Port Hueneme Municipal Code Part A Uniform Local Sales and Use Tax Ordinance

This Chapter is entitled the "Uniform Local Sales and Use Tax Ordinance." The term "City," as used within this Chapter, is the City of Port Hueneme. This Chapter is applicable in the incorporated territory of the City.

(Ord. 685 § 1 (part), 2008)

"Operative date" means the first day of the first calendar quarter commencing more than one hundred ten (110) days after the adoption of the ordinance codified in this Chapter.

(Ord. 685 § 1 (part), 2008)

This Chapter is adopted to achieve the following, among other purposes, and directs that its provisions be interpreted in order to accomplish those purposes:

(a) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this Chapter which becomes operative if a majority of the electors voting on the ballot measure approving the Chapter vote to approve the imposition of the tax at an election called for that purpose;

(b) To adopt retail transactions and use tax regulations that incorporates provisions identical to those of the Sales and Use Tax Law of the State of California insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.6 of Division 2 of the Revenue and Taxation Code;

(c) To adopt retail transactions and use tax regulations that imposes a tax and provides a measure therefore that can be administered and collected by the State Board of Equalization in a manner that adapts itself as fully as practicable to, and requires the least possible deviation from, the existing statutory and administrative procedures followed by the State Board of Equalization in administering and collecting the California State sales and use taxes;

(d) To adopt a retail transactions and use tax ordinance that can be administered in a manner that will be, to the greatest degree possible, consistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting the transactions and use taxes, and at the same time, minimize the burden of record keeping upon persons subject to taxation under the provisions of this Chapter.

(Ord. 685 § 1 (part), 2008)

Before the operative date, the City must contract with the State Board of Equalization to perform all functions incident to the administration and operation of this transactions and use tax Chapter; provided, that if the City cannot have contracted with the State Board of Equalization before the operative date, it must nevertheless so contract and in such a case the operative date is the first day of the first calendar quarter following the execution of such a contract.

(Ord. 685 § 1 (part), 2008)

For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated territory of the City at the rate of 0.5% of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this Chapter.

(Ord. 685 § 1 (part), 2008)

For the purposes of this Chapter, all retail sales are consummated at the place of business of the retailer unless the tangible personal property sold is delivered by the retailer or his agent to an out-of-State destination or to a common carrier for delivery to an out-of-State destination. The gross receipts from such sales include delivery charges, when such charges are subject to the State sales and use tax, regardless of the place to which delivery is made. In the event a retailer has no permanent place of business in the State or has more than one place of business, the place or places at which the retail sales are consummated is determined under rules and regulations to be prescribed and adopted by the State Board of Equalization.

(Ord. 685 § 1 (part), 2008)

An excise tax is imposed on the storage, use or other consumption in the City of tangible personal property purchased from any retailer on and after the operative date of this Chapter for storage, use or other consumption in said territory at the rate of 0.5% of the sales price of the property. The sales price includes delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made.

(Ord. 685 § 1 (part), 2008)

Except as otherwise provided in this Chapter and except insofar as they are inconsistent with the provisions of Part 1.6 of Division 2 of the Revenue and Taxation Code, all of the provisions of Part 1 (commencing with Section 6001) of Division 2 of the Revenue and Taxation Code are adopted and made a part of this Chapter as though fully set forth.

(Ord. 685 § 1 (part), 2008)

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code:

(a) The City is substituted wherever the State of California is named or referred to as the taxing agency. However, the substitution is not made when:

(1) The word "State" is used as a part of the title of the State Controller, State Treasurer, State Board of Control, State Board of Equalization, State Treasury, or the Constitution of the State of California;

(2) The result of that substitution would require action to be taken by or against this City or any agency, officer, or employee thereof rather than by or against the State Board of Equalization, in performing the functions incident to the administration or operation of this Chapter;

(3) In those sections, including, but not necessarily limited to, sections referring to the exterior boundaries of the State of California, where the result of the substitution would be to:

(A) Provide an exemption from this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not otherwise be exempt from this tax while such sales, storage, use or other consumption remain subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or

(B) Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the State under the said provision of that Code;

(4) In Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797 or 6828 of the Revenue and Taxation Code.

(b) The word "City" is substituted for the word "State" in the phrase "retailer engaged in business in this State" in Section 6203 and in the definition of that phrase in Section 6203 of the Revenue and Taxation Code.

(Ord. 685 § 1 (part), 2008)

If a seller's permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code, an additional transactor's permit is not required by this Chapter.

(Ord. 685 § 1 (part), 2008)

(a) There is excluded from the measure of the transactions tax and the use tax the amount of any sales tax or use tax imposed by the State of California or by any city, city and county, or county pursuant to the Bradley-Burns Uniform Local Sales and Use Tax Law or the amount of any State-administered transactions or use tax.

(b) There are exempted from the computation of the amount of transactions tax the gross receipts from:

(1) Sales of tangible personal property, other than fuel or petroleum products, to operators of aircraft to be used or consumed principally outside the County in which the sale is made and directly and exclusively in the use of such aircraft as common carriers of persons or property under the authority of the laws of this State, the United States, or any foreign government;

(2) Sales of property to be used outside the City which is shipped to a point outside the City, pursuant to the contract of sale, by delivery to such point by the retailer or his agent, or by delivery by the retailer to a carrier for shipment to a consignee at such point. For the purposes of this subsection, delivery to a point outside the City is satisfied:

(A) With respect to vehicles (other than commercial vehicles) subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, and undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code by registration to an out-of-City address and by a declaration under penalty of perjury, signed by the buyer, stating that such address is, in fact, his or her principal place of residence, and

(B) With respect to commercial vehicles, by registration to a place of business out-of-City and declaration under penalty of perjury, signed by the buyer, that the vehicle will be operated from that address;

(3) The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into before the operative date of this Chapter;

(4) A lease of tangible personal property which is a continuing sale of such property, for any period of time for which the lessor is obligated to lease the property for an amount fixed by the lease before the operative date of this Chapter;

(5) For the purposes of subsections (b)(3) and (4) of this section, the sale or lease of tangible personal property is deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised.

(c) There are exempted from the use tax imposed by this Chapter, the storage, use or other consumption in this City of tangible personal property:

(1) The gross receipts from the sale of which have been subject to a transactions tax under any State-administered transactions and use tax ordinance;

(2) Other than fuel or petroleum products purchased by operators of aircraft and used or consumed by such operators directly and exclusively in the use of such aircraft as common carriers of persons or property for hire or compensation under a certificate of public convenience and necessity issued pursuant to the laws of this State, the United States, or any foreign government. This exemption is in addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code of the State of California;

(3) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into before the operative date of this Chapter;

(4) If the possession of, or the exercise of any right or power over, the tangible personal property arises under a lease which is a continuing purchase of such property for any period of time for which the lessee is obligated to lease the property for an amount fixed by a lease before the operative date of this Chapter;

(5) For the purposes of subsections (c)(3) and (4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property is deemed not to be obligated pursuant to a contract or lease for any period of time for which any party to the contract or lease has the unconditional right to terminate the contract or lease upon notice, whether or not such right is exercised;

(6) Except as provided in subsection (c)(7), a retailer engaged in business in the City is not required to collect use tax from the purchaser of tangible personal property, unless the retailer ships or delivers the property into the City or participates within the City in making the sale of the property, including, without limitation, soliciting or receiving the order, either directly or indirectly, at a place of business of the retailer in the City or through any representative, agent, canvasser, solicitor, subsidiary, or person in the City under the authority of the retailer;

(7) "A retailer engaged in business in the City" also includes any retailer of any of the following: vehicles subject to registration pursuant to Chapter 1 (commencing with Section 4000) of Division 3 of the Vehicle Code, aircraft licensed in compliance with Section 21411 of the Public Utilities Code, or undocumented vessels registered under Division 3.5 (commencing with Section 9840) of the Vehicle Code. That retailer is required to collect use tax from any purchaser who registers or licenses the vehicle, vessel, or aircraft at an address in the City.

(d) Any person subject to use tax under this Chapter may credit against that tax any transactions tax or reimbursement for transactions tax paid to a district imposing, or retailer liable for a transactions tax pursuant to Part 1.6 of Division 2 of the Revenue and Taxation Code with respect to the sale to the person of the property the storage, use or other consumption of which is subject to the use tax.

(Ord. 685 § 1 (part), 2008)

All amendments subsequent to the effective date of the ordinance codified in this Chapter to Part 1 of Division 2 of the Revenue and Taxation Code relating to sales and use taxes and which are not inconsistent with Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, and all amendments to Parts 1.6 and 1.7 of Division 2 of the Revenue and Taxation Code, automatically become a part of this Chapter, provided however, that no such amendment operates so as to affect the rate of tax imposed by this Chapter.

(Ord. 685 § 1 (part), 2008)

No injunction or writ of mandate or other legal or equitable process may issue in any suit, action or proceeding in any court against the State or the City, or against any officer of the State or the City, to prevent or enjoin the collection under this Chapter, or Part 1.6 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.

(Ord. 685 § 1 (part), 2008)

(a) Purpose. The purpose of this section 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:

(1) 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.

(2) 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.

(3) 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, visitors and businesses.

(4) The authority granted and the purposes to be accomplished by this section are proper local governmental and public purposes for which public funds can be expended and that the opening, operation, and expansion of the inventory of retail businesses is of paramount importance to the City, its residents, and businesses.

(b) 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, including attorneys' fees) as a result of the application of this section 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 nondiscrimination.

"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 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, and are not subject to offset or appeal. However, "sales tax," for the purposes of this section, does not include the .05 percent sales tax imposed by a vote of the people in 2008 (the "additional sales tax"). Notwithstanding any language in this provision to the contrary, the City Council expressly excludes any revenues derived from the Additional Sales Tax from sharing under this program.

"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, it shall 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, which is not subject to offset or appeal. 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 sharing 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 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 and time period 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.

(c) Participation Requirements.

(1) 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:

(A) 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;

(B) Receive approval for participation in the Program from the City, after the public hearing as provided in this section;

(C) If approved by the City, enter into a sales tax sharing agreement in the form approved by the City;

(D) If approved by the City, execute and record against the business property the operating covenants provided in this section; and

(E) If approved by the City, execute an indemnification agreement in a form approved by the City.

(2) 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 covenants. If the land owner and the owner are under common control, recording the operating covenants shall be a requirement of approval of the sales tax sharing agreement.

(d) Sales Tax Sharing Program. 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 this section may be amended;

(2) The City may not enter into any sales tax sharing agreement if said agreement would violate Cal. Gov. Code Section 53084.5, as this 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.

(3) In order to determine the appropriate rate of sales tax sharing for each retail business that has submitted an application under this section, the City Council shall cause to be prepared a tax sharing report, which shall analyze factors including the following. The City Council, in its sole discretion, may consider additional factors, or require additional studies or reports, as it deems appropriate.

(A) 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;

(B) For new businesses, the projected sales tax to be generated by the new business;

(C) The amount of expected sales tax increment;

(D) For new and existing businesses, the type, quality, and price point of the goods and services sold or provided by the business;

(E) For new and existing businesses, the total projected cost to construct the new business or expand the existing business;

(F) The impact and benefits of the proposed expansion or construction of the Business on the residents of the City and the surrounding region; and

(G) The necessity for public assistance.

(4) After considering the sales tax sharing report and such other factors, studies or reports as it, in its sole discretion, deems appropriate, and subject to the limitations set forth in subdivision (h), the City shall determine the rate of sales tax sharing to be provided to a business that will be necessary or appropriate to achieve the goals and intent of this Chapter. The rate may vary over time as determined by the City Council in its sole discretion.

(5) After considering all of the material provided, and subject to the limitations set forth in this section, 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. The time period may be subject to possible reduction or termination as the City Council may determine in its sole discretion.

(6) 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 (2) 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.

(7) 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.

(8) After the public hearing on a contemplated tax sharing agreement and if the City Council approves the business, the City may, by resolution, authorize City staff to negotiate and prepare a sales tax sharing agreement with the owner or developer of the approved business, which agreement shall be brought back for final approval on an open session agenda, unless the Council shall by majority vote authorize an alternative procedure. Subject to the limitations set forth in subdivisions (h) and (i), a 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.

(9) The rate of sales tax sharing determined by the City Council is subject to the following limitations:

(A) For existing businesses, the amount of sales tax to be rebated shall not exceed fifty (50) percent of the business's sales tax increment actually received and retained by the City, unless the City Council, in its sole discretion, determines otherwise.

(B) For new businesses, the amount of sales tax to be rebated shall not exceed fifty (50) percent of the business's sales tax increment actually received and retained by the City, unless the City Council, in its sole discretion, determines otherwise.

(10) The time period of sales tax sharing determined by the city council is subject to the following limitations:

(A) 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.

(B) 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.

(e) Operating Covenants. 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. 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 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.

(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 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.

(f) 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.

(g) 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. The City shall give notice to the owner as required by the terms of the sales tax sharing agreement.

(h) Additional Sales Tax Revenues. No revenues received by the City under the imposition of an additional .05 percent sales tax, provided in Chapter 7, Part A, Sections 2711—2713, inclusive, shall be subject to sharing under this program.

(i) 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.

(Ord. No. 730, § 1, 8-21-17)