SR-061797-10A supp
SUPPL e ""'AlT
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EPWM CP RG WELFARE WPD
Council Meeting June 17,1997
Santa Monica, California JUN 1 7 1997.
SUPPLEMENTAL STAFF REPORT
TO
Mayor and City Council
FROM
City Staff
RE
DISCUSSion of Opllons for Reducing the Financial Impact on Non-
Profit OrganizatIOns from the FY 1995-96 Street ResurfaCing
Project
INTRODUCTION
On May 27, 1997 after concluding the public heanng, Council requested that staff
Investigate options for reducing the financial Impact on non-profit organizations for the
FY 1995-96 Street Assessment Dlstnct and evaluate vanous possible eligibility cntena,
including the 'welfare exemption", for granting of full or partial assessment waivers to
non-profit property owners Four options and various eligibility cntena are presented In
thiS supplemental staff report
DISCUSSION
A number of oplions are available for waiving all or a portion of assessment costs for
non-profit property owners The City Council can consider the follOWing opllons If It
Wishes to reduce the financial Impact on non-profits from assessment charges A
diSCUSSion of possible eligibility crltena for appllcalion of these options IS presented
later In thiS report
SUPPLE~NT
TO to..A
JUN 1 7 1997
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Option A
Option B
Reduce the assessment cost to eligible non-profits so that they match the
costs charged to residential property owners This option would result In
charges bemg assessed only for Sidewalk, curb, and parkway work No
charges would be assessed for alleys, streets, gutters, or curb ramps
Although this option would entail minimal administrative difficulty, some of
the affected non-profits would see their charges reduced to $0 and others
would stili face substantial assessments
Fully waive the assessment cost to eligible non-profits The City's current
assessment policies were developed and approved after the passage of
Proposition 13, as It had become Impossible for streets, Sidewalks, curbs,
gutters. and alleys to be adequately maintained In the face of greatly
reduced property tax revenues Smce most non-profit property owners
have been exempted from the payment of property taxes since before the
passage of ProposItion 13, the change In the City assessment policy,
which took place In 1979, placed a new burden on non-profits which may
serve to actually nullify the concept of a property tax exemption A full
waiver of assessments would therefore be consistent With the Spirit of
long-standing state and federal regulations granting special tax status to
non-profits
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Option C
Reduce the Interest rate charged to non-profits for time payment of
assessments and/or extend the payment term for non-profits These
approaches would Increase administrative costs to the City and therefore
constitute a less cost-efficient method to reduce the finanCial Impact on
non-profits than a partial or full waiver of total costs as IS discussed In
opllons A and B
Option D
Grant a "finanCial hardship' waiver (full or partial) for non-profits No
method for defining and venfYlng what would constitute a ;'flnanclal
hardship" eXists and thiS option would also be difficult to administer
Staff examined two possible cntena for eligibility of non-profits for partial reduction or
full exemption of assessment costs The first IS to use the 'welfare exemption" from the
payment of property tax ReligiOUS organizations, hospitals, and educational Institutions
who own their property and apply for the exemption annually are eligible for a welfare
exemplion A "welfare exemption" IS granted by and registered with the Los Angeles
County Tax Assessors office
Currently, the City receives the Tax Assessor's Information via computer disk tWice per
year The County Assessor places exemptions Into seven (7) different categones
These categones are speCifiC to the type of exemption the parcel IS receiving ThiS
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Information IS then downloaded Into the City's automated permitting system In an
attempt to determine which properties In the City have received an exemption,
Information Systems DIVISion staff sorted parcels that received any type of exemption
on their property taxes ThiS Information was cross referenced With the FY 1995-96
street assessment dlstnct parcels to determine which parcels possessed a "welfare
exemption "
Staff determined that, according to the Tax Assessor's data, only 3 parcels In the FY
1995-96 assessment district receive any type of exemption ThiS was far below the
number of organizations that staff believed might be receiving the exemption Staff then
contacted the Los Angeles County Tax Assessor's office to determine If there could be
errors In their database The Assessor's office Informed staff that much of the data
provided to the City might not be current The lack of accuracy In the data IS due in part
to a backlog of Information at the Assessor's office Including the dividing and/or
combining of parcels and the volume of property owners seeking exemplions
Staff has determined that there IS no accurate method for the City to determine which
parcels have a "welfare exemplion" based on the defiCiencies In the Assessor's
database It appears that the only feasible method of determining exempted parcels
would be for parcel owners to provide proof/documentation to the City If the Council
desires to use the "welfare exemplion" as a means of determining the eligibility for
waivers from assessment charges, then staff would need to develop a waiver
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application and certification process for those Impacted property owners Such a
process could be completed within 60 days of final Council action on the FY 1995-96
Street Resurfacing Assessment district
The second possible eligibility crltena IS exemption from City business license taxes as
outlined In Santa Monica Municipal Code Section 6 04 190 ThiS exemption crltena
apphes to entIties "organized under California law for chantable purposes" and "from
which profit IS not denved, either directly or Indirectly by any person" The Code seclion
reqUires that before the exemption can be granted, the non-profit entity must provided
satisfactory documentation to the Finance Director venfYlng their non-profit status Any
organization that can produce such documentation becomes exempt so virtually all
non-profit organlzalions that own property In the City can be presumed to qualify for
exemption Staff beheves that thiS cnterla IS the preferred approach from the standpOint
of ease of administration and consistency With eXisting City practices and poliCies A
process to determine eligibility under thiS criteria could be completed Within 60 days
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BUDGET/FINANCIAL IMPACT
It IS not possible to arnve at more than an approximate estimate for the financial Impact
from Implementation of any of the above options However, staff estimates that a full
waiver of assessment costs for eligible non-profits would Increase the costs of the FY
1995-96 Street Resurfacing project to the City by $100,000 or less
RECOMMENDATION
Staff recommends that Council adopt a policy to fully waive the assessment cost to
eligible non-profits (Opllon B) as described above uSing the provIsions of MuniCipal
Code Section 6 04 190 as the eligibility cnterla and direct staff take any necessary
acllon to return to the City Council In order to confirm assessments for the FY 1995-96
Street Resurfacing Project
Prepared by
Craig PerkinS, Director of Environmental and PubliC Works
Management
Roger Gorke, Senior Administrative Analyst, EPWM
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