East Palo Alto Municipal Code Ch. 3.44 General Excise Tax Upon Owners and Occupants of Residential, Commercial,…

It is the purpose and intent of the ordinance codified in this chapter to impose a general excise tax upon the owners and occupants of real property, pursuant to the provisions of Sections 53720 through 53730 of the California Government Code, to be levied annually for three succeeding fiscal years beginning 1994-1995, the proceeds of such tax to be placed in the city's general fund and utilized for payment of the costs to provide essential governmental services.

(Ord. 175 § 1, 1994)

The city council finds and determines as follows:

A. The city is presently confronted with a fiscal crisis that threatens the continued operation and viability of the city as a governmental organization. The city has unfunded liabilities in excess of one million one hundred thousand dollars ($1,100,000.00). There is a critical shortage of administrative and staff personnel in every department of the city and further cutbacks will be required within the immediate future unless general revenues are increased beyond existing levels.

B. The fiscal crisis has seriously impaired the ability of the city to deliver basic and essential governmental services, including, but not limited to, police protection to combat the high rate of felony crime, code enforcement to abate public nuisances, and public works programs to maintain, repair and replace streets, sidewalks, light fixtures, and other public facilities. The lack of these services has resulted in a general deterioration of the physical condition of the city, a depression of property values, a serious threat to the health, safety and welfare of East Palo Alto residents, and a significant decline in the quality of life experienced by those who live or work within the city. These services directly affect every owner or occupant of real property within the city and must be provided by any municipal government as a matter of necessity and not individual choice.

C. The tax rates established by this chapter are proportional to and based upon estimates of average use of essential municipal services by the owners and occupants of real property. The rates are based on general categories of property because the determination of individual use is not administratively feasible, and because the city must make these essential services equally available to all persons who own or occupy property within these municipal services, whether in the form of increased personal safety and comfort, response and assistance in the event of emergency, preservation of property values, enhanced quality of life, promotion of development opportunities, or any combination of the foregoing.

D. The specific tax rates established and imposed by this chapter are based upon the following considerations:

1. The owners of all single-family dwellings are taxed at the same rate because the level of municipal services provided for each owner is essentially the same.

2. In the case of multifamily dwellings, certain economies of scale can be achieved because municipal services can more efficiently be delivered to areas of higher density. For purposes of allocating cost, the city council has determined that approximately three rental units within a multifamily project are equivalent to one single-family dwelling. The city council also has determined that it is not administratively possible to tax each individual occupant of a rental unit. The tax therefore is imposed upon the owner of the property, who is entitled to collect such tax from each tenant. A vacant rental unit is subject to tax because the owner personally derives a benefit from the essential municipal services that protect the property, preserve its value, and facilitate the rental of units, whether or not all units are occupied.

3. The owners of vacant property are taxed at a lesser rate in recognition of the reduced utilization of municipal services by such owners. To the extent that effective delivery of essential municipal services will prevent a general deterioration of physical, public safety and quality of life conditions within the city, the owners of vacant property benefit from and indirectly utilize such services which preserve the value of their investment and promote development opportunities for the property.

4. The city council has further determined that it would be impractical to establish distinctions between business enterprises with respect to the utilization of municipal services. Consequently, the owners of commercial, industrial and institutional properties are taxed at the same rate. Such rate is higher than other classifications of property because of the increased utilization of infrastructure facilities and police protection services required by these business enterprises.

E. By reason of the existing fiscal crisis, the city does not have the personnel, equipment and other resources necessary for administration of the excise tax imposed by this chapter. The city must therefore utilize the services of the San Mateo County tax collector by including the excise tax on the secured real estate tax bill administered by the tax collector, to be levied and collected at the same time and in the same manner as other taxes and charges shown on such bill.

F. In order to assure that the excise tax will be paid when due, and to avoid the possible necessity for expensive and time consuming legal proceedings for the collection of delinquent taxes, the liability for payment of the excise tax established by this chapter will be secured by a lien upon the property owned or occupied by the persons utilizing the municipal services. Such lien also is required in order for the city to obtain an immediate commercial loan to pay the costs incurred for essential municipal services rendered to the community prior to receipt of the tax revenue. The city does not have sufficient credit standing to obtain such a loan without being able to secure the indebtedness by an assignment of the anticipated tax proceeds.

(Ord. 175 § 2, 1994)

The following definitions shall apply throughout this chapter:

"Agricultural parcel" means a parcel in which the land is used for the cultivation of crops, vines, food products, livestock, grazing, horticulture or open space, but does not include a nursery engaged in the sale of flowers, trees or plants.

"Commercial parcel, industrial parcel and institutional parcel" means any parcel which is not a single-family parcel, multifamily parcel, agricultural parcel or vacant parcel. Where a single business establishment is located upon more than one parcel, such business establishment shall be considered as occupying only one parcel. A parcel containing both residential and commercial uses shall be considered a commercial parcel; provided, however, a dwelling unit in which a home occupation is being conducted shall be considered a residential parcel.

"Dwelling unit" means any building or portion thereof which is occupied or intended for occupancy by a single household on a permanent basis, and contains living, sleeping, eating, cooking and sanitation facilities.

"Elderly property owner" means a person holding fifty (50) percent or more of the ownership interest in a single-family parcel who is sixty (60) years of age or older.

"Handicapped property owner" means a person holding fifty (50) percent or more of the ownership interest in a single-family parcel who is suffering from an orthopedic or physical disability which impairs his or her ability to obtain employment or a developmental disability or mental disorder which would render him or her eligible to participate in programs of rehabilitation or social services conducted by or on behalf of a public agency.

"Household" means one or more persons who live together in a dwelling unit and maintain a single domestic establishment. The term does not include a group of persons occupying a hotel, motel, nursing home, boarding house, or institution of any kind.

"Low income" means gross income which does not exceed fifty (50) percent of the median income for San Mateo County, adjusted for household size, as determined by the Secretary of Housing and Urban Development under Section 8 of the United States Housing Act of 1937, as amended, or if programs under Section 8 are terminated, the median income for San Mateo County determined under the method used by the Secretary prior to such termination.

"Multifamily parcel" means a parcel containing more than one dwelling unit.

"Parcel" means the land and any improvements thereon designated as an identifiable parcel in the official records of the assessor of San Mateo County by an assessor's parcel map and parcel number and carried on the secured property tax roll of the county of San Mateo.

"Single-family parcel" means one or more parcels containing a single dwelling unit.

"Vacant parcel" means a parcel which is not improved with any building, structure or other appurtenance located on the land. A parcel improved only with fences, poles, walls or water wells shall be deemed a vacant parcel.

(Ord. 175 § 3, 1994)

A. There is imposed annually for a term of three succeeding fiscal years beginning 1994-1995, upon each parcel of real property in the incorporated area of the city, a general excise tax as set forth below for the privilege of using and deriving the benefit of essential municipal services provided by the city. No such tax shall be imposed upon property owned or occupied by any federal, state or local public agency or any institution or organization exempt from taxation under Section 501(c)(3) or 501(c)(4) of the Internal Revenue Code or Section 214(a) of the California Revenue and Taxation Code. The property owner shall be responsible for payment of the excise tax, whether or not such owner is an occupant, but shall be entitled to reimbursement from any tenant who occupies the property, unless such tenant is exempt from taxation as specified in this chapter. The excise tax shall constitute a personal obligation owed by the property owner to the city.

B. The excise tax shall be imposed and is levied for parcels described on the last equalized assessment roll for each of the three fiscal years during the term of the tax, at rates not to exceed the following schedule:

(Ord. 175 § 4, 1994)

The revenues raised from the tax imposed by this chapter shall be deposited into the general fund of the city and utilized for the general governmental purposes of the city.

(Ord. 175 § 5, 1994)

The city council of the city is authorized to reduce the annual tax rate imposed by Section 3.44.040 by a simple majority vote; provided the same percentage reduction is made in the tax on each type of parcel specified in Section 3.44.040. Having reduced the tax below the amount set forth in Section 3.44.040, the city council may by a simple majority vote increase the annual tax rate to the amount stated in Section 3.44.040; provided the same percentage increase is made in the tax on each type of parcel specified in Section 3.44.040. Under no circumstances may the annual tax rate exceed the amount set forth in Section 3.44.070.

(Ord. 175 § 6, 1994)

A. Liens. The personal obligation of property owners to pay the excise tax imposed by this chapter shall be secured by a lien on the real property owned by such persons. With respect to the 1993-1994 fiscal year, the lien shall attach on the effective date of the ordinance codified in this chapter; with respect to each subsequent fiscal year during the term of the tax, the lien shall attach at 12:01 a.m. on March 1st preceding the fiscal year for which the tax is levied.

B. Collection. The excise tax imposed by this chapter is not an ad valorem tax on real property. However, the tax shall be collected by the tax collector of San Mateo County at the same time as and along with, and shall be subject to the same interest and penalties as, general ad valorem property taxes. In addition, the city shall be entitled to exercise any lawful remedies provided by law for collection of the indebtedness.

C. Recovery of County Costs. The county shall be entitled to deduct the reasonable costs of collection and administration of this chapter before remitting the tax revenues collected to the city.

D. Administrative Regulations. The city council of the city may from time to time adopt regulations necessary for the enforcement and administration of the excise tax provided in this chapter. Such regulations shall be consistent with the purpose and intent of this chapter.

(Ord. 175 § 7, 1994)

A. Qualification for Exemption. Any elderly property owner or handicapped property owner may qualify for an exemption from the tax imposed by this chapter by establishing, to the satisfaction of the city's finance director, that the combined annual gross income of all members of the household in which such property owner resides would constitute "low income," as defined in Section 3.44.030.

B. Application for Exemption. Applications for an exemption pursuant to this section shall be submitted to the city's finance director on such form as he shall prescribe. The application shall be accompanied by such evidence of current annual gross income as the finance director deems necessary to determine eligibility for the exemption. No fee shall be charged for filing or processing the application.

C. Granting of Exemption. Upon a determination by the finance director that the applicant qualifies for an exemption by reason of being a low income elderly or handicapped property owner, the finance director shall issue to the applicant a certificate of exemption and cause the tax to be removed from the applicant's property tax bill. In the event the tax, or any portion thereof, has already been paid, the city shall refund such payment to the applicant.

D. Expiration and Renewal of Exemption. An exemption pursuant to this section may be granted for a period of one year. The exemption may be renewed for additional one year periods upon the filing of an application for renewal with the finance director on such form as he shall prescribe. No fee shall be charged for such application. The application shall be granted and a renewal certificate of exemption shall be issued if the finance director determines that the applicant still qualifies as a low income elderly or handicapped property owner.

E. Termination of Exemption. An exemption granted pursuant to this section shall automatically terminate upon any sale or other transfer by the exempt person of his or her ownership interest in the property, or upon any change in fact or circumstance which would disqualify such person from receiving the exemption. It is unlawful and a misdemeanor for any person to knowingly receive the benefits of an exemption provided by this section when the basis for such exemption does not exist or ceases to exist.

F. Appeals to City Council. Any decision or determination made by the finance director with respect to the granting or denial of an exemption, or renewal of an exemption, may be appealed to the city council by filing a notice of appeal with the city clerk within ten calendar days after the date of such decision or determination.

(Ord. 175 § 8, 1994)

A. Notice of Right to Appeal. Within twenty (20) calendar days after the tax bills containing the tax imposed by this chapter have been mailed, the city council shall cause a notice of right to appeal to be published once a week for two successive weeks in a newspaper of general circulation in the city. Such notice shall be headed "Notice of Appeals Period and Procedure for City of East Palo Alto Excise Tax" and shall contain the wording of subsection B of this section.

B. Appeals Procedure. Appeals from the amount of the tax levied upon any parcel, or from any component of the tax, must be made in accordance with the following:

1. An appeal shall be initiated by the taxpayer by written application addressed to the City Council of East Palo Alto, 2415 University Avenue, East Palo Alto, California, 94303. The application must be received no later than December 1, 1994 for the 1994-1995 fiscal year tax, and no later than December 1st for each fiscal year thereafter. Such application shall state the name and mailing address of the taxpayer, the address and assessor's parcel number of the property for which the tax is being appealed, the amount of the tax, and all facts upon which the taxpayer relies in support of the appeal. Applications which comply with the requirements in this section shall be set for hearing by the city council as soon as reasonably possible. Notice of such hearing shall be mailed to the appealing taxpayer at least ten calendar days in advance of the hearing date. Filing of an appeal is not grounds for failure to pay the entire amount of the tax specified as due on the tax bill.

2. The taxpayer or the taxpayer's designated representative may, but need not, be present at the hearing. If present, the taxpayer or designated representative may present any relevant evidence and may be examined by the city's representatives and by members of the city council. The city's representatives may also present any relevant evidence and may be examined by the taxpayer or the taxpayer's designated representatives and by members of the city council. The burden of proof of any factual question shall be on the taxpayer. A decision on the appeal shall be rendered by the city council within thirty calendar days after the conclusion of the hearing.

(Ord. 175 § 9, 1994)