SR-11-B (20)
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CA:SSS:SC:bl
Councll Meetlng 1/27/31
Santa MODlcar Callfornla
5T
STAFf' REPORT
FEB 1 J ;921
TO: Mayor and Clty Councll
FROM: Clty Attorney and Clty Manager
SUBJEC?: Replace~ent of Llcense Revlew Board by
Adr.lDlstratlve Law Judqe
BACKGROUND
The Llcense Revlew Board ("LRB") was establlshed In
August 1974 pursuant to Ordlnance 968 (CCS) r codlfled as
Sectlon5 6124-6126 of the Munlclpal Code. The body, WhlCh 15
constltuted of =lve depart~ent heads and the Clty Clerk ana chalred
b~r the Asslstant l1anager r Slts to declde appeals lnvolvlng the
denlal or :e1Tocat.lOn. of ouslness llcenses or pollee permlts and
the lmposltlon of buslness llceDse tax penaltles.
Any declslon of the LRB nay be appealed to the Clty
Councll. In the nastr however, few l= any such appeals have been
flIed. Thusr the LRB has served the pur?ose for WhlCh It was
orlglnally created, l.e., to ?rovlde a rlght of appeal to persons
aggrleved by actlons of the Llcenslng Departnent wlthout In?051ng
an addltlonal burden on the Councll.
ISSUE
In the past the nunber of cases appealed to the LRB was
qUlte s~all and could be scheduled relatlvely promptly for hearlng
wlthout unduly burdenlnq tne nembers of the Board.
Howeverr both
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tbe ~uantlty and the guallty of the LRB's workload has been changed
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by the recent s?ate of appeals arlslng under the Massage Parlor
Llcenslng Law. Not only have disappointed appllcants demanded
hearlngs, but they are, for the most part, represented by counsel
who have ln~roduced a greate~ for~allty lnto GFB proceedlngs
than had prevlously eXlsted. It Tlay be expected too, that the
nUMber of appeals to the Clty Counell wll1 1nerease aeeordlngly.
The net result 1S that the LRB has ceased to constltute
an efflclent and cost effectlve means of reso1vlng llcenslng
dlsDutes. After study and dlScusslon undertaken ]olntly by the
Clty Manager and the Clty Atto~ney, lt 1S our suggestlon that
the Jurlsdlctlon of the LRB be taken over by an admllllstratlve
law Judge and that the LRB elther be abollshed entlrely or retalned
only for the llmlted purpose of hearlng a?peals fron deClslons
of the admlnlstratlve law Judge.
DISCUSSION
There are at least three resoects on WhlCh It would be
advantageous to have an admlnlstratlve law Judge hear and resolve
the cases presently appealed to the LRB.
Flrst, glven tne lncreaslng number of cases cO~lng before
the LRB and the greater anount of tlffie consumed by each hearlng,
lt has become increaslngly dlfflcult for the wembers of the LRB
to coordlncte tnelr schedules and lncreaslngly expenslve, ln terms
of the tlme FrtlCh the departnent heads constltutlng the LRB Qust
ta~e from thelr areas of prlmary responslbll~ty ln order to fulflll
LRB dutles. Altnough lt mav not have been cost effectlve at some
pOlnt to hlre an outslue person to conduct license reVlew hearlngs,
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the nunber of such hearlngs has now lncreased to the pOlnt where
lt would be far more efflclent tnat they be heard by a slngle
speclallzed person and the ~e~bers of the LRB freed, accordlngly,
froB what has necome a burdensome obllqatlon.
Second, although LRB heaTlngs have ln the past been
conducted on a falrly lnformal basls, It may be presumed that
as more ap~llcants are represented by counsel--as tDe a?pllcants
for massage permlts seen to be--the ?rOCeedlngs wlll become more
formal and legallstlc. For exarnDle, attorneys for dlsappointed
massage permlt appllcants have announced an lntentlon to lntroduce
~olygraph eVldence at the hearlngs, thus requlrlng the LRB to
evaluate and make a determlnatlon as to the rellablllty of such
eVldence. Moreover, such a dete~lnation is increasingly likely
to be subjected to Judlclal review.
Slnce the members of the LRB have no legal tralnlng, It
may be antlclpated that they l~~ll have to rely more and more on
the advlce and aSslstance of the Attorney's Offlce. QUlte apart
from the potentlal confllcts lnherent In utllizlng the Attorney's
Offlce ln an advlsory capaclty (see below), the increaslng need
for legal expertlse In llcense reVlew hearlngs could be more
e=fectlvely resolved by havlng a legally tralned person ln tne
role of declslon-maker. Thus, agaln, It would seem the most
economlcal use of human resources to have llcense appeals neard
lnltlally by an adDlnlstratlve law Judge who can brlng to bear In
each case, not only fornal legal tralnlng, but the expertlse accumu-
lated tnough repeated centrallzed handllng of these cases.
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F1nally, as alluded to above, there 1S a potentlal for
confllcts of 1nterest In hav1ng cases heard by the LRB as presently
constltuted. Plrst, If the LRB 1S advlsed by a memner of t~e
Cl ty Attorney I S sl:aff, tnere 15 a potentlal confl1ct to the extent
that another ~ehiller of the staff plays an adversary role In the
hearlng.
In lliassage parlor cases, for example, the ~ollce are
re~resented be~ore the LRB by a Deputy Clty Attorney.
There 15 also a potentlal co~fl1Ct 1nherent 1n the ~ake-
up of the LRB 1tself. The Code provldes for the appolntnent o~
a substltute In the event that a permanent member of tne LRB has
been lnvolved In a matter whlcn has been appealed to the LR3
(Sect1on 6126B2).
Thus, an LRB Qember cannot Slt to reVlew D1S or
he r O~'ln actlon.
However, such wemner's actlon wll1 be rev1eued
by hlS or her co-members on tne LRB.
There lS arguably some resultant
pre]Ud1Ce to the ap~ellant to the extent that the dec1s1on-makers
have an ongo1ng relatlonshJP on the LRB, not to mentlon other
respects 10 WhlCh department heads ~ay ~ork together, with the LRB
member wnose declslon 15 be1ng rev1ewed.
Whether elther of these s1tua~lons results In an actual
confllct of lnterest, there lS at least s~~e colorable 1nference
or lmproprlety. In each case th1S could be ellffilnated, to the
benef1t o~ the ap?ellants and the adnln1stratlve process 1tself,
by replaclng the LRB vn th a ;leutral admlnlstratlve law Judge who
Das no other connect10n wlth any of t~e departnent heads whose
dec1s1ons may come befoye hlB or her for reV1ew.
To summarlze brlefly, lt would appear the present method
of handllng llcense ap?eals lS exnenSlve and lnefflc1ent and creates
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at least an ap~earance of lffi?rO?rlety. Conversely, the beneflts
WhlCh ffilght oe reallzed by replaclng the LRB wlth an lndependent
ad~lnlstratlve law Judge lnclude the followlng:
1. A savlngs In Clty resources re?resented by the
tlme presently expended by department heads In LRB actlvltles
and by the Clty Attorney's Offlce In advlslng the LRB;
2. Increased efflclency In scnedullng hearlngs proQptly
and 1n conductlng ~earlngs In accordance w1th accepted legal
standards and safeguards: lncreased efflclency represented by
the centrallzatlon of functlons In a slngle s?eclallzed 1ndlV1GUal
who may be expected to develop expertlse In both the substantlve
area subJect to reVlew and the ?rocedura1 framework in WhlCh the
reVlew lS to take place;
3. Ell~lnatlon of any appearance of lmproprlety, If
not actual con~llcts of luterest, In havlng l~cense appeals
declded by persons who have sone ongolng relatlonshl? wlth the
admlnlstrators whose declslons are belng revlewed or the attorneys
representlng the~.
An addltlonal advantage In nlrlng an admlnlstratlve law
Judge to hear llcense appeals lS that th1S same person would also be
avallable to hear other klnds of cases. ~or example, there 1S
presently no admlnlstratlve ?rocedure for hearlng complaln~s arlslng
out of enforcement of alrport regulations.
It would provlde an
effectlve cOffi?lenent to crlwl~al prosecut1on for vlo1atlon 0=
ordlnance--a re~edy rarely ~ursued because of ltS formallty--to
establlsh a means whereby sueD cor~plalnts co~ld be lDltlated at
an adWlnlstratlve level.
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ALTER~ATIVES
Assumlng the Councll accepts our reco~~endatlon to
replace the LRB \11th an admlnlstratlve law Judge for the hearlng
of llcense a?peals, there are two further lssues Whlch Must be
addressed:
1. There lS a questlon whether a further admlnlstratlve
appeal should be provlded fro~ a deC1Slon of t~e adrnln1stratlve
law Judge, as tne Councll no~; orovldes a second level appeal =rom
deClslo~S of the LRB.
It would a~pear that to glve ourselves
every opportunlty to aV01G lltlgatlon, If ?osslble, we ought to
have an op?Ortunlty to reVlew dec1510ns of the admlnlstratlve law
Judge lnternally before t~ey become subject to Judlclal reVlew.
If t~e Councll would prefer not De burdened wlth the duty of Dearlng
appeals from the ad~lnlstratlve law Judge, however, perhaps the
LRB could be retalnec for that purpose.
2. A second questlon WhlCh must be resolved lS the
status of the adNlnlstratlve law Judge wlthlD tne Clty govern~ent,
that lS, to WhlCh department or offlce 15 he or she to be attached.
It has been suggested that, as an attorney, the adrnlnlstratlve law
Judge s_lould be a member of the Clty Attorney's staff. Before
thlS route lS chosen, however, we ought carefully to conslder the
llotentlal confllct of lnterest questlons.
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RECO~h~ENDATION
It lS respectfully submltted that the Counell authorlze
an ad~lnlstratlve law Judge to be hlred to hear cases lncludlng,
lnte~ alla, those 9resently wlthln the Jurlsdlctlon of ~he Llcense
ReVlew Board and complalnts arislng =rom vlolatlons of a1rport
regu1atlons; once the Cauncll has resolved certaln lssues concernlng
the status of the adWlnlstratlve law judge wlthln the Clty
government and the avallablllty of further adnlnlstratlve a?peals from
hlS or
her declslons, the Clty Attorney should be olrected
to pre?are an ordlnance amendlng the Munlclpal Code to reflect
the procedure adopted by the Councll.
Prepared by:
Step~en Shane Stark, Actlng Clty Attorney
Susan Carroll, 0eputy Clty Attorney
John Jallll, AS~lstant Clty ~anager
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Santa Monlca, calif4iiia, March 14, 1980
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MAR 2 5 1980
TO:
Mayor and City Council
FROM: Clty Staff
SUBJECT: Appeal of Saghir Ahmad Aslam from Assessment of
a Penalty Incurred by Late Payment of Gross
Receipts Tax.
515
APR 2 2 1980
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IntroductlOn
MAY 2 7 1980
This report forwards the appeal of Saghlr Ahmad Aslam from the assessment of
a penalty ln the amount of $870.41 which was incurred when Mr. Aslam failed
to pay gross receipts tax for a business dba Fabrics and Draperies by Sols
at 1248 Santa Monica Mall.
Background
Section 6116 of the Municipal Code provldes that each buslness submit to the
City License Dlvision a statement of gross receipts for the perlod endlng
June 30th of each year (see attached for~). Based on the amount of such
gross receipts, the business is assess~d a tax, payable by September 1st.
A 15% penalty is assessed for late oay~ents received from September 1 through
September 30th, with an additional 5% penalty for each month thereafter,
wlth a maximum not to exceed 50%.
Last year the License Division issued license renewals for 16,000 businesses
wlthin the City, generating a total of $1,400,000 in revenue. Three hundred
of the 16,000 businesses were assessed late payment penalties. Seven appealed
their assessment to the License ReVlew Board. The Board, however, found in
every lnstance that the License Divislon had mailed the gross receipts statement
sA
in a timely manner and that the Dlvision had not acted in an arbitrary,
MAY 2 7 1980
capriclous or discrlmlnating manner wlth respect to the penalty assessments.
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APR 2 2 ~980
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MAR 2 5 10!Ht
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. TO:
Mayor and Clty COU1IiJ
. t~arch 14~ 1980
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Jhe Appeal
Sols Fabrlcs and Draperies' license was due for renewal on July l~ 1979.
A gross receipts statement was mal led to Sols on June 26~ 1979. Another
was hand delivered to the business by request on September 30~ 1979. The
payment for renewal of the business license was not received until November l~
1979~ and therefore a penalty of $870.41 was assessed. Mr. Aslam appealed
the assessment, pursuant to Section 6126 of the Santa Monica Municipal Code~
copy of which is attached for your review.
Mr. Aslam's appeal to the License Review Board was heard on November 20, 1979
and was unanimously denied.
Section 6126F provldes for appeal of the License Review Board decision to the
City Council with the specific condition that a transcrlpt of the appeal before
the Llcense Review Board be provided to the Council for evaluation and that no
new evidence may be presented to the Council unless it is established that
Mr. Aslam !I...with reasonable diligence~ could not have submitted this evidence
to the License Review Board. II
The transcript of the appeal heard by the License Review Board is attached for
Council evaluatlon.
Prepared By: JOHN JALILI
Attachments