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HomeMy WebLinkAboutContract - 12/14/2022 - 2049 TRIBAL SALES TAX AGREEMENT THIS TRIBAL SALES TAX AGREEMENT (this "Agreement") is made and entered into on December 14, 2022 ("Effective Date") by and between the Agua Caliente Band of Cahuilla Indians, a federally recognized Indian tribe ("Tribe"), and the city of Cathedral City, a California charter city and municipal corporation("City"). Tribe and City are individually referred to herein as a "Party" and collectively as the"Parties." RECITALS A. The Tribe has retained the inherent power of taxation as an essential aspect of its sovereignty and therefore has the power to tax except when limited by federal law. B. Section (i) of article V of the Constitution and Bylaws of the Agua Caliente Band of Cahuilla Indians(the"Tribal Constitution")authorizes the Tribal Council of the Tribe to promulgate and enforce assessments or permit fees upon non-members doing business and obtaining special privileges on the Agua Caliente Indian Reservation(the"Reservation"). C. Pursuant to the Tribe's inherent power of taxation and the Tribal Constitution, the Tribal Council has authorized, through the adoption of Chapter 3.08 of the Agua Caliente Tribal Code, the imposition and collection of a sales tax on the sale and purchase of meals, food, and beverages sold on Indian Lands(defined below)by non-Indian retailers. D. The state of California,through the California Department of Tax and Fee Administration (the"CDTFA"), recently amended CDTFA Regulation 1616 (Cal. Code. Regs.,tit. 18, § 1616)to clarify that federal law preempts the California sales and use tax when a non-Indian retailer sells meals, food,and beverages from a leased space on a reservation for consumption on the reservation where the sales take place. E. Pursuant to the amendments to CDTFA Regulation 1616,the sale and purchase of meals, food,and beverages sold on the Reservation by a non-Indian retailer to a non-Indian or an Indian who does not reside on the Reservation are not subject to the California sales and use tax when all of the following requirements are met (collectively, the "Federal Preemption Requirements"): (i) a sales or use tax is imposed by the Tribe on the sales or purchases of meals, food,and beverages; (ii)the non-Indian retailer's business is operated on the Reservation pursuant to a federally or tribally authorized lease or sublease; (iii) the non-Indian retailer's business is an eating or drinking establishment, such as a restaurant or bar; and (iv)the meals, food,and beverages are sold and purchased for consumption on the Reservation. F. When the Federal Preemption Requirements are met,the Tribe can impose and collect its Tribal Sales Tax (defined below) from non-Indian retailers without the economic ramifications of double taxation. G. The Tribe's imposition and collection of the Tribal Sales Tax is an appropriate method of generating revenues for the Tribe and paying for a portion of the costs of governmental services and programs incident to the preservation of Tribal existence and the continued economic development of the Reservation. H. For the purposes set forth herein, the Tribe desires to share with the City a portion of the Tribal Sales Tax revenue generated from non-Indian retailers and the City desires to accept this revenue in accordance with the terms of this Agreement. 1 TERMS 1. Incorporation of Recitals. The Parties acknowledge and agree that the foregoing recitals constitute the factual basis upon which the Tribe and City have entered into this Agreement. The Tribe and City each acknowledge the accuracy of the recitals and agree that the recitals are incorporated into this Agreement as though fully set forth at length. 2. Purpose. The purpose of this Agreement is to promote greater government to government cooperation and to establish a funding mechanism to defray the cost of providing governmental services that benefit portions of the Reservation that are located within the City's jurisdictional boundaries. 3. Term. The term of this Agreement shall commence on January 1, 2022 and expire on December 31,2031,unless earlier terminated as provided herein. 4. Definitions. Unless the context otherwise requires,the terms defmed in this Section 4 shall for all purposes hereto, and for any amendment hereof,have the meanings defined herein. The following defmitions shall be equally applicable to both the singular and plural forms of any terms defined herein. a. "City Allocation"means an amount equal to a percentage of the rate established for the Tribal Sales Tax pursuant to Section 3.08.1230 of the Agua Caliente Tribal Code. The Tribe will establish this percentage,in its sole and absolute discretion,through Tribal Council resolution. In no event shall the percentage used to calculate the City Allocation exceed the combined percentage of the California sales and use tax and district tax that the City receives from the state of California pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law(Cal.Rev. &Tax. Code, §§ 7200 et ssq.)and the Transactions and Use Tax Law (Cal. Rev. &Tax. Code, §§ 7251 et seq.). For purposes of illustration and not limitation, if the City receives an amount calculated at a tax rate of 1%(i.e.,the equivalent to the Bradley-Burns Uniform Local Sales and Use Tax for that jurisdiction) and an amount calculated at a tax rate of 1.5% (i.e., the equivalent to the Transactions and Use Tax for that jurisdiction),the City allocation would not exceed the combined tax rate of 2.5% of the sales and use tax that City would otherwise receive from the state of California. b. "Commencement Date"means January 1,2023. c. "Fiscal Quarter"means one calendar year quarter commencing on January 1st,April 1st, July 1st, or October 1st, and ending on, as applicable, the immediately following March 31st, June 30th, September 30th, or December 31st,respectively. As an example,the Fiscal Quarter commencing January 1st shall end on the immediately following March 31st, the Fiscal Quarter commencing on April 1st shall end on the immediately following June 30th,and so on. Tax returns and payments are due at the end of the month immediately following the end of the Fiscal Quarter. For example,the tax returns and payments for the Fiscal Quarter ending on March 31st shall be due on April 30th. The tax returns and payments for the Fiscal Quarter ending on June 30th shall be due on July 31st, and so on. d. "Fiscal Year"means January 1st through December 31st. e. "Indian Lands"has the meaning ascribed to it in Section 3.08.050 of the Agua Caliente Tribal Code. f. "Notice" means all notices, requests, consents, claims, demands, waivers, and other communications hereunder sent to a Party in accordance with Section 13(d)hereof 2 g. "Public Safety" means the provision of law enforcement, emergency medical services, fire suppression and prevention,and emergency management by the City or a government or private entity that the City contracts with. h. "Term"means the term of this Agreement as specified in Section 3 hereof. i. "Tribal Council"means the Agua Caliente Tribal Council. j. "Tribal Sales Tax" means the sales tax imposed and collected pursuant to Chapter 3.08 of the Agua Caliente Tribal Code. 5. Distribution of City Allocation. Commencing on the Commencement Date and during the Term of this Agreement, the Tribe will remit the City Allocation to the City in accordance with this Agreement. The Tribe will remit the City Allocation to the City four times each Fiscal Year,with the Tribe remitting (a) the first City Allocation within thirty (30) days following the due date for tax returns and payments for the first Fiscal Quarter,representing the Tribal Sales Tax collected,net of any refunds allowed and paid, from non-Indian retailers for the first Fiscal Quarter; (b)the second City Allocation within thirty (30) days following the due date for tax returns and payments for the second Fiscal Quarter, representing the Tribal Sales Tax collected,net of any refunds allowed and paid,from non-Indian retailers for the second Fiscal Quarter; (c)the third City Allocation within thirty (30) days following the due date for tax returns and payments for the third Fiscal Quarter, representing the Tribal Sales Tax collected, net of any refunds allowed and paid, from non-Indian retailers for the third Fiscal Quarter; and(d)the fourth City Allocation within thirty(30) days following the due date for tax returns and payments for the fourth Fiscal Quarter, representing the Tribal Sales Tax collected,net of any refunds allowed and paid, from non-Indian retailers for the fourth Fiscal Quarter. The obligations of this Section 5 shall only apply Tribal Sales Tax funds collected from non-Indian retailers located on lands owned by an individual Indian(s)which is either held in trust by the United States or is subject to a statutory restriction on alienation. 6. Permissible Uses of Tribal Sales Tax. The Parties acknowledge and agree that it is within the Tribe's sole and absolute authority to use Tribal Sales Tax funds to fund any governmental service that benefits the Reservation community, whether this service is provided by the Tribe, City, or any other governmental entity. The Parties further acknowledge and agree that the Tribe's distribution of City Allocation funds to the City is meant to fund governmental services that benefit portions of the Reservation located within the territorial boundaries of the City. The City agrees that it shall only use City Allocation funds to fund Public Safety and that the Tribe's distribution of City Allocation funds to the City is conditioned upon the City's compliance with this requirement. The City may carryover any remaining portion of City Allocation funds not expended in the then current Fiscal Year to the next Fiscal Year to fund governmental services in accordance with this Agreement. 7. Annual Tribal Sales Tax Report. By March 31, 2024 and by March 31st of each Fiscal Year thereafter,the City shall prepare and transmit to the Tribe a Tribal sales tax report. The annual Tribal sales tax report shall be in a form acceptable to the Tribe and shall include the following information: a. Total Tribal Sales Tax Revenue Received. The total amount of City Allocation funds that the City received during the prior Fiscal Year. b. Description of Budgeted Expenditures. A listing of all services, supplies, capital outlays, employee expenses, and any other costs or expenses that the City identified to fund (i.e.,budgeted)using City Allocation funds during the prior Fiscal Year. 3 c. Description of Actual Expenditures. A listing of all services, supplies, capital outlays, employee expenses,and any other costs or expenses that the City funded using City Allocation funds during the prior Fiscal Year. d. Carryover. The amount of City Allocation funds not expended during the prior Fiscal Year and carried over to the then current Fiscal Year. e. Certification. A certification, executed by the mayor, certifying the receipt and the use of City Allocation funds in accordance with this Agreement. 8, Recapture. In the event the City does not comply with the terms of this Agreement, is otherwise in default, or falsifies any documents required under this Agreement, the City, pursuant to the provisions herein shall refund to the Tribe an amount equivalent to the extent of noncompliance within thirty(30) days of receipt of a written notice of noncompliance. 9. Non-Appropriation of Funds.All obligations of the Tribe under this Agreement are subject to the availability of Tribal Sales Tax funds and the City acknowledges that the ability of the Tribe to perform under this Agreement is contingent upon the continued availability of these funds. The Tribe has no obligation to make distributions under this Agreement from any other revenue or funding source apart from the Tribal Sales Tax funds the Tribe sets aside to carry out the purposes of this Agreement. The Tribe's decisions with respect to the City Allocation are within the exclusive discretion of the Tribal Council. 10. Indemnification. The City agrees to defend, indemnify, and hold harmless the Tribe, its Tribal Council,and each member thereof,and its officers,agents,and employees,against any and all claims, lawsuits,judgments, causes of action, costs, and expenses for personal injury (including death), property damage, or other harm for which recovery of damages is sought, suffered by any person or persons, that may arise out of or be occasioned by the City's breach of any of the terms or provisions of this Agreement, or by any negligent act or omission of the City, its officers, agents, servants, employees, contractors, or subcontractors,in the performance of this Agreement;except that the indemnity provided for in this Section shall not apply to any liability resulting from the sole negligence of the Tribe, its officers, agents, employees, or separate contractors. The provisions of this Section are solely for the benefit of the Parties hereto and not intended to create or grant any rights,contractual or otherwise,to any other person or entity. Both Parties expressly agree that this Agreement does not assign any responsibility for civil liability to the Tribe that may arise by virtue of this Agreement. 11. No Opposition. In consideration for the City's receipt of City Allocation funds from the Tribe, the City agrees not to oppose the Tribe's exercise of its inherent and constitutional right to impose and collect the Tribal Sales Tax on Indian Lands. 12. Termination. Either Party may terminate this Agreement without cause by providing the non-terminating Party no less than ninety(90)days prior written notice of the effective date of termination. The Tribe may also terminate this Agreement for breach of any provision of this Agreement,upon written notice of the breach and the City shall have ten(10)days after receipt of the written notice in which to cure the breach to the satisfaction of the Tribe. If the City fails to cure the breach to the satisfaction of the Tribe within the timeframe set forth herein,the Tribe may proceed with terminating this Agreement as set forth above. 13. Appeal Process. If the City wishes to appeal any decision of the Tribe relating to this Agreement,the City shall present its appeal to the Tax Director in writing within ten(10)business days of the Tribal action giving rise to the appeal. Upon receipt of the appeal and within a reasonable amount of 4 time,the Tax Director will present the appeal to the Tribal Council for consideration. The Tribal Council will review the appeal within thirty (30) days of the Tribe's receipt and decide whether to grant, conditionally grant, or deny the appeal. The decision of the Tribal Council shall be final and shall not be appealable. 14. Miscellaneous Provisions. a. Expenses. All costs and expenses incurred in connection with this Agreement and each agreement, document, and instrument contemplated by this Agreement and the transactions contemplated hereby and thereby shall be paid by the Party incurring such costs and expenses. b. Further Assurances. Each of the Parties shall execute and deliver such additional documents, instruments, conveyances, and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated hereby and thereby. c. Notices. All Notices shall be in writing and shall be deemed to have been given(i)when delivered by hand(with written confirmation of receipt); (ii) when received by the addressee if sent by a nationally recognized overnight courier(receipt requested);(iii)on the date sent by facsimile or email(with confirmation of transmission)if sent during normal business hours of the recipient,and on the next business day if sent after normal business hours of the recipient; or(iv)on the third(3rd) day after the date mailed, by certified or registered mail (in each case, return receipt requested, postage prepaid). Notices must be sent to the respective Parties at the following addresses(or at such address for a Party as shall be specified in a Notice given in accordance with this Section 13(d): If to Tribe: Agua Caliente Band of Cahuilla Indians Tax Department 5401 Dinah Shore Drive Palm Springs, California 92264 Attention: Tax Director With a copy to: Agua Caliente Band of Cahuilla Indians Legal Dep. oil ent 5401 Dinah Shore Drive Palm Springs,California 92264 Attention: General Counsel If to City: City of Cathedral City City Manager 68-700 Avenida Lalo Guerrero Cathedral City,CA 92234 Attention: Charles McClendon, City Manager With a copy to: Burke Williams& Sorenson, LLP 1770 Iowa Avenue, Suite 240 Riverside,CA 92507-2479 Attention: Eric S.Vail,City Attorney d. Interpretation. For purposes of this Agreement, (i) the words "include," "includes," and "including"are deemed to be followed by the words"without limitation";(ii)the word"or"is not exclusive; and (iii) the words "herein," "hereof," "hereby," "hereto," and "hereunder" refer to this Agreement as a 5 whole. Unless the context otherwise requires, references herein: (iv) to sections, schedules, and exhibits mean the sections of, and schedules and exhibits attached to, this Agreement; (v) to an agreement, instrument, or other document means such agreement, instrument, or other document as amended, supplemented,and modified from time to time to the extent permitted by the provisions thereof;and(vi)to a statute means such statute as amended, renumbered, or restated from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The schedules and exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. e. Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement. f. Severability.. If any term or provision of this Agreement is invalid,illegal,or unenforceable in any jurisdiction,such invalidity,illegality,or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal, or unenforceable, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible. g. Amendment and Modification. This Agreement may only be amended, modified, or supplemented by an agreement in writing signed by each party hereto. h. Waiver. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure,breach,or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power, or privilege arising from this Agreement shall operate or be construed as a waiver thereoff,nor shall any single or partial exercise of any right, remedy,power, or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right,remedy,power, or privilege. i. Cumulative Remedies. The rights and remedies under this Agreement are cumulative and are in addition to and not in substitution for any other rights and remedies available at law or in equity or otherwise. j. Assignment. Neither Party may assign any of its rights or delegate any of its obligations hereunder without the prior written consent of the other Party, which consent shall not be unreasonably withheld,conditioned,or delayed. Any purported assignment or delegation in violation of this Section shall be null and void. No assigmment or delegation shall relieve the assigning or delegating Party of any of its obligations hereunder. k. Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto and their respective permitted successors and permitted assigns. 1. No Third-Parts Beneficiaries. This Agreement is for the sole benefit of the parties hereto and their respective permitted successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other person or entity any legal or equitable right,benefit, or remedy of any nature whatsoever under or by reason of this Agreement. 6 m. Governing Law. This Agreement is made, entered into, and performed within the AI Caliente Indian Reservation, and shall in all respects be interpreted, enforced, and governed by the following applicable laws,which are stated in their order of priority in the event of a conflict between them: the laws of the United States,the laws of the Agua Caliente Band of Cahuilla Indians, and the laws of the State of California. This Agreement shall not be construed either for or against Tribe or City, but this Agreement shall be interpreted in accordance with the general tenor of the language in an effort to reach an equitable result. n. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original,but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email, or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement. o. Relationship of the Parties. Nothing herein shall be construed to create a joint venture or partnership between the Parties hereto or agency relationship. Neither Party hereto shall have any express or implied right or authority to assume or create any obligations on behalf of or in the n. e of the other Party or to bind the other Party to any contract, agreement,or undertaking with any third party. p. Entire Agreement. This Agreement constitutes the sole and entire agreement of the Parties to this Agreement with respect to the subject matter contained herein, and supersedes all prior and contemporaneous understandings, agreements,representations, and warranties,both written and oral,with respect to such subject matter. IN WI SS EREOF,the Parties have entered into this Agreement as of the Effective Date. T' I:E CITY By: By: Reid D. Milanovich Rita Lamb Chairman Mayor ATTEST ) e By: Tracey R.Hermoliiro City Clerk 7 APPROVED AS TO FO By: By: John T.Plata Eric .Vail GeneralCounsel City Attorney 8