HomeMy WebLinkAboutAGENDA REPORT 2014 0507 CCSA REG ITEM 09DITEM 9.D.
DATE: May 1, 2014 (CC Meeting of 5/7/14)
SUBJECT: Consider Golf Tax
On March 19, 2014, the City Council considered conducting a community outreach
program to raise awareness of the fiscal crossroads the City is facing and to
demonstrate the need to bring a 1/4 cent sales tax measure to the voters on the 2014
November ballot. Due to marginal public support and insufficient time to effectively
inform the public of the City's financial condition, the City Council decided against
moving forward with a community outreach program and elected not to pursue the 1/4
cent sales tax ballot measure. Over the past few years the City Council has taken
several cost-saving actions but added no new revenue sources to balance the general
fund operating budget. In addition to cost-saving actions, the budget also included the
use of General Fund Reserves to close the funding gap. The City's budget condition
requires additional revenue to avoid severe budget cuts that could harm the City's
quality of life.
DISCUSSION
The City's budget has been negatively affected by the recession and lingering decline in
new development while current annual property taxes are estimated to be at about the
Fiscal Year (FY) 2007/2008 level. In addition, while sales tax revenue has increased, it
has been less than statewide average increases and has been hampered by increasing
on-line sales. Cost increases for police services, utilities, liability insurance, and
workers' compensation insurance have been increasing above the recognized cost -of -
living index. The elimination of the Redevelopment Agency of the City of Moorpark has
shifted some costs to the City, and the State continues to divert about $500,000 a year
from the City to the Education Revenue Augmentation Fund (ERAF).
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Staff has continued to review revenue options because of the City's structural
imbalance between revenues and expenditures despite taking several actions including
delaying maintenance, reducing staff by twelve percent (12%), lowering maintenance
levels for parks and landscape areas, use of General Fund reserve to pay down liability
insurance and Other Post -Employment Benefits (OPEB) obligations and fund street
lighting and landscape districts operating deficits and postponing contributions to the
Equipment Replacement Fund and certain capital projects.
Other than fee adjustments, new retail sales businesses, construction of a hotel (City
has ten percent [10%] Transient Occupancy Tax [TOT]) and property tax from new
development (140 homes with an average assessed value of $750,000 yields about
$100,000 of property tax revenue to the City including the library portion), the City would
have to obtain voter approval for a new tax or assessment. In addition to a general
sales tax, the City can also consider business license tax or utility users' tax. These
require a simple majority of voter support. Assessments have been rejected in the past
because it would not yield sufficient revenue at the levels likely to receive public
support. A special sales tax for a specific purpose such as police would require a two-
thirds (2/3) affirmative vote.
Another potential revenue source for the City is a golf tax. The City of Rancho Palos
Verdes has had a golf tax for over 20 years. For the opportunity to play golf in the City
of Rancho Palos Verdes, each user (golfer) pays a tax in the amount of ten percent
(10%) of the green fees charged by the golf course operator. A copy of its Municipal
Code is attached.
Staff has evaluated a golf tax. It taxes the user of the golf course not the
owner/operator. About ten percent (10%) of the U.S. population plays at least one 18 -
hole round of golf per year. Approximately 50,000 rounds of golf are played annually at
the Moorpark Country Club, and about fifteen percent (15%) of the rounds are played as
part of tournaments. Because a golf tax, like a TOT for hotels and admissions tax for a
sporting event, is applied to specific users of those venues, it is more likely to have
support of Moorpark voters than a general sales tax. For this reason, staff believes that
a focused information campaign can be successful, even though there is limited time to
reach the public. These three types of taxes also generate revenue from people who
don't reside in the City but have an impact on City services. If automobile dealers and
shopping centers didn't generate sales tax revenue, it's unlikely a City would promote
such uses because of the impact on City services.
If the City Council determines to place a measure on the November 2014 Ballot, it must
take requisite actions including delivering the election resolution with the ballot question
for the golf tax measure to the County by June 30, 2014. Further, if placed on the
Ballot, staff would recommend retaining a consultant to assist with a public information
campaign. As part of the consideration of this proposed action, staff recommends
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holding a public meeting on May 21, 2014, to hear from the public and affected golf
course operator.
FISCAL IMPACT
An estimated 50,000 rounds of golf at an average cost of $90 are likely to be taxed. A
ten percent (10%) tax is estimated to provide about $450,000 in revenue to the City. As
with a sales tax measure, should the City Council elect to proceed with a golf tax
initiative, it will be necessary to implement a public information effort during the coming
months. While considering a sales tax ballot measure, two communications consulting
firms were interviewed regarding their proposals. The proposals call for a City funded
public information campaign for the purpose of explaining the City's reasons for the
additional revenue and to gain public support. Such an effort would cost approximately
$50,000 and would include material mailed to the City's voters as well as direct contact
with individuals and groups. The primary message of the information campaign would
emphasize the importance of having sufficient revenue to avoid drastic cuts and
maintenance deferrals that could cost the City even more in the long term.
As previously stated, based on current information and depending on the amount of the
tax, this could be a significant revenue source for the City. There would be some
administrative costs associated with a golf tax but would not require hiring additional
staff. A contractor such as currently used to assist the City with sales and property tax
oversight and management would be used as needed. No cost estimate has been
developed but is not expected to be a significant cost.
STAFF RECOMMENDATION
Direct staff to notice a public meeting on a proposed golf tax for May 21, 2014.
SK:db
Attachment 1: City of Rancho Palos Verdes Municipal Code
S:1City Manager\Everyonelccagenda\Golf Tax Agenda Rpt 2014 0507.doc
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Attachment 1
Ranoho:-Palos Verdes, California, Code of Ordinances >> Title 3 - REVENUE AND FINANCE » Chapter
3.40 GOLF TAX »
Chapter 3.40 - Q -0 -L.17 -TAX
Sections:
3.40.010 Title,
3 40.020 Definitions.
3.40.030 Tax imposed.
3.40.040 Tax collection.
340,050 Reporting and remitting.
340.060 Failure to remit tax.
3.40.070 Failure to collect and report tax—Determination of tax by tax administrator.
3.40.080 Appeal.
3.40.090 Records.
3.40.100 Refunds.
3.40.110 Actions to collect.
140. 120 Penalty for violation.
3.40.130 Exemptions.
3 40.140 Legislative review.
3.40.010 Tithe_
The ordinance codified in this chapter shall be known as the uniform golf tax ordinance of the
city.
(ofd. 291 ti� 2 (part). 1993)
3.40.020 Definitions.
Except where the context otherwise requires, the definitions given in this section govern the
construction of this chapter:
A. "Golf course" means any large course having a series of holes spaced considerably
apart designed for the playing of the game of golf. For the purpose of this chapter, a
golf course includes a driving range.
B. "Golf fees" means the consideration charged, whether or not received, for the use of a
golf course or driving range, whether to be received in money, or in any other form
including, without limitation, services, credits, goods, or labor of any kind or nature,
without any deduction therefrom.
C "Operator" means the person who is the proprietor of the golf course, whether in the
capacity of owner, lessee, sublessee, mortgagee in possession, licensee, or any other
capacity. Where the operator performs some or all of his/her functions through an
agent of any type or character, other than an employee, including an agent whose
only duty is to sell or resell the opportunity to use a golf course, the agent shall also
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be deemed an operator for the purpose of this chapter and shall have the same duties
and liabilities as the principal.
D. "Person" means any individual, firm, partnership, joint venture, association, social
club, fraternal organization, joint stock company, corporation, estate, trust, business
trust, receiver, trustee, syndicate, or any other group or combination acting as a unit.
E. 'Tax administrator" means the director of finance of the city or other person
designated by the city manager.
F. "User" means any person who exercises use of or is entitled to use a golf course by
reason of concession, permit, right of access, membership, license or other
agreement.
(Ord 370 § 1 2001: Ord. 291 § 2 (part) 1993)
3.40.030 Tax imposed.
For the opportunity of playing golf in the city, each user is subject to and shall pay a tax in
the amount of ten percent of the golf fees charged by the operator. The tax constitutes a debt owed
by the user to the city which is extinguished only by payment to the operator or the city.
(Ord. 291 3 2 (part), 1993)
3.40.040 Tax collection.
A. Each operator shall collect the tax imposed by this chapter to the same extent and at the
same time as the golf fees are collected from every user.
B. The amount of tax shall be separately stated from the amount of the golf fees charged, and
each user shall receive a receipt for payment from the operator.
C. Any good(s) or service(s) that the operator requires any user to rent or purchase in order to
use the golf course, which the operator contends is (are) exempt from the golf tax, shall be
separately stated from the amount of the golf fees on the invoice or receipt that is provided to
the user. In no event shall the total charges for such separately stated required items exceed
twenty-five percent of the golf fee that is charged to the user to play a round of golf.
D. If the golf fee is combined with any other service or use (such as, for example, the purchase
of a meal), then for purposes of computing the tax that is imposed under this chapter, the
charge for the round of golf or use of a driving range shall be imputed at the standard golf
fee that is charged by the operator without any discount, promotion or combination of
services.
E. If the golf fees are paid in installments, a proportionate share of the tax shall be paid with
each installment; any unpaid tax shall be due upon the user's ceasing use of the golf course.
F. If golf fees are paid as part of any membership fee or dues, the operator shall collect a tax on
an amount thereof that is fairly allocable to the golf fees or number of rounds the person
paying such membership fee or dues is entitled to play under the terms of the membership,
or the average number of rounds played by persons paying such membership fees or dues,
whichever is greater.
G. Any operator shall maintain accounting records, using generally accepted accounting
principles, that are acceptable to the tax administrator to compute, collect, report and remit
the golf tax. Such accounting records shall include, but not be limited to, vouchers or any
other methods that the tax administrator may require to verify the golf fees that are being
charged, whether by sale or resale, and the golf tax that is owed to the city.
Ord 3'0 § 2 2001 Ord 291 2 in .'i 1993;
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3.40.050 Reporting and remitting.
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Each operator shall, on or before the twentieth day of the month following the close of the
prior calendar month, make a return to the tax administrator, on forms provided by the tax
administrator, of the total golf fees charged and received and the amount of the tax collected. At the
time the return is filed, the full amount of the tax collected shall be remitted to the tax administrator.
The tax administrator may establish shorter reporting periods for any operator if the tax
administrator deems it necessary in order to insure collection of the tax, and the tax administrator
may require additional information in the return. Returns and payments are due immediately upon
cessation of business for any reason. All taxes collected by operators pursuant to this chapter shall
be held in trust for the account of the city until payment thereof is made to the tax administrator.
rOrd 291 § 2 fparf), 1990
3.40.060 Failure to remit tax.
A. Original Delinquency. Any operator who fails to remit any tax imposed by this chapter within
the time required shall pay a penalty of ten percent of the amount of the tax in addition to the
amount of the tax.
B. Continued Delinquency. Any operator who fails to remit any delinquent remittance within
thirty days following the date on which the remittance first became delinquent shall pay a
second delinquency penalty of ten percent of the amount of the tax in addition to the amount
of the tax and the ten percent penalty first imposed.
C. Fraud. If the tax administrator determines that the nonpayment of any remittance due under
this chapter is due to fraud, a penalty of twenty-five percent of the amount of the tax shall be
added thereto in addition to the penalties stated in subsections A and B of this section.
D. Interest. In addition to the penalties imposed, any operator who fails to remit any tax imposed
by this chapter shall pay interest at the rate of one and one-half percent per month or fraction
thereof on the amount of the tax, exclusive of penalties, from the date on which the
remittance first became delinquent until paid.
E. Penalties Merged With Tax. Every penalty imposed and such interest as accrues under the
provisions of this section shall become a part of the tax which is required to be paid.
(Ord 2.91 § 2 (Hart). 1993)
3.40.070 Failure to collect and report tax—Determination of tax by tax
administrator.
A. If any operator fails or refuses to collect the tax and to make, within the time provided in this
chapter, any report and remittance of the tax or any portion thereof required by this chapter,
the tax administrator shall proceed in such manner as he or she may deem best to obtain
facts and information on which to base his or her estimate of the tax due.
B- As soon as the tax administrator procures such facts and information as he or she is able to
obtain upon which to base the assessment of any tax imposed by this chapter and payable
by any operator who has failed or refused to collect the same and to make such report and
remittance, the tax administrator shall proceed to determine and assess against such
operator the tax, interest and penalties provided for by this chapter. When such a
determination is made, the tax administrator shall give a notice of the amount so assessed
by personal service to the operator or the operator's representative, or by depositing it in the
United States mail, postage prepaid, addressed to the operator so assessed at his last
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known place of address. Such operator may within ten days after the service or mailing of
such notice make application in writing to the tax administrator for a hearing on the amount
assessed. If application by the operator for a hearing is not made within the time prescribed,
the tax, interest and penalties, if any, determined by the tax administrator shall become final
and conclusive and immediately due and payable. If such application is timely made, the tax
administrator shall give not less than five days' written notice, in the manner prescribed in
this section, to the operator of the time and place fixed for a hearing. At such hearing, the
operator may appear and offer evidence why such specified tax, interest and penalties
should not be so fixed. After such hearing, the tax administrator shall determine the proper
tax to be remitted and shall thereafter give written notice to the person in the manner
prescribed in this section of such determination and the amount of such tax, interest and
penalties so determined. The amount determined to be due shall thereupon be due and
payable.
'Ord- 291 S 2 (part), 1993)
3.40.080 Appeal.
Any operator aggrieved by any decision of the tax administrator made at or following such a
hearing with respect to the amount of such tax, interest and penalties, if any, may appeal to the city
council by filing a notice of appeal with the city clerk within fifteen days after the serving or mailing
of notice of a determination by the tax administrator of the tax which is due. The city council shall
set a time and place for hearing such appeal, and the city clerk shall give notice of the time and
place of such hearing in writing to such operator at his/her last known place of address. The
findings of the city council shall be final and conclusive and notice thereof shall be served upon the
appellant in the manner prescribed in Section 3.40.070 for service of notice of hearing. Any amount
found to be due, together with interest at the rate prescribed in Section 3.40.060 from the date such
tax accrued and penalty, shall be immediately due and payable upon the service of notice.
(Ord 291 § 2 (part) 1993)
3.40.090 Records.
It shall be the duty of every operator required by this chapter to collect and pay to the city
any tax imposed by this chapter, to keep and preserve, for a period of three years from the date of
payment to the city, all records as may be necessary to determine the amount of such tax as the
operator may have been responsible for the collection of and payment to the city, which records the
tax administrator shall have the right to inspect at all reasonable times. If any operator fails to
maintain such records, the tax administrator shall make a determination of the amount of tax due
using such information and criteria as the tax administrator deems to be reasonable and relevant.
t0ia_ 291 § 2 (part), 1993;
3.40.100 Refunds.
A. Whenever the amount of any tax, interest or penalty has been overpaid, paid more than once
or erroneously or illegally collected or received by the city under this chapter, it may be
refunded as provided in subsections B and C of this section provided a claim in writing
therefor, stating under penalty of perjury the specific grounds upon which the claim is
founded, is filed with the tax administrator within one year of the date of payment. Any action
brought against the city pursuant to this section shall be subject to the provisions of
Government Code Sections 945.6 and 946. Compliance with this section shall be a
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prerequisite to a suit thereon. The claim shall be on forms furnished by the tax administrator,
shall be presented in accordance with the requirements of Section 3.24.030 and shall clearly
establish the claimant's right to the refund by written records demonstrating entitlement
thereto. It is the intent of the city that the one-year claim requirement of this subsection be
given retroactive effect; provided, however, that any claims that arose prior to the enactment
date of the one-year claims period set forth in this subsection, which are not otherwise
barred by the then -applicable statute of limitations or claim procedure, are filed with the tax
administrator as provided in this title within ninety days following the effective date of this
amended subsection (March 2, 2004).
B. An operator may claim a refund, or take as a credit against taxes due and not yet remitted,
the amount overpaid, paid more than once or erroneously or illegally collected or received
when it is established in a manner prescribed by the tax administrator that the person from
whom the tax has been collected was not a user; provided, however, that neither a refund
nor a credit shall be allowed unless the amount of the tax so collected has either been
refunded to the user or credited to any golf fees subsequently payable by the user to the
operator.
C. A user may obtain a refund of taxes overpaid or paid more than once or erroneously or
illegally collected or received by the city by filing a claim in the manner provided in
subsection A of this section, but only when the tax was paid by the user directly to the tax
administrator, or when the user having paid the tax to the operator, establishes to the
satisfaction of the tax administrator that the user has been unable to obtain a refund from the
operator who collected the tax.
D. No refund shall be paid under the provisions of this section unless the claimant establishes
his right thereto by written records and/or other evidence to the satisfaction of the tax
administrator.
(Ord- 403 c 12. 2004, Ord. 291 § 2 (parlj. 1993)
3.40.110 Actions to collect.
Any tax required to be paid by any user under the provisions of this chapter shall be deemed
a debt owed by the user to the city. Any tax collected by an operator which has not been paid to the
city shall be deemed a debt owed by the operator to the city. The amount of any tax the operator
refuses or fails to collect, and which has been assessed against the operator pursuant to Section
3.40.070 shall be deemed a debt owed by the operator to the city. Any person owing money to the
city under any provision of this chapter shall be liable for the amount of tax owed, plus interest and
penalty, if any, in a civil action brought in the name of the city for the recovery of such amount.
(Ord 291 § = (pa,t). 1993;
3.40.120 Penalty for violation.
A. Any person violating any of the provisions of this chapter shall be guilty of a misdemeanor
and shall be punishable therefor by a fine of not more than one thousand dollars or by
imprisonment in the county jail for a period of not more than six months or by both such fine
and imprisonment.
B. Any operator or other person who fails or refuses to furnish any return required to be made
by this chapter, or who fails or refuses to furnish a supplemental return or other data required
by the tax administrator, or who renders a false or fraudulent return or claim, is guilty of a
misdemeanor, and is punishable as set forth in subsection A of this section. Any person
required to make, render, sign or verify any report or claim who makes any false or
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fraudulent report or claim with intent to defeat or evade the determination of any amount due
required by this chapter to be made, is guilty of a misdemeanor and is punishable as set
forth in subsection A of this section.
(Ord 291 § 2 (par!). 1993)
3.40.4 30 Exemptions.
A. No tax shall be imposed upon any person as to whom it is beyond the power of the city to
impose the tax provided in this chapter.
B. No tax shall be imposed upon any user of a golf course that is entirely owned and/or
operated by a governmental entity.
Ord_ 370 § 3. 2001 Ord. 299 § 2 uai1), 1993)
3.40,440 Legislative review.
Beginning in January, 1996, and every four years thereafter, the city manager shall submit
for consideration by the city council an analysis of the revenues derived from the taxes imposed by
this chapter. Based on the needs of the city, the city council shall determine if any modifications to
the rate is necessary or if the tax imposed by this chapter should be repealed. Said review shall be
completed by the city council prior to the adoption of the budget being prepared for the next fiscal
year. This chapter shall be repealed if the city council does not conduct the review required by this
section.
i0rd 291 § 2 (pa /t). 1993)
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