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CA Measure E - TUT Ballot MeasureDepartment: City .Attorney Agenda a+ a a rng Date: August 5 2013 C7 1 Prepared by: Robert Epstein, City Attorney City Manager Approva 1) RESCINDING RESOLUTION NO. 13572; D ORDERING2) O THE ELECTORS OF THI CITY OF SAN RAFAEL, A BALLOT MEASURE PROPOSIN( AN l CODE OF THE CITY OF 1 RAFAEL TO EXTEND ANI INCREASE THE EXISTING TRANSACTIONS AND USE TA) AT MUNICIPAL TUESDAY,, AS CALLED B) RESOLUTION O ORDERING PUBLICATION 3) REQUESTING CONSOLIDATION WITH ANY i ELECTION CONDUCTED ON THE SAME DATE; AND 4) REQUESTING ELECTION SERVICES BY THE REGISTRAR 01 VOTERS; AND 5) REQUESTING THE CITY ATTORNEY TO PREPARE A IMPARTIAL MEASURE. PART 2: CITY ATTORNEY'S IMPARTIAL ANALYSIS OF TRANSACTIONS AND USE TAX BALLOT MEASURE PART I* Adopt Resolution as presented. PART 2: Review and accept the City Attorney's Impartial Analysis. Council Meetings Y BACKGROUND: At the Council meeting on July 15, the City Council introduced Ordinance NO. 1913 and adopted Resolution No. 13572,, placing on the November 5. 2013 ballot a measure to extend and increase by one-quarter of one percent (0.25%) the existing transactions and use tax adopted in 2005 by Measure S. Resolution No. 13572 also contained the specific ballot question to appear on the ballot. Since the July 15 meetin& the City Attorney has revised the ballot question slightly, and recommends that the revised ballot question be adopted. (See attached correspondence.) ANALYSIS: The Consent Calendar for this meeting contains an action item for final adoption of Ordinance No. 1913. Adoption of the attached Resolution would rescind Resolution No. 13572 adopted on July 15, and replace it with a new Resolution that revises the language for the ballot question as recommended by the City Attorney. The Resolution also directs the City Attorney to prepare an impartial analysis of the measure to be filed with the City Clerk and printed in the voter information pamphlet. The impartial analysis is not meant to advocate a position on the measure, but rather must show the effect of the measure on the existing law and the operation of the measure. The City Attorney has prepared the attached Impartial Analysis for the tax measure. Council acceptance of the Impartial Analysis is required prior to its submission to the County Elections Office. FISCAL IMPACT: There will be no direct fiscal impact as a result of the recommended actions. OPTIONS, 1) Adopt the Resolution and accept the Impartial Analysis as presented 2) Request changes to the Resolution and/or Impartial Analysis. 3) Reject the Resolution and leave Resolution No. 13572 in effect. PART 1: Adopt attached Resolution. PART 2: Accept the City Attorney's Impartial Analysis ATTACHMENTS. (1) Resolution (2) Letters between City Attorney and Randy Warren (3) City Attorney's Impartial Analysis RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN RAFAEL. 1) RESCINDING RESOLUTION 2) ORDERING i SUBMISSION ELECTORS OF 1 i/ 1 1 BALLOT 1i PROPOSING i AMENDMENT CHAPTER i3,19 OF THE MUNICIPAL THE CITY OF SAN RAFAEL TO EXTEND AND INCREASE EXISTING TRANSACTIONS 11O 1 D USE 1 AT THE GENERAL MUNICIPAL / BE TUESDAY, NOVEMBER 2013.1 1 CALLED BY RESOLUTION AND ORDERING PUBLICATIONTHE THEREOF; AND 3) REQUESTING CONSOLIDATION ANY OTHER ELECTION CONDUCTED ON THE SAME DATE; AND 4 REQUESTING Q ELECTION SERVICES BY THE REGISTRAR 1 i VOTERS; AND 5) REQUESTING Q ATTORNEY i O PREPARE i it i 1 IMPARTIAL 1 i OF THE MEASURE, WHEREAS, the City Council of the City of San Rafael, by adoption of Resolution No. 13529, ! called ! general municipal election Tuesday, WHEREAS, in 2005, the San Rafael Community voted m favor of Measure S, ar Chapter Rafael Municipal establishing a local transactions tax of one-half of one percent. WHEREAS, the City Council has determined to submit to the voters at the general municipal election on November 5, 2013, . ballot measure+► an ordinance amending Municipal Code of the City of San Rafael, to extend and increase the existing transactions and use tax within the City by one-quarter of one percent, raising 75 cents on each $100 transactions, so as togeneral wr H Section 1: City Council Resolution No. 13572 is hereby rescinded. Section 2: The City Council, pursuant to its right and authority and pursuant to the laws of the State of California and the Charter of the City of San Rafael, does hereby order submitted to the electors of the City of San Rafael at the general municipal election to be held Tuesday, Novemberthe following measure, to wit: "Shall the City of San Rafael extend the existing one-half percent local sales tax and increase the rate by one-quarter percent to provide YES funding that cannot be taken by the State, and can be used to preserve essential city services for a period of 20 years, including: maintaining NO rapid emergency police/fire response times, maintaining adequate numbers of on -duty firefighters/paramedics/police, ensuring earthquake safe police/fire stations, maintaining community centers and repairing city streets?" Section 3: A copy of the ordinance establishing the transaction and use tax of three- fourths of one percent, which ordinance is to be submitted to the electors of the City of San Rafael at the general municipal election to be held on Tuesday November 5, 2013, is attached M Section 4-, The Board of Supervisors of the County of Marin, is hereby requested to: A. Consolidate said election with any other election conducted on the same day; and B. Authorize and direct the County Clerk, at City expense,, to provide the following • Provide Voter Indexes • Provide Drayage and Rental of Polling Places • Provide Printing of Sample and Official Ballots • Provide Printing of Measures and Arguments N • Appoint and Notify Election Officers • Mail Sample Ballots and Polling Place Notification • Provide Precinct Supplies • Provide Training of Precinct Workers • Provide Processing of Vote By Mail Ballots • Provide Canvass of Votes Cast • Provide such other services as are necessary to conduct the General Municipal Election Section 5: The ballots to be used at the election shall be in both form and content as Section 6: The polls for said election shall be opened at seven o'clock (7:00 a.m.) of the day of said election and shall remain open continuously from said time until eight o'clock (8:00 p.m.) of the same day when said polls shall be closed, except as provided in Section 14401 Section 7: In all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections in said City. Section 8: Notice of the time and place of holding the election is hereby given and the City Clerk is hereby authorized, instructed and directed to give such further or additional notice of said election in time, form, and manner as required�$ Section 9: Pursuant to Elections Code section 9285, the City Council of the Cit)= San Rafael hereby directs the City Clerk to accept rebuttal arguments submitted to the Clerk Section 100- Pursuant to California Elections Code Section 9280, the City Council of the City of San Rafael hereby directs the City Attorney to prepare an impartial analysis of said I Section 11: This Resolution of the City Council submitting to the electors of the City of San Rafael this ballot measure establishing a transactions and use tax at the general municipal election to be held Tuesday, November 5, 2013, shall be effective upon adoption by the Council. Section 12: The City Clerk is directed to submit a certified copy of this Resolution to the Board of Supervisors of the County of Marin. 1, ESTHER C. BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing Resolution was duly and regularly introduced and adopted at a regular meeting of the Council of said City on Monday, the 5th day of August, 2013 by the following vote, to wit: AYES: COUNCILMEMBERS: Colin, Connolly & Vice -Mayor Heller EMIM3im 4'5�S7� ESTHER C. BEIRNE, City Clerk 0 ORDINANCE NO. 1913 AN ORDINANCE OF THE CITY OF SAN RAFAEL AMENDING CHAPTER 3.19 OF THE SAN RAFAEL MUNICIPAL CODE EXTENDING AND INCREASING THE EXISTING TRANSACTIONS AND USE TAX ADMINISTERED BY THE STATE BOARD OF EQUALIZATION, SUBJECT TO APPROVAL OF A MAJORITY OF THE ELECTORS VOTING ON THE TAX MEASURE AT THE GENERAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 5,2013. The City Council of the City of San Rafael hereby makes the following findings in connection with the adoption of this Ordinance: WHEREAS, In 2005, the San Rafael community voted in favor of Measure S, adding Chapter 3.19 to the San Rafael Municipal Code establishing a local transactions and use tax (i.e. sales tax) to protect vital city services from budget cuts; and WHEREAS, the City has used these funds for a number of purposes, including maintaininrapid •emergency response times, adequate numbers of on -duty police officers and g firefighters and many additional core City services; and WHEREAS, this one-half of one percent (0.5%) increase in our local sales tax accounts for approximately 12% of the City's General Fund budget, has been shielded from State appropriation, and has stayed in San Rafael to benefit local residents; and WHEREAS, given the fiscal challenges that all cities have faced in recent years, Measure S proved essential for protecting vital city services in San Rafael from budget cuts; and WHEREAS, since the 2008 Great Recession, the City has been critically evaluating its priorities and strategies for providing quality community services with new fiscal constraints. To increase efficiency and work on a leaner budget, the City has established new partnerships with other agencies to increase shared services, streamlined regulations to promote a positive business climate,, cut over 60 staff positions, temporarily reduced compensation for most staff, reformed pensions, and scaled back employee retiree health benefits. The City will continue to analyze which services are a priority, and the most cost-effective method of delivering these services; and WHEREAS, Measure S funding is scheduled to expire.., and if the City were to address this loss of local ly-controlled funding with expenditure reductions alone it would have to consider cuts to police patrois, firefighters and emergency response.., street and sidewalk repair,, parks and community centers, and curtail access to libraries. Such cuts would be a last resort-, however, police and fire account for more than half of San Rafael's budget, and in order to address a deficit of the magnitude that would occur if Measure S funding were to expire, the Citv inevitably would be required to consider cuts to public safety, and W HEREAS, even with the current sales tax in effect, there is not sufficient funding available for several key infrastructure needs such as seismic improvements fbr emergency dispatch as well as fire stations, information technology needs for improved service delivery, contributions to the City's emergency reserves, and other infrastructure needs identified as 44unfunded" in the City's Five Year Capital Improvement Program; and WHEREAS, after study of the financial issues facing the City, and following numerous discussions with residents, neighborhood associations and business and service groups, and after extensive - efforts to gauge the public's opinions and priorities through several surveys of San Rafael residents, the City Council has determined that the most prudent, reasonable and financially responsible action it can take to preserve the fiscal stability of San Rafael and to protect vital services and facilities in our City,, is to place before the voters a ballot measure to extend the existing one-half of one percent (0.5%) transactions and use tax for a period of 20 years and 'increase the rate by one-quarter of one percent (0.25%), and to recommend its adoption to the voters; and WHEREAS, if the increased and extended transactions and use tax is approved by the voters at the municipal election on November 5, 2013, the existing tax would remain in effect until the operative date of the extended and increased tax. NOW THEREFORE, the City Council of the City of San Rafael does hereby Ordain as follows: Chapter 3.19 of the San Rafael Municipal Code 'is hereby amended to read as follows: Chapter 3.19 3.19.010 -- Short Title. This Chapter shall be known as the City of San Rafael Transactions and Use Tax Ordinance. This Chapter shall be applicable only in the incorporated territory of the City. UFM A's 1* used in this Chapter, "City" means the City of San Rafael and ("tax"' means the transactions and use tax imposed under the provisions of this Chapter. N 3.19.020 -- Operative Date, "Operative Date" means the first day that the tax is imposed and collected. The Operative Date shall be April 1, 2014, unless a later Operative Date becomes effective under the provisions of Section 3.19.040. 3.19-030 -- Purpose, This Chapter is adopted to achieve the following, among other purposes, and the City Council directs that the provisions hereof be interpreted in order to accomplish those purposes: impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance which shall be operative only if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose. # 0 B. To adopt a retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code. C. To adopt a retail transactions and use tax ordinance that imposes a tax and *des a measure therefore that may be administered and collected by the State Board of provi Equalization in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the California State Sales and Use Taxes. D. To adopt a retail transactions and use tax ordinance that may be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes,, and at the same time, minimize the burden of record keeping upon persons subject 6 to taxation under the provisions of this ordinance. 3.19.040 -- Contract With State. Prior to the Operative Date,, the City shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of this transactions and use tax ordinance; provided however, that if the City shall not have contracted with the State Board of Equalization prior to the Operative Date, it shall nevertheless so contract and in such a case the Operative Date shall be the first day of the first calendar quarter following the execution of such a contract. 3.19.050 -- Imposition of Transactions Tax- Transactions Tax Rate. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of three-quarters of one percent (0.75%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the Operative Date of this ordinance. 3.19.060 -- Place of Transaction. For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization. 3.19.070 -- Imposition of Use Tax; Use Tax Rate. An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the Operative Date of this ordinance for storage, use or other consumption in said territory at the rate of three-quarters of one percent (0.75%) of the sales price of the property. The sales price shall include delivery chaes when such charges are subject to state sales or use tax regardless of the place rgto which delivery is made. 3.19.080 -- Proceeds of Tax. The proceeds of the transactions and use tax imposed by this Chapter shall be deposited into the General Fund of the City to be used for all general government purposes which may include, but are not limited to, fire and police protection, street and sidewalk repair and maintenance, library services, park repair and maintenance, recreational programs, building and code enforcement services, planning and zoning services, capital equipment requirements, repair and replacement of City facilities, capital improvement projects, operational expenses, fiduciary responsibilities, administration indebtedness and general obligations of the City. The tax imposed by this Chapter is intended to be and is, a general tax, the proceeds of which are to be spent as the City Council shall in its discretion, from time to time, determine. 3.19.090 -- Adoption of Provisions of State Law. Except as otherwise provided 'in this Chapter and except insofar as they are inconsistent w ith e thprovisions of Part 1.6 of Division 2 of the evenue and Taxation Code, all of the I I I I I I RI provisions of Part I (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this Chapter as though fully set forth herein. 3.19.100 -- Limitations on Adoption of State Law and Collection of Use Taxes. In adopting the provisions of Part I of Division 2 of the Revenue and Taxation Codel 21 A. Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefore. However, the substitution shall not be made: 1. When the word "State" is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Board of Equalization, State Treasury, or the Constitution of the State of California. 2. When the result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the State Board of Equalization, in performing the functions incident to the administration or operation of this Chapter. 3. In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to: a. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part I of Division 2 of the Revenue and Taxation Code, or b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code. 4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737,6797 or 6828 of the Revenue and Taxation Code. B. The word "City" shall be substituted for the word "State" in the phrase "retailer engaged in business in this State" in Section 6203 and in the definition of that phrase in Section 6203. 3.19.110 -- Permit Not Required. If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit shall not be required by this ordinance. .1 9.120 -- Exemptions and Exclusions, A. There shall be excluded from the calculation of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city,, city and county, or county pursuant to the Bradley -Burns Uniform Local Sales and Use Tax Law or the amount of any state- administered transactions or use tax. .There are exempted from the computation of the amount of transactions tax the gross receipts from. - 1. Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government. 2. Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the City shall be satisfied: a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter I (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented ve ssels registered under Division 3.5 (commencing with Section 984 0) of the Vehicle Code by registration to an out -of -City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, 'in fact, his or her principal place of r *dence;and esi b. With respect to commercial vehicles, by registration to a place of business out -of -City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address. 3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the Operative Date of this ordinance. 4. A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the Operative Date of this ordinance. 5. For the purposes of subparagraphs (3) and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised. C. There are exempted from the use tax 'imposed by this Chapter, the storage, use or other consumption in this City of tangible personal property: I . The gross receipts from the sale of which have been subject to a transactions tax under any state --administered transactions and use tax ordinance. 2. Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State., the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California. 3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the Operative Date of this Chapter. I the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time fbr which,the lessee is obligated to lease the property fbr an amount fixed by a lease prior to the Operative Date of this Chapter. 5. For the purposes of subparagraphs (3) and (4) of this section, storage, use, 0 or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right 'is exercised. 6. Except as provided in subparagraph (7), a retailer engaged in business in the City shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer 'in the City or through any representative, agent, canvasser,, solicitor, subsidiary, or person in the City under the authority of the retailer. 7. "A retailer engaged in business in the City" shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter I (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City. D. Any person subject to use tax under this ordinance may credit against that tax any 0 transactions tax or reimbursement for transactions tax paid to adistrict imposing, or retailer liIble for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax. 3.19.130 -- Amendments. All amendments subsequent to the effective date of this Chapter to Part I of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not 'inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this Chapter, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this Chapter. 3.19.140 -- Enjoining Collection Forbidden. No injunction or writ of mandate or other legal or equitable process shall issue in any suit., action or proceeding in any court against the State or the Citv, or against any officer of the State or the City, to prevent or enjoin the collection under this Chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected. W 3.19.142 -- Annual Audit. The proceeds resulting from this Transactions and Use Tax shall be deposited into the City's General Fund and become subject to the same independent annual audit requirements as other general fund revenue. 3.19.144 -- Independent Citizen Oversight. A City Transactions and Use Tax Committee, to be established by the City Council by Resolution, shall review the collection and expenditure of tax revenues collected under the authority of this Chapter. The Committee shall consist of at least five members, who shall be residents of the City. The terms of the Committee members and their specific duties shall be established by resolution of the City Council. 3.19.146 -- All Funds Staying Local. All tax revenues collected under the authority of this Chapter shall be expended solely on local municipal services, and shall not be used for any other purposes. 3.19.148 -- Effective Date. This ordinance levying the tax described herein shall be effective ten days after the date on which the City Council has declared that the voters of the City of San Rafael have approved said ordinance by a vote of no less than a majority of the votes cast by the electors voting on the tax measure set forth in this ordinance at the general municipal election to be held on Tuesday, November 5, 2013, and the tax established herein shall become operative on April 1, 2014 or on such later date as provided in Section 3.19.040. 3.19.150 -- Termination Date. 0 The authority to levy the tax imposed by this Chapter shall expire on March 31, 2034, or at the end of twenty years from the Operative Date if the Operative Date is later than April 1, 2014 as provided in Section 3.19.040. If any section, subsection, sentence, clause or phrase of this Ordinance or the application thereof to any person or circumstance is for any reason held to be invalid, such decision shall not affect the validity of the remaining portions of this Ordinance. This ordinance shall be published once in full before its final passage, in a newspaper of general circulationpublished and circulated in the City of 4an RafaylnrN RMSitLIPS,, Mayor 0 ATTEST: ESTHER BEIRNE, City Clerk The foregoing Ordinance No. 1913 was read and introduced at a Regular Meeting of the City A Council of the City of San Rafael, held on the 15 day of July, 2013 and ordered passed to print by the following vote, to wit: AYES: Councilmembers: Colin, Connolly, Heller, McCullough & Mayor Phillips and will come up for adoption as an Ordinance of the City of San Rafael at a Regular Meeting of the Council to be held on the 5th day of August, 2013, subject to voter approval at the General Municipal Election to be held on Tuesday, November 5, 2013. I . ESTHER BEIRNE, City Clerk I Warren Law Group PC sv r 4040 CIVI is Center Driv e. Suite '9200 Post Office Box 62185, San Rafael CA 94903 ) (415) 479-42.00, Fax (41 _15) 444-0766 Attorneys.- Rand- Warren -loan Daniels Rob Epstein City Attorney City of San Rafael Post Office Box 151560 San Rafael .949 1560 Re: Proposed ballot measure Dear Mr. Epstein,,, Research Analyst-, Lawrence Hellmann At last week` s city council meeting I spoke in opposition to the proposed 20 -year sales tax. As you may recall, my concerns largely focused on the ballot question. I indicated that case law was contrary to this style of language. To bring it into conformity with the law, it would likely face a writ of mandate. Mayor Phillips asked your thoughts and you responded that the language was appropriate. I recognize, however, that you did not have time to fully research the question right then and there. What you cited as seminal cases do not seem to fit. I would suggest the seminal case on point is -presently McDonough v. Superior Court (2,_0 12) 204 Cal. App. 4th 1169, which has no negative citations to date® T,I 'i . IcDonough was about a San Jose ballot measure that began, '"To protect essential services, including neighborhood police patrols, fire stations, libraries, community centers, streets and parks'" This is quite similar to our San Rafael ballot measure that proposes to begin "To prevent cuts and preserve city services..." 1W The Court of Appeal wrote: In other words. it promotes Measure B b -Nr iin IN,�-in )- t�hat�if�v,-c)t�ers�do�iiot�en�dor�se,�en�sio�n reform bN,- assincF t�he�measure. 1�ose�fir�ean,���otection and be derived.of po-pular community resources. (Cf. Citizens for Responsible Government v. City of Albany (1997) 56 Cal.App.4th 1199, 1225-1228 [66 Cal. Rptr. 2d 1021 [partisan language in ballot question on proposed measure was a "sufficiently egregious deviation from the prescribed form to fall outside the limits of substantial compliance"].) [11 76] Real parties in interest maintain, however, that preservation of services is indeed the purpose behind Measure B,, and thus the statement of purpose in the ballot question is accurate and not misleading. They state that before passing resolution No. 76158 the city council received reports indicating that the "'rising costs of employee pension benefits" contribute to the City's budget deficits and a corresponding reduction in "key City services." i nese points, however, property belong in the ballot arguments in favor of the measure not in the ballot question. which must be cast in neutral, unbiased language. Even if the -preservation of City -services and resources is a compe I iiin,(4 reason to vote in "' e bal'o-1- I -a -VO -f- of Measare B; t1-111-0., Ima-luagC' 01 UI I L question is artisan and prejudicial. Consequently, the ballot question must be amended to conform to the standards of impartiality required by the Elections Code and the City's own charter. Let a peremptory writ of mandate issue directing respondent court to vacate its April 4, 2012 order to the extent that it denied the petition for writ of mandate, and to enter a new order granting the petition and compelling respondents below to amend the ballot title and ballot question for Measure B, as follows: (1) change the ballot title to"PENSION MODIFICATION"'; (2-) delete the introductory phrase in the ballot question, beginning with "'To protect essential services" and ending with 'streets and parks' and (3) change the word. "reform' in, the text of the ballot question to'"modify." .1VIcDoHou gh v. Superior Court (2012) 204 Cal. App. 4th I 169, 1175-1176. (Emphasis added). For San Rafael, I would urge the city council to modify the ballot question to make these changes: 1) Delete the introductory phrase (i.e. all words prior to 4.'shall'"), I X _I rtcr SoUrt to be extended, and S-,ta-te the dat- Cl o. f !-- h e "N `A,2, �ai S, e S bc- Sate the amount of the total sales tax (three-quarters of a percent). Permit this proposal that the complete ballot language be.- 4"Shall Citv of San Rafael adopt an ordinance extending the one-half percent local sales tax, presently set to expire in 20 16, and increasing the existing local sales tax by one-quarter percent, for a total local sales tax of three-quarters percent, for twentv vears to March 31, 2034, providina locally controlled funding that cannot be taken by the State?" -1.1cDonough addresses the need for the deletions. I propose the statement of.expiration date so voters are not misled into thinkiMeasure S will, expire immectiateiv it not extended now. I_ .1 N Further., the extension date is vague if not expressly stated, for some voters will believe that I `extended-)$ mean S 20 vears from the 2013 election to while others mav think 20 years from the existing expiration date in 2016. Only a -few would know that the 20years runs from the effective date of the tax increase in 2014. City manager hackle spoke of the risk that ballot language mav confuse voters. Wouldn't you agree that the absence of specific dates may tend to cause confusion? Finally, it "seems that good government requires that any tax measure state 'Somewhere in the ballot language the actual amount of the tax proposed, rather than rely upon people having to look it up elsewhere. While I remain opposed to a 20 -year tax, yet supportive of a shorter term, I recognize that this is r -21AAN, e N r t- 1- t eina TJ h enimierated ner bove, A -,re necerssary a of nol-i .Y i -1 1 - for an election in a proper democracy. Sincerely, .and Warren C.C. Gary Phillips Kate Colin Damon Connolly Barbara Heller Andrew McCullough Nancy hackle I OFFICE OF THE CITY ATTORNEY Robert F. Epstein, City Attorney Lisa A. Goldfien, Assistant City Attorney Eric T. Davis Deputy City Attornev It Randy Warren, Esq. Warren Law Group PC 4040 Civic Center Drive,, Suite 200 P. 0. Box 6285 San Rafael, CA 94903 Dear Mr. Warren. - MAYOR GARY 0. PHILLIP VICE MAYOR BARBARA HELLE" COUNCILMEtMBER KATE COU COUNCILMEMBER DAMON CONNOLLI ANDREW CUYUGAN MCCULLOt c J 4 This is in response to your July'22 letter in which you cite VcDono ugh v. Superior Court (2-012) 204 Cal.App.4th 1169, to support your contention that the proposed San Rafael ballot measure question falls to comply with the impartiality requirements of the Elections Code. You also stated concerns regarding the identification of (1) the proposed tax expiration date-, (2) the extension date-, and (3) the amount of the tax. Following receipt of your letter, I carefully reviewed 11cDonough and the cases and statutes cited therein. I disagree with your theory that the ballot question considered by the City Council at its July 15th meeting is "false, misleading, or inconsistent with the requirements of [the Elections Code]." HcDonough at 1173 (quoting Cal. Elec. Code § 9295(b)(2)). ,VcDono ugh concerned a proposed ballot measure that would modify retirement benefits for current and retired San Jose employees. The measure was entitled "PENSION REFORM." The court of appeal held that the word "reform" was argumentative and should be replaced by the word "modification." _\ RA San Rafael s proposed ballot measure is entitled "CITY OF SAL T FAEL TRANSACTIONS AND USE TAX. The title is descriptive, not argumentative., and need not be modified. (I believe you agree., The illlcDonough court also held that San Jose's ballot question was *'flawed." The court found that the central objective of the ballot measure was to reduce the City's s pension and retirement costs-, however, the introductorylanguage suggested that the proposed measure �as 1.zz� sug,xt designed principally to protect essential services. ki. at 1175. The court held that the ballot question,, as framed,, implied that failure to pass the measure would cause the public to lose fire and police protection and be deprived of popular communitv resources. Id. To support it's reasoning, the court cited Citizens Jbr Responsible Government v. Cit -v of Alb1, (1997) 56 1400 Fifth Avenue (P.O. Box I _5 I _560) San Rafael, CA 94915- 1560 PHONE- l415)48 -3080 11 FAX- (415'085-3109 / EMAIL- city. attomevcitvofsanrafael.or�4 i<,-andy Warren, Esq. July 29, 2013 ) Page 2 Cal.App.4th 1199 (city failed to comply with a Business & Professions Code requirement that specific language be included in a ballot measure seeking approval, of licensing of new gaming clubs within a municipality). In my judgment, the reasoning in the iWeDonough and Albany cases is not applicable to the proposed San Rafael ballot question. The San Jose measure involved modifications to pension and retirement benefits that were intended to decrease San Jose's municipal expenditures. It was not a revenue -generating or revenue protection measure. The Albany measure also did not concern revenue, it concerned gaming clubs. To the contrary, the San Rafael measure concerns a proposed tax that, if passed, would generate revenues for the City's general fund. The City spends general fund revenues on city services, including public safety services, public works", libraries, community services, etc. The proposed ballot question considered by the City Council on July 15" begins with the words"To prevent cuts and preserve city services"' and is followed by a list of examples (police, fire, etc.). The City's existing transactions and use tax generates approximately $7 million annually, which represents approximately 12 percent of the expenditures in the City's '2.013-2014 General Fund budget. Expiration of the existing tax, without adoption of a new tax, necessarily would lead to cuts in the City budget. Accordingly, unlike the pension reform measure addressed by the court in NlcDonough, the proposed San Rafael ballot question accurately and impartially describes the proposed measure and its effect. City staff has continued to review the proposed ballot measure, and will recommend that the Council consider a slight modification to the ballot question at the Council's meetincr on ,,d August -1 Please be advised that staff will not be recommending your suggestion that all -1 .4 11 recommend that the anguage preceding the word "'shall"' be eliminated. Instead, staff will Council considermodifving the ballot question to read as follows: W Shall the City of San Rafael extend the existing one-half percent local sales tax and increase the rate by one-quarter percent to provide funding that cannot be taken by the State, and can be used to preserve essential city services for a period of '420 years, including: maintaining rapid emergency police / fire response times., maintaining adequate numbers of on -duty firefighters // paramedics police, ensuring earthquake safe, police / fire stations maintaining community centers and repairing city streets? In our judgment. the above ballot question is fair, impartial, accurately describes the 1 .1 purpose and effect of the proposed measure, and, therefore, adheres with the requirements of the Elections Code. Regarding the expiration date of the existing one-half percent tax,, the proposed ballot language accurately reflects the contents of the proposed measure, including that the increased tax would be in effect for.1-0 years. Any arguments about the expiration date of Measure S (the existincr tax) can and should be made in arguments for or against the proposed measure. I- Randy Warren, Esq. July 29, 2013 Page 3 Thank you for your interest in this matter. I look forward to meeting you in the near future. cc Mayor Phillips and City Council memhers Nancy Mackle, City Manager IMPARTIAL ANALYSIS BY THE CITY ATTORNEY MEASURE" 19 In 2005, ael approved the establishment of a retail transactions and use tax within ., the voters of San Raf the City at a rate of one-half of one percent (0.50%). That tax currently is in effect and generates funds that are deposited into the City's General Fund, and it is scheduled to expire by its terms in 2016. If approved by the voters, this measure would amend the San Rafael Municipal Code by replacing the existing transactions and use tax with a new transactions and use tax that would set the retail transactions and use tax rate at three-quarters of one percent (0.75%) in the City. This measure effectively would increase the cuffent tax rate by an additional one-quarter of one percent (0.25%). At this rate, for example, a transaction amounting to $100 in value would generate a tax of 75 cents. The proposed transactions and use tax would be imposed upon the sale of all tangi MEMO 1 111��� 111111 1 111�1 �"1 111111 I 3M M1101 Iff 1 14,•1 � City for storage, use or other consumption within the City. This measure would authorize the City, as required by law., to contract with the State Board of Equalization to administer and collect the tax. A person City use tax is entitled to a credit against the tax for a transactions tax paid under any other state -administered This measure requires all proceeds of the tax to be deposited into the City's General Fund to'be used for all general municipal governmental purposes in the City's discretiorl This measure would provide several enumerated exemptions and exclusions from the transactions and use tax. It further would prohibit the issuance of any injunction against collection of the tax, as well as provide for a citizens oversight committee to be appointed by the City Council to review the collection and expenditures of tax revenues generated by the tax. The measure would provide that the City's authority to impose this tax would expire 20 years following its operative date. The ordinance proposed by this measure will only become effective if approved by a simple majority of those electors voting on the measure. A YES vote approves the measure. A NO vote rejects the measure. N Robert F. Epstein City Attorney of San Rafael ROUTING SLIP FOR APPROVAL OF CONTRACTS / AGREEMENTS / ORDINANCES / RESOLUTIONS INSTRUCTIONS: USE THIS FORM SUBMITTAL ORIGINAL CONTRACT AGREEMENT ORDINANCE RESOLUTION SRCC AGENDA ITEM NO: 144 Pf/P2' DATE OF MEETING: August 5, 2013 FROM: Lisa A. Goldfien DATE: July 29, 2013 ORIGINATING DEPARTMENT: City Attorney PART I : RESOLUTION of THE CITY COUNCIL of THE CITY of SAN RAFAEL: 1) RESCINDING RESOLUTION NO. 13572. 2) ORDERING THE SUBMISSION To THE ELECTORS of THE CITY of SAN RAFAEL, A BALLOT MEASURE PROPOSING AN AMENDMENT TO CHAPTER 3.19 OF THE MUNICIPAL CODE OF THE CITY OF SAN FAEL TO EXTEND AND INCREASE THE EXISTING TRANSACTIONS AND USE TAX AT THE GENERAL MUNICIPAL ELECTION TO BE HELD TUESDAY,, Y, NOVEMBER 5, 2013, AS CALLED BY RESOLUTION NO. 13529 AND ORDERING THE PUBLICATION THEREOF; AND 3) REQUESTING CONSOLIDATION WITH ANY OTHER ELECTION CONDUCTED ON THE SAME DATE; AND 4) REQUESTING ELECTION SERVICES BY THE REGISTRAR OF VOTERS; AND 5) REQUESTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS OF THE MEASURE. �o�ert F. Epstein, City tto e (LOWER HALF OF FORM FOR APPROVALS ONLY0 Reviewed by City Manager / Executive Director City Attorney (Signaturi)