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Ordinance 2014-XXWAS NOT APPROVED BY THE VOTERS NOVEMBER 4.2014 ORDINANCE NO.2014 -XX AN ORDINANCE OF THE PEOPLE OF THE CITY OF GILROY IMPOSING A ONE -HALF CENT (0.50 %) TRANSACTIONS AND USE (SALES) TAX FOR FIFTEEN (15) YEARS TO BE ADMINISTERED BY THE STATE BOARD OF EQUALIZATION WHEREAS, over the years Sacramento takeaways have reduced the City of Gilroy's ( "City" or "Gilroy ") budget by tens of millions of dollars, and our city needs a guaranteed source of local funding that cannot be taken by Sacramento ensuring our tax dollars are spent locally for Gilroy residents; and WHEREAS, this measure includes tough fiscal accountability provisions such as requiring independent audits and public review of expenditures, and keeping all funds local, ensuring they are used effectively and efficiently, like they were for the Community Library which came in ahead of schedule and under budget and WHEREAS, gang crimes and violence continue to occur in Gilroy and South County, despite the national downward trend and additional funds will allow the City to improve and expand gang suppression and prevention programs, such as the South County Youth Task Force partnership with Morgan Hill and local schools; and WHEREAS, our many parks, sports and recreational facilities are part of what makes Gilroy a family - friendly community, and additional funds are needed to improve and make safety repairs to neighborhood parks, providing Gilroy's children — including at risk youth — with recreational programs that keep them safe and out of trouble; and WHEREAS, Gilroy's popular neighborhood sidewalk repair matching program for residents — where the City pays 80% of repairing damaged sidewalks, curbs, and gutters — is severely underfunded, and additional funds are needed to reimburse residents who have already paid for repairs, and repair the potentially dangerous sidewalks, curbs and gutters of those who are on the waiting list; and WHEREAS, our local streets and roads, including our major roadways, are deteriorating and require an estimated $30 million in repairs over the next decade, and additional funds will allow us to make these essential repairs now before our streets become more dangerous and more expensive to fix; and 4812 - 1362$7000 JFR04706083 FA and in an earthquake Gilroy's police, firefighters and paramedics must be able to effectively communicate with 9 -1 -1 responders from neighboring cities when critical help is needed; and WHEREAS, based on all of the information presented at the August 4, 2014 regular city council meeting, both written and oral, including the staff reports, minutes, and other relevant materials, the City Council fords that under CEQA Guidelines 15060(c)(2) and 15378, subdivisions (2) and (4) of subdivision (b), this tax does not constitute a project under CEQA and therefore review under CEQA is not required. WHEREAS, at its August 4, 2014 meeting, the Council considered calling an election to seek voter approval of a proposed general transactions and use tax (or "sales tax "), as authorized by Revenue and Taxation Code section 7285.9; and WHEREAS, at that meeting, the City Council concluded that all of the information presented indicated that, to obtain the revenue necessary to maintain and preserve service levels, the Council should call an election to ask the voters of the City to approve a 15 -year local transactions and use tax (sales tax), the revenue from which could be used to support general municipal services; and WHEREAS, the City Council fords the proposed ordinance and its process of adoption consistent with the provisions of City Charter sections 601 and 608 and Revenue and Taxation Code section 7285.9; and WHEREAS, on the basis of the foregoing, the City Council determined that it was appropriate to place a measure regarding a general transactions and use (sales) tax before the voters at the November 4, 2014 general election; and WHEREAS, the tax, if approved, would be imposed on the sale of tangible personal property and the storage, use, or other consumption of such property. The tax rate would be one- half of one percent (0.50 %) (a half cent for each dollar) of the sales price of the property. The tax revenue would be collected by the State Board of Equalization and remitted to the City. The tax would be in effect for 15 years, and would then expire automatically, unless extended by the voters. The tax shall be approved if the measure receives at least a simple majority of affirmative votes. BE IT ORDAINED BY THE PEOPLE OF THE CITY OF GILROY AS FOLLOWS: SECTION 1. AMENDMENT OF CODE Chapter 22 of the Gilroy City Code entitled "Taxation" is hereby amended to add a new Article V and shall read as follows: "Chapter 22, Article V 4812 - 1362 -8700v4 ORDINANCE NO. 2014 -XX JHM706083 QUALITY OF LIFE AND SAFETY TRANSACTIONS AND USE TAX" Section 22.33. Title. This ordinance shall be known as the City of Gilroy Quality of Life and Safety Transactions and Use Tax Ordinance. The City of Gilroy hereinafter shall be called "City." This ordinance shall be applicable in the incorporated territory of the City. Section 22.34. 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. Section 22.35. Purpose. This ordinance is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes: (a) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 725 1) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose. (b) To adopt a 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 retail transactions and use tax ordinance that imposes a tax and provides a measure therefore that can be administered and collected by the State Board of Equalization 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 State Board of Equalization in administering and collecting the California State Sales and Use Taxes. (d) To adopt a 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. Section 22.36. Contract with State. Prior to the operative date, the City shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of this transactions and use tax 4812- 1362- 870ov4 ORDINANCE NO.2014 -XX JFR04706083 4 ordinance; provided, that if the City shall not have contracted with the State Board of Equalization 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. Section 22.37. Transactions Tag Rate. For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of 0.50% 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. Section 22.38. 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 State Board of Equalization. Section 22.39. Use Tag 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 0.50% 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. Section 22.40. 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. Section 22.41. 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 therefor. However, the substitution shall not be made when: 4812 - 1362 -8700v4 ORDINANCE NO. 2014 -XX JH104706083 (1) The word "State" is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Board of Equalization, 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 State Board of Equalization, 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. Section 22.42. 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. Section 22.43. 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: 4812 - 1362 -8700v4 ORDINANCE NO. 2014 -XX M04706083 (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. (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. 4812 - 1362.87000 ORDINANCE NO. 2014 -XX JH104706083 (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. (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 to the use tax. 4812 - 1362 -87000 ORDINANCE NO. 2014 -XX JH104706083 8 Section 22.44. Amendments. All amendments subsequent to the effective date of this ordinance to Part 1 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 Gilroy: increasing the tax rate or revising the methodology for calculating the tax such that a tax increase would result; imposing the tax on transactions and uses not previously subject to the tax (unless such amendment occurs automatically by operation of the preceding paragraph); or extending the tax beyond the fifteenth (15`") anniversary of the operative date. The City Council may otherwise amend this ordinance without submitting the amendment to the voters for approval. Section 22.45. 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. Section 22.46. Independent Audits. There shall be an annual independent audit and report prepared on the revenue and expenditure of funds from the tax adopted by this Chapter which report shall be publicly presented annually at a city council meeting and made available to the general public. Section 22.47. Termination Date. The authority to levy the tax imposed by this ordinance shall expire on the fifteenth (156 ) anniversary of the last day of the calendar quarter following the operative date. SECTION 2. ENVIRONMENTAL COMPLIANCE. The approval of this ordinance is exempt from the California Environmental Quality Act (Public Resources Code §§ 21000 et seq., "CEQA," and 14 Cal. Code Reg. §§ 15000 et seq., "CEQA Guidelines "). The transactions and use tax to be submitted to the voters is a general tax that can be used for any legitimate governmental purpose; it is not a commitment to any particular action. As such, under CEQA Guidelines section 15378(b)(2) and (4), the tax is not a project within the meaning of CEQA because it creates a government funding mechanism that does not involve any 4812 - 1362 -8700A ORDINANCE NO. 2014 -XX JHID4706083 E commitment to any specific project that may result in a potentially significant physical impact on the environment. If revenue from the tax were used for a purpose that would have such effect, the city would undertake the required CEQA review for that particular project. Therefore, under CEQA Guidelines section 15060, review under CEQA is not required. SECTION 3. SEVERABILITY. If any section, subsection, sentence, clause, phrase, or portion of this ordinance is for any reason held to be invalid or unenforceable by a court of competent jurisdiction, the remaining portions of this ordinance shall nonetheless remain in full force and effect. The people hereby declare that they would have adopted each section, subsection, sentence, clause, phrase, or portion of this ordinance, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions of this ordinance be declared invalid or unenforceable. SECTION 4. EFFECTIVE DATE. This ordinance relates to the levying and collecting of the City transactions and use tax and shall take effect immediately. SECTION 5. PUBLICATION. The Clerk of the City of Gilroy is hereby directed to cause the ordinance to be published by a newspaper of general circulation, published and circulated in the City of Gilroy. ADOPTED by the City Council on this 4th day of August, 2014, by the following roll call vote: AYES: COUNCILMEMBERS: TUCKER and GAGE NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS ATTES::� awna Freels, City Clerk 4812- 1362- 8700v4 JH104706083 AULMAN, BRACCO, LEROE- MLT&OZ, ARELLANO WOODWARD APPR ED: Donald F. age, Mayor J f City of Gilroy ORDINANCE NO.2014 -XX I, SHAWNA FREELS, City Clerk of the City of Gilroy, do hereby certify that the attached Ordinance is an original ordinance, or true and correct copy of a City ordinance, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 4`" day of August, 2014, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 6t' day of August, 2014. City Clerk of the City of Gilroy (Seal)