HomeMy WebLinkAboutOrd 2014-3318 ORDIiv:4NCE NO. 3318
ORDIi�ANNCE OF THE CITI' COUTiCIL OF THE CIT1' OF
CHtiLA VIS7.A AMENDII�'G CILAPTER 3.44 OF THE CHUZ.A
VISTA r4UT'CIPAL CODE TO FORAI.4LIZE .4 RATE
REDUCTION II�' THE CITY'S TELEPHOI�'E USERS T.A�
("NT") FROM �% TO 4.7�%, TO CL.ARIF1' THAT THE TUT
APPLIES TO W'IRELESS TELEPHONE USAGE. AND TO ADD
STATE LAR' VALIDATIOt�' PROVTSIONS
N'HEREAS. Chula Vista's Utilitv Users' Ta� (�UUT") ���as adopted in 1970 as a means
to help fund public sen�ices and capital impro��ement projects through the Cin�'s General Fund:
and
l�'HEREAS, the UUT ��as imposed ���ith respect to intrastate telephone communications
use. electricitv use. and eas use ��ithin the Cit��: and
WHEREAS, kev provisions of the telephone communications component of the UUT
(commonly I:noNm as the '`TUT") are contained in Chula Vista Municipal Code (`CVMC°)
Sections 3.44.030 and 3.�4.1 i0: and
\1'HEREAS, these Sections define the chazges subject to the TUT. establish the
maximum TUT rate; provide exclusions and esemptions from the TUT, establish collection and
remittance obligations on telephone service providers. and set the actual TUT rate. �vhich is
currentiv 5% of qualified intrastate telephone communications chazges; and
�'HEREAS; in recent yeazs; certain ���ireless telephone communication sen ice pro��iders
have questioned their obligation to collect and remit the NT for customer charees imposed on
their wireless customers in the Cin�, contending that the NT does not appl�� to modem-dav
���ireless phone charges because the laneuaee in CV'I�4C Section 3.44.030(B) states that charges
on ���hich the Citv can le�ti� tas do not include chazaes for services paid for b�� users of"mobile
telephone° sen�ice; and
11'HEREAS. in April 2011, Carla Villa and Vanessa Garza filed a class action lati�suit
against the Cit}� challeneine certain aspects of the TUT, contendine, among other things, that
service charges for users of w�ireless telephones in the Cirv are "e�empr' from ta�ation because
the definition of ta�able charges in CVMC section 3.44.030(B) excludes charses for ser��ices
paid for b}� users of`'mobile telephone ' service; and
V1'HEREAS, throueh even� stase of the litisation the Cit}� vigorousl}; and correctiv;
defended the legal validin� of its TUT: and its application to modern, wireless telephone services;
and
Ordinance No. 3318
Pa<_*e No. Z
V�'HEREAS; ultimateh�, howe��er. because of the complexity of the case, the projected
costs of continuine its defense, and the inherent risks of litiQation, the City determined it would
be in the best interests of its citizens to settle the case; and �
R'HEREAS; the settlement agreement included ��arious terms. indudina the City's
agreement to reduce the overall TUT rate from 5% to 4.75% starting March 1, 2014; and the
City's agreement to clarify the application of the TUT to "wireless" telephone sen�ice; and
V✓HEREAS, as required b}� the settlement, the City Finance Department issued an
Administrati��e Ruline on Februan� 24. 2014 reducing the TUT rate to 4J5% effective March 1,
2014: and
WHEREAS; this ordinance was prepared to formalize and implement the remaining
terms of abo��e-described settlement agreement; and
WHEREAS. by affirmine the application of the TUT to `'ti�ireless ' telephone services the
City will also reduce the chance of future misunderstandings regarding its la�n�ful breadth; and
WHEREAS, in accordance with the requirements of CVMC Section 3.44.1�0, the City
Clerk set the time and place for a public hearing on August 5, 2014; in the Council Chambers in
Ciri- Hall, Chula Vista Civic Center, 276 Fourth Avenue. at 2:00 p.m., to consider the ordinance,
and notice of said hearing; together N�ith its purpose was given by publication in a neN�spaper of
general circulation in the city at least ten (10) days prior to the hearing; and
VdHEREAS; the duh� noticed public hearing on this ordinance was held before the City
Council of the City of Chula Vista on August 5, 2014, in the Council Chambers in City Hall,
Chula Vista Civic Center. 276 Fourth Avenue, at 2:00 p.m. to receive and to hear public
testimony with regard to same; and
��HEREAS, at the public hearine, the City Council gave due and full consideration to the
written materials presented by staf£ staff s verbal.presentation, and any and all public testimony.
NOW, THEREFORE, the City Council of the City of Chula Vista does hereby ordain as
follows:
Section I. The City Council finds and determines that the original intent of the City
Counci] in 1970 upon adoption of the TUT ordinance pursuant to Ordinance No. 1288, was to
e�clude `'mobile telephone semice ' only to the exteni that it ezisted at the time, and as it ti�as
then defined under 47 C.F.R. Part 21.1 of the Federal Communications Act, and that,
accordin�ly, upon its invention. modern '`���ireless�' telephone service was; and continues to be;
subject to the TUT.
Ordinance No. 331 S
PaQe ?`�o. 3
Section II. Consistent N�ith the Cit�� Council findines contained in Section I. hereof.
abo�e, Section 3.44.030 of Chapter 3.44, Title 3, of the Chula Vista Municipal Code is herebv
amended to read. in full. as follo��s:�
3.44.030 Telephooe users' taz -- lmposition — Maaimum Rate—Ezclusions aod
Exemptioos — Collection -- Validation.
A. There is imposed a taa upon even person in the cin� using intrastate telephone
communication sen ices in the cit��. The tax imposed b� this section shali be at the
maximum rate of fi��e percent (�%) of the charees made for such services. and shall be
paid by the person pa��ine for such services. Effective on Juh� 1. 1979. said ma�imum
rate shall be increased to sis percent (6%) of the chazees made for such sen�ices and shall
be paid b}� the person pa}ing for such service.
B. As used in this section. the term "charees' shall not include charees for sen�ices
paid for by inseRing coins in coin-operated telephones, except that �°here such coin-
operated telephone sen-ice is fumished for a euaranteed amount, the amounts paid under
such guarantee plus any fised monthlp or other periodic charge shall be included in the
base for computine the amount of taa due. The term "charees` shall not include charges
for services paid for by users of mobile telephone sen�ice and marine telephone ser��ice.
The e�clusion in the pre�ious sentence for charges paid For b} users ofl`mobile telephone
service" shall onl�� appl}� to such service as it esisted at the time this section �=as first
enacted in 1970, and as then defined in 47 C.F.R. Part 21.1 of the Federal
Communications Act.
C. Notti�ithstanding the provisions of subsection (A) of this section, the tax imposed
under this section shall not be imposed upon any person for using intrastate telephone
communications ser��ices to the eYtent that the amounts paid for such sen�ices are e�empt
from or not subject to the ta.� imposed under Sections 42�1, 42�2 and 42�3 of Title 26 of
the United States Code ("federal excise ta.i"). In the event that the federal ezcise tai is
repealed, this reference to such law, indudine an�� related federal resulations. private
letter rulings, case law� and other opinions interpretine these sections shall refer to that
body of la���that existed immediatelv prior to the effective date of such repeal.
D. The tax imposed in this section shall be collected from the service user b}� the
person providine the intrastate telephone communications sen ices. The amount of tax
' For purposes of this ordinance, in order to highlight the changes being made, revisions to the existing code are
presented in underline/strikeout format. The underline/strikeout formatting shall be removed once these changes
are incorporated into the code.
Ordinance No. 3�18
Page No. 4
collected in one month shall be remitted to the ciri- finance officer on or before the
twentieth da}� of the follo���ing month.
E. Am� action or proceedino to determine or contest the validity of this section, or
am� amendment thereto, must be brought pursuant to Chapter 9 (commencing with
section 860) of Title 10 of Part 2 of the Califomia Code of Civil Procedure.
Section III. Consistent with the TUT settlement agreement, and ti�ith the Finance
Director's administrative action taken on February 24; 2014; which was effecti��e A4arch 1; 2014;
Section 3.44.150 of Chapter 3.44. Title 3; of the Chula Vista Municipal Code is hereb�� amended
to read, in full, as follo���s:
3.4a.150 Establishment of rate— Public hearing requirements — Power to abate.
Without affecting the mazimum amount authorized by this chapter, the City Council sets
the utilit�� users' tax rate at .00250 per kilowatt-hour of electricity; .00919 per therm of
aas, and four and three quarters of one percent (4.75 %) for intrastate telephone charees
based upon gross receipts. Any chan�e to increase this amount to the maximum
authorized or decrease it to any other amount shall be subject to the requirement for a
public hearin� before the Citp Council.
Section III. Severabilih�
If any portion of this Ordinance, or its application to any person or circumstance, is for
am� reason held to be im�alid. unenforceable or unconstitutional, by a court of competent
jurisdiction, that portion shall be deemed severable, and such invalidit}-, unenforceabilit�� or
unconstitutionality shall not affect the validity or enforceability of the remaining portions of the
Ordinance, or its application to am� other person or circumstance. The City Council of the Citv of
Chula Vista hereby declares that it �vould have adopted each section; sentence, clause or phrase
of this Ordinance, irrespective of the fact that any one or more other sections, sentences; clauses
or phrases of the Ordinance be declared invalid; unenforceable or unconstitutional.
Section Ill. Construction
The City Council of the City of Chula Vista intends this Ordinance to supplement; not to
duplicate or contradict, applicable state and federal law and this Ordinance shall be construed in
light of that intent.
Section IV. Effective Date
This Ordinance shall take effect and be in force on the thirtieth dati� after its final passa�e.
Section V. Publication
The Cit�� Clerk shall certifi�to the passage and adoption of this Ordinance and shall cause
the same to be published or posted according to law.
Ordinance No. 3318
Paee \o. �
Presented b}� .4ppro�ed as to form b�-
� — , �
A4aria achadoorian Glen . Gooeins �
Finan e Director Citv�ome}�
PASSED. APPROVED. and ADOPTED b�� the Cit�� Council of the Cim of Chula Vista.
Califomia this 12th dav of August 2014; bv the follo���ing vote:
AYES: Councilmembers: Aeuilaz. Bensoussan. Ramirez. Salas and Coa
NAI'S: Councilmembers: None
ABSENT: Councilmembers: None
�
Chervl Co�. Ma'v r
ATTEST:
^/�/
Donna R. Noms. CMC. Cit�� Clerk
STATE OF CALIFORi\'[A )
COIJNTI' OF SAN DIEGO )
CITl' OF CHUL.A VISTA )
I. Donna R. Norris. Citv Clerk of Chula Vista. Califomia� do hereb�- certifi that the foreeoine
Ordinance ?�o. 3318 had its first readine at a reeulaz meetins held on the >th da�� of Aueust 201�
and its second readine and adoption atya regular meetine of said Ciri� Council held on the 12th
dav of Au2ust 2014; and �aas duh� published in summar�� form in accordance with the
requirements of state lati� and the Citv Charter.
�� ��i� �
Dated Donna R. Noms. CMC. Cit�� C erk