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R-9086 . . FD:MD:sd:br/f:\finance\admin\stfrpts\sruut2 Council Meeting: September 10, 1996 Santa Monica, California (city Council Series) !/lWaJ Oe D By 113tJ # 92-02.. CC5 f-1-3 -11 RESOLUTION NUMBER 9086 (CCS) A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA APPROVING UTILITY USER TAX ADMINISTRATIVE RULES WHEREAS, the city of Santa Monica's utility Tax (UUT) Ordinance (Chapter 6.72 of the Municipal Code) places a utility users tax on the use of certain utility services within the city; WHEREAS, the utility Service supplier (as that term is defined in section 6.72.010(e) of the Municipal Code) is required to impose and collect the UUT tax from its customers, and remit the tax to the City; WHEREAS, the cooperation of the utility Service supplier is of great importance to the appropriate implementation of the City'S UUT ordinance; WHEREAS, a number of utility Service Suppliers have raised concerns regarding their role as tax collector, associated liability, audits and third party auditors, and the need for - 1 - . . uniformity in the application of the UUT ordinances among the many public agencies with such ordinancesi WHEREAS, this city has met and conferred with other public agencies and utility industry representatives to develop administrative rules to address such concerns and to facilitate the implementation of the UUT Ordinancei NOW, THEREFORE, the city council of the CITY OF SANTA MONICA does hereby resolve: SECTION 1. This Resolution shall only become effective upon adoption of the ordinance amending the city utility Tax ordinance (Sections 6.72.010(d), 6.72.070 and 6.72.090 of the Municipal Code) by the City Council. SECTION 2. The UUT Administrative Rules attached hereto as Attachment "A" are hereby adopted by this city Council, and shall be followed and implemented by the Tax Administrator of the City utility Tax Ordinance. SECTION 3. A copy of the UUT Administrative Rules shall be distributed, within thirty days hereof, to all utility service suppliers that conduct business within the city. SECTION 4. The City Clerk shall certify to the adoption of this . . Resolution, and thenceforth and thereafter the same shall be in full force and effect. APPROVED AS TO FORM: ~~~ Ll~.-~ MARSHA JONES M~RIE City Attorney . . Adopted and approved thts lOth of September. 1996 4J~~ Mayor I hereby certIfy that the foregomg ResolutIOn 9086 (CCS) was duly adopted at a meetmg of the CIty CouncIl held on the lOth of September, 1996 by the follO\vmg vote Ayes Councllmembers Abdo, Ebner, Genser. Greenberg, Holbrook, O'Connor. Rosenstem i'\ oes Counctlmembers None Abstam CouncIlmembers None Absent Councllmembers. None ATTEST ~~~~ CIty Clerk ~ . Attachment A Utility Tax Administrative RUles I. To assist utility Service Suppliers that perform the valuable public service of collecting the city's utility Users Tax (UUT), city will assume the following responsibilities: A. Subsequent to adoption of these administrative rules, city will assure the accuracy of its boundary information needed for utility billing and tax collection purposes, by reviewing and correcting the utility Service supplier's computerized billing data no less than once a year. The utility Service Supplier shall not be responsible or liable for the collection or payment of any UUT taxes that were due prior to the adoption of these Administrative Rules that were not collected due to the inaccuracy of information provided by the City or due to the city's failure to make appropriate corrections to the utili~y Service supplier's billing data. B. The City will provide utility Service suppliers with accurate and timely ordinance information, including ordinance amendments, at a central location (e.g., Web Page on Internet) . City will provide written notice of ordinance changes to persons designated by the utility Service Supplier. In the absence of special circumstances, as determined by the Tax Administrator in his or her sole discretion, the utility Service Supplier shall begin implementation of the UUT tax change wi thin sixty (60) days from the date on which the utility Service Supplier receives the written notification from the City. If the 60th day is not the first day of a month, then the utility Service supplier shall implement the changes on the first day of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing. C. The city will assume sole responsibility for defending any legal challenge regarding the validity of the City's UUT Ordinance, any part thereof, or any collection thereunder, and shall defend and hold harmless any tax collecting agent (utility Service Supplier) named in such action for properly performing its legal obligations set out in the UUT Ordinance. D. The City, in its sole discretion, will reimburse utility service Suppliers for the reasonable costs associated with an extraordinary audit request (e.g., modifications to existing billing software in order to respond to an audit request) . E. The City will take reasonable steps to assure that all utility Service Suppliers, including new market entrants, are correctly applying and collecting the UUT tax. e - . '- F. To the extent feasible, the City will permit utility Service Suppliers to follow the same payment and remittance protocol for UUT collections that is generally employed by other California public agencies, provided that such protocol is consistent with the City's UUT Ordinance. G. Following the effective date of these Administrative Rules, the Tax Administrator shall give notice to the utility Service Suppliers within the City that they may request that the Tax Administrator, in consultation with the City Attorney, render a determination of the application of the UUT tax to their various existing services. If such request is made within ninety (90) days of the notice by the Tax Administrator to the utility service Supplier of these Administrative Rules, then any determination by the Tax Administrator shall apply prospectively. The Tax Administrator shall give the utility service supplier at least sixty (60) days written notice following the determination of tax application before implementation of such changes shall be required. If the 60th day is not the first day of a month, then the utility service Supplier shall implement the changes on the first day of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing. H. Where new utility technologies are employed or new utility services are being offered, a utility service Supplier may request that the Tax Administrator, in consultation with the City Attorney, render a determination of the application of the UUT tax to such new technology or service within ninety (90) days of providing such services or technologies. Upon rendering a determination of applicability t the Tax Administrator shall seek prospective application of the UUT tax Ordinance to such technologies or services. The Tax Administrator shall give the utility Service Supplier at least sixty (60) days written notice before implementation of such changes shall be required. If the 60th day is not the first day of the month, then the utility Service Supplier shall implement the changes on the first day of the month following the month in which the 60th day occurs. To "begin implementation" means to calculate and place the UUT tax in the customer billing. 1. Regarding Paragraphs G and H above, the Tax Administrator, in his or her sole discretion and upon consultation with the City Attorney, may participate in an advisory committee, comprised of representatives of public agencies with UUT ordinances, to develop and recommend to such public agencies (after meeting and conferring with utility representatives): uniform applications of the UUT tax to various utility services and technologies; uniform implementation protocols; and appropriate amendments to UUT ordinances to reflect industry, regulatory, and technological changes. '0 . e e J. The Tax Administrator shall not reduce or waive any obligation to collect any tax or any obligation to pay any penal ty pursuant to Santa Monica Municipal Code Sections 6.72.070(d) and 6.72.090(e), unless the affected utility Service Supplier requests a determination as is provided for in Paragraphs G and H above. Pending completion of the requested determination, the utility Service Supplier shall continue to collect all applicable taxes. II. The Tax Administrator has the right and obligation to assure fair and reasonable compliance wi th the UUT Ordinance. Due to the complexity of utility services, technologies, and tax administration, the Tax Administrator may require special outside expertise to assist in performing compliance review of the UUT ordinance. utility service Suppliers have a legitimate interest in assuring that such outside firms maintain the confidentiali ty of utility customer information and conduct their compliance reviews in a professional and efficient manner. The Tax Administrator's use of specialCoutside expertise shall therefore be subject to the following rules: A. The outside firm will execute a non-disclosure agreement (in a form acceptable to the City Attorney) in which the outside firm shall agree to maintain the confidentiality of customer information and not to use individual customer information for any purpose other than the UUT compliance review of this city. B. The outside firm will not initiate contact with a utility customer in the course of performing its compliance activities, except with the prior written consent of the utility Service supplier. C. The outside firm shall fully disclose to the City any potential conflict of interest (e.g., prior or proposed representation of private utility customers within the City) . D. The outside firm shall not make any data requests of a utility Service Supplier by subpoena unless the outside firm first receives the review and approval of the Tax Administrator prior to the request being made to the utility service Supplier. E. The outside firm shall be authorized to perform any compliance review (including sampling audits and computerized reviews) which, in its professional opinion, is reasonably necessary to perform its contractual obligation to the City. If a utility Service Supplier refuses to cooperate in connection with such compliance review, the outside firm shall immediately advise the Tax Administrator so that the Tax Administrator may take appropriate remedial steps. e - F. The outside firm will use its best efforts to accurately identify all errors, whether such corrections are in favor of the customer, the City, another public agency, or the utility Service supplier. G. The Tax Administrator shall make available to the utility Service Supplier a copy of any compliance report prepared by the outside firm regarding such utility Service Supplier. The utility Service Supplier shall be afforded an opportunity (at least thirty (30) days) to respond to any aspect of the report before such report becomes final. III. Dispute Resolution Process A. If a utility service Supplier disputes an application of these Administrati ve Rules, an interpretation of the OUT Ordinance, or any other action by the Tax Administrator (including its outside firm), the protesting utility Service Supplier may request a hearing pursuant to Paragraph B below and in addition to any other request for relief may request to the Tax "Administrator that the matter be submitted to voluntary non-binding mediation within thirty (30) days of the Tax Administrator's actions. If the Tax Administrator in his or her sole discretion agrees to submit the matter to voluntary non-binding mediation, and if the matter is not resolved within thirty (30) days following the conclusion of any mediation, the protesting utility Service Supplier may request that the matter be set for a hearing before the City Council at the next available City Council meeting. B. If a hearing before the City Council is requested, the City councilor at the City Council's direction, a hearing officer, shall hear the matter pursuant to Santa Monica Municipal Code section 6.16.010 et seq. If a hearing examiner hears the matter, the decision of the hearing examiner shall be reviewed by the City council at the next available City Council meeting following the hearing examiner's decision and shall be accepted, rejected or modified following arguments from all parties concerned. The City Council's decision shall be final and subject to judicial review pursuant to CCP Section 1094.5. f:\finance\admin\stfrpts\uutattac.b