HomeMy WebLinkAboutOrd 730 ORDINANCE NO. 430
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF CATHEDRAL CITY, AMENDING CHAPTER 3.46 TO
TITLE 3 OF THE CATHEDRAL CITY MUNICIPAL CODE
RELATING TO THE SALES TAX SHARING PROGRAM
WHEREAS, the general welfare and material well-being of the residents of the
City of Cathedral City (the "City") depend in large measure upon the facilities, goods,
and services that retail businesses make available to the public and the City's residents,
which, in turn, generate tax revenues to the City to help pay for necessary services to
support such retail services; and
WHEREAS, the opening, operation, and expansion of new and existing retail
businesses within the City will attract both local and regional shoppers and will likely
generate increased sales tax revenues to the City; and
WHEREAS, the City wishes to induce and encourage the opening, operation,
and expansion of new and existing retail businesses, thereby assisting the City in
achieving its goals related to the development of said businesses and creating new
sources of sales tax revenue for the City's general fund which supports the public
services that the City provides to its residents and to said businesses; and
WHEREAS, the City desires to incentivize retail business development in the
City by sharing a portion of the increased sales tax revenues generated by new and
expanding businesses; and
WHEREAS, the State of California's recent adoption of ABx1 26 and AB 1484
and the resulting elimination of redevelopment agencies and forms of assistance which
could be provided by redevelopment agencies has increased the necessity for the City
to provide said incentive; and
WHEREAS, the City Council desires to incentivize the opening of new retail
businesses and expansion of existing retail businesses by adding a Chapter to Title 3 of
the City's Municipal Code that provides for partial rebates of incremental sales tax to
qualifying new and existing businesses.
NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CATHEDRAL CITY
DOES ORDAIN AS FOLLOWS:
Section 1. AMEND CHAPTER 3.46 — SALES TAX SHARING PROGRAM
Chapter 3.46 of Title 3 of the City of Cathedral City Municipal Code is amended
as provided below:
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Chapter 3.46
SALES TAX SHARING PROGRAM
Sections:
3.46.010 Purpose
3.46.020 Definitions
3.46.030 Participation Requirements
3.46.040 Sales Tax Sharing Program
3.46.050 Operating Covenants
3.46.060 General Fund Revenues
3.46.070 Termination of Tax Sharing
3.46.080 Administrative Rules and Regulations
3.46.010 Purpose.
The purpose of this Chapter is to provide an incentive program for the opening,
operation, and expansion of retail businesses which i) enhance the quality of facilities,
goods, and services that businesses make available to the public and the City's
residents ii) provide desirable and attractive shopping experiences for the City's
residents and visitors, and iii) increase the Sales Tax revenue to the City. In the
implementation of this program, the City Council finds:
(a) The general welfare and material well-being of the residents of the City depend in
substantial measure upon the growth and expansion of retail businesses in the City.
(b) The opening, operation, and expansion of the inventory of retail businesses in
the City will i) enhance the quality of facilities, goods, and services that businesses
make available to the public and the City's residents, ii) provide desirable and attractive
shopping experiences for the City's residents and visitors, and iii) increase the City's
Sales Tax revenue.
(c) It is in the best interest of the City to induce and encourage the opening,
operation, and expansion of retail businesses that might not otherwise exist or might
not be as successful, thereby creating new sources of revenues for the City's general
fund which supports the public services the City provides its residents and visitors.
(d) The authority granted and the purposes to be accomplished by this Chapter are
proper local governmental and public purposes for which public funds can be expended
I and that-the opening, operation, and expansion of the inventory of retail businesses is of
paramount importance to the City, its residents, and businesses.
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3.46.020 Definitions.
For the purposes of this Chapter, the following definitions shall apply:
"Approved Business" means any Existing Retail Business or New Retail
Business which has submitted an application for participation in the Program and been
approved by the City to participate in the Program after a public hearing on a Sales Tax
Sharing Agreement.
"Business" means any "Existing Retail Business" or "New Retail Business" as
defined in this section.
"Developer" means any person or entity in the business of developing real
property for the purpose of operating a business thereon, and with whom the City
Council may, in its sole discretion, enter into a Sales Tax Sharing Agreement.
"Existing Retail Business" means a retailer in the business of selling tangible
personal property or services which are subject to Sales Tax, which was operating with
a valid business license anywhere within the City not less than one (1) year prior to the
filing of an application by the Existing Retail Business for assistance under this Chapter.
"Indemnification Agreement" means the agreement between the City and an
Owner in which the Owner agrees to indemnify and defend the City against any claims
or lawsuits that are brought against the City (and all liabilities, damages, and costs
incurred by the City in connection therewith) as a result of the application of this
Ordinance to a Business participating in the Sales Tax Sharing Program.
"New Retail Business" means a retailer in the business of, or which proposes to
be in the business of, selling tangible personal property or services which are subject to
Sales Tax, which desires to open a business within the City, and is not operating said
business within the City as of the date of the application by the New Retail Business for
assistance under this Chapter, and has not operated such a business within the City
within one (1) year of the date of the application.
"Operating Covenants" means the Operating Covenants to be recorded against
Business properties for Businesses participating in the Program, which shall include
provisions regarding continuing use of the Business, maintenance, and non-
discrimination.
"Owner" means the person or entity which owns and operates the Business, and
has legal authority to enter into a Sales Tax Sharing Agreement on behalf of the
Business with the City.
"Sales Tax" means that portion of local sales taxes accrued on account of sales
made by a Business that would be payable to the City from the State Board of
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Equalization, from the imposition of the Bradley Burns Uniform Local Sales and Use Tax
Law, provided that such sales taxes are legally available for use by the City's General
Fund, and the use of which by the City is not otherwise restricted by the state or federal
government.
"Sales Tax Base" means the historical production of Sales Tax by an Existing
Retail Business as calculated in the Sales Tax Sharing Report. The Sales Tax Base
shall be calculated in a manner as to take into account the then-current economic state
relative to the historical performance of the Business. In addition, the Sales Tax Base it
shall be calculated using use a method determined by the preparer of the Tax Sharing
Report, for averaging production over an appropriate period adjusted for inflation, or
other similar adjustment index, it being the intent that an Approved Business should
receive a tax sharing arrangement which does not reward the Business for
improvements in sales tax arising from general economic conditions as opposed to the
improvements made by the Business Owner.
"Sales Tax Increment" means, on an annual basis, the difference between the
Sales Tax Base and the amount of Sales Tax actually generated by a Business and
received by the City from the State Board of Equalization after a Business begins
participating in the Program. It is determined by reference to actual receipts by the City
of Sales Tax from the State Board of Equalization. With respect to New Retail
Businesses, all Sales Tax received shall be deemed to be Sales Tax Increment. Under
no circumstances shall the City be liable for any reimbursement of Sales Tax Increment
not actually received and permanently retained by the City.
"Sales Tax Sharing" means the rebate from the City to the Owner of an Approved
Business of a portion of that Business's Sales Tax Increment, as determined each year
for which the Agreement is valid. The payment of the Approved Business's portion of
the Sales Tax Increment shall be paid to the Approved Business within a reasonable
time after the conclusion of each year, consistent with the City's ability to verify its actual
Sales Tax receipts relative to the Approved Business
"Sales Tax Sharing Agreement" or "Agreement" means an agreement between
the City and an Approved Business which provides for the rebate from the City to the
Business Owner of a portion of the Business's Sales Tax Increment, at a rate and for a
time period as determined by the City. Said Agreements may include such provisions,
restrictions, conditions or other provisions as the parties then agree are necessary to
give effect to the intent and spirit of this Chapter.
"Sales Tax Sharing Program" or "Program" means the Sales Tax rebate program
established by this Chapter. A Business's participation in the Program extends as long
as the time period provided for in a Sales Tax Sharing Agreement.
"Tax Sharing Report" means the report which shall be completed for any
applicant Business which shall analyze the projected economic factors relating to the
expansion of an Existing Retail Business, or construction of a New Retail Business, and
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the projected impact of such expansion or construction on the Business's generation of
sales which are subject to Sales Tax and which generate general fund revenues to the
City, which shall be considered by the City Council in making its decision as to a
particular Business, and which the City Council may use, along with other evidence
presented, in its sole discretion, to determine whether the subject Business is approved
to participate in the Program, and if so, the appropriate Sales Tax Sharing rate,
maximum sharing time period and maximum dollar amount for the Sales Tax Sharing
Agreement. The Tax Sharing Report shall be prepared by staff or by a qualified
consultant employed by the City. The cost of preparing the Tax Sharing Report,
whether prepared by staff or an outside consultant shall be paid by the Owner of the
Business applying for participation in the Program, unless the City, in its sole discretion,
waives this requirement.
3.46.030 Participation Requirements.
(a) To participate in the Sales Tax Sharing Program, the Owner of (1) any Existing
Business which plans a renovation or expansion to improve and/or expand its
operations or (2) any New Business must:
(1) Complete and submit to the City Manager an application for participation
in the Sales Tax Sharing Program on the City's official Sales Tax Sharing Program
application form; and
(2) Allow the City to inspect the Existing Retail Business, if applicable, to
determine that the improvements contemplated by the Tax Sharing Report, which
are the justification for the Sales Tax Sharing, do not already exist, and, upon
demand of the City, provide the City with such evidence of the Approved Business'
intention and ability to proceed to construct the necessary improvements or make
the necessary purchases, as are reasonably satisfactory to the City; and
(3) Receive approval for participation in the Program from the City, after the
public hearing as provided in Section 3.46.040(e); and
(4) E nter into a Sales Tax Sharing Agreement in the
form approved by the City; and
(5) E - _ _ _ . -_ e -- _. . , -xecute and record against the Business
property the Operating Covenants provided in Section 3.46.050; and
(6) Elf approved by the City, execute an Indemnification Agreement in a form
approved by the City; and
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(7) Upon completion of the subject improvements or purchases and before
Sales Tax Sharing commences, allows the City to inspect the Approved Business
to verify that in fact the contemplated improvements and/or purchases have been
made and completed so as to enable the Business to increase its sales.
(b) It is recognized that some businesses will be located in premises which are not
owned by the Owner of the Business and are rented or leased from a third party. In
such circumstances, the City and the Business shall seek the permission of the owner
of the property to record the Operating Covenants against the subject property,
applicable only to the Business. The City Council, at its sole discretion, may approve
such terms or conditions as it deems appropriate in order to obtain the property owner's
consent, or may, in its sole discretion, waive the requirement of recording the Operating
I Covenants. If the land owner and the Owner are the same person or entity or are under
common control, recording the Operating Covenants shall be a requirement of approval
of the Sales Tax Sharing Agreement.
3.46.040 Sales Tax Sharing Program.
(a) Subject to the following statutory exceptions, the City Council is authorized to
enter into Sales Tax Sharing Agreements with retail Businesses in accordance with this
section:
(1) The City may not enter into any Sales Tax Sharing Agreement with a
vehicle dealer or big box retailer which is relocating from the territorial jurisdiction
of another local agency within the same market area, if said Agreement would
violate the provisions of Cal. Gov. Code Section 53084, as that+s Section may be
amended;
(2) The City may not enter into any Sales Tax Sharing Agreement if said
I Agreement would violate Cal. Gov. Code Section 53084.5, as that+s Section may
be amended. Said violation may arise, subject to exception, if the Agreement
would result in reduced sales tax revenues received by another local agency
from a retailer that is located within the territorial jurisdiction of that other local
agency from the tax proceeds collected under the Bradley Burns Act, and the
retailer maintains a physical presence in the territorial jurisdiction of that other
local agency.
(b) In order to determine the appropriate rate of Sales Tax Sharing for each retail
business that has submitted an application pursuant to Section 3.46.030(a)(1), the City
Council shall cause to be prepared a Tax Sharing Report, which shall analyze factors
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including the following. The City Council, in its sole discretion, may consider additional
factors, or require additional studies or reports, as it deems appropriate.
(1) For Existing Businesses, the existing level of Sales Tax generated by the
Business, and the projected Sales Tax to be generated after a planned
expansion project; and
(2) For New Businesses, the projected Sales Tax to be generated by the new
Business; and
(3) The amount of expected Sales Tax Increment; and
(4) For New and Existing Businesses, the type, quality, and price point of the
goods and services sold or provided by the Business; and
(5) For New and Existing Businesses, the total projected cost to construct the
New Business or expand the Existing Business; and
(6) The impact and benefits of the proposed expansion or construction of the
Business on the residents of the City and the surrounding region; and
(7) The necessity for public assistance.
(c) The City Council shall hold a public hearing on all contemplated Sales Tax
Sharing Agreements. Notice of the time and place of the hearing shall be published in a
newspaper of general circulation in the City once a week for two consecutive weeks
prior to the hearing. At this hearing, the City Council shall consider all evidence before
it, including the information contained in the Tax Sharing Report. This shall be the sole
hearing required under this Chapter.
(d) At or after the public hearing, after considering the Sales Tax Sharing Report and
such other factors, studies or reports as it, in its sole discretion, deems appropriate,
including, without limitation, the past history of the Owner in conforming to the
ordinances, statutes, rules and regulations of the City, the County of Riverside and the
State of California, and subject to the limitations set forth in subdivision (g), the City
shall determine, in its sole discretion: (i) whether the applicant Business shall be
designated as an Approved Business; and, if so, (ii) the rate of Sales Tax Sharing to be
provided to the Approved a Business that will be necessary or appropriate to achieve
the goals and intent of this chapter, which rate may vary over time as determined by the
City Council in its sole discretion; and (iii) the City shall determine, in its sole discretion,
the time period over which Sales Tax Sharing will be necessary or appropriate to
achieve the goals and intent of this chapter, subject to the provisions of subdivision (h),
which time period may be subject to various factors as determined by the City Council in
its sole discretion; and (iv) the City shall determine, in its sole discretion, the maximum
dollar amount of Sales Tax Sharing which the Approved Business may receive. Each of
the foregoing factors affecting the total amount of Sales Tax Sharing may be subject to
possible reduction or termination as the City Council may determine in its sole
discretion.
(e) The City shall make all Tax Sharing Reports available for public inspection and
copying, at a cost not to exceed the cost of duplication, no later than the time of
publication of the first notice of the public hearing mandated by this section.
(f) At or after the public hearing,. e _ __ •• _ _ •_ _ _ _ _ A _ -- ••-- _ •_
the City Council approves the Bucinc , the City may, in its sole discretion, by
Resolution, designate the applicant Business as an Approved Business and either: (i)
approve a Sales Tax Sharing Agreement with the Owner or Developer of the Approved
Business as presented to the City Council at the hearing, or (ii) authorize City staff to
negotiate and enter into prepare a Sales Tax Sharing Agreement
Developer of the Approved Business, which agreement shall be brought back for final
approval on an open session agenda, on terms approved by the City Council and
subject to final review and approval of both the City Manager and the City Attorney.
unless the Council shall by majority vote to authorize an alternative procedure. Subject
to the limitations set forth in subdivisions (g) and (h), a Sales Tax Sharing Agreement
may provide for the City to rebate to a Business an appropriate rate of Sales Tax
Increment for an appropriate time period, as necessary to achieve the goals and intent
of this chapter, as determined by the City Council in its sole discretion. The rate and
time period determinations made by the City Council pursuant to this section shall be
final and conclusive.
(g) The rate of Sales Tax Sharing determined by the City Council is subject to the
following limitations:
(1) For Existing Businesses, the amount of Sales Tax to be rebated shall not
exceed fifty percent (50%) of the Business's Sales Tax Increment actually
received and retained by the City, unless the City Council, in its sole discretion,
determines otherwise.
(2) For New Businesses, the amount of Sales Tax to be rebated shall not
exceed fifty percent (50%) of the Business's Sales Tax Increment actually
received and retained by the City, unless the City Council, in its sole discretion,
determines otherwise.
(h) The time period of Sales Tax Sharing determined by the City Council is subject to
the following limitations:
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(1) For Existing Businesses, the Sales Tax Sharing Agreement shall not
exceed a time period of ten (10) years, unless the City Council determines, in its
sole discretion, that a longer time period is warranted to achieve the goals and
intent of this chapter.
(2) For New Businesses, the Sales Tax Sharing Agreement shall not exceed
a time period of ten (10) years, unless the City Council determines, in its sole
discretion, that a longer time period is warranted to achieve the goals and intent
of this chapter.
(i) The City Council, acting in its sole discretion, may set a maximum dollar amount
of Sales Tax Sharing which the Approved Business may receive, and/or impose other
restrictions on the amount, taking into account such factors as the City Council may
determine in its sole discretion, such as success of the Business beyond that
contemplated by the Sales Tax Report.
(j) To the extent that the City Council imposes rate limits, time limits or maximum
benefit limits upon the Approved Business, such limits shall be set forth in the Sales Tax
Sharing Agreement. If any one of the three limits so identified is reached, then the
Sales Tax Sharing shall immediately terminate.
3.46.050 Operating Covenants.
Subject to the provisions of Section 3.46.030, each Owner or Developer which
enters into a Sales Tax Sharing Agreement with the City shall record against the
participating Business property the following Operating Covenants, to run with the land:
(1) Continuing Use and Operation. During the Business's participation in
the Sales Tax Sharing Program, the Owner and/or Developer covenants
and agrees for itself, its successors, assigns or designees, to continually
operate and use the Business property for the same purposes, in the
same manner, and at the same level of quality, or higher, as that which
the Business operates upon execution of the Sales Tax Sharing
Agreement. All uses conducted on the Business property shall conform to
all applicable provisions of the City's Municipal Code. Further, the Owner
and/or Developer will at all times operate the Business in conformity with
all ordinances, statutes, rules and regulations of the City, the County of
Riverside and the State of California.
(2) Maintenance. During the Business's participation in the Sales Tax
Sharing Program, the Owner covenants and agrees for itself, its
successors, assigns or designees, to continually maintain and repair or
cause to be maintained and repaired, the Business property, including but
not limited to buildings, structures, parking areas, lighting, signs, and
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landscaping, to be in good condition conforming to all applicable laws,
including all applicable provisions of the City's Municipal Code, and shall
keep the Business property free from any accumulation of debris or waste
materials.
(3) Non Discrimination. During the Business's participation in the Sales Tax
Sharing Program, the Owner covenants and agrees for itself, its
successors, assigns or designees, that the Business and any of its
employees shall not discriminate against any person on the basis of sex,
marital status, race, color, religion, ancestry, national origin, physical
handicap, sexual orientation, or domestic partnership status.
3.46.060 General Fund Revenues.
All Sales Tax revenues or Sales Tax Increment remitted to the City by the State
Board of Equalization, which were collected by a Retail Business, are general fund
revenues of the City and shall be deposited in the City's general fund.
3.46.070 Termination of Tax Sharing.
The City may terminate the Sales Tax Sharing Agreement on ten (10) days'
notice if the Business violates any of the Operating Covenants, provided that such
violation or violations continue to exist at the end of said ten (10) day period.
Specifically, without limiting the generality of the foregoing, a failure to pay to the City in
a timely manner and in the correct amount shall permit the City to terminate the Sales
Tax Sharing Agreement. The City shall give notice to the Owner as required by the
terms of the Sales Tax Sharing Agreement.
3.46.080 Administrative Rules and Regulations.
Consistent with the intent and goals of this chapter, the City Manager may adopt
administrative rules and regulations for implementation and furtherance of the
requirements of this chapter.
Section 2. SEVERABILITY
The City Council declares that, should any provision, section, paragraph,
sentence or word of this Ordinance be rendered or declared invalid by any final court
action in a court of competent jurisdiction or by reason of any preemptive legislation, the
remaining provisions, sections, paragraphs, sentences or words of this Ordinance as
hereby adopted shall remain in full force and effect.
Section 3. REPEAL OF CONFLICTING PROVISIONS
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All the provisions of the Cathedral City Municipal Code as heretofore adopted
that are in conflict with the provisions of this Ordinance are hereby repealed.
Section 4. EFFECTIVE DATE
This Ordinance shall take effect thirty (30) days after its second reading by the
City Council.
Section 5. POSTING
The City Clerk shall within fifteen (15) days after passage of this Ordinance,
cause it to be posted in at least three (3) designated public places; shall certify to the
adoption and posting of this Ordinance; and shall cause this Ordinance and its
certification, together with proof of posting, to be entered in the Book of Ordinances of
this City.
END OF PAGE
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Section 6. CERTIFICATION
The foregoing Ordinance was approved and adopted at a meeting of the City
Council held on the I I day of k�ct. ,C44—. , 2013, by the following vote:
Ayes: J(4los*, IMs'i'i,, 14/11S) l6 LC Sr 14 f
Noes: -Or
Abstain: 1.1
Absent: 'e
►, -&r
t ,leen J. .. Rosa, ayor
ATTEST:
V&A --‘-1 '.
,,ary Howe , City Cler'
APPROVED AS TO FORM:
Charles R. Green, City Attorney
REVIEWED BY:
R ,d Wood Werim City r anager
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