ORDINANCE NO. _________
AN ORDINANCE OF THE PEOPLE OF THE CITY OF COMMERCE ENACTING A SPECIAL PARCEL TAX ON INDUSTRIAL PROPERTY TO PROTECT THE QUALITY OF LIFE OF OUR RESIDENTS BY MAINTAINING ESSENTIAL LAW ENFORCEMENT, FIRE, PARAMEDIC SERVICES, EMERGENCY SERVICE / RESPONSE TIMES, ENVIRONMENTAL SERVICES AND IMPROVE COMMUNITY SAFETY WHEREAS, the City of Commerce physical area consists of approximately 85% industrial property, 10% commercial property and 5% residential property; and WHEREAS, industrial property in the City of Commerce consumes a disproportionately large share of police, fire, paramedic and environmental services; and WHEREAS, funding police, fire, paramedic and environmental services in the industrial areas of the City imposes an unusual hardship on the general fund revenues; and WHEREAS, current City revenues in the general fund are insufficient to sustain the current level or any increased demand for police, fire, paramedic and environmental services in the City of Commerce.
WHEREAS, prior to Covid the City received $27 million a year or close to 40% of the general fund operating budget from the Commerce Casino. This revenue source dropped to $19.9 million during fiscal year 2020 and then plummeted to $8.9 million during fiscal year 2021.
WHEREAS, the advent and increasing popularity of on-line gambling is likely to further reduce Commerce Casino revenues.
WHEREAS, the City needs to diversity its sources of revenue (no single revenue source should be responsible for more than 15% of revenues) to provide for financial stability for the City and reduce the risk of revenue fluctuations.
WHEREAS, the enactment of an industrial property parcel tax would assist in providing revenue diversification, mitigate reliance on Commerce Casino revenues, and assist in providing long term financial stability.
NOW, THEREFORE, the people of the City of Commerce do ordain as follows:
SECTION 1. Chapter 3.14, of Title 3 of the City of Commerce Municipal Code is added to read as follows:
“CHAPTER 3.14 – SPECIAL PARCEL TAX
3.14.010 - Authority to adopt Special Parcel Tax.
This Ordinance and the tax authorized herein is adopted pursuant to the provisions of Government Code Sections 37100.5, Government Code Sections 50075 to 50077.5, Government Code Sections 53720-53730 and the California Constitution Articles XI, Section 5, XIII A, Section 4 and XIII D, Section 3(a)(2). The tax authorized herein is based on use and occupancy of improved real property, and it is not an ad valorem property tax.
3.14.020 – Definitions.
For purposes of this Chapter 3.14, the following terms shall have the following meanings:
(1) Industrial real property shall mean any real property zoned or used for industrial purposes. (2) Industrial purposes shall mean manufacturing, warehousing, trucking, truck terminals, cold storage and refrigerated warehouse, freight terminal and railroad facilities. (3) Assessor’s parcel map means an official map of the assessor of the County of Los Angeles designating parcels by assessor’s parcel number. (4) Cold storage and refrigerated warehouses mean a building or part of a building used primarily to store non-durable, perishable goods under refrigeration including services for processing, preparing or packaging goods for storage. (5) Freight terminal is a lot, building or part of a building, as used or designed for use, in or on which goods or freight are transferred or redistributed from one vehicle to another. (6) Other distribution facility means and includes an intermodal container transfer facility and storage areas related to such facility. (7) Parcel means a lot or parcel shown on the current applicable assessor’s parcel map with an assigned assessor’s parcel number. (8) Truck terminal means a lot, building or part of a building used or designed primarily for the storage, maintenance or servicing of highway-type vehicles carrying persons or property, including, but not limited to, trucks and buses. (9) Trucking uses mean any lot, building or part of a building in or on which goods or freight are transferred or redistributed from one vehicle to another, or any lot, building or part of a building used primarily for the storage, maintenance or servicing of highway-type vehicles carrying persons or property including, but not limited to, trucks and buses, but excluding commercial repair facilities. (10) Railroad facilities mean rail lot yards used primarily for the switching of rail cars or transferring of freight or goods from a rail car to another vehicle, but does not include railroad spur tracks. (11) Retail sales mean those sales in which the City receives one percent (1%) of the sales tax. (12) Warehouse, distribution and wholesale uses mean a building or part of a building used or designed primarily for the storage of non-perishable goods or non-refrigerated perishable goods intended for distribution to other locations, or the sale of goods for distribution to other locations for wholesale or retail sale, but does not include: (i) an accessory warehouse building that is an integral part of a manufacturing business located in the City of Commerce used for storage of goods or materials produced in that operation, (ii) any wholesale, distribution and wholesale uses which pay at least .20¢ per square foot in sales tax to the City of Commerce during the subject fiscal year, and (iii) cold storage and refrigerated warehouses.
3.14.030 – Imposition of Special Parcel Tax
(a) Effective July 1, 2023 the City of Commerce levies an annual special parcel tax on each industrial real property parcel within the City in the manner provided herein. This is a non-ad valorem parcel tax which, pursuant to California Constitution Article XIII D, Section 3, shall be deemed a special tax as defined pursuant to Section 53721 of the California Government Code. (b) The maximum special tax commencing in fiscal year 2023-24 shall be calculated as follows:
(1) The square footage of all buildings located on an individual industrial real property shall be multiplied by the maximum allowed tax rate of $.3357 for each square foot of building area for each industrial real property parcel. The resulting amount shall be the maximum allowed parcel tax for that individual parcel pursuant to this ordinance. The maximum allowed special parcel tax rate shall include the CPI adjustment provided in subsection 3.14.030(d). (2) The City Council by resolution or ordinance shall set the tax rate for each fiscal year or multiple years, which rate may not exceed the maximum rate allowed by Section 3.14.030(b)(1). (3) The initial tax rate for the period commencing July 1, 2023 shall be $0.1500 per square foot of building area, and shall continue at that same rate until changed by resolution or ordinance approved by the City Council. (c) Pursuant to Section 2(b) of Article XIIIC of the California Constitution, the tax rate established by this Chapter is a maximum rate, and the City Council, by resolution or ordinance, may levy a tax at any rate or amount that is equal to or less than the maximum rate or amount authorized by this Chapter without submitting the changed rate to a municipal election. (d) The maximum rate established by this Chapter shall be revised annually based upon changes in the Consumer Price Index for All Urban Consumers (CPI-U), All Items Index, Los Angeles-Anaheim- Riverside Area (1982-84=100) (herein-after “CPI”) published by the United States Department of Labor, Bureau of Labor Statistics. In the event said CPI for the twelve-month period ending March 31 of each year (the “adjustment date”) is higher than said CPI for the twelve-month period ending March 31, 2022, the maximum tax rate set forth in this Chapter shall be increased by multiplying said tax rate by a fraction, the numerator of which is the CPI on the adjustment date and the denominator of which is the CPI for the twelve-month period ending March 31, 2022. The resulting adjusted tax rate shall then be the maximum tax rate for the fiscal year commencing the next July 1st. There shall be no reduction in rates by operation of this provision. If, in the future, said CPI shall be changed so that the base year differs from that used as of the effective date of this Chapter, it shall be converted in accordance with the conversion factor published by the United States Department of Labor, Bureau of Labor Statistics. The City Clerk shall submit a written report to the City Council setting forth the adjustments to the maximum tax rate required by this subsection, which the City Council shall approve by resolution. (e) Periodically, the City Clerk shall submit to the City Council a recommendation for revising the rate to be employed in levying the tax, provided, that the recommended tax rate shall not exceed the maximum tax rate authorized by this Chapter. (f) The City Council is authorized to determine for each fiscal year, by ordinance or resolution, the special tax to be imposed on each parcel subject to this section. The special tax shall not exceed the maximum special tax rate established in subsection (b) of this section as adjusted by subsection (d), but it may be imposed at a lower rate. The ordinance or resolution shall also list, by assessor’s parcel number, all parcels subject to the tax. The ordinance or resolution shall constitute the official record of the assessment of the special tax, and a copy thereof, together with any other pertinent data, shall be transmitted to the appropriate county or city officials to facilitate collection of the special tax. (g) The special tax shall be due in two equal installments in accordance with the collection procedures of the Los Angeles County Tax Collector, with the first installment due November 1, and the second installment due the next succeeding February 1. The owner of the land, land and improvements, at the time set forth in California Revenue and Taxation Code Sections 405 and 2192 for each fiscal year, shall have a personal obligation to the City of Commerce until the tax is paid. (h) The City clerk may prepare a questionnaire to be served on the owner of a parcel or improvements subject to the tax imposed by this Chapter. The questionnaire may request information which would be useful to the City Clerk in the enforcement or administration of this Chapter. The failure by an owner to provide the information requested within thirty (30) days of receipt of the request, or the act of an owner in knowingly providing false information, shall be a misdemeanor. (i) In determining the gross square footage area of improvements the City Clerk may use County Assessor’s records, city records, questionnaires and any other records the City Clerk deems reliable. (j) Properties or entities exempt by law from the ad valorem tax imposed by Articles XIII and XIIIA of the California Constitution shall be exempt from the tax imposed by this section. (k) Pursuant to Government Code section 53087.4 the special tax imposed by this section shall be collected in the same manner as ad valorem property taxes are collected and shall be subject to the same procedure, sale and lien priority in case of delinquency as is provided by ad valorem taxes (which such procedures include the exercise of all rights and remedies permitted by law to make corrections, including but not limited to, the issuance of amended or supplemental tax bills), as such procedure may be modified by law or by the Board of Supervisors of the County of Los Angeles from time to time; provided that the City Council shall have authority to provide, by ordinance or resolution, for a different method of collection of said taxes as it shall determine to be in the best interest of the City of Commerce. The Board of Supervisors, the Auditor-Controller, the Treasurer-Tax Collector and the Assessor of the County of Los Angeles shall perform the duties of assessment of property for the special tax, the correction of any assessment, the collection, payment, and enforcement of the special tax, including delinquent taxes, and the redemption of property from sale or other penalty for nonpayment of the special tax. (l) The special tax imposed by this section shall be a tax upon each parcel of property, and the tax shall not be measured by the value of the property. (m) If the parcel tax becomes effective after the commencement of the fiscal year, the tax shall only be imposed at the rate of 1/12 for each month remaining in the fiscal year. If a property become subject to the tax after the commencement of the fiscal year, the tax shall be imposed at the rate of 1/12 for each month remaining in the fiscal year. (n) The City Clerk or his or her designee is authorized to issue guidelines for the implementation and interpretation of this section.
3.14.040 – Limited use of proceeds of taxes
The proceeds of the special tax shall be deposited in a special account and used only for the purposes of providing police protection, fire (prevention/suppression), paramedic services, and environmental services (such as hazardous materials response, mitigate air pollution, mitigate stromwater impact, mitigate noise and light impacts, mitigate traffic impacts), for such other necessary ancillary expenses for such services made available throughout the industrial areas of the City, to pay the costs of processing and holding the election for the ballot measure enacting this ordinance and to pay the ongoing costs of administering the special parcel tax. In particular, as of the effective date of this ordinance, such services are provided to the City of Commerce by the Los Angeles County Sheriff’s Department (Contract City Law Enforcement Services – Service Level Authorization SH-AD-575) and the Consolidated Fire Protection District of Los Angeles County (Fire District) under the Annexation Agreement, and it is the purpose of this ordinance to raise revenue to pay a portion of the costs, charges and fees of the City of Commerce under said agreements for such time as such Agreements remain in effect, and to provide for an equivalent level of police protection, fire, paramedic services and environmental services through other means should such Agreements terminate or expire.
3.14.050 – Accountability measures.
The proceeds of the special parcel tax shall be deposited in a special account, to be created and maintained by the City. For so long as proceeds of the special parcel tax remain unexpended, the Finance Director of the City shall file an annual report with the City Council no later than January 1 of each year, commencing January 1, 2024, stating (i) the amount of special parcel tax funds collected and expended, and (ii) the status of any project required or authorized to be funded pursuant to this Section. Such annual report shall relate to the fiscal year most recently ended, and may be incorporated into or filed with the annual budget, audit or other appropriate routine report to the City Council.
3.14.060 – Savings clause
Nothing in this Chapter shall be construed as requiring the payment of a tax or the doing of an act which would constitute an unlawful burden upon or an unlawful interference with interstate or foreign commerce or which would be in violation of the constitution or the laws of the United States or the constitution or the laws of the State of California.
3.14.070 - Apportionment of special tax.
In calculating the tax imposed pursuant to Section 3.14.040 upon a parcel whose improvements are in multiple uses, the gross floor area of the buildings shall be apportioned between the various uses of the buildings, and the amount of the tax against the parcel shall be based only on the building area apportioned to uses that would otherwise trigger the tax. The gross building area shall be apportioned proportionally to the use of the square footage of improvements on the parcel, with improved common space areas (such as break rooms, restrooms, hallways and loading docks that are shared by the occupants, tenants or uses of a building) allocated proportionally to the improved square footage of the uses.
3.14.080 – Penalties.
The penalties provided for in Chapter 1.12 of this Code shall apply to the tax imposed by this Chapter; provided, that should said tax be collected by the County of Los Angeles, the delinquency date shall be the same date ad valorem property taxes become delinquent.
3.14.090 - Amendment.
The City Council may, by ordinance, amend, repeal, renumber or recodify any or all of the provisions of this Section; provided, however, that no ordinance extending or increasing the special parcel tax shall be effective unless submitted to, and approved by, the voters of the City as required pursuant to the applicable law at the time of such action.
3.14.100 – Administrative appeals.
Requests for adjustments involving imposition of the special tax may be filed with the chief fiscal officer of the City of Commerce. The chief fiscal officer shall provide to the requesting party a written decision denying or approving the request within thirty days of receipt of the request by the chief fiscal officer. The decision of the chief fiscal officer shall be supported by written findings. Upon sufficient evidence of error in the computation of the special tax, the chief fiscal officer shall cause the tax to be recalculated, and shall so advise the Tax Collector of the County of Los Angeles or other appropriate official. The decision of the chief fiscal officer is final.
SECTION 2. In the event of any conflict between the provisions of this Ordinance and the Commerce Municipal Code, or any appendix or ordinance adopted therein by incorporation, the provisions of this Ordinance shall apply and supersede.
SECTION 3. CEQA. This ordinance is exempt from the California Environmental Quality Act (“CEQA”) based on the following:
Under CEQA Guidelines Section 15061(b)(3), CEQA review is not required because there is no possibility that this ordinance may have a significant effect on the environment.
Under CEQA Guidelines Section 15378, the proposed amendment is not a project under CEQA because it will not cause a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment, because it is limiting in nature and does not authorize any specific development activity or promote new construction.
Any potential indirect physical change in the environment is speculative and no reasonably foreseeable.
SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held out to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have adopted this Ordinance and each section, subsection, subdivision, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more section, subsection, subdivision, sentence, clause, phrase, or portion thereof, be declared invalid or unconstitutional.
SECTION 5. Effective date. This ordinance relates to the levying and collection of a city special tax and shall take effect immediately upon its approval of the voters of the city of Commerce.
SECTION 6. City Clerk Certification. The City Clerk of the City of Commerce shall certify as to the adoption of this Ordinance and shall cause the same to be posted in the manner required by law.
INTRODUCED on this ______ day of July, 2022, and passed to print and approved to be placed on the November 8, 2022 election ballot by the following called vote:
Members of the City Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Oralia Rebollo, Mayor
APPROVED by the following vote of the People of the City of Commerce on November ___, 2022:
YES:
NO:
ADOPTED by Declaration of the vote at the November ____, 2022 election by the City Council of the City of Commerce on ________________, 2022:
Members of the Council:
AYES:
NOES:
ABSENT:
ABSTAIN:
______________________________
Oralia Rebollo, Mayor
ATTEST:
____________________________
Lena Shumway
City Clerk