penalty section of the Utility Tax law. Furthermore, there existed .knowledge and experience within GTE regarding the consequences of submitting Utility Tax Proceeds beyond the 20th of the month. If circumstances existed that went beyond a person's control, or in this case an organization's control, such as "an act of god" or a plane crash (as was used as an example in the testimony), then the basis for an exception to the ordinance could be made and a finding to wave the penalty would be appropriate. Unfortunately, the circumstances surrounding this particular appeal do not give rise for such occurrences and; therefore, the request to wave the penalty should not be granted. Page 4 April 15, 1996 RECOMNMNDATIONS 1. Uphold the actions of the City's Administrative Services Department to enforce city of .Huntington Beach Municipal Code, Chapter 3.36, Section 3.36.180., the assessment of a 15 percent penalty. 2. Provide direction to the City Administrator to review the provisions of Chapter 3.36, Utility Tax and provide the City Council with recommended modifications for future consideration. FINDINGS OF FACT 1. Under the city of Huntington Beach Municipal Code, Chapter 3.36, all Utility Tax proceeds are due and payable to the city by the service supplier(in this case GTE) on or before the 20th of each month for the amount of taxes billed by the service supplier during the preceding month. .2. GTE prepared a form letter September 12, 1995, eight days before the payment was due to the city. This form letter indicated the amount of dollars to be transmitted to the city. 3. The check(No. 931500762)in the amount of$235,050.12 was prepared by GTE on September 22, 1995, two days after the actual due date for payment to the city (SECTION 3.36.160). 4. The envelope in which the payment was received by the city was postmarked September 25, 1995, 5 days after payment was due to the city. 5. The city of Huntington Beach, Accounting Division, imposed a 15 percent penalty against GTE for failure to comply with Section 3.36.1 60 of the city Municipal Code. 6. GTE was fully aware of the requirements of the Huntington Beach Municipal Code regarding late payments and the associated penalty and could have taken steps to prevent the payment from being late. 7. The city of Huntington Beach has consistently enforced the late penalty section of Huntington Beach Municipal Code, Chapter 3.36, Utility Tax. t; 7 LIST OF ATTACHMENTS 1. Huntington Beach Municipal Code Chapter 3.36-Utilities Tax 2. Huntington Beach Ordinance No. 1598-Amending Chapter 17 of the Huntington Beach Ordinance Code by adding Article 176 pertaining to a Utilities Tax 3. Huntington Beach Ordinance No. 2211 -Amending the Huntington Beach Municipal Code Sections 3.36.160 through 3.36.210 pertaining to payment of Utilities Tax 4. Letter to GTE California Incorporated from Robessie Cornner dated September 12, 1995 5. GTE Check No. 931500762 in the amount of$235,050.12 to the order of the City of Huntington Beach dated September 22, 1995 6. Certified Mail envelope from GTE dated September 25, 1995 7. Letter to Tax Department of GTE Telephone Operations from Arnold Ross, Sr. Accountant, City of Huntington Beach dated October 5, 1995 8. Letter to Ray Silver,Assistant City Administrator, City of Huntington Beach from Lou Banas, Public Affairs Manager,GTE dated October 31, 1995 9. Letter to Gail Hutton, City Attorney,City of Huntington Beach from Lou Banas,Public Affairs Manager,GTE dated December 1, 1995 10. Letter to Mayor, Councilmembers,Michael Uberuaga,and Robert Franz,City of Huntington Beach from Lou Banas,Public Affairs Manager,GTE dated January 9, 1996 11. City of Huntington Beach Inter-Department Communication to Michael Uberuaga, City Administrator,from Gail Hutton, City Attorney dated January 16, 1996 12. City of Huntington Beach Inter-Department Communication to Rich Barnard,Hearing Officer, from Robert Franz,Acting Tax Administrator/Finance Director dated March 15, 1996 13. Letter to KBLCOM,Inc. from Dan Villella,Tax Administrator, City of Huntington Beach dated February 28, 1992 14. KBLCOM Incorporated Check No. 186486 in the amount of$11,871.30 to the order of the City of Huntington Beach dated March 11, 1992 15. Letter to C.W. Thompson,City Administrator, City of Huntington Beach from Mike Martin, Manager, Southern California Edison Company dated July 28, 1987 16. Letter to Richard Barnard,Deputy City Administrator, City of Huntington Beach from Joyce Riddell, President,Huntington Beach Chamber of Commerce dated March 15, 1996 4 Huntington Beach Municipal Co 3.36.010-3.36.010(d) Chapter 3.36 UTILITIES TAX (1598-10/70,2211-8n7, 2452-10/80,2470-2/81,2886-12/86, 2933-8/88,3095-4/91,30964/91. 3118-7/91, 3162-9/92) ecti : 3.36.010 Definitions .3.36.020 Telephone tax--Imposed 3.36.030 Telephone tax--Charges 3.36.040 Telephone tax--Intrastate use 3.36.050 Electricity tax 3.36.060 Use of electrical energy 3.36.070 Gas tax--Imposed 3.36.080 Gas tax--Exclusions 3.36.090 Water tax--Imposed 3.36.100 Water tax--Exclusions 3.36.110 Cable Television Users Tax 3.36.120 Exemptions 3.36.130 Collection of tax 3.36.140 Collection--When made 3.36.150 Collection--Commencement 3.36.160 Filing return and payment 3.36.170 Delinquent when 3.36.180 Penalty--Effect 3.36.190 Penalty--Imposed by administrator 3.36.200 Penalty--Combining nature 3.36.210 Actions to collect 3.36.220 Failure to pay--Administrative remedy 3.36.230 Assessment--Administrative remedy 3.36.240 Assessment--Hearing 3.36.250 Records 3.36.260 Refunds 3.36.270 City exempt 3.36.280 Senior citizens--Exemption 3.36.290 Application required 3.36.300 Notification to service supplier 3.36.310 Service supplier--Duty of 3.36.320 Exemption automatic 3.36.330 Tax billing exemptions--Effective when 3.36.340 Violation--Penalty 3.36.010 Definitions. Except where the context otherwise requires, the definitions given in this Section govern the construction of this chapter: (a) "City" means the City of Huntington Beach. (b) "Month" means a calendar month. (c) "Person" means any domestic or foreign corporation, firm, association, syndicate,joint stock company, partnership of any kind,joint venture, club, Massachusetts business or common law trust, society, individual or municipal corporation. (d) "Service supplier" means any entity which receives taxes paid and remits same as imposed by this chapter. 9/92 3.36.010(e)-3.36.060 ntington Beach Municipal Code (e) "Service user" means a person required to pay a tax imposed by this chapter. (f) "Tax Administrator" means the Finance Director of the City. (g) "Telephone corporation, electrical corporation, gas corporation, and water corporation" shall have the same meanings as defined in Sections 234, 218, 222, and 241 respectively, of the Public Utilities Code of the State of California, as said Sections existed on January 1, 1970. "Electrical corporation" and "water corporation" shall be construed to include any organization, municipality or agency engaged in the selling or supplying of electrical power or water to a service user; however, as specified by Public Utilities Code Section 218, does not include a corporation or person employing cogeneration technology or producing power from other than a conventional power source for the generation of electricity. (1598-10n0, 2933-8/88) 3.36.020 Telephone tax--Imposed. There is imposed a tax upon every person in the City, other than a telephone corporation, using international, interstate, and intrastate telephone communication services in the City. The tax imposed by this Section shall be at the rate of five (5%) percent of all charges made for such services. (1598-10n0, 3096-4/91) 3.36.030 Telephone tax--Charges. As used in this Section, the term "charges" shall not include charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated telephone service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "telephone-communication services" include maritime-mobile services as defined in Section 2.1 of Title 47 of the Code of Federal Regulations, or as that section may be amended from time to time. (1598-1on0, 3162-9/92) 3.36.040 Telephone tax--Intrastate use. Nomithstanding the provisions of Section 3.36.020, the tax imposed under this chapter shall not be imposed upon any person for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed by Section 4251 of Title 26 of the United States Code, as such Section existed on January 1, 1970, without regard to Section 3.36.020. (1598-10n0) 3.36 050 Electri'61y tax. There is imposed a tax upon every person in the City using electrical energy in the City. The tax imposed by this Section shall be at the rate of five (5%) percent of the charges made for such energy and shall be paid by the person paying for such energy. "Charges" as used in this Section shall include charges made for: (a) Metered energy; and (b) Minimum charges for service, including customer charges, service charges, demand charges, standby charges and annual and monthly charges. In the case of a service user employing cogeneration technology the tax imposed by this Section shall be based upon the legal rate per kilowatt cogenerated, as charged by the applicable public utility. (1598-10n0, 2933-8/88) 3.36.060 Use of electrical energy. As used in this Section, the term "using electrical energy" shall not be construed to mean the storage of such energy by a person in a battery owned or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the energy was received; provided, however, that the term shall include the receiving of such energy for the purpose of using it in the charging of batteries. The term shall not include electricity used in water pumping by water corporations; nor shall the term include the mere receiving of such energy by an electrical corporation or governmental agency at a point within the City for resale. (1598-1ono) 9/92 Huntington Beach Municipal Codt 3.36.070--3.36.150 3.36.070 Gas tax--Imposed. There is imposed a tax upon every person in the City using gas in the City which is delivered through mains or pipes. The tax imposed by this Section shall be at the rate of five (5%) percent of the charges made for such gas. (1598-10no) 3.36.080 Gas tax—Exclusions. There shall be excluded from the base on which the tax imposed in this Section is computed: (a) Charges made for gas which is to be resold and delivered through mains or pipes; (b) Charges made for gas to be used in the generation of electrical energy by an electrical corporation; (c) Charges made by a gas public utility for gas used and consumed in the conduct of the business of gas public utilities; and (d) Charges for gas used in water pumping by water corporation. (1598-1ono) 3.36.090 Water tax—Imposed. There is imposed a tax upon every person in the City using water in the City which is delivered through mains or pipes. The tax imposed by this Section shall be at the rate of five (5%) percent of the charges made for such water and shall be paid by the person paying for such water. (1598-10/70) 3.36.100 Water tax—Exclusions. There shall be excluded from the base on which the tax imposed in this Section is computed charges made for water which is to be resold and delivered through mains or pipes; and charges made by a municipal water department, public utility or a county or municipal water district for water used and consumed by such department, utility or district in the conduct of the business of such department, utility or district. (1598-10n0) 3.36.110 Cable Television Users Tax. (3118-7/91) (a) There is hereby imposed a tax upon every person in the City using cable television service. The tax imposed by this section shall be at the rate of Five Percent (5%) of the charges made for such service and shall be paid by the person paying for such services. (3118-7/91) (b) The Tax imposed in this section shall be collected from the service user by the person furnishing the cable television service. (3118-7/91) 3.36.120 Exemptions. Nothing in this chapter shall be construed as imposing a tax upon any person if imposition of such tax upon that person would be in violation of the Constitution of the United States or the Constitution of the State of California. (1s98-1ono) 3.36.130 Collection of tax. The amount of tax imposed by this chapter shall be collected from the service user by the service supplier. (1598-1ono,2933-8/88) 3.36.140 Collection--When made. The tax shall be collected insofar as practicable at the same time as and along with the collection of charges made in accordance with the regular billing practice of the service supplier. (1598-10170) 3.36.150 Collection--Commencement. The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to that person which shall begin as of January 1, 1971, or at the beginning of the first regular billing period thereafter which would not include service prior to January 1, 1971. Where a person receives more than one billing, one or more being for different periods than another, the duty to collect shall arise separately for each billing period. (1598-lono) 9/92 i 3.36.160-3.36.230 mtington Beach Municipal Code 3.36.160 Filing_return and payment. Each service supplier shall make a return to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. The full amount of the tax collected shall be included with the return and filed with the Tax Administrator. The Tax Administrator is authorized to require such further information as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance with this chapter. Returns must be postmarked with prepaid postage and properly addressed, or personally delivered to the Tax Administrator on or before the 20th of each month. Returns are due immediately upon cessation of business for any reason. (1598-10/70,2211-8n7) 3.36.170 Delinquent-when. Taxes collected from a service user which are not filed with the Tax Administrator on or before the due dates provided in this chapter are delinquent. (1598-1 ono, 2211-8n7) 3.36.180 Penalty--Effect. Penalties for delinquency in payment of any tax collected or any deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of fifteen (15%) percent of the total tax collected or imposed herein. (1598-10no, 2211-8n7) 3.36._190 Penalty--Imposed by administrator. The Tax Administrator shall have power to impose additional penalties upon persons required to collect taxes under the provisions of this chapter for fraud or negligence in reporting or paying at the rate of fifteen (15%) percent of the amount of the tax collected or as recomputed by the Tax Administrator. (1598-10n0, 2211-8n7) 3.36.200 Penally--Combining_nature. Every penalty imposed under the provisions of this chapter shall become a part of the tax required to be paid. (1598-long. 2211-8n71) 3.36.210 Actions to collect. Any tax required to be paid by a service user under the provisions of this chapter shall be deemed a debt owed by the service user to the City. Any such tax collected from a service user which has not been paid to the Tax Administrator shall be deemed a debt owed to the City by the person required to collect and pay. Any person owing money to the City under the provisions of this chapter shall be liable to an action brought in the name of the City for the recovery of such amount. (1598-10n0,2211-8n7) 3.36.220 Failure to pad---Administrative remedv. Whenever the Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by him from the amounts remitted to a service supplier, or that a service user has failed to pay the amount of the tax for a period of two or more billing periods, or whenever the Tax Administrator deems it in the best interest of the City, he may relieve the service supplier of the obligation to collect taxes due under this chapter from certain named service users for specified billing periods. The Tax Administrator shall notify the service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the service user by handing it to him personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was made by the service supplier; or should the service user have changed his address, to his last known address. If a service user fails to remit the tax to the Tax Administrator within fifteen days from the date of the service of the notice upon him, which shall be the date of mailing if service is not accomplished in person; a penalty of twenty-five (25%) percent of the amount of the tax set forth in the notice shall be imposed but not less than five dollars. The penalty shall become part of the tax herein required to be paid. (1598-10no) 3.36.230 Assessment--Administrative remedy. The Tax Administrator may make an assessment for taxes not paid or remitted by a person required to pay or remit. A notice of the assessment which shall refer briefly to the amount of the taxes and penalties imposed and the time 9/92 Huntington Beach Municipal Cod 3.36.230-3.36.300 and place when such assessment shall be submitted to the City Council for confirmation or modification. The Tax Administrator shall mail a copy of such notice to the person selling the service and to the service user at least ten days prior to the date of the hearing and shall post such notice for at least five continuous days prior to the date of the hearing on the chamber doors of the City Council. Any interested party having any objections may appear and be heard at the hearing provided his objection is filed in writing with the Tax Administrator prior to the time set for the hearing. (1598-1ono) 3.36,240 Assessment—Hearing. At the time fixed for considering the assessment, the City Council shall hear the same together with any objection filed as aforesaid and thereupon may confirm or modify the assessment by motion. (1598-10no) 3.36.250 Records. It shall be the duty of every person required to collect and remit to the City any tax imposed by this chapter to keep and preserve, for a period of three years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and remittance to the Tax Administrator, which records the Tax Administrator shall have the right to inspect at all reasonable times. (1598-10n0) 3.36.260 Refunds. Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this chapter, it may be refunded as provided in this Section. (a) A person required to collect and remit taxes imposed under this chapter, may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Tax Administrator that the service user from whom the tax has been collected did not owe the tax; provided, however,that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the person required to collect and remit. (b) No refund shall be paid under the provisions of this Section unless the claimant established his right thereto by written records showing entitlement thereto. (1598-1ono) 3.36.270 Ci - exempt. The taxes imposed by this chapter shall not apply to the City. (1598-10n0) 3.36.280 Senior citizens--Exemption. The tax imposed by this chapter shall not apply to any individual service user sixty-two years of age or older who uses telephone, electric, water or gas services, in or upon any premises occupied by such individual, provided the combined adjusted gross income as used for federal income tax reporting purposes of all members of the household in which such service user resides does not exceed the "HUD Income Guidelines - Very Low Income Category" currently on file at the City's Office of the Housing Rehabilitation Administrator, for the calendar year prior to the fiscal year (July 1 through June 30) for which the exemption provided by this chapter is applied. (2452-10/80,2886-12/86,3095-4/91) 3.36.290 Application required. Any service user, meeting the requirements for exempt status, may file a verified application with the Director of Finance on a form furnished by him. The Director of Finance, or his designee, shall review all applications and certify those service users as exempt who meet the requirements for the exemption provided by this chapter. (2452-10/80) 3.36.300 Notification to service supplier. The Director of Finance, or his designee shall compile a list of all exempt service users, together with the addresses, account numbers, if any, of such users, and such other information as may be necessary for service suppliers to remove exempt service users from their tax billings. (2452-10/80) 9/92 3.36.310-3.36.340 1 rigton Beach Municipal Code 3.36,310 Service supplier—Duty of. No service supplier shall be required to bill any exempt service user for any tax imposed by this chapter after receipt of notice from the Director of Finance that such service user has met the requirements for exempt status established by the provisions of this chapter. (2452-10/80,2470-2/81) 3.36.320 Exemption automatic. The exemption provided for in this'chapter shall continue and be renewed automatically from year to year except as hereinafter provided. No exempt service user shall fail to notify the Director of Finance within ten (10) days of a change of address, or of any other fact or circumstance which might disqualify him or otherwise affect his exempt status. All exempt service users shall file with the Director of Finance new verified applications in order to receive exempt service at a new address or location. _(2452-10/80) 3.36.330 Tax billing exemptions—Effective when. All service suppliers shall remove exempt service users from their tax billings for the first regular full billings dated on or before October 15, 1980, and thereafter within sixty (60) days after notice from the Director of Finance to do so. (2452-10180) 3.36.340 Violation—Penal!3% It is unlawful and a'misdemeanor for any person knowingly to receive the exemption provided by this chapter when such person has not met the requirements on which such exemption is based, or when such person can no longer meet the requirements on which such exemption is based, and upon conviction thereof shall be subject to a fine of five hundred dollars ($500) or imprisonment in the county jail for a period not to exceed six (6) months, or by both such fine and imprisonment. Each such person shall be guilty of a separate offense for each and every day or portion thereof during which a violation is committed or continued. (2452-10/80) 9/92 I A. I ORDINANCE NO . 1598 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING CHAPTER 17 OF THE HUNTINGTON BEACH ORDINANCE CODE BY ADDING .THERETO ARTICLE 176 PERTAINING TO A UTILITIES TAX. The City Council of the City of Huntington Beach does ordain as follows : SECTION 1 . The Huntington Beach Ordinance Code is hereby amended by adding to Chapter 17 Article 176 , being Section 1760 through 1769 , to read as follows : ARTICLE 176 UTILITIES TAX 1760 . DEFINITIONS . Except where the context otherwise requires , the definitions given in this section govern the con- struction of this article . (a) Person means any domestic or .foreign corporation, firm, association, syndicate, joint stock company , partnership of any kind, joint venture , club, Massachusetts business or common- law trust , society, individual, or municipal corporation. (b) City shall mean the City of Huntington Beach . (c) Telephone Corporation, Electrical Corporation, Gas Corporation, Water Corporation and Cable Television Corporation. shall have the same meanings as defined in Section 234, 218, 222, 241, and 215 . 5, respectively, of the Public Utilities Code of the State of California, as said sections existed on January 1 , 1970 . "Electrical corporation" and "water corporation" shall be construed to include any organization, municipality or agency engaged in the selling or supplying of electrical power or water to a service user. (d) Tax Administrator shall mean the Finance Director of the City of Huntington Beach. (e) Service Supplier shall mean a person required to collect and remit a tax imposed by this article . 1. (f) Service User shall mean a person required to pay a tax imposed by this article . (g) Month shall mean a calendar month . 1761 . TELEPHONE TAX . (a) There is hereby imposed a tax upon every person in the city, other than a telephone corporation, using intrastate telephone communication services in the city. The tax imposed by this section shall be at the rate of five per cent (5%) of all charges made for such services and shall be paid by the person paying for such services . (b ) As used in this section, the term "charges" shall not include charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated telephone service is furnished for a guaranteed amount , the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; nor shall the term "telephone-communication services" include land-mobile services or maritime-mobile services as defined in Section 2 .1 of Title 47 of the Code of Federal Regula- tions , as such section existed on January 1, 1970 . (c) Notwithstanding the provisions of subsection (a) the tax imposed under this section shall not be imposed upon any person for using intrastate telephone communication services to the extent that the amounts paid for such services are exempt from or not subject to the tax imposed by Section 4251 of Title 26 of the United States Code , as such section existed on January 1, 1970, without regard to subsection (b) thereof. 1762 . ELECTRICITY TAX. (a) There is hereby imposed a tax upon every person in the city using electrical energy in the city . The tax imposed by this section shall be at the rate of five per cent (5%) of the charges made for such energy and shall be paid. by the person paying for such energy . "Charges" , as used in this section, shall include charges made for (1) metered energy , and (2) minimum charges for service, including customer charges , service charges , demand charges , standby charges , and annual and monthly charges . (b) As used in this section, the term "using electrical energy" shall not be construed to mean the storage of such energy by a person in a battery owned or possessed by him for use in an automobile or other machinery or device apart from the premises upon which the energy was received, provided however, that the term shall include the receiving of such energy 2 . for the purpose of using it in the charging of batteries . The term shall not include electricity used in water pumping by water corporations ; nor shall the term include the mere receiving of such energy by an electrical corporation or governmental agency at a point within the City of Huntington Beach for resale . 1763 . GAS TAX. (a) There is hereby imposed a tax upon every person in the City of Huntington Beach using gas in the city which is delivered through mains or pipes . The tax imposed by this section . shall be at the rate of five per cent (5%) of the charges made for such gas and shall be paid by the person paying for such gas . (b) There shall be excluded from the base on which the tax imposed in this section is computed (1) charges. made for gas which is to be resold and delivered through mains or pipes ; ( 2) charges made for gas to be used in the generation of electrical energy by an electrical corporation; (3) charges made by a gas public utility for gas used and consumed in the conduct of the business of gas public utilities ; and (4) charges for gas used in water pumping by water corporations . 1764 . WATER TAX. (a) There is hereby imposed a tax upon every person using in the city water which is delivered through mains or pipes . The tax imposed by this section shall be at the rate of five per cent (5%) of the charges made for such water and shall be paid by the person paying for such water. (b) There shall be excluded from the base on which the tax imposed in this section is computed charges made for water which is to be resold and delivered through mains or pipes ; and charges made by a municipal water department , public utility or a county or .municipal water district for water used and consumed by such department , utility or district in the conduct of the business of such department, utility or district . 1765 : CABLE TELEVISION TAX. There is hereby imposed a tax upon every person in the city using cable television service . The tax imposed by this section shall be at the rate of five per cent (5%) of the charges made for such service and shall be paid by the person paying for such service . 1766 . EXEMPTIONS . Nothing in this article shall be construed as imposing a tax upon any person if imposition of such tax upon that person would be in violation of the Constitution of the United States or the Constitution of the State of California. 3 . -- 1767 . COLLECTION OF TAX. (a) Every person receiving payment of charges from a service user shall collect the amount of tax imposed by this article from the service user . (b ) The tax shall be collected insofar as practicable at the same time as and along with the collection of -charges made in accordance with the regular billing practice of the service supplier . (c) The duty to collect tax from a service user shall commence with the beginning of the first regular billing period applicable to that person which shall begin as of January 1 , 1971, or at the beginning of the first regular billing period thereafter which would not include service prior to January 1 , 1971 . Where a person receives more than one (1) billing, one or more being for different periods than another, the duty to collect shall arise separately for each billing period . 1767 . 1. REPORTING AND REMITTING. Each service supplier shall, on or before the 20th of each month, make a return to the Tax Administrator, on forms provided by him, stating the amount of taxes billed by the service supplier during the preceding month. At the time the return is filed, the full amount of the tax collected shall be remitted to the Tax Administrator. The Tax Administrator is authorized to require such further infor- mation as he deems necessary to determine properly if the tax here imposed is being levied and collected in accordance with this article . Returns and remittances are due immediately upon cessation of business for any reason. 1767 . 2 . PENALTY . (a) Taxes collected from a service user which are not remitted to the Tax Administrator on or before the due dates provided in this article are delinquent . (b ) Penalties for delinquency in remittance of any tax collected or any deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of fifteen per cent (15%) of the total tax collected or imposed herein. (c ) The Tax Administrator shall have power to impose additional penalties upon persons required to collect and remit taxes under the provisions of this article for fraud or negligence in reporting or remitting at the rate of fifteen per cent (15%) of the amount of the tax collected or as recomputed by the Tax Administrator . 4 . (d) Every penalty imposed under the provisions of this section shall become a part of the tax required to be remitted. . 1767 . 3 . ACTIONS TO COLLECT . Any tax required to be paid by a service user under the provisions of this article shall be deemed a debt owed by the service user to the City. Any such tax collected from a service user which has not been remitted to the Tax Admini- strator shall be deemed a debt owed to the city by the person re- quired to collect and remit . Any person owing money to the city under the provisions of this article shall be liable to an action brought in the name of the city for the recovery of such amount . 1767 . 4 . FAILURE TO PAY TAX. ADMINISTRATIVE REMEDY . Whenever the Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by him from the amounts remitted to a service supplier, or that a service user has failed to pay the amount of the tax for a period of two ( 2) or more billing periods , or whenever the Tax Administra- tor deems it in the best interest of the city, he may relieve the service supplier of the obligation to collect taxes due under this article from certain named service users for specified billing periods . The Tax Administrator shall notify the service user that he has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes . The notice shall be served on the service user by' handing it to. him personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to the service user at the address to which billing was made by the service supplier; or should the service user have changed his address , to his last known address . If. a service user fails to remit the tax to the Tax Administrator within fifteen (15) days from the date of the service of the notice upon him, . which shall be the date of mailing if service is not accomplished in person, a penalty of twenty-five per cent (25%) of the amount of the tax set forth in the notice shall be- imposed, but not less than Five Dollars ( $5 . 00) . The penalty shall become part of the tax herein required to be paid . 1767 . 5 • ASSESSMENT. ADMINISTRATIVE REMEDY . (a) The Tax Administrator may make an assessment for taxes not paid or remitted by a person required to pay or remit . A notice of the assessment which shall refer briefly to the amount of the taxes and penalties imposed and the time and place when such assessment shall be submitted to the City Council for confirmation or modification. The Tax Administrator shall mail a copy of such notice to the person selling the service and to the service user at least ten (10) days- prior to 5• the date of the hearing and shall post such notice for at least five (5) continuous days prior to the date of the hearing on the chamber door of the City Council . Any interested party having any objections may appear and be heard at the hearing provided his objection is filed in writing with the Tax Administrator prior to the time set for the hearing. At the time fixed for considering said assessment , the City Council shall hear the same together with any objection filed as aforesaid and thereupon may confirm or modify said assessment by motion. 1767 . 6 . RECORDS . It shall be the duty of every person required to collect and remit to the city any tax imposed by this article to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and remittance to the Tax Administrator, which records the Tax Administrator shall have the right to inspect at all reasonable times . 1767 .7 . REFUNDS. (a) Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this article, it may be refunded as provided in this section. (b) A person required to collect and remit taxes imposed under this article may claim a refund or take as credit against taxes collected and remitted the amount overpaid, paid more than once or erroneously or illegally collected or received when it is established in a manner prescribed by the Tax Administra- tor that the service user from whom the tax has been collected did not owe the tax; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the person required to collect and remit . (c ) No refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records showing entitlement thereto . 1768 . The taxes imposed by this article shall not apply to the City of Huntington Beach. 1769 . SEVERABILITY . If any section, subsection , subdivi- sion, paragraph, sentence, clause or phrase of this article or any part thereof is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portions of this article or any part thereof . The City Council hereby 6 . declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections , subsec- tions , subdivisions , paragraphs, sentences , clauses or phrases be declared unconstitutional . SECTION 2 . This ordinance shall take effect thirty days after its adoption. The City Clerk shall certify to the passage of this ordinance and cause same to be published within fifteen days after adoption in the Huntington Beach News , a weekly newspaper of general circulation, printed and published in Hunting- ton Beach, California . PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held on the 8th day of _ September 1970 . A4�Y Mayor ATTEST: City erk APPROVED AS TO FORM: City Attorney 7 . Ord. No. 15' STATE OF CALIFORNIA ) - COUNTY OF ORANGE ) ss : CITY OF HUNTINGTON BEACH ) ` I , PAUL C. JONES, the duly elected, qualified, -and acting .City .C.lerk of the City of Huntington Beach and ex- officio Clerk of the City Council of the said City, do hereby certify that the whole number of members of the City Council of the City of Huntington Beach is seven; that the foregoing ordinance was read to said City Council at a regular ad.iourned meeting thereof held on the 18th day of August , 19 70 , and was again read to said City Council at a regular meeting thereof held on the 8th day of September, .19 70 , and was passed and adapted by the affirmative vote of more than a majority of all the members of said City Council. AYES: Councilmen: Green, Gibbs , Matney, Shipley NOES: Councilmen: Bartlett , McCracken ABSENT: Councilmen: Coen �e City Clerk and -officio Clerk of .the City Council of the City of Huntington Beach; California I, PAUL C. JONES, CITY CLERK of the City of Huntington Beach and ex•officio Clerk of the City Council,.do hereby certify that this ordinance has 4aordance bl' th Huntington Beach News on . ..,l6?:............ In with the City Charter of said City. _.... PAUL Ca..aToRES...... . ........ Clty Clerk ... Deputy City Clerk ORDINANCE NO 2211 AN ORDINANCE OF THE CITY OF HUNTINGTON BEACH AMENDING THE HUNTINGTON BEACH MUNICIPAL CODE BY AMENDING SECTIONS 3. 36 .160 THROUGH 3. 36 .210 PERTAINING TO THE PAYMENT OF UTILITIES TAX The City Council of the City of Huntington Beach does ordain as follows : SECTION 1. The Huntington Beach Municipal Code is hereby amended by amending Sections 3. 36.160 through 3. 36 . 210 - to read as follows : 3. 36. 160 Filing return and payment. Each service supplier shall make a return to the tax administrator, on forms provided by him, stating the amount of taxes billed by the service- sup- plier during the preceding month. The full amount of the tax collected shall be included with the return and filed with the tax administrator. The tax administrator is authorized to require such further information as he deems necessary to determine properly if the tax here imposed is being levied and collected in --' accordance with this chapter. Returns must be postmarked with prepaid postage and properly addressed, _ or personally delivered to the tax administrator on or before the 20th of each month. Returns are due immediately upon cessation of business for any reason. 3. 36.170 Delinquent when. Taxes collected from a service user which are not filed with the tax administrator on or before the due dates provided in this chapter are delinquent . 3. 36. 180 Penalty--Effect . Penalties for delinquency in payment of any tax collected or any „deficiency determination, shall attach and be paid by the person required to collect and remit at the rate of 15 percent of the total tax collected or imposed herein. 3. 36. 190 Penalty--Imposed by administrator. The tax ad- ministrator shall have power to impose additional penalties upon persons required to collect taxes under the provisions of this chapter for fraud or negligence in reporting or paying at the rate of 15 percent of the amount of the tax collected or as recomputed by the tax administrator. JG:ahb 1. i r -- 3. 36. 200 Penalty--Combining nature. Every penalty im- posed under the provisions of this chapter shall become a part of the tax required to be paid. 3. 36. 210 Actions .to collect . Any tax required to be paid by a service user under the provisions of this chapter shall be deemed a debt owed by the service user to the city. Any such tax collected from a service user which has not been paid to the tax' administrator shall be deemed a debt owed to the city by the . person required to collect and pay.. Any person owing money to the city under the provisions of this chapter shall be liable to an action brought in the name of the city for the recovery of such amount . SECTION 2. This ordinance shall take effect thirty days after its adoption. The City Clerk shall certify to the passage . of this ordinance and cause same to be published within fifteen days after adoption in the Huntington Beach News , a weekly news- paper of general circulation, printed and published in Huntington Beach, California. PASSED AND ADOPTED by the City Council of the City of Huntington Beach at a regular meeting thereof held-. on the 1st day of August , 1977. 1 ATTEST:Alicia M. Wentworth ;lam City Clerk Mayor ' ATTEST_ APPROVED AS TO FORM: F: I By Deputy City Clerk. City At rney INITIATED AND APPROVED: X001 City Administrator i I i -- 2. "`rd. No. 2211 STATE OF CALIFORNIA ) COUNTY OF ORANGE ) ss: CITY OF HUNTINGTON BEACH ) j I, ALICIA M. WENTWORTH, the duly elected, qualified City, . .-Clerk of the City of Huntington Beach and ex-officio Clerk of the 'City Council of the said City, do hereby certify that the whole number of members of the City Council of the City. of Huntington Beach is seven that the foregoing ordinance was .read to said City Council at a regular meeting thereof held on the 18th day of July 19 77 and was again read to said City Council at a regular meeting thereof held on the 1st day of . August 19 77 and . was passed and adopted by the affirmative vote of more than a majority of all the members of said City Council. AYES: Councilmen: Bartlett, Wieder, Coen, Gibbs, Siebert, Shenkman, Pattinson NOES: Councilmen: None ABSENT: Councilmen: None Alicia M. Wentworth City Clerk and ex-officio Clerk of the City Council of the City of Huntington Beach, California By lxmwl Deputy City Clerk I, Alicia M. Wentworth CITY CLERK of the City of Huntington Beach and ex-officio Clerk of the City Council, do hereby certify that this ordinar:ce has been pu ishsd in the�H�untirgtcn Beach News on ••--•••... t -51hr.....T 19.-1....1.. In accordance h i o City Cl�3r; of said City. ALICIA M. �YENTWORTN —_� -------- ---------••--••-•--•.... City Clerk •-- ............ ...... Deput ity Clerk GTE CALIFORNIA INCORPORATED P 0 BOX 407 19845 NORTH US 31 WESTFIELD, IN 46074 12-Sep-95 Dear Sir: Enclosed is our check for 235, 050.12 for Utility Users Tax for HUNTINGTON BEACH This reflects taxable billing to our subscribers for the month ending August, 1995 . Sincerely, Robessie Cornner Associate Accountant Sales & Use Tax Department (214) 718- 8051 enclosure (s) 1 • FOR ANY QUESTIONS, PLEASE CALL 915-944-6143 233.050.12 1 931500762 ® GTE TELEPHONE OPERATIONS WEST AREA-GTE CALIFORNIA 2701 SOUTH JOHNSON POST OFFICE BOX NUMBER 27240 SAN ANGELO•TEXAS 76902 7240 VENDOR NO. GTE TELEPHONE OPERATIONS CHECK NO. HUNBEA711 ®' WEST AREA-GTE CALIFORNIA 931500762 500762 of v1x^s /IMT IMTERfTATE AMR'": - L J" J PAY EXACTLY *******235, 050j DOLLARS<-AND 12 CENTS= ** VOID AFTER :DATE 0,� '22'/9 5 W DAYS ****235, 050 . 12 TO THE •CITY OF 'HUNTINGTON BEACH t.r M \ \ ' r 1 ORDER OF ATT•N CITY TREASURER'' ' x / ,, �� / r i PO BOX 711, . , v`' .HUNTINGTON BEACH, CA.. i UAW- pip 931SO0 ?62ill 1: 11909631,1: 11'430960299Sao I I I I L J __ __J __ __J L J -. 1 CERTIFIED Tax Depariri1er11 `` f V S.POSTA^:: GTE Telephone Operations Z 26 5 687 1,08 P.O.Box 15Z?05 ® crP In".TX 75015-?20B t[ti// t�!4 ? 4 h �� {Fa21eyz� . ..