Agenda packet, study session — Cathedral City City Council, November 30, 2022

CITY COUNCIL
AGENDA

Study Session
Wednesday, November 30, 2022
3:00 PM

City Council Chambers
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234

MAYOR
Ernesto Gutierrez

CITY COUNCIL MEMBERS

Mayor Pro Tem
Rita Lamb

Councilmember
Mark Carnevale

Councilmember
Nancy Ross

Councilmember
Raymond Gregory
• CALL TO ORDER
• ROLL CALL
• AGENDA FINALIZATION
At this time the City Council may announce any items being pulled from the agenda or continued to another date.

1. CLOSED SESSION
A. Conference with Labor Negotiator Pursuant to Government Code Section 54956.6
Agency Negotiator: Charles McClendon, City Manager
Represented Employees:

AFSCME - American Federation of State, County and Municipal Employees

2. PUBLIC COMMENT
This is the opportunity for members of the public to comment on any items not appearing on the regular agenda. Because of restrictions contained in California Law, the City Council may not discuss or act on any item not on the agenda but may briefly respond to statements made or ask a question for clarification. The Mayor may also request a brief response from staff to questions raised during public Cathedral City P a g e 2
comment or may request a matter be agendized for a future meeting. Public Comment will be limited to three (3) minutes.

3. STUDY SESSION
Normally no action is taken on Study Session items, however, the City Council reserves the right to give specific policy direction and take specific action as necessary. Presentation will be limited to 10 minutes unless other provisions are made in advance.

A. Presentation - Update on the Coachella Valley Rail Project Recommendation: This is a presentation only. There is no formal action required.

B. Agua Caliente Tribal Food and Beverage Sales Tax Agreement Recommendation: This item is presented for information, discussion and direction only.

C. FY 2022/2023 CDBG Sidewalk Repair Assistance Program Recommendation: Staff will be presenting Cathedral City's FY 2022-2023 Community Development Block Grant (CDBG) Sidewalk
Repair Assistance Program for City Council review,
discussion, and direction.

D. Cannabis Task Force Update
Recommendation: This item is presented for information, discussion and direction only.

ADJOURN

NOTES TO THE PUBLIC:

The City of Cathedral City complies with the American s with Disabilities Act of 1990. If you require special assistance to participate in this meeting, please call the City Clerk’s Office at (760) 770-0322 at least 48 hours prior to the meeting.

If you desire to address the City Council during the meeting, please complete a Request to Speak Form available at the entrance and present it to the City Clerk. Speakers will be called upon at the appropriate time.

Any documents provided to a majority of the City Council regarding any item on this agenda will be m ade available for public inspection in the City Clerk’s office at City Hall located at 68 -700 Avenida Lalo Guerrero during normal business hours. In addition, such documents will be posted on the City’s website at www.cathedralcity.gov.

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Staff Report

City Council

Meeting Date: November 30, 2022
From: Charles McClendon, City Manager
Title: Conference with Labor Negotiator Pursuant to Government Code Section 54956.6
Agency Negotiator: Charles McClendon, City Manager
Represented Employees:

AFSCME - American Federation of State, County and Municipal Employees

1.A
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Staff Report

City Council

Item No. 3.A

Meeting Date: November 30, 2022
From: Charles McClendon, City Manager
Title: Presentation - Update on the Coachella Valley Rail Project

City Council

RECOMMENDATION:

This is a presentation only. There is no formal action required.

DISCUSSION:

Aaron Hake, Deputy Executive Director, Riverside County Transportation Commission (RCTC), will present an update on the Coachella Valley Rail Project.

FISCAL IMPACT:

There is no fiscal impact with this item.

3.A
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Staff Report

City Council

Item No. 3.B

Meeting Date: November 30, 2022
From: Charles McClendon, City Manager
Title: Agua Caliente Tribal Food and Beverage Sales Tax Agreement

City Council

RECOMMENDATION:

This item is presented for information, discussion and direction only.

BACKGROUND:

The state of California, through the California Department of Tax and Fee Administration (the “CDTFA”), recently amended CDTFA Regulation 1616 to clarify federal law preempts the California sales and use tax whe n a non -Indian retailer sells meals, food, and beverages from a leased space on a reservation for consumption on the reservation where the sales take place.

DISCUSSION:

The amendments to CDTFA Regulation 1616 mean the sale and purchase of meals, food, and beverages sold on the Reservation by a non -Indian retailer to a non-Indian or an Indian who does not reside on the Reservation are not subject to the California sales and use tax when all of the following requirements are met:
(i) a sales or use tax is imposed by the Tribe on the sales or purchases of meals, food, and beverages;
(ii) the non-Indian retailer’s business is operated on the Reservation pursuant to a federally or tribally authorized lease or sublease; (iii) the non -Indian retailer’s business is an ea ting or drinking establishment, such as a restaurant or bar; and
(iv) the meals, food, and beverages are sold and purchased for consumption on the Reservation.

When the Federal Preemption Requirements are met, the Tribe can impose and collect its Tribal Sal es Tax from non -Indian retailers without the economic ramifications of double taxation.

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Under this authority, the Agua Caliente Band of Cahuilla Indians has notified the City they will begin collecting their tribal sales tax beginning January 1, 2023. Th e ACBCI are also notifying the affected businesses.

To hold the cities harmless, the ACBCI are proposing agreements with the cities in their jurisdiction (Palm Springs, Cathedral City and Rancho Mirage) to share back with the cities sales tax collections equal to the rates of the local taxes under the current state sales tax collections.

Staff and tribal representatives will be present at the study session to explain the proposed agreements and answer questions.

The agreements will then be placed on th e December 14, 2022 Council agenda for consideration.

FISCAL IMPACT:

There should be no fiscal impact as the intent of the proposed agreements is to hold the cities harmless relative to current sales tax collections from the affected businesses.

ATTACHMENTS:

Tribal Food and Beverage Sales Tax
Regulation 1616 Notice to the Office of Administrative Law Regulation 1616
Letter to Restaurant Owners
Tribal Sales Tax Agreement (9-27-2022) (003)
Tribal Sales Tax Agreement RCTC (9-27-2022) (003)

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Tribal Food and Beverage Sales Tax
• Amendments to Tribal Code
• Adoption of:
• Tax Rate
• Interest Rates
• Rebate/Incentive Rate
• Distributions to Cities
• Local Tax and District Tax
• Riverside County District Tax
• Draft Tribal Sales Tax Agreement Template

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Amendments to Tribal Code
Tribal Tax Ordinance Chapter 3.08

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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Section 3.08.710
• Current statute limits the interest imposed on the late payment and underpayment to 15% of the tax amount that is due.
• At current interest rates, if a deficiency is two year’s old, interest would nearly reach its cap, and this reduces the incentive for payment since the limitation prohibits additional intertest from accruing.
• Accordingly, this limitation could hinder collection of delinquent tax liabilities.
• Therefore, the Tax Department proposes an amendment to subdivision (b)(1) to remove the 15% cap.

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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Section 3.08.1230
• This section requires that the tax rate is adopted by the Tribal Council prior to December 31st each year.
• The Tax Department proposes an amendment to subdivision (b) to establish the tax rate by December 31, 2022, and thereafter, pursuant to subdivision (b)(1), that rate will remain in place until otherwise amended by resolution.
• This will allow flexibility to address any changes in the event the State of California or local jurisdictions should change their rates. • This amendment will provide the flexibility to enact tax rate changes as warranted rather than imposing a statutory restriction of a January 1st effective date.
• Additionally, an amendment is proposed to add subdivision (b)(2) to provide a mechanism to authorize an allocation to local jurisdictions.

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Section 3.08.1235
• This is a new section to the ordinance to address sales by Delivery Network Companies (DNCs).
• DNCs are businesses, such as UberEats, Postmates, GrubHub, and DoorDash, that deliver meals, food, and beverages from an eating or drinking establishment.
• Some DNCs (UberEats and Postmates) have elected with the CDTFA to become retailers to report and remit the sales and use tax on the meals, food, and beverages they deliver to their customers.
• This section will deem the DNCs (that elect to be a retailer with CDTFA) as an eating or drinking establishment for the purposes and the Tribal food and beverage sales tax and therefore require they report and remit the Tribal food and beverage sales tax.

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Section 3.08.1270
• Currently, the code requires that a customer is provided a proof of sale with a separate statement of the tax collected by the retailer. • A common industry practice for some food and beverage retailers (most often bars) is to sell items as “tax included” meaning there is no separate statement of the tax collected.
• This amendment is to provide conformity to the requirements of the California Department of Tax and Fee Administration and reflect current industry practice.
• Accordingly, retailers will need to meet only one standard of record- keeping, and it will ease the administrative burden upon the retailers.

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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Rate Setting
• Tribal Food and Beverage Sales Tax Rate
• Use the combined California sales and use tax rate.
• The current rates are as follows:
• Rancho Mirage 7.75%
• Cathedral City 8.75%
• Palm Springs 9.25%
• Interest Rates
• Underpayments and unpaid sales tax
• Equivalent rate to the current CDTFA interest rate. Currently 6% (8% effective January 1, 2023) • Overpayments
• Equivalent rate to the current CDTFA interest rate. Currently 0% (2% effective January 1, 2023) • Rebate/Incentive Rate
• We recommend a rebate at the rate of 3% of the sales tax timely reported and paid before the quarterly due date.

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Distribution of Tribal Food and Beverage Sales
Tax Proceeds to Cities
• The Bradley-Burns Local Tax is 1.25%
• 1% is distributed to the place of sale (Under these facts it is the city) • 0.25% is distributed to the county
• It is recommended that we enter into an Tribal Sales Tax Agreement to distribute an amount equivalent to the current distributions that cities presently receive from the CDTFA. This includes the 1% local tax and the district tax the cities currently receive.
• Palm Springs receives 1.5% district tax.
• Cathedral City receives 1.0% district tax.
• Rancho Mirage receives no district tax.
• The Tribal Sales Tax Agreement would direct that the proceeds be spent on a specific purpose for use by the cities.
• It is also proposed that we do not distribute any sales tax proceeds to the county of Riverside (the rate is 0.25%).

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Distribution of Tribal Food and Beverage Sales
Tax Proceeds to Cities (Contd.)
• Riverside County District Tax
• The current combined California sales and use tax rate includes 0.5% tax for Riverside County.
• We recommend that we do not distribute this to the county, but instead redirect these proceeds to the cities of Rancho Mirage, Cathedral City, and Palm Springs.
• We further recommend this distribution is not included in the Tribal Sales Tax Agreement with the cities for local and district tax distributions. It would be an additional quarterly payment under a separate Tribal Sales Tax Agreement.
• We recommend it should also be directed towards a specific purpose for use by the cities.

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales Draft Tribal Sales Tax Agreement Template
• This will cover distributions to the cities
• The allocation will vary by city
• There will be two agreements for each city
• One agreement will address the 1% local tax plus any applicable district tax • The funds are provided for public safety
• This is proposed to be a long term agreement
• The second agreement will address the 0.5% additional district tax • The funds are provided for public safety
• This is proposed to be a two-year agreement

3.B.a
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Attachment: Tribal Food and Beverage Sales Tax (3470 : Agua Caliente Tribal Food and Beverage Sales

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.b
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Attachment: Regulation 1616 Notice to the Office of Administrative Law (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.c
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Attachment: Regulation 1616 (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.c
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Attachment: Regulation 1616 (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.c
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Attachment: Regulation 1616 (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.c
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Attachment: Regulation 1616 (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3.B.d
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Attachment: Letter to Restaurant Owners (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

1 TRIBAL SALES TAX AGREEMENT

THIS TRIBAL SALES TAX AGREEMENT (this “Agreement”) is made and entered into on [***INSERT DATE***] (“Effective Date”) by and between the Agua Caliente Band of Cahuilla Indians, a federally recognized Indian tribe (“Tribe”), and the city of [***INSERT CITY NAME***], a California charter city and municipal corporation (“City”). Tribe and City are individually referred to herein as a “Party” and collectively as the “Parties.”

RECITALS

A. The Tribe has ret ained the inherent power of taxation as an essential aspect of its sovereignty and therefore has the power to tax except when limited by federal law.

B. Section (i) of article V of the Constitution and Bylaws of the Agua Caliente Band of Cahuilla Indians (the “Tribal Constitution”) authorizes the Tribal Council of the Tribe to promulgate and enforce assessments or permit fees upon non-members doing business and obtaining special privileges on the Agua Caliente Indian Reservation (the “Reservation”).

C. Pursuant to the Tribe’s inherent power of taxation and the Tribal Constitution, the Tribal Council has authorized, through the adoption of Chapter 3.08 of the Agua Caliente Tribal Code, the imposition and collection of a sales tax on the sale and purchase of me als, food, an d beverages sold on Indian Lands (defined below) by non-Indian retailers.

D. The state of California, through the California Department of Tax and Fee Administration (the “CDTFA”), recently amended CDTFA Regulation 1616 (Cal. Code. Regs., tit. 18, § 1616) to clarify that federal law preempts the California sales and use tax when a non-Indian retailer sells meals, food, and beverages from a leased space on a reservation for consumption on the reservation where the sales take place.

E. Pursuant to the amendments to CDTFA Regulation 1616, the sale and purchase of meals, food, and beverages sold on the Reservation by a non-Indian retailer to a non-Indian or an Indian who does not reside on the Reservation are not subject to the California sales and use tax when all of the following requirements are met (collectively, the “Federal Preemption Requirements”): (i) a sales or use tax is imposed by the Tribe on the sales or purchases of meals, food, and beverages; (ii) the non-Indian retailer’s business is operated on the Reservation pursuant to a federally or tribally authorized lease or sublease; (iii) the non-Indian retailer’s business is an eating or drinking establishment, such as a restaurant or bar; and (iv) the meals, food, and beverages are sold and purchased for consumption on the Reservation.

F. When the Federal Preemption Requirements are met, the Tribe can impose and collect its Tribal Sales Tax (defined below) from non -Indian retailers without the economic ramifications of double taxation.

G. The Tribe’s imposition and collection of the Tribal Sales Tax is an appropriate method of generating revenues for the Tribe and paying for a portion of the costs of governmental services and programs incident to the preservation of Tribal existence and the continued economic development of the Reservation.

H. For the purposes set forth herein, the Tribe desires to share with the City a portion of the Tribal Sales Tax revenue generated from non-Indian retailers and the City desires to accept this revenue in accordance with the terms of this Agreement.

3.B.e
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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

2 TERMS

1. Incorporation of Recitals. The Pa rties acknowledge and agree that the foregoing recitals constitute the factual basis upon which the Tribe and City have entered into this Agreement. The Tribe and City each acknowledge the accuracy of the recitals and agree that the recitals are incorpora ted into this Agreement as though fully set forth at length.

2. Purpose. The purpose of this Agreement is to promote greater government to government cooperation and to establish a funding mechanism to defray the cost of providing governmental services that benefit portions of the Reservation that are located within the City’s jurisdictional boundaries.

3. Term. The term of this Agreement shall commence on January 1, 2022 and expire on December 31, 2031, unless earlier terminated as provided herein.

4. Definitions. Unless the context otherwise requires, the terms defined in this Section 4 shall for all purposes hereto, and for any amendment hereof, have the meanings defined herein. The following definitions shall be equally applicable to both the singular and plural forms of any terms defined herein.

a. “City Allocation” means an amount equal to a percentage of the rate established for the Tribal Sales Tax pursuant to Section 3.08.1230 of the Agua Caliente Tribal Code. The Tribe will establish this percentage, in its sole and absolute discretion, through Tribal Council resolution. In no event shall the percentage used to calculate the City Allocation exceed the combined percentage of the California sales and use tax and district tax that the City receives from the state of California pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law (Cal. Rev. & Tax. Code, §§ 7200 et seq.) and the Transactions and Use Tax Law (Cal. Rev. & Tax. Code, §§ 7251 et seq.). For purposes of illustration and not limitation, if the City receives an amount calculated at a tax rate of 1% (i.e., the equivalent to the Bradley-Burns Uniform Local Sales and Use Tax for that jurisdiction ) and an amount calculated a t a tax rate of 1.5% (i.e., the equivalent to the Transactions and Use Tax for that jurisdiction), the City allocation would not exceed the combined tax rate of 2.5% of the sales and use tax that City would otherwise receive from the state of California.

b. “Commencement Date” means January 1, 2023.

c. “Fiscal Quarter” means one calendar year quarter commencing on January 1st, April 1st, July 1st, or October 1st, and ending on, as applicable, the immediately following March 31st, June 30th, September 30th, or December 31st, respectively. As an example, the Fiscal Quarter commencing January 1st shall end on the immediately following March 31st, the Fiscal Quarter commencing on April 1st shall end on the immediately following June 30th, and so on. Tax returns and payments are due at the end of the month immediately following the end of the Fiscal Quarter. For example, the tax returns and payments for the Fiscal Quarter ending on March 31st shall be due on April 30th. The tax returns and payments for the Fiscal Quarter ending on June 30th shall be due on July 31st, and so on.

d. “Fiscal Year” means January 1st through December 31st.

e. “Indian Lands” has the meaning ascribed to it in Section 3.08.050 of the Agua Caliente Tribal Code.

f. “Notice” means all notices, requests, consents, claims, demands, waivers, and other communications hereunder sent to a Party in accordance with Section 13(d) hereof.

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3 g. “Public Safety” means the provision of law enforcement, emergency medical services, fire suppression and prevention, and emergency management by the City or a government or private entity that the City contracts with.

h. “Term” means the term of this Agreement as specified in Section 3 hereof.

i. “Tribal Council” means the Agua Caliente Tribal Council.

j. “Tribal Sales Tax” means the sales tax imposed and collected pursuant to Chapter 3.08 of the Agua Caliente Tribal Code.

5. Distribution of City Allocation. Commencing on the Commencement Date and during the Term of this Agreement, the Tribe will remit the City Allocation to the City in accordance with this Agreement. The Tribe will remit the City Allocation to the City four times each Fiscal Year, with the Tribe remitting (a) the first City Allocation within thirty (30) days following the due date for tax returns and payments for the first Fiscal Quarter, representing the Tribal Sales Tax collected, net of any refunds allowed and paid, from non-Indian retailers for the first Fiscal Quarter; (b) the second City Allocation within thirty (30) days following the due date for tax returns and payments for the second Fiscal Quarter, representing the Tribal Sales Tax collected, net of any refunds allowed and paid, from non-Indian retailers for the second Fiscal Quarter; (c) the third City Allocation within thirty (30) days following the due date for tax returns and payments for the third Fiscal Quarter, representing the Tribal Sales Tax collected , net of any refunds allowed and paid, from non-Indian retailers for the third Fiscal Quarter; and (d) the fourth City Allocation within thirty (30) days following the due date for tax returns and payments for the fourth Fiscal Quarter, representing the Tribal Sales Tax collected, net of any refunds allowed and paid, from non-Indian retailers for the fourth Fiscal Quarter. The obligations of this Section 5 shall only apply Tribal Sales Tax funds collected from non-Indian retailers located on lands owned by an individual Indian(s) which is either held in trust by the United States or is subject to a statutory restriction on alienation.

6. Permissible Uses of Tribal Sales Tax. The Parties acknowledge and agree that it is within the Tribe’s sole and absolute authority to use Tribal Sales Tax funds to fund any governmental service that benefits the Reservation community , whether this service is provided by the Tribe , City, or any other governmental entity . The Parties further acknowledge and agree that the Tribe’s distribution of City Allocation funds to the City is meant to fund governmental services that benefit portions of the Reservation located within the territorial boundaries of the City. The City agrees that it shall only use City Allocation funds to fund Public Safety and that the Tribe’s distribution of City Allocation funds to the City is conditioned upon the City’s compliance with this requirement . The City may carryover any remaining portion of City Allocation funds not expended in the then current Fiscal Year to the next Fiscal Year to fund governmental services in accordance with this Agreement.

7. Annual Tribal Sales Tax Report . By March 31, 2024 and by March 31st of each Fiscal Year thereafter, the City shall prepare and transmit to the Tribe a Tribal sales tax report. The annual Tribal sales tax report shall be in a form acceptable to the Tribe and shall include the following information:

a. Total Tribal Sales Tax Revenue Received. The total amount of City Allocation funds that the City received during the prior Fiscal Year.

b. Description of Budgeted Expenditures. A listing of all services, supplies, capital outlays, employee expenses, and any other costs or expenses that the City ide ntified to fund (i.e., budgeted) using City Allocation funds during the prior Fiscal Year.

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

4 c. Description of Actual Expenditures . A listing of all services, supplies, capital outlays, employee expenses, and any other costs or expenses that the City funded using City Allocation funds during the prior Fiscal Year.

d. Carryover. The amount of City Allocation funds not expended during the prior Fiscal Year and carried over to the then current Fiscal Year.

e. Certification. A certification, executed by the mayor, certifying the receipt and the use of City Allocation funds in accordance with this Agreement.

8. Recapture. In the event the City does not comply w ith the terms of this Agreement, is otherwise in default, or falsifies any documents required under this Agreement, the City, pursuant to the provisions herein shall refund to the Tribe an amount equivalent to the extent of noncompliance within thirty (30) days of receipt of a written notice of noncompliance.

9. Non-Appropriation of Funds. All obligations of the Tribe under this Agreement are subject to the availability of Tribal Sales Tax funds and the City acknowledges that the ability of the Tribe to perform under this Agreement is contingent upon the continued availability of these funds. The Tribe has no obligation to make distributions under this Agreement from any other revenue or funding source apart from the Tribal Sales Tax funds the Tribe sets aside to carry out the purposes of this Agreement. The Tribe’s decisions with respect to the City Allocation are within the exclusive discretion of the Tribal Council.

10. Indemnification. The City agrees to defend, indemnify, and hold harmless the Tribe, its Tribal Council, and each member thereof, and its officers, agents, and employees, against any and all claims, lawsuits, judgments, causes of action, costs, and expenses for personal injury (including death), property damage, or other harm for which recovery of damages is sought, suffered by any person or persons, that may arise out of or be occasioned by the City’s breach of any of the terms or provisions of this Agreement, or by any negligent act or omission of the City, its officers, agents, servants, employees, contractors, or subcontractors, in the performance of this Agreement; except that the indemnity provided for in this Section shall not apply to any liability resulting from the sole negligence of the Tribe, its officers, agents, employees, or separate contractors. The provisions of this Section are solely for the benefit of the Parties hereto and not intended to create or grant any rights, contractual or otherwise, to any other person or entity.

Both Parties expressly agree that this Agreement does not assign any responsibility for civil liability to the Tribe that may arise by virtue of this Agreement.

11. No Opposition. In consideration for the City’s receipt of City Allocation funds from the Tribe, the City agrees not to oppose the Tribe’s exercise of its inherent and constitutional right to impose and collect the Tribal Sales Tax on Indian Lands.

12. Termination. Either Party may terminate this Agreement without cause by providing the non-terminating Party no less than ninety (90) days prior written notice of the effective date of termination.

The Tribe may also terminate this Agreement for breach of any provision of this Agreement, upon written notice of the breach and the City shall have ten (10) days after receipt of the written notice in which to cure the breach to the satisfaction of the Tribe. If the City fails to cure the breach to the satisfaction of the Tribe within the timeframe set forth herein, the Tribe may proceed with terminating this Agreement as set forth above.

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

5 time, the Tax Director will present the appeal to the Tribal Council for consideration. The Tribal Council will review the appeal within thirty (30) days of the Tribe’s receipt and decide whether to grant, conditionally grant, or deny the appeal. The decision of the Tribal Council shall be final a nd shall not be appealable.

14. Miscellaneous Provisions.

a. Expenses. All costs and expenses incurred in connection with this Agreement and each agreement, document, and instrument contemplated by this Agreement and the transactions contemplated hereby and thereby shall be paid by the Party incurring such costs and expenses.

b. Further Assurances . Each of the Parties shall execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reason ably required to carry out the provisions hereof and give effect to the transactions contemplated hereby and thereby.

c. Notices. All Notices shall be in writing and shall be deemed to have been given (i) when delivered by hand (with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (iii) on the date sent by facsimile or email (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next business day if sent after normal business hours of the recipient; or (iv) on the third (3rd) day after the date mailed, by certified or registered mail (in each case, return receipt requested, postage prepaid). Notices must be sent to the respective Parties at the following addresses (or at such address for a Party as shall be specified in a Notice given in accordance with this Section 13(d):

If to Tribe: Agua Caliente Band of Cahuilla Indians
Tax Department
5401 Dinah Shore Drive
Palm Springs, California 92264
Attention: Tax Director

With a copy to: Agua Caliente Band of Cahuilla Indians Legal Department
5401 Dinah Shore Drive
Palm Springs, California 92264
Attention: General Counsel

If to City: [***INSERT CITY NAME***]
[***INSERT CITY DEPARTMENT***]
[***INSERT ADDRESS***]
[***INSERT CITY, STATE AND POSTAL CODE***]
Attention: [***INSERT TITLE OF OFFICER TO
RECEIVE NOTICES***]

With a copy to: [***INSERT NAME OF LAW FIRM***]
[***INSERT ADDRESS***]
[***INSERT CITY, STATE AND POSTAL CODE***]
Attention: [***INSERT ATTORNEY NAME***]

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

6 and (iii) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (iv) to sections, schedules, and exhibits mean the sections of, and schedules and exhibits attached to, this Agreement; (v) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (vi) to a statute means such statute as amended, renumbered, or restated from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The schedules and exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

e. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

f. Severability. If any term or provision of this Agreement is invalid, illegal, or unenforceable in any jurisdiction, such invalidity, illegality, or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

g. Amendment and Modification . This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto.

h. Waiver. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach, or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.

i. Cumulative Remedies. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise.

j. Assignment. Neither Party may assign any of its rights or delegate any of its obligations hereunder without the prior writt en consent of the other Party, which consent shall not be unreasonably withheld, conditioned, or delayed. Any purported assignment or delegation in violation of this Section shall be null and void. No assignment or delegation shall relieve the assigning or delegating Party of any of its obligations hereunder.

k. Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective permitted successors and permitted assigns.

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

7 intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.

m. Governing Law. This Agreement is made, entered into, and performed within the Agua Caliente Indian Reservation, and shall in all respects be i nterpreted, enforced, and governed by the following applicable laws, which are stated in their order of priority in the event of a conflict between them:
the laws of the United States, the laws of the Agua Caliente Band of Cahuilla Indians, and the laws o f the State of California. This Agreement shall not be construed either for or against Tribe or City, but this Agreement shall be interpreted in accordance with the general tenor of the language in an effort to reach an equitable result.

n. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electro nic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

o. Relationship of the Parties. Nothing herein shall be construed to create a joint venture or partnership between the Parties hereto or agency relationship. Neither Party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the name of the other Party or to bind the other Party to any contract, agreement, or undertaking with any third party.

p. Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements, representations, and warranties, both written and oral, with respect to such subject matter.

IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date.

TRIBE CITY

By: _____________________________________
Reid D. Milanovich
Chairman
By: _____________________________________
[***INSERT NAME***]
Mayor

ATTEST

By: _____________________________________
[***INSERT NAME***]
City Clerk

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

8 APPROVED AS TO FORM

By: _____________________________________
John T. Plata
General Counsel

APPROVED AS TO FORM

By: _____________________________________
[***INSERT NAME***]
City Attorney

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Attachment: Tribal Sales Tax Agreement (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

1 TRIBAL SALES TAX AGREEMENT

RECITALS

A. The Tribe has ret ained the inherent power of taxation as an essential aspect of its sovereignty and therefore has the power to tax except when limited by federal law.

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

2 TERMS

3. Term. The term of this Agreement shall commence on January 1, 2022 and expire on December 31, 2023, unless earlier terminated as provided herein.

a. “City Allocation” means an amount equal to a percentage of the rate established for the Tribal Sales Tax pursuant to Section 3.08.1230 of the Agua Caliente Tribal Code. The Tribe will establish this percentage, in its sole and absolute discretion, through Tribal Council resolution. In no event shall the percentage used to calculate the City Allocation exceed the percentage of the California district tax for the Riverside County Transportation Commission pursuant to the Transactions and Use Tax Law (Cal. Rev. & Tax. Code, §§ 7251 et seq.). For purposes of illustration and not limitation, the City will receive an amount calculated at a tax rate of 0.5% (i.e., the equivalent to the Transactions and Use Tax for the Riverside County Transportation Commission ). T he City Allocation would not exceed the tax rate of 0.5% of the Transactions and Use Tax for the City.

b. “Commencement Date” means January 1, 2023.

d. “Fiscal Year” means January 1st through December 31st.

e. “Indian Lands” has the meaning ascribed to it in Section 3.08.050 of the Agua Caliente Tribal Code.

f. “Notice” means all notices, requests, consents, claims, demands, waivers, and other communications hereunder sent to a Party in accordance with Section 13(d) hereof.

g. “Public Safety” means the provision of law enforcement, emergency medical services, fire suppression and prevention, and emergency management by the City or a government or private entity that the City contracts with.

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

3 h. “Term” means the term of this Agreement as specified in Section 3 hereof.

i. “Tribal Council” means the Agua Caliente Tribal Council.

j. “Tribal Sales Tax” means the sales tax imposed and collected pursuant to Chapter 3.08 of the Agua Caliente Tribal Code.

a. Total Tribal Sales Tax Revenue Received. The total amount of City Allocation funds that the City received during the prior Fiscal Year.

c. Description of Actual Expenditures . A listing of all services, supplies, capital outlays, employee expenses, and any other costs or expenses that the City funded using City Allocation funds during the prior Fiscal Year.

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

4 d. Carryover. The amount of City Allocation funds not expended during the prior Fiscal Year and carried over to the then current Fiscal Year.

e. Certification. A certification, executed by the mayor, certifying the receipt and the use of City Allocation funds in accordance with this Agreement.

9. Non-Appropriation of Funds. All obligations of the Tribe under this Agreement are subject to the availability of Tribal Sales Tax funds and the City acknowl edges that the ability of the Tribe to perform under this Agreement is contingent upon the continued availability of these funds. The Tribe has no obligation to make distributions under this Agreement from any other revenue or funding source apart from the Tribal Sales Tax funds the Tribe sets aside to carry out the purposes of this Agreement. The Tribe’s decisions with respect to the City Allocation are within the exclusive discretion of the Tribal Council.

10. Indemnification. The City agrees to defend, indemnify, and hold harmless the Tribe, its Tribal Council, and each member thereof, and its officers, agents, and employees, against any and all claims, lawsuits, judgments, causes of action, costs, and expenses for personal injury (including death), property damage, or other harm for which recovery of damages is sought, suffered by any person or persons, that may arise out of or be occasioned by the City’s breach of any of the terms or provisions of this Agreement, or by any negligent act or omission of the City, its officers, agents, servants, employees, contractors, or subcontractors, in the performance of this Agreement; except that the indemnity provided for in this Section shall not apply to any liability resulting from t he sole negligence of the Tribe, its officers, agents, employees, or separate contractors. The provisions of this Section are solely for the benefit of the Parties hereto and not intended to create or grant any rights, contractual or otherwise, to any other person or entity.

Both Parties expressly agree that this Agreement does not assign any responsibility for civil liability to the Tribe that may arise by virtue of this Agreement.

The Tribe may also terminate this Agreement for breach of any provision of this Agreement, upon written notice of the breach and the City shall have ten (10) days after receipt of the written notice in which to cure the breach to the satisfaction of the Tribe. If the City fails to cure the breach to the satisfaction of the Tribe within the timeframe set forth herein, the Tribe ma y proceed with terminating this Agreement as set forth above.

13. Appeal Process. If the City wishes to appeal any decision of the Tribe relating to this Agreement, the City shall present its appeal to the Tax Director in writing within ten (10) business days of the Tribal action giving rise to the appeal. Upon receipt of the appeal and within a reasonable amount of time, the Tax Director will present the appeal to the Tribal Council for consideration. The Tribal Council will review the appeal within thir ty (30) days of the Tribe’s receipt and decide whether to grant, conditionally grant, or deny the appeal. The decision of the Tribal Council shall be final and shall not be appealable.

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

5 14. Miscellaneous Provisions.

a. Expenses. All costs and expenses incu rred in connection with this Agreement and each agreement, document, and instrument contemplated by this Agreement and the transactions contemplated hereby and thereby shall be paid by the Party incurring such costs and expenses.

b. Further Assurances . Ea ch of the Parties shall execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated hereby and thereby.

If to Tribe: Agua Caliente Band of Cahuilla Indians
Tax Department
5401 Dinah Shore Drive
Palm Springs, California 92264
Attention: Tax Director

With a copy to: Agua Caliente Band of Cahuilla Indians Legal Department
5401 Dinah Shore Drive
Palm Springs, California 92264
Attention: General Counsel

If to City: [***INSERT CITY NAME***]
[***INSERT CITY DEPARTMENT***]
[***INSERT ADDRESS***]
[***INSERT CITY, STATE AND POSTAL CODE***]
Attention: [***INSERT TITLE OF OFFICER TO
RECEIVE NOTICES***]

With a copy to: [***INSERT NAME OF LAW FIRM***]
[***INSERT ADDRESS***]
[***INSERT CITY, STATE AND POSTAL CODE***]
Attention: [***INSERT ATTORNEY NAME***]

d. Interpretation. For purposes of this Agreement, (i ) the words “include,” “includes,” and “including” are deemed to be followed by the words “without limitation”; (ii) the word “or” is not exclusive; and (iii) the words “herein,” “hereof,” “hereby,” “hereto,” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (iv) to sections, schedules, and exhibits mean the sections of, and schedules and exhibits attached to, this Agreement; (v) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended,

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

6 supplemented, and modified from time to time to the extent permitted by the provisions thereof; and (vi) to a statute means such statute as amended, renumbered, or restated from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The schedules and exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

e. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

g. Amendment and Modification . This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto.

k. Successors and Assigns . This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective permitted successors and permitted assigns.

l. No Third-Party Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective permitted successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement.

m. Governing Law. This Agreement is made, entered into, and performed within the Agua Caliente Indian Reservation, and shall in all respects be interpreted, e nforced, and governed by the

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

7 following applicable laws, which are stated in their order of priority in the event of a conflict between them:
the laws of the United States, the laws of the Agua Caliente Band of Cahuilla Indians, and the laws of the State of California. This Agreement shall not be construed either for or against Tribe or City, but this Agreement shall be interpreted in accordance with the general tenor of the language in an effort to reach an equitable result.

n. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmiss ion shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

IN WITNESS WHEREOF, the Parties have entered into this Agreement as of the Effective Date.

TRIBE CITY

By: _____________________________________
Reid D. Milanovich
Chairman
By: _____________________________________
[***INSERT NAME***]
Mayor

ATTEST

By: _____________________________________
[***INSERT NAME***]
City Clerk

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

8 APPROVED AS TO FORM

By: _____________________________________
John T. Plata
General Counsel

APPROVED AS TO FORM

By: _____________________________________
[***INSERT NAME***]
City Attorney

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Attachment: Tribal Sales Tax Agreement RCTC (9-27-2022) (003) (3470 : Agua Caliente Tribal Food and Beverage Sales Tax Agreement)

Cathedral City Page 1 of 3 Printed on 11/23/2022

Staff Report

City Council

Item No. 3.C

Meeting Date: November 30, 2022
From: John Corella, Director of Engineering/Public Works Title: FY 2022/2023 CDBG Sidewalk Repair Assistance Program

City Council

RECOMMENDATION:

Staff will be presenting Ca thedral City's FY 2022 -2023 Community Development Block Grant (CDBG) Sidewalk Repair Assistance Program for City Council review, discussion, and direction.

BACKGROUND:

The Community Development Block Grant (CDBG) program, funded by the U.S.

Department of Housing and Urban Development (HUD), allows Cathedral City to carry out a wide range of community development activities directed towards revitalizing neighborhoods, economic development, and improving community facilities and services, mainly focused o n Low -to-Moderate Income (LMI) areas of the City. This annual funding is used to address the priority needs of the community outlined in the 5 - Year Consolidated Plan.

On June 22, 2022, the City Council approved Cathedral City’s FY 2022 -2023 Annual Action Plan (AAP) outlining the proposed allocation of funds for this fiscal year. The AAP included a $15,000 allocation from CDBG Public Infrastructure funds for the City’s Sidewalk Repair Assistance Program.

Sidewalks
The Sidewalk Repair Assistance Program (P rogram) has been developed to reduce the financial hardship that repairing an out of compliance sidewalk places on Cathedral City property owners within LMI areas as designated by HUD. These out of compliance sidewalks are identified through the City’s Co de Compliance Division’s enforcement of California Streets and Highways Code Section 5610 and Cathedral City Municipal Code Section 14.12.010 Duty to Maintain, which states “…. maintenance and repairs to the sidewalk shall be provided by the owner or owner s or other persons in possession of the abutting property as may be required to maintain it in a condition which will not endanger any person or property, or interfere with the public convenience in the use of the sidewalk.”

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Corner Ramps
The City’s curre nt Cathedral City Municipal Code Section 14.12.010 Duty to Maintain includes the maintenance of corner pedestrian ramps ( corner ramps). Corner ramps are required to be in place at every intersection where an accessible route crosses a curb to allow access to crosswalks for people with disabilities.

Corner ramps require the installation of detectable warning surface, replacing the level landing and , at times, a few adjacent sidewalk panels to bring the ramp into the Americans with Disabilities Act ( ADA) compliance, increasing the limits of this repair from the beginning to the end of the curb return. Therefore, the cost to repair a curb ramp is considerably higher in comparison with the cost to repair a sidewalk , which can pose a difficult financial challenge for residents. For reference, in November 2022, the Cathedral City Public Works Department replaced the corner ramp at Whispering Palm and Baristo Road, costing $9,760 (Invoice and picture are attached to this Staff Report).

DISCUSSION:

Sidewalks
The purpose of this Program is to assist Cathedral City residents facing hardship to resolve code compliance violations related to non -compliant sidewalks fronting their property. This Program will address HUD’s national objectives of LMI areas benefits, qualifying the Sidewalk Repair Assistance Program as eligible improvements to be funded through the City’s CDBG Program.

The Program will use the following documents to inform residents about the steps to participate in this program.

• Program Overview : An i nformational page describing how to apply to the program, the eligibility requirements, and includes a map of the HUD LMI areas within the City limits. This Program Overview would be mailed out with the code compliance notices to property owners in LMI areas.
• Application Instructions : This packet provides eligible residents with forms/applications such as: Program Application and No Fee Encroachment Application, allowing residents to disclose reasons of financial hardships, and all other information required to participate in the program. • Agreement Packet : This packet includes the Program Agreement between the property owner and the City, outlining property owner’s and City’s obligations and a Payment Voucher to be redeemed once the work has been completed b y the owner/owner’s contractor and inspected by City Staff.

The eligibility requirements for this financial assistance are as follows:

• The applicant must be Cathedral City property owner and have a financial hardship.
• The property address must be in a HUD LMI area.
• The property address must have a Notice of Violation for damaged sidewalk issued by the Cathedral City Code Compliance Division.
• The property address is the owner’s primary residence.

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Residents living in a HUD LMI area with a Code Compliance V iolation for damaged sidewalks will receive the Program Overview. Qualified residents will complete a Program Application, and a Program Agreement will be executed between the property owner and the City to repair the sidewalk. The property owner will rece ive a voucher assisting with 75% of the repair cost up to $800, to be redeemed with the City after the sidewalk is inspected and approved by City Staff.

Program Funding:
• The program will fund 75% of the cost to complete the sidewalk repair up to $800.00.
• Funding will be awarded on a first come , first serve basis until all program funds are depleted ($15,000).

Duty to Maintain Corner Ramps
City Staff has evaluated the cost for homeowners to repair the corner ramps under the current Cathedral City Municipal Code Section 14.12.010 Duty to Maintain . This cost is high and poses a significant financial burden on the property owner cited to make repairs. As a result of this evaluation, Staff is also recommending the Duty to Maintain Ordinance be modified to e xclude corner ramps from the maintenance and repairs to the sidewalk provided by the owner or owners or other persons in possession of the abutting property.

It is proposed the m aintenance and repairs of corner ramps from the beginning to the end of the c urb return will be the responsibility of Cathedral City Public Works Department as it requires to be maintained in a condition which will not endanger any person or property or interfere with the public convenience in the use of the sidewalk.

The proposed language for the ordinance modification will be presented to the City Council at a future City Council meeting.

FISCAL IMPACT:

The Program would be funded through Cathedral City’s FY 22 -23 CDBG AAP Public Infrastructure Program, in the amount of $15,000.

Due to the limited funding, the Program would continue until the funds are depleted or until the end of FY 2022 -2023. City Staff estimates this Program would assist approximately 19 Cathedral City LMI property owners requiring sidewalk repairs.

ATTACHMENTS:

Cathedral City CDBG Sidewalk Repair Assistance Program Overview Cathedral City CDBG Sidewalk Repair Assistance Program Application Cathedral City CDBG Sidewalk Repair Assistance Program Agreement Curb Ramp - Invoice - Whispering Palms Baristo
Image Whispering Palms and Baristo

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68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Cathedral City FY 2022-23 CDBG Sidewalk Repair Assistance Program The purpose of the Sidewalk Repair Assistance Program is to support Cathedral City residents facing hardships with resolving code compliance violations for damaged sidewalks in a Low-Mod Income (LMI) area, as designated by U.S Department of Housing and Urban Development (HUD). Please refer to the map on Page 2 to confirm your property address is within a HUD LMI area.

Per Cathedral City Municipal Code Section 14.12.010 “Duty to maintain”, “Pursuant to California Streets and Highways Code Section 5610, the owner or owners of lots or portions of lots fronting on any portion of a public street which has been improved by the installation of a sidewalk shall maintain the sidewalk, including any parkway area between the sidewalk and the street line…” Cathedral City’s Sidewalk Repair Assistance Program provides funds to property owners for the cost to repair damaged sidewalk fronting their property. Qualified property owners will complete removal of damaged sidewalk and installation of new sidewalk in compliance with City standards.

Program Eligibility:
• Applicant must be Cathedral City Property Owner
o Property Address is located in a HUD LMI area
o Property Address has Code Compliance Notice of Violation for damaged sidewalk o Property Address is the applicant’s primary residence If yo
u are interested in participating in the assistance program, please email [email protected] or call 760- 770-0319 and provide the following information:

FIRS

T AND LAST NAME (PROPERTY OWNER)

PROPERTY ADDRESS

PHONE NUMBER

CODE COMPLIANCE NOTICE NUMBER
If the i
nformation provided meets the program eligibility requirements, the property owner will receive the application instructions by mail. The property owner must complete and submit the application back to City Hall.

APPLICATION MUST BE COMPLETED IN ITS ENTIRETY TO BE APPROVED.

If your a
pplication is approved, the agreement packet with the payment voucher will be mailed to applicant. Once the applicant receives the agreement packet, the sidewalk repair may begin. The value of the voucher will cover 75% of the sidewalk repair costs up to $800. The voucher can be redeemed at City Hall once the sidewal k repair has been completed by the owner/owner’s contractor and inspected by City Staff. This Sidewalk Repair Assistance Program will be funded through Cathedral City’s Fiscal Year 2022-23 Community Development Block Grant (CDBG) Program.

Than
k you,
The E
ngineering Department

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Overview (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Overview (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance Program) 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Applicant:

Enclosed is Cathedral City’s Sidewalk Repair Assistance Program Application. Please review and complete the application forms, whic h includes the program application form and the no-fee encroachment permit application form.

When the completed application forms are completed and ready for submittal, please mail or drop off to the addres s below.

If there are any issues , the City will contact the property owner to resolve any irregularities with the subm itted application for ms. Applications are normally reviewed the same week they are received.

Once the application is approved, the AGREEMENT packet will be mailed to the applicant. The agreement packet will include the payment voucher that can be redeemed once the sidewalk repairs have been com pleted by the owner/owner 's contractor AND inspected by City Staff.

Please MAIL/DROP OFF documents to the address below.

If you have any questions regarding the enclosed documents, please call (760)-770-0319 or email [email protected].

Sincerely,
City of Cathedral City
Engineering Department

CATHEDRAL CITY

SIDEWALK REPAIR ASSISTANCE PROGRAM

APPLICATION

INSTRUCTIONS
City of Cathedral City
Engineer Department
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Application (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Cathedral City Sidewalk Repair Assistance Program Application Before you fill out the Application, please read the Program Information/Application Instructions and complete the application in its entirety.

The Community Development Block Grant requires demographic information for all program beneficiaries.

Applicant Name:

Last First Middle Initial
Co-applicant Name:

Last First Middle Initial
Address:

Applicant Telephone: Home: ( )- - Cell: ( )- -
Email:

Do you own this property? Yes No
Have you or the property received a notice of violation from Cathedral City Code Compliance for the condition of the sidewalk? Yes No
If yes, when? _____________ Please include Case# if known: _________________ Will the cost of the Sidewalk Replacement cause a financial hardship to you and your household? _____Yes _____N o If yes, please explain the financial hardship: ______________________________________________________________________ ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ ___________________________________________________________________________________________________________ Please attach documentation (Examples include but are not limited to proof of unemployment, proof of outstanding debt, medical bills, etc.). Are documents attached to the application? __
__ Yes ___ No

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Application (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Number in Household: Female Head of Household? Yes No Elderly or Disabled Household? _____Yes _____No A househol
d is defined as all persons occupying the same housing unit, regardless of their relationship to each other. The occupants could consist of one family, two or more families living together, or any other group of related or unrelated persons who share living arrangements.

Please note: Please select at least one from the following list that best describes your household racial characteristics. HUD requires the City of Cathedral City to report the following information for all recipients. HUD encourages self-reporting, but you are not required to furnish the following racial/ethnic information:

One Race Household: White
Black/African American
Asian
American Indian/Alaskan Native
Native Hawaiian/Other Pacific Islander
Multi-racial Household: American Indian/Alaskan Native and White Asian and White
Black/African American and White
American Indian/Alaskan Native and Black/African American Other Multi-Racial
Are you also Hispanic? _____Yes No
I hereby submit this application to the City of Cathedral City's Sidewalk Repair Assistance Program. I further certify that all ownership, occupancy, and code compliance information is accurate.

If the approving staff rejects the application, I understand that the City shall provide no assistance for this project.

By my/our own signature(s), I/we acknowledge receipt of, have read, and understand the City’s Sidewalk Repair Assistance Program and I/we agree to abide by the terms of the policy, the, and applicable City codes.

I/we, the undersigned, do hereby swear under penalty of perjury that all information contained on the application is true and correct to the best of my knowledge and belief.

Appl
icant Signature
________
____________________ Date: __________________
Co-Applicant Signature (if applicable)
________
____________________ Date: __________________

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Application (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance

APPLICATION FOR

NO-FEE ENCROACHMENT

PERMIT APPLICATION FORM
Sidewalk Repair Assistance Program Application

PROPERTY IDENTIFICATION
Property Address:

Description of Work:

PROPERTY OWNER INFORMATION
Name: Tel:

Address: Email:

City: State: Zip:

ENGINEER INFORMATION
Name: Tel:

Address: Email:

City: State: Zip:

Eng. License No.: City Business License No.:

CONTRACTOR INFORMATION
Name: Tel:

Address: Email:

City: State: Zip:

Contractor’s State Lic. No.: City Business License No.:

REQUIRED SUBMISSIONS Office Use Only
Drawings 1st Sub 2nd Sub 3rdd Sub Approved Fee Due Fee Paid

Grading Plan Check - 3 Sets

Hydrology Report - 2 Sets

PM10 Package - Signed Set

FEMA Package – Signed Set

Fire Department Approval - 2 Sets

Retaining Wall Design & Details - 3 Sets

Engineer’s Estimate of Work - 2 Sets

Grading Permit

Encroachment Permit

Encroachment Permit Plot Plan

Other -
Lot: Tract: APN: Flood Zone:

R/W/Parkway: Drive Width LF: Sidewalk LF:

Lot Size: Cut (CY): Fill (CY):

Bldg PC #: B-Perm#: G-Perm#: E-Perm#:

Applicant’s Signature: Tel:

Email:

Date:

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Application (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Enclosed you should find the following documents:
• Program Agreement
• No-Fee Encroachment Permit
• Payment Voucher
• Invoice Form (Exhibit A)
• Authorization
to Release Voucher Funds/ Contractor Acknowledgment (Exhibits B/C) Please review the documents carefully. Once the sidewalk repairs have been completed, the following documents must be submitted to the City:
 Fully executed Program Agreement
 Completed Exhibit A
 Encroachment
Permit with Inspection Signature
 Authorization to
Release Voucher Funds OR Contractor Acknowledgment
Please MAIL/DROP OFF documents to the address below.

If you have any questions regarding the enclosed documents or instructions, please call (760)-770-0319 or email [email protected].

Sincerely,
Cathedral City
Engineering Department

CATHEDRAL CITYY

SIDEWALK REPAIR ASSISTANCE PROGRAM

AGREEMENT PACKET
City of Cathedral City
Engineering Department
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov

PLEASE DO NOT STAPLE DOCUMENTS

TOGETHER

CATHEDRAL CITYY

SIDEWALK REPAIR ASSISTANCE

PROGRAM

AGREEMENT
Please print
Property Ow
ner:

Property Address:

Property Owner’s Obligations:

Property Owner agrees to complete sidewalk repairs as described in the Application Instructions within six months of the approved application date. To complete the Project, Property Owner shall submit the following to the City:
 A fully executed original copy of this Program Agreement.  An invoice identifying the costs incurred for the sidewalk repair. Attached as Exhibit A (Invoice).
 Encroachment Permit with Inspection Signature
Within six months after Property Owner completes the sidewalk repair, Property Owner shall participate in a survey to be conducted by the City. Upon receipt of a survey card from the City, Property Owner shall complete and return the card to the City. The survey responses will assist the City in evaluating the success of the Program.

Property Owner agrees to remove damaged sidewalks and install new sidewalk to City Standards. Once the sidewalk repair is completed, Property Owner is responsible for calling the City Inspection Line, (760)-770-0379, for an inspection. If the sidewalk repair work passes inspection, the owner/owner's contractor can follow the steps on the next page to redeem the voucher. Property Owner is responsible for complying with all laws, policies, regulations or covenants that may apply.

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
City’s Obligations:

The City will fund the Program by the issuance of a payment voucher to the Property Owner. The value of the payment voucher shall be equal to 75% of the total cost to repair the damaged sidewalk , up to a maximum amount of $800.

All costs to be considered when calculating the amount of the voucher must have been for expenses clearly related to the sidewalk repair consistent with City Standards. Only those expenses for which the Property Owner submits proof of payment, in a form acceptable to the City, shall be considered.

The City processes check on a bi-weekly basis. The processing of payment may take 2- weeks, depending on when all the required documents and payment voucher are submitted. Please note the following documents are required to be submitted to process payment:
• If work is completed by a Contractor and voucher is redeemed by the Property Owner: Proof of Full Payment to the Contractor, Contractor's Invoice, and Contract Acknowledgment (Exhibit B
)
• If work is completed by a Contractor and voucher is redeemed by the Contractor: Invoice, W-9 Form, and Authorization to Release Voucher Funds (Exhibit C) • If the work is completed by the Property Owner and voucher is redeemed by the Property Owner
: Receipt of Materials
All communications concerning this Program shall be directed to:

DECLARATION OF PROPERTY OWNER: The undersigned declares under penalty of perjury, under the laws of the State of California, that the foregoing information set forth in this application and in its attachments is true and correct.

Date of this Agreement:

Signature Authorized Property Owner
_________________________________________________________________ Armando Garcia Baldizzone, City Engineer
City of Cathedral City
City of Cathedral City
ATTN: Engineering Department
68-700 Avenida Lalo Guerrero, 92234
(760)-770-0319
[email protected]

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
BILL TO:

City of Cathedral City
68-700 Avenida Lalo Guerrero
Cathedral City, CA 92234
Invoice Number

PLEASE DO NOT STAPLE RECEIPTS

TO INVOICE FORM

CATHEDRAL CITY

SIDEWALK REPAIR ASSISTANCE PROGRAM

AGREEMENT
Total amount spent on project
(see reverse side for additional instructions)
Voucher Amount:
(see reverse side for additional instructions)
Please initial here confirming that you are the
property owner of the property address listed
above. You must be listed as one of the
property owners in order to receive payment of
funds for this project.

Initial
(see reverse side for additional instructions)
Make reimbursement check payable to:

Property Owner:

Property Address:

Phone Number:

Date:

The above information and all supporting documentation is subject to the declaration under penalty contained in the Program Agreement.

EXHIBIT A

INVOICE FORM

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 68700 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Total amount spent on project: The total cost to complete the sidewalk repair. Contractor Invoice or Receipt of Materials
required for documentation.

Voucher Value: The voucher value is 75% of the total cost to complete the sidewalk repair, up to $800.00.
• In order to receive the maximum value of the voucher ,$800, you must be able to attach to this invoice form:
o If work is completed by a
Contractor and voucher is redeemed by the Property
Owner: Proof of Full Payment to the Contractor, Contractor's Invoice, and Contract Acknowledgment (Exhibit B)
o If work is completed by a Contractor and voucher is redeemed by the Contractor: Invoice, W-9 Form, and Authorization to Release Voucher Funds (Exhibit C)
o If the work is completed by the
Property Owner and voucher is redeemed by the
Property Owner: Receipt of Materials
• Receipts
must have a direct nexus to the sidewalk repair.
• The
maximum voucher value per property owner is $800.

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance

PAYMENT VOUCHER
Amount:

Property Owner:

Approved By: Signature:

CATHEDRAL CITY SIDEWALK REPAIR ASSISTANCE PROGRAM
Property Address:

Redeemed By:

Contractor:

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Attachment: Cathedral City CDBG
6870 0 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Contractor Acknowledgment Receipt
I, __________________________, the Contractor, Business License # is ______________________________ , acknowledge receipt of all payments for sidewalk repairs from the Property Owner_________________________ at Property Address _______________________________. The Property Owner, who is presently holding the payment voucher worth $ , may redeem the payment voucher through Cathedral City’s Sidewalk Repair Assistance Program, pursuant to the terms of the Program Agreement between Cathedral City and the Property Owner hereto, dated _____ day of ________________ , 2022.

I,__________________________ (Contractor Name), understand that Cathedral City will release the value of the payment voucher from the Cathedral City Sidewalk Repair Assistance Program to ____________________________________ (Property Owner Name) and agree to hold (him)(her)(them) harmless for the release of the payment voucher funds.

Date: ___________________________________________
Property Owner: Contractor:

Printed Name: Printed Name:

Signature: Signature:

CATHEDRAL CITY

SIDEWALK REPAIR ASSISTANCE PROGRAM

AGREEMENT

EXHIBIT B

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance 687 00 Avenida Lalo Guerrero | Cathedral City | California | 92234 www.cathedralcity.gov
Auth
orization to Release Voucher Funds
I, __________________________, the Property Owner, of the Property located at ______________________________ , a
m presently holding the payment voucher worth $ , awarded through Cathedral City’s Sidewalk Repair Assistance Program, pursuant to the terms of the Program Agreement between Cathedral City and the Property Owner hereto, dated _____ day of ________________ , 2022.

I,__________________________ (Property Owner Name), authorize Cathedral City to release the value of the payment voucher from the Cathedral City Sidewalk Repair Assistance Program to ____________________________________ (Contractor Name) and agree to hold (him)(her)(them) harmless for the release of the payment voucher funds.

Date: ___________________________________________
Property Owner: Contractor:

Printed Name: Printed Name:

Signature: Signature:

CATHEDRAL CITY

SIDEWALK REPAIR ASSISTANCE PROGRAM

AGREEMENT

EXHIBIT C

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Attachment: Cathedral City CDBG Sidewalk Repair Assistance Program Agreement (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance

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Attachment: Curb Ramp - Invoice - Whispering Palms Baristo (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance Program)

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Attachment: Curb Ramp - Invoice - Whispering Palms Baristo (3469 : FY 2022-2023 CDBG Sidewalk Repair Assistance Program)

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Attachment: Image Whispering Palms and Baristo

Cathedral City Page 1 of 4 Printed on 11/23/2022

Staff Report

City Council

Item No. 3.D

Meeting Date: November 30, 2022
From: Charles McClendon, City Manager
Title: Cannabis Task Force Update

City Council

RECOMMENDATION:

This item is presented for information, discussion and direction only.

BACKGROUND:

Cannabis businesses became fully legal for both medicinal and adult use with the passage of Proposition 64 by California voters. The full implementation of Prop 64 became effective January 1, 2018. The industry continues to mature in Cathedral City.

Staff provided an update to the City Council at their study session on September 8, 2021, which covered the history of tax collections in Cathedral City and discussed a request from a business owner to consider a retail “tax holiday”. Council decided not to implement a tax holiday.

The Cannabis Task Force met on November 29, 2021. Topics of discussion included the Cathedral City tax structure and tax comparisons with other local cities. The results of the task force meeting were then discuss ed with the City Council on January 19, 2022. Council directed staff to conduct a deeper review of the City’s regulations related to cannabis and the tax structure and report back to the task force and ultimately to the City Council.

A staff working group met during the spring of 2022 and developed some recommended revisions to the municipal code regarding cannabis business regulations. These were reviewed by the Cannabis Task Force on April 11, 2022. The Task Force expressed agreement with the recommen dations of the staff working group regarding revisions to the code, especially those that would align the municipal code more closely with state law. The Task Force was not supportive of lifting the moratorium on new retail licenses south of I -10. The ta sk force also expressed support for some type of tax relief for cultivators, notably limiting the taxable area to the canopy space. There was some support for Council consideration of a reduction in the retail tax rate, at least on a trial basis.

The results of the task force discussion were presented to Council in study session on

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April 20, 2022. In general , Council agreed with the proposed ordinance revisions in some areas and asked for additional information on others. Council agreed with the recommendation to keep the moratorium on new retail licenses in place. A follow up Council study session was held on May 11, 2022 during which the requested additional information was presented and further discussion on taxation occurred. As a result of the discussion, Council provided direction to move ahead with the proposed ordinance revisions, asked for a further discussion on outdoor consumption lounges, provided direction to allow a phase in period for new cultivators prior to taxation beginning and also t o provide for a temporary pause on cultivation taxes during a period of non - operation. There was not support for changing the retail tax and staff was asked to revisit the manufacturing tax structure with the task force.

Further discussions were held wit h the City Council on June 8, 2022 and August 10, 2022. Resolutions amending the cultivation tax definitions to reduce the taxable space and establishing tax exemptions for pre -operational and non -operational businesses were approved on August 10, 2022 an d are attached. The ordinance implementing the recommended code amendments was introduced for first reading on August 24, 2022 and approved on September 14, 2022 and is now in effect.

Taxes in Neighboring Jurisdictions

Staff reviewed the taxes charge d to cannabis businesses in the cities of Palm Springs, Palm Desert, Desert Hot Springs and Coachella. La Quinta, Indian Wells and Rancho Mirage do not currently allow cannabis businesses. Indio recently acted to allow retail storefronts only.

Retail Taxes:

City Tax Rate
Cathedral City – 10% tax on gross proceeds
Palm Springs - 10% tax on gross proceeds
Palm Desert - 10% tax on gross proceeds
Desert Hot Springs - 10% tax on gross proceeds
Coachella - 6% tax on gross proceeds

Cultivation Taxes:

Note: Since some cities have variable rates based on the size of the facility a calculation is included showing the annual tax on a 6,000 square foot facility which is the average among all currently operating cultivation facilities in Cathedral City.

City Tax Rate Tax on 6000 sq. ft.
*Desert Hot Springs - $10.20/sq.’ $61,200
*Coachella - $15/sq.’ up to 20k; $7.50/sq.’ over $90,000 Cathedral City $15/sq.’ $90,000
Palm Desert $13/sq.’ $78,000
Palm Springs $10/sq.’ $60,000

*In addition to the square foot tax, Coachella also charges a gross proceeds tax of 4% *Desert Hot Springs previously had a two -tiered rate structure and recently eliminated the tiers resulting in a rate of $10.20 per square foot regardless of size.

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Manufacturing Taxes:

Coachella - $15/sq.’ up to 20k; $7.50/sq.’ over plus 2% gross proceeds Cathedral City - $.05/gram on crude; $.10/gram on distillate; $.40/gram other Palm Springs 2% tax on gross proceeds
Palm Desert 2% tax on gross proceeds
Desert Hot Springs 0

*The Cathedral City enabling legislation requires a per gram tax on products manufactured. The current schedule was designed to approximate the 2% gross proceeds level. The mix of products produced will affect taxes paid.

Distribution and Testing Taxes:

Coachella - 2% gross proceeds on distribution, 1% gross proceeds on testing Cathedral City - 0 on product cultivated or manufactured (and taxed) in CC Palm Springs - 0
Palm Desert - 0
DHS - 0

Council asked staff a nd the task force to review the per piece element of the manufacturing tax. Crude and distillates are taxed per gram as are other oils.

Individual items, such as pre-rolled joints, are taxed on a per piece basis, currently at 40 cents per piece. Manufac turers have indicated the current rate is prohibitive causing them to operate in other jurisdictions.

DISCUSSION:

The task force had a lengthy discussion on the financial challenges facing the cannabis industry, and also on the financial considerations City Council members must take into account when considering tax policy. It was noted the tax revenues from cannabis businesses are already declining which has been the trend for the past year and half or so.

The task force identified three factors affecting the profitability of the industry:

1. Market saturation - the number of retail outlets in the Palm Springs/Cathedral City market has increased dramatically compared to three years ago.

2. Competition with the “black market”, those selling product from unli censed suppliers.

3. Taxes are higher than retailers of any other product face. The multiple levels of taxation from the state, the city and regular sales taxes make it harder to attract customers and make a profit.

Task force members acknowledged the retai l taxes charged by Cathedral City are in line with those charged by most other cities in the Coachella Valley, but indicated that businesses in those cities, notably Palm Springs are struggling as well.

Task force members also noted that cultivators also are facing increased competition and that unlike retailers, they face competition from a statewide market as product can

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move readily across the state. Cathedral City’s cultivation taxes are higher than other Coachella Valley cities.

It was the consensus of the task force that decisions regarding the cannabis industry and city tax revenue need to focus on the long -term survival of the industry in Cathedral City. There is concern the current status of the industry is not sustainable. Current trends indicate that in the future there will be a smaller number of retail stores and likely fewer cultivators as well. The task force agrees that lower rates of taxation are likely necessary for long-term survival of the industry.

As Council asked, the task force briefly discussed the manufacturing taxes on the per piece products produced, primarily pre-rolled joints. At a wholesale price of about $1.50 each, the 40 cent per item tax represents an effective tax rate of about 27%. The manufacturing tax rates for c rude (5 cents per gram) and distillate (10 cents per gram) were set to try to approximate the Coachella Valley normal manufacturing tax rate of about 2%. Thus, a tax more in the range of 3 to 5 cents per piece would come closer to the target rate.

Recommendations:

Retail tax rate reduction to 5%
Cultivation tax rate reduction to $10 per square foot
Manufacturing per piece rate of 3-5 cents.

FISCAL IMPACT:

In calendar year 2021, total cannabis taxes paid to Cathedral City were $4,971,001. For calendar year 2022, it looks like total taxes paid will be about $3.6 million. Based on estimated 2022 collections, each 1% reduction in the retail tax will result in an additional revenue loss of about $120,000 annually. A reduction in the cultivation tax rate to $ 10 per square foot would result in a revenue loss of about $750,000. A reduction in the per piece manufacturing tax would not have a cost as there is very little, if any, of this type of manufacturing occurring in Cathedral city. It could theoretically r esult in additional taxes if manufacturers resumed such operations.

ATTACHMENTS:

Cannabis Ordinance Amendments September 2022
CC Reso 2022-43
CC Reso 2022-44
Cannabis Tax Graph November 2022

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RIV #4889-3092-9927 v1
ORDINANCE NO. _______

AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CATHEDRAL CITY AMENDING CHAPTER 5.88 (CANNABIS

BUSINESSES)
WHEREAS, the City of Cathedral City has allowed a wide range of cannabis businesses to operate within the City, subject to licensing and other regulatory requirements, since Proposition 64 legalized medicinal and adult-use cannabis; and WHEREAS, as the cannabis industry and State regulations evolve, the City desires to update its local regulations to address new concerns and ensure consistency with State requirements; and
WHEREAS, the City Council and Cannabis Task Force have held study sessions on proposed revisions to the City’s cannabis regulations and provided input and direction on desired changes.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1 AMENDMENT OF SECTION 5.88.025 (DEFINITIONS)
A. The definition of “good cause” in Section 5.88.025 is amended as follows:
“Good cause” for purposes of denying an initial local license issuance, for suspending or revoking a local license, or for denying a local license renewal, means:

1. The applicant or licensee has violated been cited for violating any of the terms, conditions or provisions of this chapter, of state law, of any regulations and rules promulgated pursuant to state law, any applicable local rules and regulations, or any special terms or conditions placed upon its conditional use permit, state license, or local license;

2. The premises has been or is proposed to be operated in a manner that adversely affects the public health, safety or welfare or the safety of the immediate neighborhood in which the establishment is located;

3. The applicant or licensee has knowingly made false statements, misrepresentations or material omissions on an application form, renewal form, or any other document submitted to the city;

4. The criminal history of the applicant’s or licensee’s owner(s) indicates that one or more of the owner(s) lack good moral character; 5 An owner of the applicant or licensee is a licensed physician providing physician’s recommendation to qualified patients for medicinal cannabis;

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6. The applicant or licensee, or any owner of the applicant or licensee, operated a cannabis business in violation of this chapter or Chapter 9.108 of the code;

76. The applicant or licensees, or any owner of the applicant or licensee, is a person who is prohibited from holding the license under this chapter;

87. The premises proposed to be licensed or the licensed premises is located on land that is owned by the United States and held in trust for any federally- recognized Indian tribe or any member of the tribe, or that is subject to a restriction on alienation imposed by the United States;

98. For renewals, suspensions and revocations, the licensee has allowed a person whose criminal history indicates that person is not of good moral character to work within the premises as an employee, independent contractor, or volunteer; or 109. For renewals, suspensions and revocations, the licensee fails to allow inspection of the security recordings, activity logs, or business records of the licensed premises by city officials.

B. The definition of “Owner” is amended as follows:
“Owner” means any of the following:

1. A person with an aggregate ownership interest of ten twenty percent or more in the person applying for a license or a licensee, unless the interest is solely a security, lien, or encumbrance.

2. The chief executive officer of a nonprofit or other entity.

3. A member of the board of directors of a nonprofit.

4. An individual who will be participating in the direction, control, or management of the person applying for a license.

SECTION 2 AMENDMENT OF SECTION 5.88.035 (LOCAL LICENSE

REQUIRED)
A. Paragraph B of Section 5.88.035 is amended as follows:

B. Beginning January 1, 2018, it is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. Notwithstanding the foregoing, any licensee operating in the city prior to January 1, 2018 may continue to operate without a state license provided that it applies for the appropriate temporary or permanent license(s) from the state no later than forty -five days from the date that the state begins accepting applications. If the state denies the application for a temporary or permanent license(s) for any reason, the cannabis business must cease operations until such time as it obtains the

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appropriate temporary or permanent state license(s). It is unlawful for a cannabis business to operate in the city unless it has been granted the appropriate temporary or permanent state license(s) for its commercial cannabis activities. If the state denies the application for a temporary or permanent license(s) for a ny reason, the cannabis business must cease operations until such time as it obtains the appropriate temporary or permanent state license(s).

SECTION 3 AMENDMENT OF SECTION 5.88.065 (CANNABIS BUSINESS

OPERATIONAL REQUIREMENTS)
A. Paragraph I of Section 5.88.065 is amended as follows:

I. Cannabis Consumption on Licensed Premises. Smoking, vaporizing, ingesting, or otherwise consuming cannabis and cannabis products at a licensed premises is prohibited, except on the premises of a licensed dispensary in accordance with Section 5.88.070(JK). “Licensed premises” as used in this subsection includes the actual building, as well as any accessory structures, common areas and parking areas. A sign shall be posted at each entrance to a licensed premises that clearly and legibly states, “Smoking, vaporizing, ingesting, or otherwise consuming cannabis or cannabis products on these premises or in their vicinity is prohibited and a violation of the Cathedral City Municipal Code.” B. Paragraph P (Seed to Sale Tracking Req uired) of Section 5.88.065 is deleted in its entirety, and all subsequent paragraphs within the section are re-lettered to maintain alphabetical order.

C. A new subparagraph 4 is added to paragraph Q (Waste Disposal) of Section 5.88.065 to read as follows:

4. Odor. Disposal of cannabis waste shall be done in a manner consistent with the conditional use permit for the business. The conditional use permit may include conditions to minimize odor generated by cannabis waste, including but not limited to the placement of waste containers and the imposition of odor control requirements.

SECTION 4 AMENDMENT OF SECTION 5.88.070 (DISPENSARY

OPERATIONAL REQUIREMENTS)
A. Paragraph A of Section 5.88.070 is amended as follows:

A. Limited Hours of Operation. A dispensary may only be open to the public and engage in sales between the hours of eight six a.m. and ten p.m.

B. Paragraph B of Section 5.88.070 is amended as follows:

B. Product Not Visible To Public Displays. The display of cannabis and cannabis products for sale shall not be visible from outside the licensed premises include cartoon characters or other images designed to appeal to children .

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C. Paragraph I (Sale of Untested Products) is deleted in its entiret y and all subsequent paragraphs in the section are re -lettered to maintain alphabetical order.

D. Subparagraphs 3 and 4 of Paragraph J (Consumption of Cannabis and Cannabis Products on Premises) are amended as follows:

3. Cannabis consumption must occur only within the interior building space of the dispensary areas designated for consumption by the license. Consumption may not occur on patios, in parking areas, or in any other space that is not fully enclosed.

4. The cannabis business must install and maintain in good working order an odor control system in accordance with Section 9.108.080(A)(1). Odors caused by the consumption of cannabis at the dispensary must not be detectable from any public place. The cannabis business shall submit and abide by a certified odor control plan approved by the local licensing authority as a part of the license application and approval process. The plan shall include the use of a Vapor Phase System utilizing an odor neutralizer, such as Cannabolish or a similarly eff ective technology.

SECTION 5 AMENDENT OF SECTION 5.88.095 (PACKAGING AND

LABELING)
A. Paragraph D of Section 5.88.095 is amended as follows:

D. State-Mandated Warnings and Information. All cannabis and cannabis product labels and inserts shall include the state-mandated warnings and information contained in Business and Professions Code Section 26120(c).

Notwithstanding the foregoing, during the period of time that the state permits untested cannabis and cannabis products to be sold to purchasers, all cannabis and cannabis products must have a label affixed to each package that clearly states “This product has not been tested as required by the Medicinal and Adult-Use Cannabis Regulation and Safety Act” and must comply with any other labeling requirements imposed by the state.

SECTION 6 AMENDMENT OF SECTION 5.88120 (CIVIL FINES)
A. Section 5.88.120 is amended as follows:

Any person convicted of an infraction or misdemeanor violation shall, for each separate violation of this chapter, be subject to the following civil fines in amounts set by resolution of the city council in addition to any infraction or misdemeanor penalties.:

A. A fine in an amount not to exceed two hundred fifty dollars for a first conviction of an offense;

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B. A fine in an amount not to exceed five hundred dollars for a second conviction of the same offense within a twelve-month period of the date of the first offense;
C. A fine in an amount not to exceed seven hundred fifty dollars for a third conviction of the same offense within a twelve-month period of the date of the first offense; and
D. A fine of one thousand dollars for the fourth and subsequent convictions of the same offense within a twelve-month period of the date of the first offense.

SECTION 7 SEVERABILITY
The City Council declares that, should any provision, section, paragraph, sentence or word of this Ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this Ordinance as hereby adopted shall remain in full force and effect.

SECTION 8 EFFECTIVE DATE
This Ordinance shall take effect thirty (30) days after its second reading and adoption by the City Council.

SECTION 9 POSTING
The City Clerk shall, within fifteen (15) days after passage of this Ordinance, cause it to be posted in at least three (3) designated public places; shall certify to the adoption and posting of this Ordinance; and shall cause this Ordinance and its certification, together with proof of posting, to be entered in the Book of Ordinances of this City.

SECTION 10 CERTIFICATION
The foregoing Ordinance was approved and adopted at a meeting of the City Council held on the ____ day of _____________, 2022, by the following vote:

Ayes:

Noes:

Abstain:

Absent:
___________________________

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Ernesto Gutierrez, Mayor
ATTEST:

____________________________
Tracey Martinez, City Clerk

APPROVED AS TO FORM:

____________________________
Eric S. Vail, City Attorney

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Attachment: Cannabis Ordinance Amendments September 2022 (3514 : Cannabis Task Force Update) RESOLUTION NO. 2022- 43

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL

CITY, CALIFORNIA, ESTABLISHING AN EXEMPTION TO THE

CANNABIS TAX FOR PORTIONS OF CANNABIS CULTIVATION SPACE

WHERE CANNABIS IS NOT PHYSICALLY PRESENT PURSUANT TO
SECTION 3.48. 040 OF THE CATHEDRAL CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:

A. At the November 2016 general election the voters approved Measure P, which imposes the following taxes on cannabis businesses in the City:

Fifteen cents for each one dollar of gross receipts or fractional part thereof received by a dispensary or by any other cannabis business for activities other than cannabis cultivation or manufacturing.

Twenty- five dollars for each square foot or fractional part thereof of cannabis cultivation space.

One dollar for each gram of cannabis concentrate produced or manufactured.

One dollar for each unit of cannabis- infused product other than cannabis concentrate produced or manufactured and packaged or intended for individual sale.

B. Measure P authorizes the Council to set the taxes on cannabis at lower rates than what was approved by the voters, and to establish exemptions, incentives, or other reductions.

C. Via City Council Resolution Nos. 2017- 13, 2018- 46, 2019- 02, and 2020- 05 the City Council has lowered the cannabis tax rates.

D. The City Council now desires to exempt from the cannabis cultivation tax portions of the cannabis cultivation space where cannabis is not physically present, as provided herein.

THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:

SECTION 1. The gross square footage of the cannabis cultivation space, as defined in the Cathedral City Municipal Code (` CCMC") Section 3. 48. 020, subject to taxation pursuant to Chapter 3. 48 of the CCMC shall be reduced to exempt from taxation those rooms where cannabis is not physically present on a regular basis, including but not limited to nutrient rooms, storage rooms, hallways, offices, employee lounges, and restrooms.

3.D.b
Packet Pg. 81
Attachment: CC Reso 2022-43 (3514 : Cannabis Task Force Update) SECTION 2. The exemption provided in Section 1 of this Resolution becomes effective for each licensee upon the renewal of each cultivation license or upon issuance of any new cultivation license.

SECTION 3. This Resolution shall take effect immediately.

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Cathedral City held on this
10th
day of August, 2022, by the following vote:

Ayes: Councilmembers Gregory, Ross and Carnevale; Mayor Pro Tem Lamb and Mayor Gutierrez
Noes:

None

Absent: None
Abstain: None
i
rnesto Gutierrez, Mayor
ATTEST:

Ot, C41 ( th N1/1,C11.0-
Tracey R. lie mosillo, City Clerk

APPROV T O
Eric S. Vail, City Attorney

3.D.b
Packet Pg. 82
Attachment: CC Reso 2022-43 (3514 : Cannabis Task Force Update) RESOLUTION NO. 2022- 44

A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CATHEDRAL

CITY, CALIFORNIA, ESTABLISHING EXEMPTIONS TO THE CANNABIS TAX FOR CANNABIS CULTIVATION BUSINESSES FOR THE FIRST 90

DAYS OF OPERATIONS AND WHEN OPERATIONS ARE
TEMPORARILY SUSPENDED PURSUANT TO SECTION 3. 48. 040 OF

THE CATHEDRAL CITY MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY FINDS:

A. At the November 2016 general election the voters approved Measure P, which imposes the following taxes on cannabis businesses in the City:

Twenty-five dollars for each square foot or fractional part thereof of cannabis cultivation space.

One dollar for each gram of cannabis concentrate produced or manufactured.

One dollar for each unit of cannabis- infused product other than cannabis concentrate produced or manufactured and packaged or intended for individual sale.

B. Measure P authorizes the Council to set the taxes on cannabis at lower rates than what was approved by the voters, and to establish exemptions, incentives, or other reductions.

C. Via City Council Resolution Nos. 2017-13, 2018-46, 2019-02, and 2020-05 the City Council has lowered the cannabis tax rates.

D. The City Council now desires to exempt from the cannabis cultivation tax certain legally established cannabis cultivation businesses that have not yet commenced operations or who provide the City with a notice of non- operation, as provided herein.

THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY RESOLVES:

SECTION 1. Except as provided in Section 2 of this Resolution, every cannabis business operating in the City shall pay the cannabis tax imposed in Section 3.48.010 of the Cathedral City Municipal Code, as such tax may be adjusted from time to time by the City Council pursuant to Section 3.48.040 of the Cathedral City Municipal Code.

RIV# 4811- 4257- 5281 vl

3.D.c
Packet Pg. 83
Attachment: CC Reso 2022-44 (3514 : Cannabis Task Force Update) SECTION 2. The cannabis tax imposed in paragraph B of Section 3. 48. 010 of the Cathedral City Municipal Code, as it may be adjusted from time to time by resolution of the City Council pursuant to Section 3.48.040 of the Cathedral City Municipal Code, shall not apply to a legal cannabis cultivation business during the following time periods:

A. Early Operations. A legal cannabis cultivation business shall not be subject to taxation under paragraph B of Chapter 3.48 of the Cathedral City Municipal Code until 90 days after a certificate of occupancy ( whether temporary or final) is issued for the business or any portion thereof.

B. Suspended Operations. A legal cannabis cultivation business shall not be subject to taxation under paragraph B of Chapter 3.48 for a period of no more than ninety 90) days if the cannabis licensee provides the City with written notice that it will be suspending all cultivation operations under its local license for a period of at least ninety 90) days but no longer than the remaining term of the local license issued by the City pursuant to Chapter 5.88 of the Cathedral City Municipal Code. This exemption may be invoked one ( 1) time per license.

SECTION 3. All definitions in Chapters 3.48 and 5.88 of the Cathedral City Municipal Code shall apply to this Resolution.

SECTION 4. This Resolution shall take effect immediately.

PASSED, APPROVED AND ADOPTED at a regular meeting of the City Council of the City of Cathedral City held on this
10th
day of August, 2022, by the following vote:

Ayes: Councilmembers Gregory, Ross and Carnevale; Mayor PRo Tem Lamb and Mayor Gutierrez
Noes: None

Absent: None
Abstain: None
Ernesto Gutierrez, Mayor
ATTEST:

Lb 13x
Trac ermosil. lo, CityClerkY
RIV# 4811- 4257- 5281 vl

3.D.c
Packet Pg. 84
Attachment: CC Reso 2022-44 (3514 : Cannabis Task Force Update) APPROVED AS It FO'
Eric S. Vail, City Attorney
RIV# 4811- 4257- 5281 vl

3.D.c
Packet Pg. 85
Attachment: CC Reso 2022-44 (3514 : Cannabis Task Force Update)

$-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$160,000
$180,000
$200,000
Retail Cannabis Taxes
2018 2019 2020 2021 2022

3.D.d
Packet Pg. 86
Attachment: Cannabis Tax Graph November 2022 (3514 : Cannabis Task Force Update)

$-
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
$500,000
Total All Cannabis Taxes
2018 2019 2020 2021 2022

3.D.d
Packet Pg. 87
Attachment: Cannabis Tax Graph November 2022 (3514 : Cannabis Task Force Update)

Cathedral City City CouncilNovember 30, 2022

Cathedral City City Council
November 30, 2022