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September 23, 2025
ITEM TITLE
Agreements: Approve Agreements with the California Department of Tax and Fee Administration (CDTFA) for the Continued Administration and Implementation of a Voter-Approved Temporary One -Half Cent General Transactions and Use Tax
Report Number: 25-0038
Location: No specific geographic location
Department: Finance
G.C. § 84308 Regulations Apply: No
Environmental Notice: The activity is not a “Project” as defined under Section 15378 of the California Environmental Quality Act State Guidelines. Therefore, pursuant to State Guidelines Section 15060(c)(3) no environmental review is required.
Recommended Action
Adopt a resolution: A) authorizing the City Manager to execute agreements between the City of Chula Vista and CDTFA for the continued administration and implementation of a voter-approved temporary one-half cent general transactions and use tax and B) authorizing the examination of transactions and use tax records.
SUMMARY
In November 2024, the City's electorate approved the extension of Measure P, a temporary one-half cent general transactions and use tax (TUT) in the City. In order to implement the tax, the California Department of Tax and Administration (CDTF A) requires that the City take certain actions, including approving and entering into two agreements with the CDTFA , and authorizing the examination of tax records. The resolutions and agreements included in this item for approval will meet CDTFA implementation requirements.
ENVIRONMENTAL REVIEW
The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a “Project” as defined under Section 15378 of the State CEQA Guidelines because it will not result in a physical change in the environment.
Therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines, the activity is not subject to CEQA.
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BOARD/COMMISSION/COMMITTEE RECOMMENDATION
Not applicable
DISCUSSION
In accordance with the Revenue and Taxation Code, the CDTFA will administer the TUT on behalf of the City.
In order to do so, the CDTFA requires that the City adopt two resolutions. The first resolution approves, and authorizes the City Manager to sign, the following two agreements between the City and the CDTFA: (i) "Agreement for Preparation to Administer and Operate City's Transactions and Use Tax Ordinance;" and (ii) "Agreement for State Administration of City Transactions and Use Taxes." The first of these agreements will enable CDTFA to perform the preparatory work it must do in order to administer and operate the TUT for the City. T his work includes designing and printing forms, developing instructions for staff and taxpayers, developing appropriate regulations, and other necessary tasks. The agreement details the types of costs that will be included, how the costs will be accounted for, and how the City will be billed. The agreement provides that the City’s costs for this work will not exceed $175,000.
The second agreement sets forth the terms for CDTFA’s administration of the City's TUT. The agreement is consistent with the requirem ents of the Revenue and Taxation Code. It includes provisions regarding how the TUT will be administered by the CDTFA, how and when the tax funds will be remitted to the City, and the City's agreement to compensate the CDTFA for its administration costs (w hich will be deducted from taxes collected).
The second resolution asks the City to designate which of its representatives may examine the CDTFA's records regarding the TUT collected on the City's behalf. The resolution authorizes the following City employees to have access to such records: (i) City Manager; (ii) Assistant City Manager; (iii) Deputy City Manager; (iv) Director of Finance; (v) Assistant Director of Finance; (vi) Budget and Analysis Manager; and (vii) Revenue Manager. In addition, it authorizes the City's consultant, Hinderliter, de Llamas and Associates, to examine the records, pursuant to its contract with the City.
After City Council approval of the resolutions, City staff will transmit the signed agreements, certified resolutions, and other required documents to the CDTFA.
DECISION-MAKER CONFLICT
Staff has reviewed the decision contemplated by this action and has determined that it is not site-specific and consequently, the real property holdings of the City Council members do not create a disqualifying real property-related financial conflict of interest under the Political Reform Act (Cal. Gov't Code § 87100, et seq.).
Staff is not independently aware and has not been informed by any City Council member, of any other fact that may constitute a basis for a decision-maker conflict of interest in this matter.
CURRENT-YEAR FISCAL IMPACT
The Preparation Agreement requires the City to pay CDTFA costs up to $175,000. The costs associated with this agreement will commence in fiscal year 2027 when the new measure extension will take effect . As a result, there is no fiscal impact in the current fiscal year.
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ONGOING FISCAL IMPACT
The Preparation Agreement requires the City to pay CDTFA costs up to $175,000. These costs will commence in fiscal year 2027 when the new measure extension will take effect. In addition, with the approval of these agreements, City will be required to pay the CDTFA's on-going administrative costs relative to the City's TUT.
These costs wi ll be offset by the revenue generated by the TUT. The temporary one -half cent general transaction and use tax is projected to generate an estimated $373 million over a 10 -year period, with the actual revenues determined by economic conditions.
ATTACHMENTS
1. Agreement with CDTFA for the Preparation to Administer and Operate City’s Transactions and Use Tax Ordinance
2. Agreement with CDTFA for State Administration of City Transactions and Use Taxes Staff Contact: Adrian Del Rio, Assistant Director, Finance Department Courtney Chase, Deputy City Manager