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
RESOLUTION NO. 2024-13
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF VERNON
DETERMINING THE PUBLIC SAFETY SPECIAL PARCEL TAX LEVIED FOR FISCAL YEAR 2024-2025 PURSUANT TO VERNON MUNICIPAL
CODE SECTION 3.20.020
SECTION 1. Recitals.
A. Vernon Municipal Code Section 3.20.020 authorizes an annual public safety special parcel tax (Tax) to fund: 1) City police services and projects; 2) City health services and projects; and 3) contracted City fire protection services and projects.
B. Vernon Municipal Code Section 3.20.020(E) requires that the City Council determine, for each fiscal year, by ordinance or resolution, the amount of the Tax to be imposed on each parcel subject to the Tax, calculated based on the applicable maximum rate for such fiscal year but may, at the discretion of the City Council, be determined based on lower rates.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF VERNON AS FOLLOWS:
SECTION 2. The City Council of the City of Vernon hereby finds and determines that the above recitals are true and correct.
SECTION 3. The City Council hereby determines the Tax for fiscal year 2024- 2025 shall be $0.03831 per square foot of taxable parcel area. A list of parcels subject to the Tax, as well as the amount of the Tax to be levied upon each parcel, is attached hereto as Exhibit A and is hereby approved.
SECTION 4. The tax 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.
SECTION 5. The Interim City Clerk, or designee, is hereby directed to transmit a copy of this resolution, together with such other information as may be required for placement of the tax on the County property tax bills, to the Department of AuditorController of the County of Los Angeles.
SECTION 6. The City Administrator, or designee, is hereby authorized to amend the aforesaid list to add any parcel subject to the Tax omitted therefrom, with said Tax calculated at the rate of $0.03831 per square foot of taxable parcel area, and to delete any parcel erroneously included.
Resolution No. 2024-13
_______________________
SECTION 7. The Deputy City Clerk shall certify the passage and adoption of this resolution and enter it into the book of original resolutions.
APPROVED AND ADOPTED June 18, 2024.
_________________________
JUDITH MERLO, Mayor
ATTEST:
______________________________
YONNIE PARKER, Deputy City Clerk
(seal)
APPROVED AS TO FORM:
_______________________________
ZAYNAH N. MOUSSA, City Attorney
Finance Department
4305 Santa Fe Avenue, Vernon, CA, 90058
CityofVernon.org
DA Account #: 276.40, 276.41
AGREEMENT FOR BILLING OF DIRECT ASSESSMENTS
This agreement is made and entered into between the Los Angeles County Auditor-Controller and City of Vernon to provide the service of placement of direct assessments on the Secured Tax Roll and distribution of collections to City of Vernon.
I. PROPERTY TAX SERVICES
Los Angeles County will place direct assessments on the Secured Tax Roll and distribute collections to City of Vernon at the same time and in the same manner as Los Angeles County property taxes are collected and distributed. City of Vernon will adhere to the policies and procedures established by the Los Angeles County Auditor-Controller as outlined in the Direct Assessment Submission Procedure Manual.
Fee for Billing Services
For billing of direct assessments, the Los Angeles County Auditor-Controller shall collect the following charge:
DA Original Submission $0.25 per assessment per parcel
For correction of direct assessments requested by City of Vernon after extension of the tax roll, the Los Angeles County Auditor-Controller will collect $13.00 per correction.
The Los Angeles County Auditor-Controller will charge an additional fee for extended services provided to City of Vernon that are outlined in the Auditor-Controller Direct Assessment Submission Procedure Manual.
II. COLLECTION OF AUDITOR-CONTROLLER FEES
Direct Assessment billing charges are collected once a year, on the December 20th advance distribution. Any additional charges are deducted on the next available distribution of monies.
Agreement for Billing of Direct Assessments
III. ACCOUNTING SERVICES
The Los Angeles County Auditor-Controller has available a report of direct assessments levied for the tax year by parcel and will be provided to City of Vernon. Accounting Services beyond this will be considered extended services and will be subject to additional charges and fees.
IV. MODIFICATION OF COLLECTION FEES AND CHARGES
The Los Angeles County Auditor-Controller reserves the right to increase or decrease any charges herein provided, in proportion to any changes in costs incurred by the Auditor-Controller in providing the services described herein, provided that written notice of any increase or decrease in charges is given to City of Vernon.
V. AUTHORITY FOR LEVY AND COMPLIANCE WITH LAW
The authority for such levy, (i.e. resolution, ordinance or election), shall accompany requests for the levy of direct assessments. City of Vernon warrants that the taxes, fees, or assessments imposed by City of Vernon and collected pursuant to this Agreement comply with all requirements of state law, including but not limited to Articles XIIIC and XIIID of the California Constitution (Proposition 218).
City of Vernon hereby releases and forever discharges Los Angeles County and its officers, agents and employees from any and all claims, demands, liabilities, costs and expenses, damages, causes of action, and judgments, in any manner arising out of City of Vernon responsibility under this agreement or other action taken by City of Vernon in establishing a special tax, fee, or assessment and implementing collection of special taxes, fees, or assessments as contemplated in this agreement.
City of Vernon agrees to and shall defend, indemnify and hold harmless Los Angeles County and its officers, agents and employees (“indemnified parties”) from any and all claims, demands, liabilities, costs and expenses, damages, causes of action and judgments, in any manner arising out of any of City of Vernon responsibility under this agreement, or other action taken by City of Vernon in establishing a special tax, fee, or assessment and implementing collection of special taxes, fees, or assessments as contemplated in this agreement.
City of Vernon agrees that Los Angeles County may offset the amount of any claims, demands, liabilities, costs and expenses, damages, causes of action and judgments, in any manner arising out of any of City of Vernon responsibility under this agreement, or other action taken by City of Vernon in establishing a special tax, fee, or assessment and implementing collection of special taxes, fees, or assessments as contemplated in this agreement incurred or paid by Los Angeles County or by any indemnified party, from any monies collected by Los Angeles County on City of Vernon behalf, including property taxes, special taxes, fees, or assessments. Los Angeles County may, but is not required to, notify City of Vernon of its intent to implement any offset authorized by this paragraph.
Agreement for Billing of Direct Assessments
VI. TERMS OF AGREEMENT
All existing agreements between Los Angeles County Auditor-Controller and City of Vernon pertaining to the collection of direct assessments shall be terminated upon the execution of this agreement. This agreement shall continue from year to year and shall be subject to cancellation by either party by giving a thirty-day written notice to the other party of cancellation.
VII. COUNTERPARTS AND ELECTRONIC SIGNATURES AND REPRESENTATIONS This agreement may be executed in two or more counterparts, each of which will be deemed an original but all of which together will constitute one and the same agreement. The facsimile, email or electronic signature of the parties will be deemed to constitute original signatures, and facsimile or electronic copies hereof will be deemed to constitute duplicate originals.
The Los Angeles County Auditor-Controller and the City of Vernon hereby agree to regard electronic representations of original signatures of authorized officers of each party, when appearing in appropriate places on records required by the Los Angeles County AuditorController for providing the services described herein (e.g., i.e. resolution, ordinance, election records, agency information sheet, or data transmittal) and received via communications facilities (facsimile, email or electronic signature), as legally sufficient evidence that such legally binding signatures have been affixed to agreement.
AUTHORIZED SIGNEE:
☐ Director of Finance ☐ Manager ☐ Authorized Consulting Agent ☐ Other (please specify Title): ______________________________ Authorized Signature: ____________________________________ Date: _____________
Authorized Name: ____________________________________
PRINT NAME
___________________________________________________________________________ For Auditor-Controller Use Only Approved Signature: ____________________________________ Date: _____________
SECTION MANAGER
Approved Name: ____________________________________
PRINT NAME
WAREHOUSE SPECIAL PARCEL TAX
CPI - MARCH
A
BASE
B
INCREASE FROM INCEPTION
(A/B)-1
% CPI % Increase from
Previous Year
Maximum Tax Rate
$.20*(CPI/Base CPI)
Proposed Tax Rate Increase from Previous Year %
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
330.671
317.873
306.679
282.648
276.589
271.311
264.158
254.525
247.873
243.738
242.491
239.995
165 1.004067
0.926503
0.858661
0.713018
0.676297
0.644309
0.600958
0.542576
0.502261
0.477200
0.469642
0.454515
100.41%
92.65%
85.87%
71.30%
67.63%
64.43%
60.10%
54.26%
50.23%
47.72%
46.96%
45.45%
4.026136%
3.650071%
8.502094%
2.190615%
1.945369%
2.707849%
3.784697%
2.683632%
1.696494%
0.514246%
1.040022%
1.288928%
0.40081
0.38530
0.37173
0.34260
0.33526
0.32886
0.32019
0.30852
0.30045
0.29544
0.29393
0.29090
0.40081
0.37020
0.35716
0.34260
0.33526
0.32886
0.32019
0.30852
0.30045
0.29544
0.29393
0.29090
0.08269
0.03650
0.04250
0.02191
0.01945
0.02708
0.03785
0.02684
0.01696
0.00514
0.01040
0.01288
8.269100%
3.650071%
4.250000%
2.190615%
1.945369%
2.707849%
3.784697%
2.683632%
1.696494%
0.514246%
1.040022%
1.288301%
165
165
165
165
165
165
165
165
165
165
165
PUBLIC SAFETY SPECIAL PARCEL TAX
CPI - MARCH
A
BASE
B
INCREASE FROM INCEPTION
(A/B)-1
% CPI % Increase from
Previous Year
Maximum Tax Rate
0.03683*(CPI/Base CPI)
Proposed Tax Rate Increase from Previous Year %
2024
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
330.671
317.873
306.679
282.648
276.589
271.311
264.158
254.525
247.873
243.738
242.491
239.995
317.873
317.873
239.995
239.995
239.995
239.995
239.995
239.995
239.995
239.995
239.995
239.995
0.040261
0.000000
0.277856
0.177725
0.152478
0.130486
0.100681
0.060543
0.032826
0.015596
0.010400
0.000000
4.03%
0.00%
27.79%
17.77%
15.25%
13.05%
10.07%
6.05%
3.28%
1.56%
1.04%
0.00%
4.026136%
3.650071%
8.502094%
2.190615%
1.945369%
2.707849%
3.784697%
2.683632%
1.696494%
0.514246%
1.040022%
0.000000%
0.03831
0.03683
0.03834
0.03533
0.03457
0.03391
0.03302
0.03182
0.03098
0.03047
0.03031
0.03000
0.03831
0.03683
0.03683
0.03533
0.03457
0.03391
0.03302
0.03182
0.03098
0.03047
0.03031
0.03000
0.04026
0.00000
0.04250
0.02191
0.01945
0.02708
0.03785
0.02684
0.01696
0.00514
0.01040
0.00000
4.026136%
0.000000%
4.250000%
2.190615%
1.945369%
2.707849%
3.784697%
2.683632%
1.696494%
0.514246%
1.040022%
0.000000%