HomeMy WebLinkAboutO-1686 amending existing Chapter 3.15 (Essential Services Transactions (Sales) and Use Tax) of the San Luis Obispo Municipal CodeO 1686
ORDINANCE NO. 1686 (2020 SERIES)
AN ORDINANCE OF THE CITY COUNCIL AND THE PEOPLE OF THE
CITY OF SAN LUIS OBISPO, CALIFORNIA, AMENDING EXISTING
CHAPTER 3.15 (ESSENTIAL SERVICES TRANSACTIONS (SALES) AND
USE TAX OF THE SAN LUIS OBISPO MUNICIPAL CODE AND
REENACTING IN FULL AMENDED CHAPTER 3.15 (COMMUNITY
SERVICES AND INVESTMENT) IMPOSING A TRANSACTIONS (SALES)
AND USE TAX TO BE ADMINISTERED BY THE CALIFORNIA
DEPARTMENT OF TAX AND FEE ADMINISTRATION
WHEREAS, in 2006, the voters of San Luis Obispo approved the San Luis Obispo
Essential Services Measure (also commonly known as Measure Y, its 2006 ballot designation)
with 64.77% of the vote, establishing a half-cent per dollar local transaction (sales) and use tax to
address fiscal challenges including State takeaways totaling more than $22 million over the prior
15 years, and ongoing State funding reductions of $3 million annually; and
WHEREAS, in 2014, the voters of San Luis Obispo approved the San Luis Obispo
Essential Services Measure (also commonly known as Measure G, its 2014 ballot designation)
with 70.32% of the vote, renewing the half-cent per dollar local transaction (sales) and use tax to
continue protecting and maintaining essential services and facilities, to end March 31, 2023 unless
renewed by voters; and
WHEREAS, the revenue from Measure G has funded approximately 30% of essential
services and 70% of maintaining City facilities but has not been sufficient to fund the level of
services, maintenance, and infrastructure improvements the community has identified as priorities;
and
WHEREAS, one in every two calls to the San Luis Obispo Fire Department are responses
to medical emergencies or rescues, and locally-controlled funding is critical to maintain firefighter-
paramedic staffing, infrastructure, life-saving/personal protective equipment, and communications
technology to save lives in any type of natural disaster or emergency; and
WHEREAS, the impacts of coronavirus on the City’s local economy, including loss of
jobs and business closures, may take years to recover from and a reliable source of local funding
will assist in businesses and downtown investment through economic recovery programs like Shop
Local; and
WHEREAS, the City's Essential Services Transaction (Sales) and Use Tax includes
substantial accountability measures including: requirements for independent annual financial
audits; integration of use of funds into the City's budget and goal-setting process; annual
community reports; and annual citizen engagement meetings; and
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WHEREAS, the City’s Essential Services Transaction (Sales) and Use Tax also includes
an additional accountability measure, a Citizen's Revenue Enhancement Oversight Commission,
to increase transparency and accountability and to ensure the expenditure of revenue measure
funds in alignment with evolving community priorities, as defined through citizen engagement and
City Council direction; and
WHEREAS, approximately 70% of sales tax revenue collected by San Luis Obispo is
generated by tourists, visitors, and commuters ensuring that visitors are paying their fair share to
use the City’s community resources and infrastructure; and
WHEREAS, the City's existing Essential Services Transactions (Sales) and Use Tax
Ordinance is found in Chapter 3.15 of the City's Municipal Code; and
WHEREAS, Section 3.15.030 of this Chapter sets forth an expiration date of March 31,
2023, at which time Chapter 3.15 will expire, unless extended by the voters of the City at an
election called for that purpose; and
WHEREAS, this proposed Measure G extension and enhancement will continue to require
substantial accountability measures including: requirements for independent annual financial
audits; integration of use of funds into the City's budget and goal-setting process; annual
community reports; annual citizen engagement meetings; and the oversight role of the Citizen's
Revenue Enhancement Oversight Commission; and
WHEREAS, the COVID-19 pandemic’s economic impacts on the community, local
businesses, and City finances is unprecedented and an extension of Measure G and enhancement
of the existing local transactions (sales) and use tax by an additional one (1)-cent per dollar for a
total rate at one and half (1.5)-cents per dollar will protect and improve the level of City services,
and maintenance and improvements to infrastructure the community values most; and
WHEREAS, the funding will support San Luis Obispo’s economic recovery, stability and
resiliency to protect and maintain residents’ quality of life.
NOW, THEREFORE, BE IT ORDAINED by the Council and the People of the City of
San Luis Obispo, as follows:
SECTION 1. Chapter 3.15 of the City's Municipal Code is hereby amended and re-enacted
in full to read as follows:
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CHAPTER 3.15
COMMUNITY SERVICES AND INVESTMENT
TRANSACTIONS (SALES) AND USE TAX
3.15.010 Title.
This chapter shall be known as the “City of San Luis Obispo community services and investment
transactions (sales) and use tax ordinance.” The City of San Luis Obispo hereinafter shall be called
the “City.” This chapter shall be applicable in the incorporated territory of the City.
3.15.020 Purpose.
This chapter is adopted to achieve the following, among other general municipal purposes, and
directs that the provisions hereof be interpreted in order to accomplish those purposes:
A. To provide funding to protect City of San Luis Obispo’s financial stability; maintain fire,
community safety, health emergency, disaster preparedness; protect creeks from pollution,
address homelessness; keep public areas clean/safe; retain local businesses; repair streets;
maintain youth/senior services, streets, open space/natural areas, and other general services
by extending an existing, voter-approved, general purpose retail transactions (sales) and
use tax of one-half (.5) cent per dollar and enhancing the local transactions (sales) and use
tax by an additional one (1) cent per dollar; at a total rate of one and one half (1.5) cent per
dollar (1.50% of the gross receipts) 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 general
purpose tax chapter, which shall be operative if two-thirds of the council and a majority
vote of the electors voting on the measure vote to approve the extension and enhancement
of this general purpose revenue source at an election called for that purpose.
B. To adopt a retail transactions and use tax chapter that incorporates provisions identical to
those of the transactions 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 chapter that imposes a tax and provides a measure
therefor that can be administered and collected by the California Department of Tax and
Fee Administration 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 California Department of Tax and Fee Administration in administering
and collecting the California State sales and use taxes.
D. To adopt a retail transactions and use tax chapter that can 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 recordkeeping
upon persons subject to taxation under the provisions of this chapter.
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3.15.030 Termination Date.
The authority to levy the tax imposed by this chapter shall expire when ended by the voters of the
City.
3.15.040 Fiscal accountability provisions—Citizen oversight and independent annual
financial audits.
Along with the City’s ongoing commitment to citizen involvement as a fundamental principle of
good government, specific citizen oversight and fiscal accountability provisions are hereby
established as follows:
A. Revenue Enhancement Oversight Commission. A citizen’s commission will be established
to provide transparency and maximize city accountability. The commission will be
responsible for reviewing and making budget recommendations directly to the city council
regarding expenditures from the essential services transactions (sales) and use tax and
reporting annually to the community on the City’s use of these tax revenues.
B. Accounting and Tracking Expenditures. The funds collected through the City of San Luis
Obispo essential services transactions (sales) and use tax ordinance shall be accounted for
and tracked by the City treasurer separately to facilitate citizen oversight.
C. Independent Annual Financial Audit. The amount generated by this general-purpose
revenue source and how it was used shall be included in the annual audit of the City’s
financial operations by an independent certified public accountant.
D. Integration of the Use of Funds into the City’s Budget and Goal-Setting Process. The
estimated revenue and proposed use of funds generated by this measure shall be an integral
part of the City’s budget and goal-setting process, and significant opportunities will be
provided for meaningful participation by citizens in determining priority uses of these
funds.
E. Annual Community Report. A written report shall be reviewed at a public meeting by the
revenue enhancement oversight commission, and a summary will be provided annually to
every household in the community detailing how much revenue is being generated by the
measure and how funds are being spent.
F. Annual Citizen Oversight Meeting. An invitation will be extended each year to the entire
community inviting them to participate in a forum to review and discuss the use of the
revenue generated by this measure. City staff will also be available to meet with any group
that requests a specific briefing with their members to discuss and answer questions about
the revenues generated by the measure and their uses.
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3.15.050 Transactions (sales) tax rate.
For the privilege of selling tangible personal property (physical merchandise) at retail, a tax is
hereby imposed upon all retailers in the incorporated territory of the City at the total rate of one
and one half percent (1.5%) 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 chapter, prior
to which the tax rate shall be as previously imposed by voter approval of Measure G (November
2014).
3.15.060 Use tax rate.
An excise tax is hereby imposed on the storage, use or other consumption in the City of tangible
personal property (physical merchandise) purchased from any retailer for storage, use or other
consumption in said territory at the rate of one and one half percent (1.5%) of the sales price of
the property on and after the operative date of this chapter, prior to which the tax rate shall be as
previously imposed by voter approval of Measure G (November 2014). The sales price shall
include delivery charges when such charges are subject to state sales or use tax, regardless of the
place to which delivery is made
3.15.070 Operative date.
“Operative date” means the first day of the first calendar quarter commencing more than one
hundred ten days after the adoption of the ordinance codified in this chapter.
3.15.080 Contract with state.
Prior to the operative date, the City shall contract with the California Department of Tax and Fee
Administration to perform all functions incident to the administration and operation of this
transactions and use tax chapter; provided, that if the City shall not have contracted with the
California Department of Tax and Fee Administration 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.
3.15.090 Place of sale.
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 California Department of Tax and Fee Administration.
3.15.100 Adoption of provisions of state law.
Except as otherwise provided in this chapter and except insofar as they are inconsistent with the
provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of
Part 1 (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.
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3.15.110 Limitations on adoption of state law and collection of use taxes.
In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the state of California is named or referred to as the taxing agency, the name of
this City shall be substituted therefor. However, the substitution shall not be made when:
1. The word “state” is used as a part of the title of the State Controller, State Treasurer,
State Board of Control, California Department of Tax and Fee Administration, State
Treasury, or the Constitution of the State of California.
2. 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 California
Department of Tax and Fee Administration, 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 1 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.
3.15.120 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 chapter.
3.15.130 Exemptions and exclusions.
The following transactions shall be exempted and excluded:
A. There shall be excluded from the measure 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.
B. There are exempted from the computation of the amount of transactions tax the gross
receipts from:
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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 section, 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 1 (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 vessels registered under Division 3.5
(commencing with Section 9840) 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 residence; and
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 chapter.
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 chapter.
5. For the purposes of subsections (B)(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:
1. 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.
4. If 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
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period of time for which the lessee is obligated to lease the property for an amount fixed
by a lease prior to the operative date of this chapter.
5. For the purposes of subsections (C)(3) and (4) of this section, storage, use, 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 subsection (C)(7) of this section, 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 1 (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 chapter may credit against that tax any transactions
tax or reimbursement for transactions tax paid to a district imposing, or retailer liable 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.
3.15.140 Amendments.
All amendments subsequent to the effective date of this chapter to Part 1 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.
3.15.150 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 City, 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.
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SECTION 2. A summary of this ordinance, together with the names of Council members
voting for and against, shall be published at least five (5) days prior to its final passage, in The
New Times, a newspaper published and circulated in this City. This ordinance shall go into effect
upon adoption by the voters.
INTRODUCED on the 21st day of July 2020 by the Council of the City of San Luis Obispo
on the following vote:
AYES: Council Member Christianson, Pease, Stewart, Vice Mayor Gomez, and
Mayor Harmon
NOES: None
PASSED AND ADOPTED by the Voters of the City of San Luis Obispo on November 3,
2020 by the following vote tally:
AYES: 14,513 (58.23%)
NOES: 10,410 (41.77%)
FINALLY ADOPTED following declaration of the vote by the City Council of the City
of San Luis Obispo on December 1, 2020.
____________________________________
Mayor Heidi Harmon
ATTEST:
____________________________________
Teresa Purrington
City Clerk
APPROVED AS TO FORM:
_____________________________________
J. Christine Dietrick
City Attorney
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the City
of San Luis Obispo, California, on ____________________________.
____________________________________
Teresa Purrington, City Clerk