HomeMy WebLinkAboutC-2 Staff Report - CDTFA Authorization to Implement Measure ZZSCHEDULED ITEM
C-2
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
VIA: SERGIO GONZALEZ, CITY MANAGER
FROM: TALIKA M. JOHNSON, DIRECTOR OF ADMINISTRATIVE SERVICES
DATE: DECEMBER 11, 2024
SUBJECT: ADOPT RESOLUTION GRANTING THE CALIFORNIA DEPARTMENT OF TAX
AND FEE ADMINISTRATION (CDTFA) AUTHORITY TO IMPLEMENT
MEASURE ZZ, A LOCAL TRANSACTION AND USE TAX (TUT) AND ADOPT
RESOLUTION TO GRANT CERTAIN EMPLOYEES AND HDL ASSOCIATES
AUTHORITY TO EXAMINE THE TUT TAX RECORDS OF THE CDTFA; AND
APPROVE REQUIRED CDTFA AGREEMENTS AND DOCUMENTS
BACKGROUND:
The voters of the City of Azusa voted on Measure ZZ, a local transactions and use tax (TUT) on
November 5, 2024, that authorizes a 0.25% TUT which will be effective April 1, 2025. In order to
implement Measure ZZ, there are certain agreements and documents the City must execute with the
California Department of Tax and Fee Administration (CDTFA).
Once the resolutions are approved by Council and agreements executed, the CDTFA will be able to
implement the TUT on behalf of the City.
RECOMMENDATIONS:
Staff recommends the City Council take the following actions:
1)Adopt Resolution No. 2024-C70 authorizing the CDTFA to administer and implement Measure
ZZ, a local transaction and use tax (TUT); and
2) Authorize the City Manager and Director of Administrative Services to execute an agreement
with the CDTFA for preparation work; and
3) Authorize the City Manager and Director of Administrative Services to execute an agreement
with the CDTFA granting the CDTFA approval to administrate the City’s transactions and use
taxes; and
Approved
City Council
December 11, 2024
Granting CDTFA Authorization to Implement Measure ZZ
December 11, 2024
Page 2
4) Adopt Resolution No. 2024-C71 granting certain City Employees and Hinderliter, de Llama &
Associates authority to examine the transactions and use tax records of the CDTFA.
ANALYSIS:
In order to implement the TUT with the CDTFA, the City has to execute the CDTFA agreement package
and pertinent forms. Part of CDFTA’s agreement package can be processed by staff administratively.
However, there are a total of four items that must be reviewed and approved by Council including:
1. Council must adopt a resolution granting CDTFA authority to implement Measure ZZ, the local
TUT on behalf of the City.
2. The preparatory agreement will allow City staff to enter into an agreement with the CDTFA for
preparation to administer and operate the City’s transactions and use tax ordinance for Measure
ZZ. CDTFA charges for preparatory work including developing procedures; programming for
data processing; developing and adopting appropriate regulations; designing and printing forms;
developing instructions for the Department's staff and for taxpayers; and other appropriate and
necessary preparatory costs to administer a transactions and use tax ordinance. These costs shall
include both direct and indirect costs as specified in Section 11256 of the Government Code.
The amount to be paid by the City for CDTFA's preparatory costs shall not exceed one hundred
seventy-five thousand dollars $175,000 (based on Revenue and Taxation Code Section 7272).
3. The agreement for State administration of the City Transactions and Use Taxes will allow City
staff to enter into an agreement with the CDTFA to implement Measure ZZ, a local TUT. The
agreements will ensure the City’s Ordinance, applicable law and revenue taxation code, rules,
and transmittal of funds information, etc., are implemented correctly.
4. Council must adopt a resolution granting specific City employees and Hinderliter, De Llamas &
Associates (HDL), the City’s tax consultant, the ability to examine the transaction and use tax
records of the CDTFA.
The attached resolutions and agreements contain the standard terms established by the CDTFA and
cannot be modified. These standard CDTFA terms and agreements are used for any local California city
for the purpose of implementing a local TUT.
FISCAL IMPACT:
Measure ZZ, a 1/4¢ Transactions and Use Tax (TUT), was approved by Azusa voters on November 5,
2024. CDTFA will begin collecting the tax on April 1, 2025 and will distribute the TUT revenues to the
City around June or July of 2025. Fiscal Year 2024-25 revenues are expected to be around $625,000 and
$2.5 million annually thereafter.
The CDTFA will charge the City a one-time fee for preparatory work for implementation of the TUT.
The actual cost is unknown until the work is fully completed, but the maximum allowable cost is
Granting CDTFA Authorization to Implement Measure ZZ
December 11, 2024
Page 3
$175,000 based on taxation code section 7272. Upon Council approval and when the City receives
CDTFA’s preparatory work invoice, staff will prepare a budget amendment and increase the FY 2024-
25 Budget by the invoice amount (not to exceed $175,000) under account 10-90-000-000-7071. The
administrative expenses will be offset by TUT revenues the City will receive from the CDTFA.
Prepared by: Reviewed and approved:
Richard Lam Talika M. Johnson
Budget & Revenue Administrator Director of Administrative Services
Reviewed and approved:
Sergio Gonzalez
City Manager
Attachments:
1)Resolution No. 2024-C70 authorizing staff to execute the agreements with the CDTFA to
administer and implement Measure ZZ.
a.Exhibit “A” Agreement with the CDTFA for preparation to administer and operate
City’s transaction and use tax ordinance for Measure ZZ.
b.Exhibit “B” Agreement with the CDTFA so the CDTFA can administrate the City’s
transactions and use taxes for Measure ZZ.
2)Resolution No. 2024-C71 granting certain City Employees and Hinderliter, de Llama &
Associates authority to examine the transaction and use tax records of the CDTFA
RESOLUTION NO. 2024-C70
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA
AUTHORIZING THE DIRECTOR OF ADMINISTRATIVE SERVICES
TO EXECUTE AGREEMENTS WITH THE CALIFORNIA
DEPARTMENT OF TAX AND FEE ADMINISTRATION FOR
IMPLEMENTATION OF A LOCAL TRANSACTIONS AND USE TAX
WHEREAS, on November 5, 2024, the People of the City of Azusa approved Ordinance
No. 2024-09 amending the City Municipal Code and providing for a local transaction and use
tax; and
WHEREAS, WHEREAS, on December 11, 2024, the City Council approved Ordinance
No. 2024-09 amending the City Municipal Code and providing for a local transactions and use
tax; and; and
WHEREAS, the California Department of Tax and Fee Administration (Department)
administers and collects the transactions and use taxes for all applicable jurisdictions within the
state; and;
WHEREAS, the Department will be responsible to administer and collect the
transactions and use tax for the City and;
WHEREAS, the Department requires that the City enter into a “Preparatory Agreement”
and an “Administration Agreement” prior to implementation of said taxes; and;
WHEREAS, the Department requires that the City Council authorize the agreements;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Azusa
that the “Preparatory Agreement” attached as Exhibit A and the “Administrative
Agreement” attached as Exhibit B are hereby approved and the Director of Administrative
Services is hereby authorized to execute each agreement.
PASSED, APPROVED and ADOPTED this 11th day of December, 2024.
___________________________________
Robert Gonzales
Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2024-C70 was duly adopted
by the City Council of the City of Azusa, at a meeting thereof held on the 11th day of December
2024, by the following vote of the Council:
AYES: COUNCILMEMBERS: GONZALES, ALVAREZ, AVILA, MENDEZ
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS: BECKWITH
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
___________________________________
Best Best & Krieger, LLP
City Attorney
Exhibit "A"
Exhibit "B"
RESOLUTION NO. 2024-C71
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF AZUSA AUTHORIZING
THE EXAMINATION OF SALES OR TRANSACTIONS AND USE TAX RECORDS
WHEREAS, pursuant to Ordinance Number 1064, the City of Azusa (City) entered into
a contract with the California Department of Tax and Fee Administration (Department) to
perform all functions incident to the administration and collection of sales and use taxes; and
WHEREAS, pursuant to Ordinance Nos 2024-09 and 2020-03 (City of Azusa Municipal
Code Article VIII), Section 7270 of the Revenue and Taxation Code, the City entered into a
contract with the California Department of Tax and Fee Administration (CDTFA) to perform all
functions incident to the administration, and collection of the transactions and use taxes ; and
WHEREAS, the City Council of the City of Azusa deems it desirable and necessary for
authorized officers, employees and representatives of the City to examine confidential sales or
transactions and use tax records of the Department pertaining to sales or transactions and use
taxes collected by the Department for the City pursuant to that contract; and
WHEREAS, Section 7056 of the California Revenue and Taxation Code sets forth
certain requirements and conditions for the disclosure of California Department of Tax and Fee
Administration records and Section 7056.5 of the California Revenue and Taxation Code
establishes criminal penalties for the unlawful disclosure of information contained in or derived
from, the transactions and use tax records of the Department;
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Azusa
does hereby:
SECTION 1. That the City Manager or Director of Administrative Services or
other officer or employee of the City designated in writing by the City Manager or Director of
Administrative Services to the California Dept of Tax and Fee Administration (hereafter referred
to as the CDTFA) is hereby appointed to represent the City with authority to examine sales or
transactions and use tax records of the CDTFA pertaining to sales or transactions and use taxes
collected for the City by the CDTFA pursuant to the contract between the City and the CDTFA.
The information obtained by examination of CDTFA records shall be used only for purposes
related to the collection of the City’s sales or transactions and use taxes by the CDTFA pursuant
to the contract.
SECTION 2. That the authorized positions listed below Authorized Positions: Director
of Administrative Services, Budget and Revenue Administrator, Economic and Community
Development Director, Economic Development Specialist, Economic Development and Housing
Coordinator, Community Improvement Manager, Business License Officer, Code Enforcement
Officer, or other officer or employee of the City designated in writing by the City Manager or
Director of Administrative Services to the CDTFA is hereby appointed to represent the City with
authority to examine those sales or transactions and use tax records of the CDTFA for purposes
related to the following governmental functions of the City:
a) City Administration
b) Revenue Management & Budgeting
c) Community & Economic Improvement
d) Business License Tax
The information obtained by examination of CDTFA records shall be used only for those
governmental functions of the City listed above.
SECTION 3. That Hinderliter, de Llamas & Associates (HDL) is hereby designated to
examine the sales or transactions and use tax records of the California Department of Tax and
Fee Administration pertaining to sales or transactions and use taxes collected for the City by the
Department. The person or entity designated by this section meets all of the following
conditions:
a) has an existing contract with the City to examine those sales or transactions and use tax
records;
b) is required by that contract to disclose information contained in, or derived from those
sales or transactions and use tax records only to the officer or employee authorized under
Section 1 (or Section 2) of this resolution to examine the information;
c) is prohibited by that contract from performing consulting services for a retailer during the
term of that contract;
d) is prohibited by that contract from retaining the information contained in or derived from
those sales or transactions and use tax records after that contract has expired.
BE IT FURTHER RESOLVED that the information obtained by examination of
Department records shall be used only for purposes related to the collection of City’s sales or
transactions and use taxes by the Department pursuant to the contracts between the City and
Department.
SECTION 4. That this resolution supersedes all prior sales or transactions and use tax
resolutions of the City of Azusa adopted pursuant to subdivision (b) of Revenue and Taxation
Section 7056.
IT IS FURTHER PROCLAIMED AND ORDERED that said local emergency shall
be deemed to continue to exist until its termination is proclaimed by the City Council of the City
of Azusa, State of California.
PASSED, APPROVED and ADOPTED this 11th day of December, 2024.
___________________________________
Robert Gonzales
Mayor
ATTEST:
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF AZUSA )
I HEREBY CERTIFY that the foregoing Resolution No. 2024-C71 was duly adopted
by the City Council of the City of Azusa, at a meeting thereof held on the 11th day of December
2024, by the following vote of the Council:
AYES: COUNCILMEMBERS: GONZALES, ALVAREZ, AVILA, MENDEZ,
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS: BECKWITH
___________________________________
Jeffrey Lawrence Cornejo, Jr.
City Clerk
APPROVED AS TO FORM:
___________________________________
Best Best & Krieger, LLP
City Attorney