Any writing or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at City Hall located at 147 Fourth Street, Gonzales, California, during normal business hours.
A G E N D A
GONZALES CITY COUNCIL
SPECIAL MEETING
CITY COUNCIL CHAMBERS – 117 FOURTH STREET
GONZALES, CA 93926
TUESDAY, MAY 31, 2022
5:00 P.M.
CALL TO ORDER
PLEDGE OF ALLEGIANCE
1. ROLL CALL- City Council/Successor Agency
Mayor Pro Tem/Vice Chair Scott Funk, Council/Agency Member Liz Silva, Council/Agency Member Lorraine Worthy, Council/Agency Member Paul Miller, Mayor/Chair Jose L. Rios
Youth Commissioners
Sherlyn Flores and Autumn Escobedo
PUBLIC NOTICE
This meeting is being conducted consistent with State of California Executive Order N-29-20 dated March 17, 2020, regarding the COVID-19 pandemic. The public may participate in person or online via zoom at https://us06web.zoom.us/j/88659085876 or call 1-1669-900-6833 and use Meeting ID: 886 5908 5876.
If you wish to make either a general public comment or to comment on a specific agenda item, please use the Raise Hand function. You will be allowed three minutes for your comments.
If you choose not to attend the City Council meeting but wish to make a comment on a specific agenda item, please submit your comment limited to 250 words or less by 12:00p.m. on Tuesday, May 31st to the City Clerk at [email protected]
BUSINESS FROM THE PUBLIC
2. Business from the Public not on the Agenda; any member of the Public may address the Council/Agency for a period not to exceed three minutes on any subject not on the Agenda. The Council/Agency will listen to all communications but may take no action.
Any writing or documents provided to a majority of the City Council regarding any item on this agenda will be made available for public inspection at City Hall located at 147 Fourth Street, Gonzales, California, during normal business hours.
REGULAR AGENDA
3. Public Hearing to Consider Approval of Resolution No. 2022-31, A Resolution of the City Council of the City of Gonzales Proposing to Adopt a Special Tax Increasing the City’s Transactions and Use Tax (Sales Tax) by One-Half Percent (0.5%), Calling for a Special Mailed Ballot Election to be held on August 30, 2022, Ordering that a Question Relating to the Levy of a Special Tax be Submitted to the Qualified Voters at the Special Mailed Ballot Election, Requesting that the Board of Supervisors of Monterey County Consent to the Consolidation of the Special Election with any other Election Conducted on said date and Requesting Election Services from the Monterey County Elections Department
a) Staff Report
b) Public Hearing
c) Council Discussion
d) Council Action
Staff Recommended Action-Adopt Resolution No. 2022-31
CLOSED SESSION
Any member of the public may address the Council on a closed session item appearing on the agenda.
Speakers shall have a limited time of three (3) minutes. Please be brief and to the point.
4. The City Council will recess to closed session to consider personnel matters pursuant to Government Code Section 54957(b)(1)- City Manager -Employment/Recruitment.
ADJOURNMENT
In compliance with the American with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk at (831) 675-5000. Notification 48 hours prior to the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. (CFR 35.102-
35.104 ADA Title II). This is a public meeting and as such, can be seen live by people present or online and is being recorded; therefore; anything you say or do here is public information. The recordings are available online.
City of Gonzales
CITY MANAGER DEPARTMENT
STAFF REPORT
TO: Honorable Mayor Rios and City Council
DATE: May 31, 2022
FROM: Rene Mendez, City Manager
SUBJECT: Resolution No. 2022-31 Submitting to the Voters a Measure Increasing the City's Temporary Transactions and Use Tax by One-Half Percent (0.5%)
RECOMMENDATION
It is recommended that your Council Conduct a public hearing on, and Consider Adopting Resolution No. 2022-31, A Resolution of the City Council of the City of Gonzales Proposing to Adopt a Special Tax Increasing the City’s Transactions and Use Tax (Sales Tax) by One-Half Percent (0.5%), Calling for a Special Mailed Ballot Election to be held on August 30, 2022, Ordering that a Question Relating to the Levy of a Special Tax be Submitted to the Qualified Voters at the Special Mailed Ballot Election, Requesting that the Board of Supervisors of Monterey County Consent to the Consolidation of the Special Election with any other Election Conducted on said date and Requesting Election Services from the Monterey County Elections Department.
BACKGROUND
In 2014, your Council considered and placed on the ballot a One-Half Percent (0.5%) Transaction and Use Tax (TUT) measure, which was ultimately approved by the voters. In 2020, an additional One-Half Percent (0.5%) TUT measure was placed before the voters and also approved.
Since the passage of both tax measures, the City has worked very hard to meet all the requirements set forth by the voters, which staff is pleased to report have all been met. A prime example is the establishment of the Transaction and Use Tax Advisory Committee which, since its inception, has been very engaged, proactive, and effectively represented the community. To date, all the projects and programs recommendations by the Advisory Committee to the Council have been approved. Projects and/or programs have included:
• Funding the debt service for the renovation of the Community Pool • Youth Services and Leadership Development
• New restrooms at Central and Meyer Park
AGENDA
ITEM
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• Tot Lot at Centennial Park
• Improvements to the Skate Park
• Resurfacing of the Tennis Courts (split with the GUSD) • Gonzales Day Camp
• A very successful Community Participation Grants Program • Expanded After School and Summer Youth Program
• Senior Programs
• Accessibility Improvements to the Council Chambers and City Hall • New Playground equipment at Meyer Park
• Internet for All
Similarly, since the passage of the Measure X One-Half Percent (0.5%) TUT, the established Advisory Subcommittee has recommended the use of a portion of those tax proceeds be applied to the pending Gonzales Community Center Complex Project (“Project”). The Project, which is the result of several years of planning and extensive public outreach and input, will include a library, Teen Innovation Center, standalone gymnasium, outdoor venues, and a 3,500 square foot Community Hall to host fitness and recreation classes, competitive sports events and public and private functions. However, while the use of Measure X revenues will represent a significant source of funding, unfortunately it cannot support nor fully fund the Project. This Project was going to be challenging enough, but with the impacts of the pandemic as well as the current war between Russia and Ukraine, anticipated costs have increased considerably to the point that they are significantly outpacing the available funding sources for the Project.
Costs are estimated at $34.8 million for the base project and an additional $8 million for the standalone gymnasium for a total project budget of $42.8 million. Attachment A illustrates the benefit of a dedicated one-half percent (0.5%) TUT. Without the new dedicated funding source based on the current cost estimates the shortfall ranges from $4.1 million to $29 million, which assumes that the capital campaign and all the grants being pursued would be successful. As a result, based on the reality of an existing shortfall, staff was directed on April 4, 2022, to bring back the resolution and ordinance to consider putting forward a new dedicated special One-Half Percent (0.5%) Transaction and Use Tax (TUT) measure to before the electorate.
How does Gonzales Tax Rate Compare to Other Cities?
It is important to understand and realize that Gonzales’s current sales tax rate is the second lowest in the County of Monterey.
The following table compares existing local tax rates from surrounding communities.
City/County Tax Rate %
Greenfield 9.50%
Salinas 9.25
Seaside 9.25
Marina 9.25
Del Rey Oaks 9.25
Soledad 9.25
Sand City 9.25
Monterey 9.25
Carmel-by-the-Sea 9.25
King City 8.75
Gonzales 8.75
Monterey County (unincorporated area) 7.75
** Going out a little bit further, the sales tax rate in Morgan Hill is 9.00%, and San Jose, Watsonville, and Santa Cruz are all 9.25%
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Similar to 2014 and 2020 elections, the simple fact of the matter is that our community, when shopping outside the City or online, is paying a higher sales tax rate already so a one-half percent (0.5%) increase would have minimal impact and likely not significantly impact buying habits.
Furthermore, because all of the communities around us have higher Transaction and Use Tax rates, when large purchases are made outside the City (i.e., automobiles, internet purchases, etc.), the City is losing tax revenue as a result of not having a comparable TUT. This is because while the base Sales & Use Tax (commonly known as the Bradley-Burns) is generally allocated to the jurisdiction where the sale is negotiated or the order is taken, the transactions and use tax is allocated to the district/jurisdiction where the goods are delivered or placed into use.
REVIEW & ANALYSIS
Attached for your consideration and approval is Resolution No. 2022-31, with the accompanying:
Ordinance of the Voters of the City of Gonzales Imposing a Temporary Special Transactions and Use Tax, Known as the “Gonzales Community Center Temporary Tax Measure,” to be administered by the California Department of Tax and Fee Administration and Restricting the Use of Tax Revenues to Gonzales Community Center Financing and Funding and Street Maintenance and Repair subject to Annual Audits and Annual Public Expenditure Reports.
General Purpose or Special Tax Differences
Staff was provided direction to bring back a “Special Tax” to your Council for consideration instead of the prior two TUT measures that are “General-Purpose” taxes. There are two fundamental differences between special and general taxes. One difference is that a General-Purpose Tax only requires a 50%+1 voter result to pass when compared to Special Tax, which requires a 2/3rd (66%+) voter result for adoption. The second difference is that a General-Purpose tax can be used for many general purposes approved and directed by the City Council, while a Special Tax is tied to specific purpose(s). In this case, the proposed special TUT would be used only for financing and funding the Project, and once the Project was fully funded, all remaining tax revenues would be dedicated exclusively to street maintenance and repair.
Additionally, due to the urgency of this matter, staff recommended and the Council directed that the proposed Ordinance by considered at a special all-mail ballot election. Resolution No. 2022-31 reflects the legal language necessary to set a special mail only ballot election on August 30, 2022, and also:
• Sets the Community Center Complex as the priority project for the use of the funds with street maintenance and repair as the second priority for any remining funds. • Increases the existing TUT an additional one-half percent (0.5%), which would raise bring the City’s total sales tax rate to 9.25%, bringing us in line with every city in Monterey County • Based on the fact that all the surrounding communities already have a high sales tax rate, it finds that the proposed increase in sales tax will not create a significant financial burden; • It establishes a term of the Special Tax for forty (40) years, which is the best estimate of the time that may be required for financing the costs of the Community Center Project.
A public hearing was duly notice for this evening’s consideration of Resolution No. 2022-31 and proposed Ordinance No. 2022-132.
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Explain Recommendation and How it Supports the Vision
Gonzales will continue to be a safe, clean, family-friendly community, diverse in its heritage, and committed to working collaboratively to preserve and retain its small-town charm.
Explain: Should the proposed on-half percent (0.5%) increase in the dedicated Special Tax pass, it would provide the additional funding needed for the Community Center Complex, which would provide the opportunities, activities, programs, etc., needed by our community that would maintain and enhance the Quality-of-Life.
Explain how the Recommendation Directly Implements the Mission The City Council and Staff of the City of Gonzales will realize our Vision by providing the leadership, commitment, and resources necessary to provide excellent services that enhance the quality of life of our diverse community. X Yes ___No ___ NA
Explain: Please see above.
Strong fiscal policies allow us to provide appropriate infrastructure for:
• Public Safety X Yes ____No __NA
• Housing X Yes ____No NA
• Recreation X Yes ____No NA
• Environment X Yes ____No __NA
• Education X Yes ____No NA
Explain: Please see above.
ALTERNATIVES
Your Council has the following alternatives: (a) do not call for the special mail-only ballot election and instead direct staff to bring this back as part of the November 2022 General Election; or (b) simply do not call for the election.
BUDGET IMPACT
Should your Council decide to set the special mail-only ballot election, costs for the election would likely range around $50,000.
On the revenue side, passage of the special tax would generate approximately $750,000 annually to start.
CONCLUSION
It is recommended that your Council Conduct a public hearing on, and Consider Adopting Resolution No. 2022-31, A Resolution of the City Council of the City of Gonzales Proposing to Adopt a Special Tax Increasing the City’s Transactions and Use Tax (Sales Tax) by One-Half Percent (0.5%), Calling for a Special Mailed Ballot Election to be held on August 30, 2022, Ordering that a Question Relating to the Levy of a Special Tax be Submitted to the Qualified Voters at the Special Mailed Ballot Election, Requesting that the Board of Supervisors of Monterey County Consent to the Consolidation of the Special Election with any other Election Conducted on said date and Requesting Election Services from the Monterey County Elections Department.
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Attachments:
1. Public Notice
2. Table TUT Increase
3. Resolution No. 2022-31
4. Ordinance No. 2022-132
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Attachment: Public Notice (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) Base Project Standalone
Gymnasium Total Notes
Estimated Cost $ 34,800,000 $ 8,000,000 $ 42,800,000
Current Funding Sources
Measure X Financing 8,000,000 - 8,000,000
As reported in a February 22nd Council meeting. This Public Funding is based on the then interest environment with a maturity date of 2044. Interest rates have increased since, so likely would not be able to generate the full $8 million.
Teen Innovation Center Grant 5,000,000 - 5,000,000
Community Development Block Grant 800,000 - 800,000
Available Funds 13,800,000 - 13,800,000
Shortfall (21,000,000) - (29,000,000)
Funding Being Pursued
Capital Campaign 10,000,000 - 10,000,000 In process. To date have received a $2 million pledge State/Local Grants & Other Funds 6,900,000 - 6,900,000 In process, nothing has been awarded Subtotal Possible funds 16,900,000 - 16,900,000
Hopeful Shortfall (4,100,000) - (12,100,000)
New 1/2 cent TUT 12,500,0000 12,500,000
As reported in a February 22nd Council meeting. This assumes a USDA loan based on the then interest environment with a maturity date of 2062. Interest rates have increased since, so likely would not be able to generate the full $12.5 million.
Net shortfall 8,400,000 400,000
Though the interest environment in a few short months is not as favorable, a new 1/2 TUT would clearly and unequivocally make this project more doable especially the base project.
Community Center Complex Project
Why a New Dedicated 1/2 Cent Transaction Use Tax?
ATTACHMENT A
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Attachment: Table TUT Increase (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) RESOLUTION NO. 2022-31
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GONZALES PROPOSING TO ADOPT A SPECIAL TAX INCREASING THE CITY’S
TRANSACTIONS AND USE TAX (SALES TAX) BY ONE-HALF PERCENT (0.5%),
CALLING FOR A SPECIAL MAILED BALLOT ELECTION TO BE HELD ON AUGUST 30, 2022, ORDERING THAT A QUESTION RELATING TO THE LEVY OF A
SPECIAL TAX BE SUBMITTED TO THE QUALIFIED VOTERS AT THE SPECIAL
MAILED BALLOT ELECTION, REQUESTING THAT THE BOARD OF
SUPERVISORS OF MONTEREY COUNTY CONSENT TO THE CONSOLIDATION
OF THE SPECIAL ELECTION WITH ANY OTHER ELECTION CONDUCTED ON
SAID DATE AND REQUESTING ELECTION SERVICES FROM THE MONTEREY
COUNTY ELECTIONS DEPARTMENT
WHEREAS, after several years of planning and extensive public outreach and input, the City of Gonzales is pursuing the construction of a Community Center Complex Project (“Project”) which will include a public library, Teen Innovation Center, a fitness studio, standalone gymnasium, multi-use conference rooms, consulting and counseling rooms, commercial kitchen, a 3,500 square foot Community Hall to host fitness and recreation classes and competitive sports events and public and private functions extensive outdoor venues which include an exercise area, amphitheater with stage, and meet-and-greet lounge areas; and WHEREAS, the Council, Staff and Community are generally of the joint opinion that the Project, as planned, will provide a multitude of recreation, education and social activities for local and regional residents and will be of benefit to the health and the quality of life for City residents of all ages; and
WHEREAS, the total cost estimate for the Project is $42.8 million dollars ($34.8 million dollars for the base project and an additional $8 million for the stand-alone gymnasium), and while the City has been and continues to be diligent in seeking and obtaining funding sources for the Project, including significant State and local grants and use of City Measure X tax funds, the City still faces a significant Project funding deficit; and WHEREAS, the Council has determined that it is in the best interest of the community to seek voter approval of a special transactions and use tax as authorized by Revenue and Taxation Code Section 7285.91, with the revenues initially dedicated exclusively to financing and funding a portion of the cost of the Project, and thereafter, if the Project is fully funded before the expiration of the established term of the tax, to street maintenance and repair.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF GONZALES DOES HEREBY RESOLVE, DECLARE DETERMINE AND ORDER AS FOLLOWS:
Section I. Recitals and Findings
1. All of the foregoing recitals are true and correct and are incorporated herein by reference.
2. The City’s current Temporary Transactions and Use Tax is set at 1%. It is estimated that a onehalf percent (0.5%) increase in the City’s Transaction and Use Tax would generate an additional Packet Pg. 10
Attachment: Resolution No. 2022-31 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) $750,000 a year. These funds would provide the City with a source of security for financing the outstanding balance of the cost of the Gonzales Community Center Complex Project, with any funds generated after the complete funding of said Project being dedicated to street maintenance and repair. All special transactions and use tax revenues would be kept in a separate account from the revenues generated by the existing general transaction and use tax.
3. The City anticipates that the impact of a one-half percent (0.5%) increase to the City’s Transaction and Use Tax will not create an unduly heavy financial burden on the City’s significant sales tax producing businesses since they are already paying a comparable sales tax in other cities and regions.
Section II. Call For All Mail Ballot Election
Pursuant to California Constitution Article XIIIC, Section 2, the provisions of Government Code Sections 50075-50077.5, and 53720-53730, Elections Code Sections 4100 et seq., including but not limited to Section 4108, and Elections Code Section 12001, and other applicable law, the Council hereby calls for a special all-mail ballot election at which it will submit to the qualified voters of the City a question, that if approved, would adopt a one-half percent (0.5%) special Temporary Transaction and Use Tax, as authorized by Revenue and Taxation Code Section 7285.91, for a term of forty (40) years. When added to the City’s existing Temporary Transactions and Use Tax of one percent (1% ), this would result in a total Transactions and Use Tax in the City of one and one-half percent (1.5%). Pursuant to Elections Code Section 1500, the election would be held on August 30, 2022.
Section III. Proposed Ordinance
The ordinance authorizing the special temporary transactions and use tax to be approved by the voters pursuant to Section II is as set forth in Exhibit A hereto. The City Council hereby approves the ordinance, the form thereof, and its submission to the voters of the City at a special all-mail ballot election on August 11, 2022, consolidated with any other election held on this date, subject to approval of this resolution by a two-thirds (2/3) vote of the City Council and a two-thirds (2/3) vote of the qualified voters of the City. The ordinance specifies that a special Temporary Transactions and Use Tax of one-half percent (0.5%) shall be imposed on the gross receipts of any retailer from the sale of all tangible personal property sold at retail in the City and on the sales price of tangible personal property stored, used or otherwise consumed in the City.
The term of the special tax shall be forty (40) years. The California Department of Tax and Fee Administration shall collect the tax from retailers subject to the tax and remit the same to the City. Pursuant to Article XIIB of the California Constitution, the appropriations limit of the City shall be increased in the amount equal to the proceeds of the special tax (if approved by the voters).
Section IV. Ballot Language
The official ballot to be used at said all-mail ballot election shall conform to the laws of the state of California with relation thereto. The proposed Temporary Transactions and Use Tax shall be submitted to the voters at an all-mail ballot election to be held on August 30, 2022, in the form of the following question:
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Attachment: Resolution No. 2022-31 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) “Gonzales Community Center Temporary Tax Measure. Shall the measure establishing a Special Temporary Gonzales Transactions and Use Tax at the rate of one-half percent (0.5%) for a term of 40 years through 2062, with all funds initially used exclusively for financing and funding the Gonzales Community Center Complex Project, and thereafter, upon full funding of the Complex, exclusively for street maintenance and repair, be adopted? The special tax would generate an estimated $750,000.00 annually.”
The words “Yes” and “No” shall be printed on the ballots so the qualified electors may express their choice.
The Monterey County Elections Department is requested to print the full measure text, attached hereto as Exhibit A, exactly as filed in the voter information guide for the August 30, 2022 all mail election, as applicable.
Section V. Impartial Analysis and Submission of Ballot Arguments To the extent required or allowed by law, the City Attorney is hereby authorized to prepare an impartial analysis of the proposed measure in compliance with applicable law. Written arguments in favor or opposed to the proposed tax measure, and rebuttals thereto, will also be accepted in accordance with applicable laws and regulations.
Section VI. CEQA
The City finds that no analysis of the proposed special temporary transactions and use tax is required pursuant to the California Environmental Quality Act (“CEQA”) because: 1) with respect to revenues used for the Community Center Complex Project, the Project has been determined to be exempt from CEQA analysis pursuant to CEQA Guidelines section 15332- Class 32- in-fill development.; and, 2) with respect to revenues used for general street maintenance and repair, the City Council finds that the proposed tax does not constitute a project under CEQA Guidelines 15378, subdivisions (2) and (4) of subdivision (b), due to the fact that the proposed tax merely creates a government funding mechanism that does not involve any commitment to any specific project that may result in a potentially significant physical impact on the environment, and therefore, review under CEQA is not required.
Section VII. Request to Consolidate and Election Services and Canvassing
Pursuant to Elections Code Section 10400, the City requests and authorizes the Registrar of Voters of Monterey County to consolidate this election with any other election conducted on the same date established herein, August 30, 2022, for the ease and convenience of the registered voters and to take advantage of any costs savings possible by such consolidation. The election shall be held and conducted, the votes canvassed and the returns made, and the results ascertained and determined as provided by all laws applicable to an all-mail ballot election on a special tax measure. Pursuant to Elections Code Section 10002, the City hereby requests the Board of Supervisors of the County of Monterey to permit the Monterey County Elections Department, at City expense, to provide all necessary election services and to canvass and report the results of the election and agrees to pay the costs of all such services incurred by the County in providing such assistance upon presentation of a bill to the City. The City Manager is hereby authorized and directed to enter into or modify any written agreement for such services with the Packet Pg. 12
Attachment: Resolution No. 2022-31 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) County of Monterey Elections Department, including but not limited to the County’s standard “Service Agreement for the Provisions of Election Services.” The City Clerk or Acting City Clerk is authorized and instructed to provide whatever cooperation is necessary to facilitate the proposed all-mail ballot election.
Section VIII. Publication of Measure
In accordance with Section 12111 of the Elections Code and Section 6061 of the Government Code, the City Clerk is hereby authorized and directed to cause notice of the measure to be published once in the Salinas Valley Tribune, a weekly newspaper of general circulation, circulated in the City of Gonzales and hereby designated for that purpose by the Council of Gonzales.
Section IX. Effective Date
This Resolution shall become effective immediately upon its passage and forthwith entered upon the minutes of this Council and kept and maintained by the City Clerk of the City of Gonzales.
Section X. Transmission of Resolution
The City Clerk is hereby authorized and directed to certify to the due adoption of this Resolution and to transmit a copy hereof so certified to the Board of Supervisors and the Registrar of Voters of Monterey County.
Section XI. Corrections
The City Clerk and City Attorney are authorized to make any typographical, clerical, nonsubstantive corrections to this resolution and to the ballot measure as may be deemed necessary by the Monterey County Clerk/Registrar of Voters.
PASSED AND ADOPTED by the City Council of the City of Gonzales at a special meeting duly held on the 31st day of May, 2022 by the following vote:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
____________________________
Jose L. Rios, The Honorable Mayor
ATTEST:
_________________________________
Mary Villegas, Deputy City Clerk
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Attachment: Resolution No. 2022-31 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) Exhibit A
ORDINANCE NO. 2022-132
AN ORDINANCE OF THE VOTERS OF THE CITY OF GONZALES
IMPOSING A TEMPORARY SPECIAL TRANSACTIONS AND USE TAX, KNOWN AS THE “GONZALES COMMUNITY CENTER TEMPORARY TAX MEASURE” TO BE
ADMINISTERED BY THE CALIFORNIA DEPARTMENT OF TAX AND FEE
ADMINISTRATION AND RESTRICTING THE USE OF TAX REVENUES
TO GONZALES COMMUNITY CENTER COMPLEX FINANCING AND FUNDING
AND THEREAFTER ON STREET MAINTENANCEAND REPAIR, SUBJECT TO
ANNUAL AUDITS AND ANNUAL PUBLIC EXPENDITURE REPORTS
BE IT ORDAINED BY THE VOTERS OF THE CITY OF GONZALES:
SECTION 1. FINDINGS. The voters of the City of Gonzales hereby find as follows:
1. The voters of the City of Gonzales have previously approved two tax measures (Measure K and Measure X), setting the City’s current Temporary Transaction and Use Tax (TUT) at one percent (1%). The 1% TUT has established a sales tax rate in Gonzales at 8.75%, the second lowest rate in Monterey County. With guidance provided by TUT Advisory Committees, TUT revenues in Gonzales have been used for a variety of projects, including but not limited to funding debt service for the Community Pool, youth services and leadership development, park improvements (restrooms, tot lot, playground equipment), grant programs, senior programs, and internet accessibility for all citizens.
2. After several years of planning and extensive public outreach and input, the City of Gonzales is pursuing the construction of a Community Center Complex Project (“Project”) which will include a public library, a Teen Innovation Center, a fitness studio, stand-alone gymnasium, multi-use conference rooms, consulting and counseling rooms, a commercial kitchen, a 3,500 square foot Community Hall to host fitness and recreation classes, competitive sports events, and public and private functions, and extensive outdoor venues that include an exercise area, amphitheater with stage, and meet-and-greet lounge areas. The Council, Staff and community are largely unified in the belief that the Project, as planned, will provide a multitude of recreation, education and social activities for local and regional residents and will be of significant benefit to the health and the quality of life for City residents of all ages.
3. Project estimated costs are $34.8 million for the base project, and an additional $8 million for a standalone gymnasium requested and supported by community members and the Council, for a total cost estimate for the Project of $42.8 million dollars.
4. While the City has been and continues to be diligent in seeking and obtaining funding sources for the Project, including significant State and local grants and the recommended use of a portion of the proceeds from the City’s Measure X TUT revenues, Project costs have been adversely impacted by the COVID pandemic and the current war between Russia and Ukraine. As a result of these circumstances, Project costs are significantly outpacing available funding sources, thus creating a substantial Project funding deficit.
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)
5. In light of the above-referenced Project funding deficit, when paired with the community and Council desire for the Project, on April 4, 2022, the Council directed staff to prepare a resolution and ordinance that would call for an all-mail ballot election for the City’s electorate to consider adoption of a special one-half percent (0.5%) increase to the City’s TUT. The Tax would be a special tax, requiring a two-thirds vote for approval, with use of the tax revenues restricted initially to financing and funding the Community Center Project, and only upon the completion of such funding, to be used for street maintenance and repair.
6. Pursuant to Part 6.1 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code, and Part 1.7 of Division 2, and more specifically Section 7285.91, the City may seek voter approval for a special transactions and use tax (TUT.) SECTION 2. AMENDMENT OF CODE. “Chapter 3.30- Community Center Temporary Special Transactions and Use Tax” shall be added to Title 3- Revenue and Finance of the Gonzales City Code and shall read as follows:
“3.30.010 Title. The ordinance codified in this Chapter shall be known as the “Gonzales Community Center Special Temporary Transactions and Use Tax Measure” Ordinance. This ordinance shall be applicable in the incorporated territory of the City.
3.30.020 Operative date. “Operative Date” means the first day of the first calendar quarter commencing more than 110 days after the adoption of this ordinance, the date of such adoption being as set forth below.
3.30.030 Purpose. The city council declares that the ordinance codified in this chapter is adopted to achieve the following purposes, and directs that the provisions hereof be interpreted in order to accomplish said purposes:
A. To impose a temporary special retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.91 of Part 1.7 of Division 2 which authorizes the city to adopt this tax ordinance which shall be operative if two-thirds (2/3) of the electors voting on the measure vote to approve the imposition of the tax at an all-mail ballot election called for that purpose.
B. To adopt a temporary special retail transactions and use tax ordinance that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code.
C. To adopt a temporary special retail transactions and use tax ordinance that imposes a tax and provides a measure therefore that can be administered and collected by the California Department of Tax and Fee Administration (“CDTFA”) in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the CDTFA in administering and collecting the California State Sales and Use Taxes.
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) D. To adopt a temporary special retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this ordinance.
3.30.040 Contract with State. Prior to the operative date, the city shall contract with the CDTFA to perform all functions incident to the administration and operation of this transactions and use tax ordinance; provided, that if the city shall not have contracted with the CDTFA prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.
3.30.050 Transactions tax rate. For the privilege of selling tangible personal property at retail, a special tax is hereby imposed upon all retailers in the incorporated territory of the city at the rate of one-half percent (0.5%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this ordinance.
3.30.060 Place of sale. For the purposes of this ordinance, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-state destination or to a common carrier for delivery to an out-of-state destination. The gross receipts from such sales shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the CDTFA.
3.30.070 Use tax rate. An excise tax is hereby imposed on the storage, use or other consumption in the city of tangible personal property purchased from any retailer on and after the operative date of this ordinance for storage, use or other consumption in said territory at the rate of one-half percent (0.5%) of the sales price of the property. The sales price shall include delivery charges when such charges are subject to state sales or use tax regardless of the place to which delivery is made.
3.30.080 Adoption of provisions of State law. Except as otherwise provided in this ordinance and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are hereby adopted and made a part of this ordinance as though fully set forth herein.
3.30.090 Limitations on adoption of State law and collection of use taxes. In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:
A. Wherever the State of California is named or referred to as the taxing agency, the name of this city shall be substituted therefore. However, the substitution shall not be made when:
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)
1. The word “State” is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Department of Tax and Fee Administration, State Treasury, or the Constitution of the State of California;
2. The result of that substitution would require action to be taken by or against this city or any agency, officer, or employee thereof rather than by or against the CDTFA, in performing the functions incident to the administration or operation of this Ordinance.
3. In those sections, including, but not necessarily limited to sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:
a. Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or; b. Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code.
4. In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.
B. The word “City” shall be substituted for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 and in the definition of that phrase in Section 6203.
3.30.100 Permit not required. If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor’s permit shall not be required by this ordinance.
3.30.110 Exemptions and exclusions.
A. There shall be excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any state-administered transactions or use tax.
B. There are exempted from the computation of the amount of transactions tax the gross receipts from:
1. Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the county in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government.
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)
2. Sales of property to be used outside the city which is shipped to a point outside the city, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this paragraph, delivery to a point outside the city shall be satisfied:
a. With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out-of-city address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence; and
b. With respect to commercial vehicles, by registration to a place of business out-of-city and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address.
3. The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this ordinance.
4. A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease prior to the operative date of this ordinance.
5. For the purposes of subparagraphs (3) and (4) of this section, the sale or lease of tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
C. There are exempted from the use tax imposed by this ordinance, the storage, use or other consumption in this city of tangible personal property:
1. The gross receipts from the sale of which have been subject to a transactions tax under any state-administered transactions and use tax ordinance.
2. Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California.
3. If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this ordinance.
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)
4. If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease prior to the operative date of this ordinance.
5. For the purposes of subparagraphs (3) and (4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.
6. Except as provided in subparagraph (7), a retailer engaged in business in the city shall not be required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the city or participates within the city in making the sale of the property, including, but not limited to, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the city or through any representative, agent, canvasser, solicitor, subsidiary, or person in the city under the authority of the retailer.
7. “A retailer engaged in business in the city” shall also include any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer shall be required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the city.
D. Any person subject to use tax under this ordinance may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject etc to the use tax.
3.30.120 Amendments. All amendments subsequent to the effective date of this ordinance to Part I of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Part 1.6 and Part 1.7 of Division 2 of the Revenue and Taxation Code, shall automatically become a part of this ordinance, provided however, that no such amendment shall operate so as to affect the rate of tax imposed by this ordinance. The foregoing amendments shall not require voter approval.
The following amendments to this ordinance must be approved by the voters of the city of Gonzales; increasing the tax rate or revising the methodology for calculating the tax such that a tax increase would result; or imposing the tax on transactions and uses not previously subject to the tax (unless such amendment occurs automatically by operation of the preceding paragraph); identifying a use for tax revenues other than that specified herein. The city council may otherwise amend this ordinance without submitting the amendment to voters for approval.
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)
3.30.130 Enjoining collection forbidden. No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action or proceeding in any court against the State or the city, or against any officer of the State or the city, to prevent or enjoin the collection under this ordinance, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.
3.30.140 Annual audits, expenditure report and oversight committee. Annually, the city retains an independent auditor to conduct an audit of and provide audited financial statements for all of the city’s financial activities. The auditor shall include an accounting of the revenue received from the tax and expenditures thereof in the audited financial statements. The auditor’s report shall be presented to the council at a public meeting and made available to the public. The City Manager and City Finance Director shall annually prepare and present to the council and the public a report in conjunction with the budget that reviews the use of the proceeds of the special tax.
3.30.150 Refunds and credits; suits and legal proceedings.
A. Refunds of and credits for any tax paid pursuant to this article may be made only as provided for in Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code.
B. Suits and proceedings for the recovery of any amount alleged to have been erroneously or illegally determined or collected pursuant to this article may be maintained in any court only as provided for in Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code. A judgment shall not be rendered in favor of the plaintiff in any action brought against the CDTFA to recover any amount paid when the action is brought by or in the name of an assignee of the person paying the amount or by any person other than the person who paid the amount.
3.30.160 Termination date. This ordinance is meant to establish a special transactions and use tax for a limited period of time. The authority to levy the tax imposed by this chapter shall expire on the fortieth anniversary of the last day of the calendar quarter preceding the operative date.
3.30.170 Effect of tax. The tax established herein is meant to be imposed and collected in addition to any existing tax established by the city, and is not meant to supersede or otherwise impact the tax established in Chapters 3.28 and 3.29 of this code.
SECTION 3. USE OF TAX REVENUE. The tax approved by this ordinance is a special tax.
The city may only initially use the revenue from the tax for financing and funding the City of Gonzales Community Center Complex Project, and thereafter, upon achieving full funding of the Complex, for street maintenance and repair.
SECTION 4. SEVERABILITY. If any provision of this ordinance or the application thereof to any person or circumstance is held invalid by a court of competent jurisdiction, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be Packet Pg. 20
Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%) affected thereby. The voters of the City of Gonzales hereby declare that they would have adopted each and every provision of this ordinance regardless of the invalidity of any other provision.
SECTION 5. CODIFICATION. Upon adoption of this ordinance pursuant to the voter approval referenced in Section 2, the City Clerk, in consultation with the City Attorney, is hereby authorized and directed to codify this ordinance in the Gonzales City Code.
SECTION 6. EFFECTIVE DATE. If approved by a two-thirds majority of the voters voting on the issue at the August 30, 2022 all mail ballot election, this ordinance shall become effective ten (10) days after the Council declares the results of the election, and the tax shall become operative on the “operative date,” as defined in Section 2 of this ordinance.
SECTION 7. PUBLICATION. The Clerk of the City of Gonzales is hereby directed to cause the following summary of the ordinance to be published by one (1) insertion in The Salinas Valley Tribune, a newspaper of general circulation in the City of Gonzales:
Contingent upon two-thirds voter approval, this ordinance adopts a new one-half percent (0.5%) special transactions and use tax on the sale or consumption of tangible personal property within the City of Gonzales. The special tax will be collected for a term of forty (40) years. The ordinance requires independent annual audits and annual public expenditure reports. The tax revenues will only be spent initially on financing and funding the City of Gonzales Community Center Complex Project, and upon achievement of full funding, thereafter will be used exclusively for street repair and maintenance.
APPROVED by the following vote of the Voters of the City of Gonzales on August 30, __, 2022.
ADOPTED by Declaration of the vote by the City Council of the City of Gonzales on ____, 2022:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
____________________________
Jose L. Rios, The Honorable Mayor
ATTEST:
_________________________________
Mary Villegas, Deputy City Clerk
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Attachment: Ordinance No. 2022-132 (2431 : Resolution No. 2022-31 Increasing TUT by 0.5%)