City of Sacramento
City Council - 2PM Report
915 I Street Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2025-00048 1/14/2025 Consent Item 5.
Appointment of Hearing Examiner for Business Operations Tax Administrative Hearings File ID: 2025-00048
Location: Citywide
Recommendation: Adopt a Resolution appointing Dennis Hay, Esq. as Hearing Examiner to hear administrative appeals of Business Operations Tax under Chapter 3.08 of the Sacramento City Code for the remainder of his four-year term that commenced on March 22, 2022.
Contact: Bryan Howard, Program Manager, (916) 808-4847, [email protected]; Jackie Rice, Finance Manager, (916) 808-5844, [email protected]; Finance Department Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: Sacramento City Code Chapter 3.08.300 provides that the City may make a Business Operations Tax or Cannabis Business Operations Tax (both referred to herein as BOT) deficiency determination, or a re-computation of tax owed (assessment), when the Administrator determines there is reasonable cause to believe the amount of BOT paid by a taxpayer has been erroneous.
City Code Section 3.08.320 provides that within fifteen (15) days of the City mailing the BOT deficiency determination, the recipient of the assessment may file in writing an application for a hearing with the Director of Finance to challenge the assessment and the Director of Finance will make a ruling, or decision, either upholding, dismissing, or amending the assessment. City Code Section 3.08.330 provides that any person aggrieved by the decision of the Director of Finance, made pursuant to the provisions of City Code Section 3.08.320, may file an appeal to City Council within fifteen (15) days after service of the Director of Finance’s decision where City Council may hear the matter itself or refer the matter to a Hearing Examiner authorized by City Code Section
1.24.050 and this decision shall be final and conclusive with any amounts determined to be due and payable upon service of the decision of City Council or their appointed Hearing Examiner. City Code Section 1.24.050 provides that City Council may appoint a Hearing Examiner to hear appeals initially
File ID: 2025-00048 1/14/2025 Consent Item 5.
to be heard by City Council. City Code Section 1.24.060 further provides that City Council may, at its sole discretion, delineate one or more categories of appeal which routinely involve a lengthy fact- finding process, and instruct staff to schedule such appeal hearings before a Hearing Examiner without further action of the City Council.
Following a Request for Proposal process in 2019, Dennis Hay, Esq. was appointed as a Hearing Examiner for the Office of Cannabis Management. Mr. Hay has practiced law for over 30 years with an emphasis in municipal law. Additionally, he served for 12 years as a Hearing Examiner for the City of Stockton and has been a Hearing Examiner for the City of Sacramento since 2019.
Once appointed, Hearing Examiners cannot ordinarily be removed during their term unless they fail to meet the requirements of a Hearing Examiner. However, under City Code section 1.24.060.C the City Council may, at any time before a Hearing Examiner commences a hearing on a matter under appeal, with or without prior notice to the appellant, rescind the appointment of the Hearing Examiner and schedule the matter under appeal for a hearing before the entire City Council.
Because a hearing on the subject of the appeal will involve a lengthy fact-finding process which would be more appropriately accommodated by a formal hearing before a Hearing Examiner, staff is recommending appointment of Dennis Hay, Esq. as a Hearing Examiner to hear appeals filed under Chapter 3.08 of the City Code for the remainder of his four-year term that commenced on March 22, 2022. Upon term expiration, he could apply for reappointment.
Policy Considerations: None.
Economic Impacts: None.
Environmental Considerations: Not applicable.
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: A Hearing Examiner appointment is necessary to ensure due process for appeals of the Director of Finance’s BOT deficiency determinations. They are non-City employees who conduct hearings and issue decisions based on findings of fact as the City Code and other relevant applicable laws allow.
Financial Considerations: The rate for Hearing Examiners for administrative hearings is $150 per hour. This rate applies to the time necessary for hearing packet review, the hearing itself, post- hearing evidence review, and decision preparation. Hearing costs are partially offset by BOT administrative appeal fees. There are sufficient resources in the Fiscal Year 2024/25 Revenue
File ID: 2025-00048 1/14/2025 Consent Item 5.
Division operating budget to fund the hearing costs.
Local Business Enterprise (LBE): Not applicable.
RESOLUTION NO. 2025-
Adopted by the Sacramento City Council
________, 2025
Designation of Hearing Examiner for Appeals of the
City’s Business Operations Tax
BACKGROUND
A. Article II of Chapter 1.24 and Article V of Chapter 3.08 set forth the process and procedure for appointment of hearing examiners and appeals of decisions rendered by the Director of Finance pertaining to enforcement of the City’s business operations tax rules and regulations.
B. Section 3.08.330 requires that the City Council hear the appeals or refer the appeals to a hearing examiner.
C. Section 1.24.060 authorizes the City Council, by resolution, to delineate categories of appeal which routinely involve a lengthy fact-finding process, and to instruct the City Clerk to schedule such appeal hearings before a hearing examiner without further action of the City Council.
D. Following a Request for Proposal process in 2019, Dennis Hay, Esq. was appointed as a hearing examiner to conduct hearings for administrative penalties relating to cannabis citations. Due to Mr. Hay’s experience and qualifications, Staff is recommending that the City Council expand the appointment and appoint Mr. Hay to hear appeals of decisions rendered by the Director of Finance pertaining to enforcement of the City’s business operations tax rules and regulations.
BASED ON THE FACTS SET FORTH ABOVE, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. The City Council finds that a hearing on an appeal of the City’s business operations tax rules and regulations will involve a lengthy fact-finding process which would be more appropriately accommodated by a formal hearing before a hearing examiner.
Section 2. The City Clerk shall schedule appeal hearings for all appeals filed pursuant to Chapter 3.08 of the Sacramento City Code before a hearing examiner.
Section 3. Dennis Hay, Esq. is designated as a hearing examiner for appeals filed pursuant to Section 3.08.330 for the remainder of his four-year term that commenced on March 22, 2022.
Adopted by the City of Sacramento City Council on _______, 2025, by the following vote:
Ayes:
Noes:
Abstain:
Absent:
Attest:
_____________________________________
Mindy Cuppy, City Clerk
The presence of an electronic signature certifies that the foregoing is a true and correct copy as approved by the Sacramento City Council.