SR-501-002-01 (4)
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f-c
~ 11 19B.r
CA:RMM
CIte} Cour-'::;~l ~ieetl"g ':'L-~1-84
Santa MOY1lca. Call+ornla
::w/~ tJOZ-O/
STAFf- REPORT
T,-,
U'
~a~or ana CIty COUPsIl
!="ROI1:
C It") H t t Co r n e v
S!JBJ EC T :
OrdlnaY1Ce H~endlno Mur-1Slpal
F'elatl'l9 ~o Cabie TeleVISlor
Code Se~tlon 6623H
Utlilt~ Users 1ax
This
=,t a ff
ReporT
TraY1Smlts
to
the CIty
Coune 1 i an
ordlna'lce
"'llner-'d: ng 5al1 t a 110'lI.::.a
MU'IIClpal ~ode ~eC{IOn o623H
rei3tl"g
to
"hE'
Cable
Tel'3'vlSlon
Utll1tl,..:
Users
Tax.
atopted.
thIS amendme~t wOLld delete t~e utility users tax on
te le.....:ls lC~
Signals
:ser>t for a Tee
or c~arge b~ mIcrowave or
dr-V other ~et~od o~ teleco~munlcatlon other than bv a cable.
{-;
bUSIness
11Ce'lSe
"ee
on
SUbscrIptIon
teleVISIon
Ser\.Jlces
I~Jas
successfu ll'~'
cnalle""lged In the
recent case of
Clt~~_~la~eda V. PremIer
LOfYlmUn Icat IOi'S He1:~"ork. Inc.. 1130
Cal t4DO
3d
148..
202
ea i . Rp t - .
':l8Q
(1984',
Tloe
Llt._) or
~l:!lf'eda
adopted
a
DU:::. u-'e5:::
llsense "(-3:>, cot
3% o+: ,he qro5s
~eC81c;tE
earlled
I;Jlt~lr-
t t- e i::'. 1 t .~' .
Hotlna tha" subscrIPtIon
telf"..>ISlO'l
ser"Ices
.AI e - e
cor-s Ide red
I~Jltr-iln
protected tree
:<:'D~ecr-
rIghts
t~e CQU~t stated tnat
t~e t3V could not 51:3Pd
unt~ss
there
l:a5
an
overrIdIng governms'Ital
Inte'^est.
i'l
partIcular
t~e court founj that
'3 taxInc s')stem wl-tlcr- treats
protected
fI~st ome~d~ent actlvltles
dlT~erertlv ~rom taXIng
5')5 t ems
aOD l. led
to
bUSInesses
lr>
-:::Jenerai
are
unconstl-
tutlonall~ burdensome.
g-c,
DEe 1 1 e:J
.
.
TL<IO at ~ne bUSlr,esse-3 a++ected D'''' itLJ'I1CIDal Lode SectIon
66231-'-. S~ I Be- T<; ar"j en T'~'. ..av~ re -.- a 1 ned !: he 1 aw firm 0 l' W).-'m<:ln,
t:iautz:et'
Rot~man_ ~uchel a~d ~I!bert
~o challenae the LItv s
ta,..
Sl~ce the two bUSinesses could conceIvablv be faced wIth
tho<=.
t =<'"
In
ever:) Cltt) they 5erve~
the',' IndIcated that the
:::.~nt-a
r-1c;r> 1 ca
orClr:arce
would be challe~Qec
as a test case.
l Se eat t a c h e d let t e r ) .
~Irce e~t~nslV~ lltlgatlo~ In Federal court 15 e~pected.
tt--. e
c-~st
at
an+-orclng
and collectIng
the cable televlslor
u t 1 i I t 'J
users ta~ ~Ili exceed
the projected revenue ~rom the
t a" .
Ht
the
current
-: 1 rne
there
are
app rox 1 ma t e i '~I
9'UO
subscrlb8"':S
1 t""l
Santa tion lca 'dhlch
,.JO u ! d "I P P r OJ '0 I ma tel ~J V lei d
$ 1;: , '7 0 iJ a r '1 U all 'J .
~lthough The Cl[~ Attornev believes that the [Itv tax on
S '.J b :5 C rib e r s
IS dIfferent fro~ the tax etruck down In Alaweda.
the
r e ',''3 n u e
froll'
the
1: '=I.,
Coes not:
)u:stlfy the litigation
costs. whlc~ could Include attorne~'5 fees tor the SelecTV and
ON
H)
1 ....
t!-te
Cltv IS u~s~cce5stul.
The City Attornev has
erg aged
1'"\ :l number of dlSCUS510ns ioJl'(h -;::he reoresentatl'-,;e of
~:;~ 1 ~c Ttj
and
'JH
Tl)
ar-c:
bell~\}~S
t:-.at
t !'"'"Ie'..)
~.Jl! 1 commene:oo:-
Iltlgatlcr
It the ordlnarlce 15
not amended.
Since the ~egai
Issue':>
-':Ire like 1,_, to be
resol,Jed l'l lltlqatlon aaalnst ':Jther
cltles,
1 t
IS
prudent to amend the
ordinance a~d awalt t~e
outcome at suc~ Iltlgatlor.
-J
L
I t
.
IS
res pee t f u 1 1 '_'
.
Rt::C/jl1!1Er'i['h - 1 (jl'~
reco:JrnrlOen deci t: ho3 t
PREPf4REC, 8 I :
ordlrance be l~troduc~d tor ~lrst reo3dl~g.
Ro be'" t i1.
1103 r T Hl r.
t r. e a C ::: 0 rr'D an:/ 1 n 9
"1-)e r ~. 1~ 1 t 'J H t t 'J r n e~.'
; a c f-; 1 K 1 _ ['13 put Y C 1 t '-J ..., t tor n e y
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CA: R~1M
C I t Y Co u n ell i'le e T- 1 r' 9 ~ .:..: - ..L l ~ t: 4
~a~ta ~O~lca. California
OPDINHNCE NUMBER
,Cl:V Council Serles1
AN OPDIN~NC~ O~ T~E CITY COUNCIL OF THE
CITY iJF SHNiA riOtnc,:::, -'t'1EtmINC; '::.ECTION 0023'""'
OF T~E. S8HT H r10r~ I eN liUN leI PHL CO[i~ PELPo T 1 NG
TO L~BLE 'ELEVISION uTiLITy uSeRS THX
THE. C 1 T / ;=>)UNC I L OF TiiE C I T / (ii=" SHrHH t10H I c.p. DOES ORDH i t-.l
f-oS ~ OLLOW::.:
SECTION
1
Sect 10'-' 06L=~H of the ::,ar-ta ['or-1Ga rlurlclpal
Code Ie amended to ~eao as tDllows:
SECT I O:~ o~2~.,.
Cable 'alevlslon.
t a )
CDrnmen.~ 1 na
O~ January 1. 1984,
there
15 hereb~ Iffip0S80
a tax upon everv
persorl
In r.Me 'c..lt~) of Sent::! '1onlca U51"lg
1 'i
rhe
C I t \} a
cable televIsion ser"lce.
Tite
t a ~"-
Imposed
01. ~
f
thiS
Sectlc'r
she 11 be
t l"e Per ce'1t: '':7'Y.:' OT the cheraes cnade +0'"
such cab Ie te le'')1510r ser"lce '3nd sha i i be
D'310
be,' tt-oe DerS:Jr>
paYing Tor such cable
tetel)lSlOtl ser,Llce.
(b }
For
purposes ot
thIS SeC"lon,
cable
tele"')l5l0tl
ser-\}lCe
Sh-91 i
meen
a
tel e ',) I S 1 0 n s 1 a n a l del I ve r- e db' " cab 1 e ~ D r a
tee or eharae.
"+
.
.
':::JEe 1 i Qq
2.
.....n'" or"JC,'i:'::l,:;r-; 0+ -he ::I8nta r'!<::)n:ca J'lwnlclpal
Cede or ~pce~dlces theret~ IncC~slstent ultb the prOVISions of
t r' I ;Co
ordlnanc~. to the e^t~~t
of sucb 1~conslstencle5 and ~o
further,
are
he reb~)
reoealec
Qr
modl+lej
to
ti'">:l": exte...t
neC8SS:lry to affect the prOVl~10n5 of thIS QrdInance.
~EC.TIDN
3.
If
a'l'~'
58CtiOr-.
'SubsectIon.
sentence,
clause.
0r ohrase Jf thIS ordInance 1;: for anv rea;:on neld to
be
InvalId or UnCO"5tIt~tlon~1 bv a
deCI;:.lor 0" an',' court of
an') COMpe:ent lUt lsdIctlO""'. sucf-; deCISIon :;hall not .:!ftect ,,:he
'y' a 1 I ,j 1 t ') ::d' t r-. ere Mal n I "1 ':l ::J 0 r t Ion 5 0 f the 0 r dIn a nee
The C lt '.)
CouncIl
ne reb'~'
CeCli::lre5
that
, ~
. <
,,\10 L: 1 d
have
pa5~ed
thiS
orOInar':::e
and
e3ch and ever\-'
sectIon, subsection. sentence,
clcll.Jse
':J r
phrase
not
declared In'JallO
or urcons~ltutloral
l.<) 1 tho u t
regard to ~Jhether an'}
portIon of the ordinance woulo
be sUbsE'quently declare.-1 In';alld or unconstItutional.
SECTlmi
4
The
r'la '.)0'
shail 510"1 and
the Clt'; Clerk
shall attest to the cassag~ of ~hlS ~rdlnance.
The Clt"/ Clerk
~ha 1 1
cause
the
same
to be oubllshed
once In the oftlClal
ne'..Jsoape r
l\l 1-: h 1 "1
15 daus afte"
Its adoptl':Jn.
The OrOIF'anCe
sball
become e~~ectl~e after
3:j ca.)":.
.......c;IT1
1 .. ~
... "_0
adoption.
8PPPOVED ~S 10 ~ORM:
RO~i::;5'o-
CIt') H'"torne:)
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L.AW OFFICES
WYMAN, BAUTZER, ROTHMAN, KUCHEL. & SIL.BERT
WASI-'INGToN. DC
A PAAT..r~5-"1c. '!'lICU.,D'NG pQO=-E5S'OfolA.i,. CORPORAnONS
Ne:WF'ORT ee:AC'"
WASHINGTON, 0 C ~0037
r202) .....e 2222
TWO CENiURY PLAZA. FOURTEENTH F'L.OOR
2049 CENiUFlY PARI<. EAST
600 NiE:W ~"'MPSI.HR!: "yENUE N w. Sv'TE. Bose
L.OS ANGELES. CALIFORNIA 90067
....100 MAC.ART:HUft BO...."EV...Ft'D
...e:WPORT BEACH, CALIFORNIA >.>l660
f714' "eo &1300
12131s56-eooo (213) 879-eooo
BARFlY E FINK P C
PAATN ER
CABLE ADDR~SS WYBARO:K
June 26, 1984
Robert M. Hyers
CJ.ty Attorney
City of Santa MonJ.ca
1685 MaJ.n Street
Santa MonJ.ca, CalJ.fornla 90401
Re: Santa MonJ.ca Tax on SubscriptJ.on Televlsion
Services -- SelecTV and ON TV
Dear Nr. Myer 5:
In connection WJ.th our ongoing discussJ.ons wJ.th you concernJ.ng
the valJ.dJ.ty of Santa MonJ.cals taxatJ.on of the subscription televisJ.on
services provJ.ded by our cllents, SelecTV of America, Ltd. ("Sele.cTVlT)
and Oak IndustrJ.es, Inc. (liON TV), we hereby enclose for your review
a copy of a recent CalJ.forn~a Appellate Court decislon, City of
Alameda v. Premler Co~~unicatlons Network, Inc., 115 L.A. Daily
Journal 1876 (DaJ.ly App. Rep. Supp., June 6, 1984), in which a
munJ.cJ.pal tax on subscrlption televJ.sion services was J.nvalidated
on First Amendment grounds.
C~ty of Alameda J.S the fJ.rst Callfornia appellate case to
consJ.der munJ.cJ.pal taxatlon of subscrJ.ption televJ.sion since the
u. S. Supre~e Court's recent holdJ.ng J.n MJ.nneapolJ.s Star v.
MJ.nnesota Corom. of Rev., U. S. , 75 L.Ed.2d 295, 103 S.Ct.
1365 (1983r~~As --you-"W11l note, the Appellate Court interprets
MJ.nneapolJ.s Star identically to the way we J.nterpreted it J.n our
brlef submltted to the City of Santa Monlca on November 21, 1983.
Moreover, the Court's opinlon adopts and approves an argument
J.dentJ.cal to that advanced J.n our brlef. To summarize, the
opLn2on fJ.rst notes the Supreme Court's ernphasJ.s, in M~nneapolls
Star, that a "tax that burdens rights protected by the First
Amendment cannot stand unless the burden 18 necessary to achJ.eve
an overr1dlng government J.nterest," then stresses that the
government's 2nterest 2n raisJ.ng revenue, standJ.ng alone, cannot
)ustJ.fy the J.nherent censorial power of "specJ.al treatment of a
segment of the med~a wh~ch dissemJ.nates protected speech," and
fJ.nally concludes that a mun~clpal tax on subscrJ.ption television
servJ.ces lS "unJustlfied by any compell1ng 1nterest of the City. If
,.
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.
'....
Robert M. r~yers
Page Two
June 26, 1984
Accord~nglYI the Court invalldated the tax ordinance in issue
as v~olat~ve of the F~rst Amendmentts guarantee of free speech.
In l~ght of the C~ty of Alameda decislon, we respectfully
re~terate our argument that Santa Monlca's taxation of
subscrlptlon televls10n serVlces lS constitutionally lnvalid
as an ~mpe~lss~ble burden on free speech and repeat our request
that the Clty cease its attempt to collect such tax froffi
SelecTV and ON TV.
We look forward to your prompt response in this ~atter.
Very truly yours,
,,-
-'
/-LAA-\.~ /. --__~...; L -
Barry ~. F1.nk,
A Professlonal Corporation
BEF:crv
Enclosure
cc: LOU1S R. M~ller, P.C.
Mr. George Gates
Mlchael E. V~ebrock, Esq.
JUdlth Mann, Esq.