City Council Agenda Report
Meeting Date: June 18, 2024
From: Jessica Alcaraz, Financial Services Administrator Department: Finance
Submitted by: John Lau, Accountant
Subject
Public Safety Special Parcel Tax Rate for Fiscal Year 2024-25 Recommendation
A. Adopt Resolution No. 2024-13 determining the Public Safety Special Parcel Tax levied for Fiscal Year (FY) 2024-25, pursuant to Municipal Code Section 3.20.020; and B. Approve and authorize the Financial Services Administrator to execute an Agreement for Billing Direct Assessments with the County of Los Angeles Auditor-Controller’s Office, in substantially the same form as submitted, for the collection and distribution of the Public Safety Special Parcel Tax for FY 2024-25.
Background
On April 9, 2013, the City of Vernon voters approved Measure L, which authorized the annual levy of a parcel tax on non-residential parcels to fund public safety services. Since its adoption, and continuing through its final fiscal year 2022-23, the Public Safety Special Parcel Tax (Public Safety Tax) was collected annually for each taxable parcel area that is not apportioned a share of the Warehouse Special Parcel Tax as an assessment on the Los Angeles County property tax bill.
On April 11, 2023, the City of Vernon voters approved Measure W, which extended and authorized the levy of an annual special parcel tax on non-residential parcels for a period of five years beginning with FY 2023-24. For each fiscal year the special parcel tax is to be collected, through and including FY 2027-28, the City Council sets the rate of the tax at an amount that does not exceed the maximum tax rate calculated for the fiscal year. The provisions for calculating and collecting the Public Safety Tax are codified in Section 3.20.020 of the Vernon Municipal Code (VMC).
Pursuant to VMC Section 3.20.020, the maximum rate shall be adjusted annually based upon changes in the Consumer Price Index (CPI) for All Urban Consumers (CPI-U), All Items Index, Los Angeles-Long Beach-Anaheim, California Area (1982-84=100) for any fiscal year in which the CPI for the month of March of the immediately preceding fiscal year is greater than the CPI for March 2023. For each fiscal year in which the CPI for the month of March of the immediately preceding fiscal year is not higher than the CPI for March 2023, the maximum rate for such fiscal year shall not be adjusted and such maximum rate shall be equal to the maximum rate for fiscal year 2023-24. For FY 2023-2024 City Council adopted Resolution No. 2023-15 setting the rate at $0.03683 per square foot of taxable parcel area.
FY 2024-2025 MAXIMUM PUBLIC SAFETY TAX RATE CALCULATION Applying the CPI (Attachment 3) in the manner required by Section 3.20.020(d)(2) of the VMC, staff calculated the maximum Public Safety Tax rate for FY 2024-25 to be $0.03831 per square foot of taxable area. The calculations are as follows:
Multiply the 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 period ending March, 2023.
CPI March, 2023 = 317.873
CPI March, 2024 = 330.671
$0.03683(330.671/317.873) = $0.03831 per square foot of taxable parcel area. The maximum Public Safety Tax rate for FY 2024-25 is an approximate increase of 4.03% over the FY 2023-24 rate.
Pursuant to VMC Section 3.20.020(f), the tax is collected on the County of Los Angeles property tax bill. An agreement is required by the County of Los Angeles Auditor-Controller's Office for the City of Vernon to use the County's collection services. Pursuant to VMC Section 3.32.110 et seq., competitive bidding and competitive selection are not required because the services are provided by a governmental entity and because the entity is the sole provider. The Agreement for Billing Direct Assessments was reviewed and approved as to form by the City Attorney's Office.
In order to implement the Public Safety Tax, staff recommends that the City Council adopt the proposed resolution setting the Public Safety Tax at $0.03831 per square foot of taxable parcel area and approve and authorize the Financial Services Administrator to execute an Agreement for the Billing of Direct Assessments (Public Safety Special Parcel Tax) with the County of Los Angeles Auditor-Controller's Office for the collection and distribution of the Public Safety Special Parcel Tax for FY 2024-25.
Fiscal Impact
Based on the proposed rate adjustment of $0.03831 per square foot of taxable parcel area, and by implementing the recommended action, the City's Public Safety Tax revenue will increase from approximately $2.263 million to approximately $2.334 million, providing an estimated additional $71,000 for the FY 2024-25 Budget.
The County of Los Angeles Auditor-Controller charges $0.25 per assessment per parcel, plus a $50 processing fee for FY 2024-25. Corrections of direct assessments will be charged at a rate of $13 per parcel. Direct assessment billing charges are deducted from revenues forwarded by the County to the City on the December 20th advanced distribution. The estimated total cost, based upon the parcels subject to the Public Safety Tax is $280.75.
Attachments
1. Resolution No. 2024-13
2. Agreement for Billing of Direct Assessments
3. Bureau of Labor Statistics Data