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Home My WebLink AboutE-14 Staff Report - Increasing Tax Rate on Offsite Multiuser Hazardous Waste FacilitiesCONSENT ITEM E-14 TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL VIA: SERGIO GONZALEZ, CITY MANAGER FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES DATE: NOVEMBER 18, 2019 SUBJECT: RESOLUTION INCREASING TAX RATE ON OFFSITE, MULTIUSER HAZARDOUS WASTE FACILITIES WITHIN THE CITY BACKGROUND: Since 1988, the City has imposed a general tax on offsite multiuser hazardous waste facilities operating within City limits. This voter-approved tax is levied upon a facility’s annual gross receipts for the treatment, storage, or disposal of hazardous waste at the facility. State law and the City’s voter- approved ordinance allow the City to levy up to a 10% rate by resolution, but the City currently levies the tax at only a 2% rate. In order to enhance General Fund revenues in light of projected budget shortfalls, the proposed recommendation is for the Council to adopt a resolution to gradually increase the tax rate on offsite, multiuser hazardous waste facilities in the City from the current 2% up to 6% beginning in Fiscal Year 2020/21 through Fiscal Year 2024/25. As indicated below, Council action is sufficient to enact this rate increase and an additional election is not required. RECOMMENDATION: Staff recommends that the City Council take the following action: 1) Adopt Resolution 2019-C60 gradually increasing the rate of the offsite, multiuser hazardous waste facilities tax from 2% to 6% pursuant to California Health and Safety Code Section 25173.5 and Azusa Municipal Code Section 18-707. ANALYSIS: Staff has been performing an ongoing in-depth analysis of the City’s existing contracts and franchise agreements in order to ensure the City is capturing all the revenues we’re entitled and to explore opportunities to revise agreements in order to enhance revenues in light of projected budget deficits. One area examined is the City’s ordinance levying a general tax on offsite, multiuser hazardous waste facilities. APPROVED CITY COUNCIL 11/18/2019 Resolution amending tax on offsite multiuser hazardous waste facilities November 18, 2019 Page 2 of 2 At the General City Election held on November 2, 1988, Azusa voters approved Ordinance No. 2373 (currently codified as AMC 18-707) establishing an offsite, multiuser hazardous waste facilities tax effective January 1, 1989. The Ordinance allows the City to levy a tax up to a rate of ten percent (10%) tax on such facilities, and to set or adjust that rate by Council resolution. AMC Section 18-707 is consistent with the State law (Health and Safety Code Section 25173.5) which authorizes cities to levy a Hazardous Waste Facilities tax not to exceed ten percent (10%) of the annual gross receipts for the treatment, storage, disposal of hazardous waste at the facility. However, since 1998, the City has set the tax rate at two percent (2%). The Azusa Municipal Code allows the tax rate to be adjusted via Council resolution subject to the ten percent (10%) maximum. After careful consideration and communication with the hazardous waste operator within the City, Staff recommends increasing the current two percent (2%) rate to six percent (6%) over the next five years as follows: Effective Date Percentage Assessed Estimated Revenues Increase From Current Year Current 2.00% $ 500,000 July 1, 2020 3.00% $ 750,000 $ 250,000 July 1, 2021 4.00% $ 1,000,000 $ 500,000 July 1, 2022 4.75% $ 1,187,500 $ 687,500 July 1, 2023 5.50% $ 1.375,000 $ 875,000 July 1, 2024 6.00% $ 1,500,000 $ 1,000,000 This proposed plan will result in gradually increased revenues up to approximately $1.0 million per year by end of the five-year plan period. As reflected in more detail in the attached resolution, because AMC 18-707 was already approved by Azusa voters in 1988 and the Council’s action would be consistent with the voter-approved ordinance, another election is not required to enact this increase in the taxing rate. A City Council resolution is sufficient. FISCAL IMPACT: Approval of the Hazardous Waste Facility tax rate increase will help to reduce the projected General Fund budget deficits and increase revenues by approximately $250,000 beginning in Fiscal Year 2020/21 up to $1,000,000 annually by end of Fiscal Year 2024/25. Prepared by: Reviewed and approved: Talika M. Johnson Sergio Gonzalez Director of Administrative Services City Manager Attachment: 1. Resolution 2019-C60 45635.01000\32490471.2 RESOLUTION NO. 2019-C60 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, GRADUALLY INCREASING THE RATE OF THE OFFSITE MULTIUSER HAZARDOUS WASTE FACILITIES TAX FROM 2% TO 6% PURSUANT TO CALIFORNIA HEALTH AND SAFETY CODE SECTION 25173.5 AND AZUSA MUNICIPAL CODE SECTION 18-707 WHEREAS, the City of Azusa (“City”) is a municipal corporation, duly organized under the Constitution and laws of the State of California; and WHEREAS, California Health and Safety Code Section 25173.5 (originally enacted in 1986) states, in pertinent part: “. . . . the legislative body of a city or county may impose and enforce a tax, for general purposes, or may impose a user fee on the operation of an offsite, multiuser hazardous waste facility located within the jurisdiction of the city or county. The tax or the user fee imposed shall not exceed 10 percent of the facility’s annual gross receipts for the treatment, storage, or disposal of hazardous waste at the facility.”; and WHEREAS, pursuant to Section 25173.5, in 1988 the City opted to enact a tax on offsite multiuser hazardous waste facilities rather than a user fee; and WHEREAS, in 1988, California Proposition 62 (Government Code Section 53724) required that any City general tax be approved by a majority of Azusa voters voting at an election; and WHEREAS, on November 2, 1988, Azusa voters approved Azusa Municipal Code Section 18-707 (formerly codified as AMC 5.12.150) establishing a general tax on offsite multiuser hazardous waste facilities; and WHEREAS, Azusa Municipal Code Section 18-707 states, in pertinent part: “Every person who operates an offsite, multiuser hazardous waste facility located within the city shall pay a tax to the city in such amount as set by resolution of the city council, but not to exceed ten percent, or such other amount as authorized by state law of the facility's annual gross receipts for the treatment, storage or disposal of hazardous waste at the facility.” WHEREAS, since 1998 the City has set the offsite multiuser hazardous waste facilities tax rate at two percent (2%) of a facility’s annual gross receipts for the treatment, storage, or disposal of hazardous waste at the facility; and Attachment 1 45635.01000\32490471.2 WHEREAS, the City Council desires to gradually increase over a period of five years the offsite multiuser hazardous waste facilities tax rate from two percent (2%) to six percent (6%) of the facility’s annual gross receipts for the treatment, storage, or disposal of hazardous waste at the facility; and WHEREAS, through the enactment of Azusa Municipal Code Section 18-707, Azusa voters have vested the City Council with the discretion to adjust the rate of the offsite multiuser hazardous waste facilities tax by future resolution, subject to a ten percent (10%) maximum rate; and WHEREAS, California Government Code Section 53750(h)(2)(B) provides that an additional election for a tax is not required, if the tax: “Implements or collects a previously approved tax, fee, or charge, so long as the rate is not increased beyond the level previously approved by the agency, and the methodology previously approved by the agency is not revised so as to result in an increase in the amount being levied on any person or parcel.; and WHEREAS, this resolution does not increase the taxing rate beyond the 10% maximum level nor does it alter the taxing methodology already approved by Azusa voters; and WHEREAS, for these reasons, the City Council is authorized to adopt this resolution and another election is not required for its approval. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF AZUSA, CALIFORNIA, DOES FIND AND DECLARE THAT: SECTION 1. Incorporation of Recitals. The City Council hereby finds the above recitals to be true and correct. SECTION 2. Approval of Gradually Increased Tax Rate on Offsite Multiuser Hazardous Waste Facilities. The City Council hereby approves the following increases to the offsite multiuser hazardous waste facilities tax rate on the annual gross receipts for the treatment, storage, or disposal of hazardous waste at a facility: Effective Date Tax Rate Current 2.00% July 1, 2020 3.00% July 1, 2021 4.00% July 1, 2022 4.75% July 1, 2023 5.50% July 1, 2024 6.00% 45635.01000\32490471.2 SECTION 3. All Other Provisions Unaffected. Except as set forth herein, the tax on offsite multiuser hazardous waste facilities shall continue to be levied, collected and administered as set forth in California Health and Safety Code Section 25173.5, Azusa Municipal Code Section 18-707 and any other applicable law. SECTION 4. CEQA. That the City Council finds that adoption of this Resolution relates to organizational or administrative activities of governments that will not result in direct or indirect physical changes in the environment, and therefore is not a “project” within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines, section 15378(b)(5). SECTION 5. Effective Date. This resolution shall become effective upon its adoption. PASSED, APPROVED AND ADOPTED ON NOVEMBER 18, 2019. ____________________________ Joseph R. Rocha, Mayor 45635.01000\32490471.2 I HEREBY CERTIFY that the foregoing Resolution No. 2019-C60, was duly adopted at a regular meeting of said City Council on the 18th day of November, 2019, by the following vote of the Council: AYES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: _________________________________ Jeffrey Lawrence Cornejo, Jr. City Clerk