1377
I hereby certify that the foregoing Urgency Ordinance of the City Council of the City of Richmond was duly passed and adopted at a regular meeting thereof held April 16, 2024, by the following vote:
AYES:
NOES:
ABSTENTIONS:
ABSENT:
Approved:
EDUARDO MARTINEZ
Mayor
Approved as to form:
DA VE ALESHIRE
City Attorney
State of California }
County of Contra Costa
City of Richmond }
Councilmembers Bana, McLaughlin, Willis, Zepeda, Vice
Mayor Jimenez, and Mayor Martinez.
None.
None.
Councilmember Doria Robinson.
: ss.
PAMELA CHRISTIAN
CLERK OF THE CITY OF RICHMOND
(SEAL)
I certify that the foregoing is a true copy of Urgency Ordinance No. 03-24 N.S., passed and adopted by the City Council of the City of Richmond at a regular meeting held on April 16, 2024.
Pamela Christian, Clerk of the City of Richmond
Ord. No. 03-24 N.S.
1378
10-DAY REPORT ON THE CITY OF RICHMOND’S 45-DAY
URGENCY MORATORIUM ORDINANCE PLACING A TEMPORARY MORATORIUM
ON ALL NEW TOBACCO RETAILERS WITHIN THE CITY OF RICHMOND PENDING
THE STUDY AND DEVELOPMENT OF REASONABLE REGULATIONS AS REQUIRED BY GOVERNMENT CODE SECTION 65858(d)
BACKGROUND:
On April 16, 2024, pursuant to Government Code Sections 65858 and 36937, the City Council adopted Ordinance No. 03-24 N.S., a 45-day urgency moratorium ordinance. Ordinance No. 03-24 N.S. was adopted in an effort to protect the public health, safety, and welfare by placing a 45-day moratorium on all new tobacco retailers with the City of Richmond pending completion of anticipated study and development of reasonable regulations for tobacco retailers. Under Government Code Section 65858(d), at least 10 days prior to the expiration of the 45-day ordinance, the City is to issue a written report describing the measures taken to alleviate the conditions which led to the adoption of the moratorium. Issuance of this report satisfies the requirements of Government Code Section 65858(d). The 45-day moratorium is set to expire on May 31, 2024.
MEASURES TAKEN TO ALLEVIATE THE CONDITIONS THAT LED TO THE ADOPTION
OF THE URGENCY ORDINANCE
1. Since April 16, 2024, City staff has been developing a community engagement plan to receive input from stakeholders, including neighborhood councils, school organizations, and residents on the contemplated municipal code amendments. This effort has included compiling a list of stakeholders to engage in the community input process.
2. The City has assembled a legal team that will be needed to study and implement the recommendations contained in Ordinance No. 03-24 N.S.
3. City staff has prepared a draft scope of work seeking a planning consultant to assist in the study and development of reasonable regulations on tobacco retailers.
4. City staff has started reviewing municipal code regulations of peer cities with regard to regulations on tobacco retailers.
5. City staff has started to assemble an inter-department and inter-agency team that will be tasked with the enforcement and review of licenses and unlicensed tobacco retailers to understand violations of current regulations and the need for potential new regulations.
6. City staff has created and published a project webpage to post information regarding the project. See https://www.ci.richmond.ca.us/4662/Tobacco-Retailers-License
7. City staff has started developing lists of tobacco retailers with current licenses, those with expired licenses, and those operating with no licenses to study the current landscape and determine certain regulations that may be beneficial.
The above reflects actions undertaken during this short period. Conditions continue to exist that make it necessary to extend the interim urgency ordinance currently in effect to provide staff with 1379
the necessary time to complete its analysis and research, develop appropriate regulations, and ensure the protection of the public health, safety, and welfare.
CONTINUED NEED FOR THE MORATORIUM
Actions addressing the underlying need for the moratorium are on-going. Specifically, at the direction of Council, staff is studying and will develop reasonable regulations for tobacco retailers, including a potential use permit, to address community concerns regarding underage access, public notification of licenses, and proliferations of retailers. These contemplated regulation changes require public outreach, additional study, a public hearing before the Planning Commission, and a second public hearing before the City Council. These tasks cannot be completed within the initial 45-day period which ends on May 31, 2024. Therefore, the need for the moratorium remains and staff recommends the City Council adopt an ordinance extending the current moratorium for a period of 10 months and 15 days. Unless extended by Council, the moratorium would automatically expire on May 31, 2024. Staff intends to return to Council with municipal code amendments by the end of the calendar year.
OPPORTUNITY FOR PUBLIC COMMENT: Members of the public will have the opportunity to comment on the draft extension of the Urgency Ordinance at the City Council hearing to be held on May21, 2024. The City will publish notice for this meeting pursuant to Government Code § 65090. 1380
May 21, 2024
Mayor's Office
DATE: May 21, 2024
TO: Members of the City Council
FROM: Mayor Eduardo Martinez and Vice Mayor Claudia
Jimenez
Subject: Richmond Refining Tax Act
FINANCIAL IMPACT: Staff time to research the issue and develop the necessary ballot measure language.
PREVIOUS COUNCIL
ACTION:
May 7, 2024 (Item P.1.)
April 16, 2024 (Item V.4.d)
STATEMENT OF THE
ISSUE:
To improve quality of life for Richmond residents, the City is seeking new sources of tax revenue. Oil refining has negative impacts on the City, including environmental
hazards, public health harms, and stressing emergency
services. Community groups have a proposal to generate
new tax revenue to improve the City’s financial position.
In raising new revenue, the City could raise new tax
revenue from the oil industry, justified by its negative impacts on the City.
RECOMMENDED ACTION: RECEIVE a presentation on general tax proposal related to oil refining and DIRECT the City Attorney to review
and prepare a Richmond Refining Tax Act ballot measure
and related documents- Mayor's Office (Mayor Eduardo
Martinez 510-620-6503) and Councilmember Claudia
Jimenez (510-620-6565).
AGENDA
REPORT
1381
May 21, 2024
DISCUSSION:
In recent years, the City of Richmond has taken a proactive and strategic approach to improving its financial health. Key strategies have included a) implementing new taxation measures ; b) careful adherence to recommendations made by the state auditor and HUD; c) terminating its use of credit swaps; and d) updated, prudent fiscal policies (i.e. the reserve and assumed vacancy rates).
The City has also actively engaged the community in its budgeting process. The annual budget cycle is accompanied by multiple community meetings, wherein the public can learn about the process and provide input on resident priorities. Transparent Richmond, launched in 2020, is a citywide open data and performance reporting system that offers the community access to the City’s financial data and infrastructure projects.
City leadership is, in short, prioritizing its financial health in order to provide budgetary stability and quality services to all Richmond residents.
The draft Fiscal Year 2024-25 Annual Operating Budget, presented to City Council on May 7th, 2024, underscores the need for increased revenue streams. Table 3 of the agenda report illustrates the General Fund currently cannot meet almost $34 million dollars in budgetary requests across City departments.
In the same agenda report, tables 4 and 5 provide a General Fund Five-Year Forecast “Middle of the Road” revenues and expenditures scenario, both of which indicate that, within the next 2
_____________________
₁ Approved by 72.53% of Richmond voters in November 2020, Measure U authorized a business tax of 0.06% to 5% of gross receipts, with higher rates being assigned to marijuana businesses, firearm businesses and big businesses, generating an estimated $9.5 million per year for city services including emergency response, street repair, homeless services and youth services.
₂ Approved by 64.89% of Richmond voters in November 2018, Measure H authorized the district to increase the real estate transfer tax for properties with a sale price of over $1 million from 0.7 percent to 1.25 percent for sale prices below $3 million, 2.5 percent for sale prices between $3 million and $10 million, and 3.0 percent for sale prices over $10 million.
1382
May 21, 2024
₃ State Audit Corrective Action Plan, May 2024 Update.
years, the City of Richmond will not be able to achieve a balanced budget without increased revenue streams.
There are also anticipated budgetary needs that the City currently cannot fund but has recognized it must prioritize. The state auditor, for example, takes care to emphasize a dilemma in continuing to improve Richmond’s financial health: high staff turnover and lower staffing levels have historically impacted the City’s finances and economic development; at the same time, the staffing levels the City needs to provide quality services are difficult for the City to afford, given current revenue streams and its commitment to its employees’ retirement packages. The City’s pavement network, as another example, is degrading each year; even preventing further degradation requires millions more each year in budgetary allocations.
Public Impacts Associated with the Refining Industry
There are ongoing negative externalities associated with proximity to a large, pollutive industrial facility. As further described in the attached presentation, the City and its residents face negative public impacts from oil refining, including public health and environmental impacts, and additional stresses on emergency services. With respect to public health, particulate matter from the refinery alone is linked to 5 to 11 premature deaths in Richmond each year. The federal EPA estimates that the health impacts of oil refining in Contra Costa County range from $70 million to $140 million annually. Oil spills and other toxic releases underscore the environmental risks and ______________________
1383
May 21, 2024
₄ Current projections indicate that at the anticipated pavement rehabilitation funding level of $4 million per year, the PCI will decrease. In order for the City’s PCI to remain at the current level of 61, City staff recommend the City Council direct City staff to allocate an additional $11 million per year above and beyond the anticipated budget, for a sum total of approximately $15 million per year for the next five years. See February 6, 2024, Agenda Item Y.4. impacts. Incidents like the 2012 explosion demonstrate that refinery emergencies are Richmond emergencies.
These burdens are each a justification for the City to impose tax liability proportional to the many impacts that oil refining has on our community. These costs are also illustrative, non-binding examples of what the City could allocate, on an annual basis at Council discretion, future revenue towards. Other examples include growing the City’s tax base through economic development activities or increasing financial reserves to support public sector employment and general City services in the case of future economic shifts.
Proposal
The City of Richmond has the legal authority to levy taxes within its jurisdiction.
Communities for a Better Environment (CBE) and Asian Pacific Environmental Network (APEN) have a proposal on how to raise new revenue from oil refining within the City to improve the City’s financial position. By raising additional revenue, it would be possible for the City to also address the impacts associated with the refining sector; if the City chooses to put a general tax forward to the electorate, and should the tax measure succeed, such funding allocation decisions would be made by the City through the ordinary budgeting process for the General Fund. CBE and APEN hope to work with the City on developing a measure to be put forward to the electorate to raise revenue from the refining sector to augment revenue for the General Fund. The purpose of this presentation is to begin such discussions before the Council.
DOCUMENTS ATTACHED:
Attachment 1 — Richmond Refining Tax Presentation
1384
Proposal:
The Richmond
Refining Tax Act
May 21, 2024
Kerry Guerin, she/her
Attorney, Communities for a Better Environment (CBE)
o.b.o. CBE and Asian Pacific Environmental Network (APEN) [email protected] 1385
Agenda
2 1. Benefits of – and a Need for – Additional City Revenue
2. Measure T
3. A Tax on Oil Refining
4. Negative Public Refining Impacts on the City
5. General Tax vs. Special Tax
6. Q&A – also welcome throughout
1386
1. A Need for New Revenue
3 The 2022 State Auditor’s Report details the need for the City to balance its budget – which may be done by raising revenue. (Link)
The April 16, 2024 Port audit presentation describes fiscal needs to support the Port’s viability, mindful of legalities of directing funds from the City to the Port. (Link)
The May 7, 2024 draft FY 2024-25 Annual Operating Budget forecasts a $34 million gap between budget requests and available revenue. Five-year forecasts in the same document predict that it will be impossible to balance the budget without new revenue. (Link) 1387
1. Opportunities in the Richmond Refining Tax
4 The City could use new revenue to address a range of general government issues, all at its choosing through the budgeting process. In general, the City could shore up its fiscal position.
The City could save reserves for future economic disturbances to maintain future public sector employment.
The City could seed new industries to reduce economic and taxbase reliance on any one industry, reflective of Blue/Green New Deal proposals. (Link)
The City could use the new revenue to mitigate the negative impacts of refining – e.g., environmental impacts, public health impacts, and emergency services impacts from oil refining. 1388
2. Measure T
5 Measure T was also a tax on activities at oil refineries, approved by a majority of Richmond voters in 2008. (Link) Measure T was challenged in court, and the tax was struck down in 2009, for two reasons:
1. Measure T lacked an apportionment mechanism;
and
2. Measure T was a tandem tax, where the basis for
liability would be determined by assessing whether
basis #1 (value added during manufacturing in
Richmond) or basis #2 (employee headcount) would
generate more revenue.
Measure T’s faults would be easy to address now in hindsight and going forward. 1389
2. Measure T Settlement Agreement
6 Since litigation over Measure T, there is a 15-year settlement agreement in place with the refinery that expires June 30, 2025.
That settlement agreement froze new taxes from applying to the refinery while the agreement was in effect, including Measure U’s Gross Receipts Tax and edits to the User Utility’s Tax.
But once the agreement expires, all City taxes will apply to the refinery as currently on the books, and the City’s ability to impose new tax liability returns free of the credit
complications laid out in the agreement. 1390
3. A Tax on Oil Refining
7 An excise tax is a tax on a good or service before the point it reaches a customer. There are many examples of legal excise taxes in California. There are examples too of refining taxes.
Learning the lessons of Measure T to avoid its pitfalls, we are confident that a tax on oil refining within the City could be written in a way that survives legal challenge.
We are not the City’s lawyers. It would be prudent for the City to engage the City Attorney on an independent risk
assessment.
After further discussion with the City Attorney, we would be happy to return to discuss a more detailed proposal. 1391
4. Negative Public Refining Impacts –
Environmental
8 In 2023, the refinery produced an average of 25,000 pounds of hazardous waste each day. (Link)
In 2021, the refinery released 37,722 pounds of toxic
chemicals into surface waters. (Link) The February 2021 oil spill into the Bay underscores additional risks. (Link) Oil spills and permitted releases of pollution impact wildlife, and communities that depend on our local ecosystem. (Link)
Groundwater may also get polluted as contaminants seep into aquifers; sea level rise may push toxic groundwater upwards, and these toxic substances can seep into basements, a broken sewage line, or be vaporized and breathed in.
1392
4. Negative Public Refining Impacts –
Public Health
9 The refinery is the City’s single largest source of particulate matter emissions (PM2.5). (Link) BAAQMD data connects the refinery’s PM2.5 emissions with 5.1 to 11.6 premature deaths in Richmond each year. (Link) Other PM 2.5 effects include infant mortality, cancer, and traumatic mental health effects. (Link)
Richmond’s asthma rate is at the statewide 90th percentile. (Link) Fence-line neighborhoods near the refinery are in the 97th to 99th percentile for asthma, meaning that their asthma rate is higher than 97 to 99% of other California residents. (Link) The healthcare impacts associated with oil refining in Contra Costa County are estimated to be between $70 million and $140 million each year, according to federal EPA figures. ( 1393 Link)
4. Negative Public Refining Impacts –
Emergencies
10 Refinery emergencies are Richmond emergencies.
The 2012 explosion injured 6 employees and sent 15,000
Richmond residents to hospitals seeking medical treatment. (Link)
The November 2023 flaring incident logged more than 100 air quality complaints to the Air District. (Link)
These incidents, and future ones like it, strain public resources, including the Fire Department, but also increase stress on other public systems, including with increased vehicle traffic on roads.
1394
4. Negative Public Refining Impacts
11 All these impacts are tied to to refinery operations.
The more crude oil that is refined, the more pollution that is emitted – the more the environment and public health are harmed, with costs born by the City. The more refining that occurs, the higher the risk that refining-related emergencies are to occur, with costs again born by the City.
It would be prudent to base the tax not just on crude oil (the current feedstock, or input, for the refinery) but to also include biofuels feedstock, given the recent transitions of other local refineries and the negative impacts of biofuels refining.
The City may impose taxes proportional to these impacts 1395 .
5. General Tax vs. Special Tax
12 Under Article XIII C of the California Constitution, local governments can generate new revenue in the form of general taxes or special taxes.
They differ in how they are used:
General taxes go to the General Fund.
Special taxes may be restricted for special uses.
And they differ in how they are established. Both must be approved by the electorate (whether referred by the Council, or by signature petitions), at different thresholds:
General taxes are a 50% threshold, special taxes are
2/3. 1396
Recap
13 1. Benefits of – and a Need for – Additional City Revenue
2. Measure T
3. A Tax on Oil Refining
4. Negative Public Refining Impacts on the City
5. General Tax vs. Special Tax
1397
Questions & Answers
Thank you!
May 21, 2024
Kerry Guerin, she/her
Attorney, Communities for a Better Environment (CBE)
o.b.o. CBE and Asian Pacific Environmental Network (APEN) [email protected]
1398