Chapter 3-6 TAXATION

The following ordinances of the City relating to the assessment, levy, and collection of taxes are hereby continued in effect until hereafter superseded or repealed by proper authority:

Ordinance Number	TITLE OF ORDINANCE	Date Passed
443 N.C.S.	An Ordinance to Provide for the Assessment, Equalization, Levy, and Collection of All Taxes within the City of Watsonville, and to Pro-
	vide for Penalty for Violation of the Same; and Repealing Ordinance No. 256 (New Charter Series), Ordinance No. 259 (New Charter Series), and Ordinance No. 350 (New Charter Series)	2-13-46
555 N.C.S.	An Ordinance Amending Section 31 (a) of Ordinance No. 443 (New Charter Series) and Repealing Ordinance No. 496 (New Charter Series)	1-10-56
47 C-M	An Ordinance Amending Section 21 of Ordinance No. 443 (New Charter Series) Changing the Time for Meeting of the Council to Meet as a Board of Equalization	7-19-62

Article 2. Sales and Use Tax*

* Sections 3-6.201 through 3-6.208, codified from Ordinance No. 559 N.C.S., as amended by Ordinance No. 39 C-M and Ordinance No. 179 C-M, effective April 26, 1968, tax operative July 1, 1968, superseded by Section 1, Ordinance No. 316 C-M, operative January 1, 1974.

3-6.201 Title.

This article shall be known as the “Uniform Local Sales and Use Tax Law” of the City.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.202 Rate.

The rate of the sales tax and use tax imposed by this article shall be one percent.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.203 Operative date.

This article shall be operative on January 1, 1974.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.204 Purpose.

The Council hereby declares that this article is adopted to achieve the following, among other, purposes and directs that the provisions of this article be interpreted in order to accomplish those purposes:

(a) To adopt a sales and use tax law which complies with the requirements and limitations contained in Part 1.5 of Division 2 of the Revenue and Taxation Code of the State;

(b) To adopt a sales and use tax law which incorporates provisions identical to those of the Sales and Use Tax Law of the State insofar as those provisions are not inconsistent with the requirements and limitations contained in Part 1.5 of Division 2 of the Revenue and Taxation Code;

(c) To adopt a sales and use tax law which imposes a tax and provides a measure therefor which 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 sales and use taxes of the State; and

(d) To adopt a sales and use tax law which can be administered in a manner that will, to the degree possible consistent with the provisions of Part 1.5 of Division 2 of the Revenue and Taxation Code, minimize the cost of collecting City sales and use taxes and at the same time minimize the burden of record keeping upon persons subject to taxation under the provisions of this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.205 Contract with State.

Prior to the operative date of this article, the City shall contract with the State Board of Equalization to perform all the functions incident to the administration and operation of this sales and use tax law; provided, however, if the City shall not have contracted with the State Board of Equalization prior to such operative date, the City shall nevertheless so contract, and, in such a case, the operative date shall be the first day of the first calendar quarter following the execution of such contract rather than the first day of the first calendar quarter following the adoption of this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.206 Sales tax.

For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the City at the rate set forth in Section 3-6.202 of this article of the gross receipts of the retailer from the sale of all tangible personal property sold at retail in the City on and after the operative date of this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.207 Place of sale.

For the purpose of this article, 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 shall 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 shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.208 Use tax.

An excise tax is hereby 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 article for the storage, use, or other consumption in the City at the rate set forth in Section 3-6.202 of this article of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax, regardless of the place to which delivery is made.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.209 Adoption of provisions of State law.

Except as otherwise provided in this article, and except insofar as they are inconsistent with the provisions of Part 1.5 of Division 2 of the Revenue and Taxation Code of the State, all of the provisions of Part 1 of Division 2 of said Code are hereby adopted and made a part of this article as though fully set forth in this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.210 Limitations on adoption of State law.

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code of the State, wherever the State is named or referred to as the taxing agency, the name of the City shall be substituted therefor. The substitution, however, shall not be made when the word “State” is used as part of the title of the State Controller, the State Treasurer, the State Board of Control, the State Board of Equalization, the State Treasury, or the Constitution of the State; the substitution shall not be made when the result of that substitution would require action to be taken by or against the City, or any agency thereof, rather than by or against the State Board of Equalization, in performing the functions incident to the administration or operation of the provisions of this article; the substitution shall not be made in those sections, including, but not necessarily limited to, sections referring to the exterior boundaries of the State, where the result of the substitution would be to 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 remains subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, or to 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 provisions of said Code; the substitution shall not be made in Sections 6701, 6702 (except in the last sentence thereof), 6711, 6715, 6737, 6797, or 6828 of the Revenue and Taxation Code; and the substitution shall not be made for the word “State” in the phrase “retailer engaged in business in this State” in Section 6203 or in the definition of that phrase in Section 6203.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.211 Permit not required.

If a seller’s permit has been issued to a retailer under Section 6067 of the Revenue and Taxation Code of the State, an additional seller’s permit shall not be required by this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.212 Exclusions and exemptions.

(a) The amount subject to tax shall not include any sales or use tax imposed by the State upon a retailer or consumer.

(b) The storage, use, or other consumption of tangible personal property, the gross receipts from the sale of which have been subject to tax under a sales and use tax ordinance enacted in accordance with Part 1.5 of Division 2 of the Revenue and Taxation Code of the State by any city and county, county, or city in the State shall be exempt from the tax due under this article.

(c) There shall be exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of aircraft to be used or consumed principally outside the city 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 the State, the United States, or any foreign government.

(d) In addition to the exemptions set forth in Sections 6366 and 6366.1 of said Revenue and Taxation Code, the storage, use, or other consumption of tangible personal property 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 the State, the United Stares, or any foreign government shall be exempted from the use tax.

(§ 1, Ord. 316 C-M, operative January 1, 1974, as amended by § 1, Ord. 613-83 C-M, eff. December 13, 1983, operative January 1, 1984)

3-6.213 Exclusions and exemptions.

(a) The amount subject to tax shall not include any sales or use tax imposed by the State upon a retailer or consumer.

(c) There shall be exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of waterborne vessels to be used or consumed principally outside the City in which the sale is made and directly and exclusively in the carriage of persons or property in such vessels for commercial purposes.

(d) The storage, use, or other consumption of tangible personal property purchased by operators of waterborne vessels and used or consumed by such operators directly and exclusively in the carriage of persons or property of such vessels for commercial purposes shall be exempted from the use tax.

(e) There shall be exempted from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of aircraft to be used or consumed principally outside the city 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 the State, the United States, or any foreign government.

(f) In addition to the exemptions set forth in Sections 6366 and 6366.1 of said Revenue and Taxation Code, the storage, use, or other consumption of tangible personal property 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 the State, the United States, or any foreign government shall be exempted from the use tax.

(§ 1, Ord. 316 C-M, operative January 1, 1974, as amended by § 1, Ord. 613.83 C-M, eff. December 13, 1983, operative on the operative date of any act of the Legislature of the State which amends Section 7202 of the Revenue and Taxation Code of the State or which repeals and reenacts said Section 7202 to provide an exemption from city sales and use taxes for operators of waterborne vessels in the same, or substantially the same, language as that existing in subsections (7) and (8) of subsection (i) of said Section 7202 as said subsections read on October 1, 1983)

3-6.214 Application of provisions relating to exclusions and exemptions.

(a) The provisions of Section 3.6.213 of this article shall become operative on January 1 of the year following the year in which the State Board of Equalization adopts an assessment ratio for State-assessed property which is identical to the ratio which is required for local assessments by Section 401 of the Revenue and Taxation Code of the State, at which time the provisions of Section 3-6.212 of this article shall become inoperative.

(b) In the event the provisions of Section 3-6.213 of this article become operative, and the State Board of Equalization subsequently adopts an assessment ratio for the State-assessed property which is higher than the ratio which is required for local assessments by Section 401 of said Revenue and Taxation Code, the provisions of Section 3-6.212 of this article shall become operative on the first day of the month next following the month in which such higher ratio is adopted, at which time the provisions of Section 3-6.213 of this article shall be inoperative until the first day of the month following the month in which said Board again adopts an assessment ratio for State-assessed property which is identical to the ratio required for local assessments by Section 401 of the Revenue and Taxation Code, at which time the provisions of Section 3-6.213 shall again become operative and the provisions of Section 3-6.212 shall become inoperative.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.215 Amendments.

All subsequent amendments of the Revenue and Taxation Code of the State which relate to the sales and use tax and which are not inconsistent with Part 1.5 of Division 2 of said Code shall automatically become a part of this article.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.216 Enjoining collection forbidden.

No injunction or writ of mandate or other legal or equitable process shall 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 article, or Part 1.5 of Division 2 of the Revenue and Taxation Code, of any tax or any amount of tax required to be collected.

(§ 1, Ord. 316 C-M, operative January 1, 1974)

3-6.217 Existing sales and use tax ordinances suspended.

At the time this article goes into operation, the provisions of Ordinance Nos. 548 N.C.S. and 549 N.C.S. shall be suspended and shall not again be of any force and effect until and unless for any reason the State Board of Equalization ceases to perform the functions incident to the administration and operation of the sales and use tax hereby imposed; provided, however, if for any reason it is determined that the City is without power to adopt this article, or that the State Board of Equalization is without power to perform the functions incident to the administration and operation of the taxes imposed by this article, the provisions of Ordinance Nos. 548 N.C.S. and 549 N.C.S. shall not be deemed to have been suspended but shall be deemed to have been in full force and effect at the rate of one percent continuously from and after July 1, 1956. Upon the ceasing of the State Board of Equalization to perform the functions incident to the administration and operation of the taxes imposed by this article, the provisions of Ordinance Nos. 548 N.C.S. and 549 N.C.S. shall again be in full force and effect at the rate of one percent. Nothing in this article shall be construed as relieving any person of the obligation to pay to the City any sales or use tax accrued and owing by reason of the provisions of Ordinance Nos. 548 N.C.S. and 549 N.C.S. in force and effect prior to and including June 30, 1956. (See Table 3 of Appendix.)

(§ 1, Ord. 316 C-M, operative January 1, 1974)

Article 3. Uniform Transient Occupancy Tax Law*

* Code reviser’s note: Sections 3-6.301 through 3-6.317 were voter approved on November 8, 2016.

Former Article 3 entitled “Uniform Transient Occupancy Tax,” consisting of Sections 3-6.301 through 3-6.313, codified from Ordinance No. 84 C-M, effective July 14, 1964, and amended by Ordinance Nos. 126, eff. August 1, 1966; 710-86 C-M, eff. October 1, 1986; 785-88 C-M, eff. October 1, 1988; and 896-92 C-M, eff. July 9, 1992, was repealed and replaced by § 1, Ord. No. 1332-16 (CM), eff. January 1, 2017.

3-6.301 Title.

This article shall be known as the “Uniform Transient Occupancy Tax Law” of the City.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.302 Definitions.

Except where the context otherwise requires, the definitions given in this section govern the construction of this article:

(a) “Person” shall mean any individual, firm, partnership, limited liability company, 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.

(b) “Transient occupancy facility” shall mean any temporary or permanent structure, motor home, mobile home, modular building or out building or any portion thereof, which is occupied or intended or designed for occupancy, by transients for dwelling, lodging, or sleeping purposes and shall include any hotel, inn, tourist home or house, home, residence, outbuilding, granny unit, accessory unit, duplex, triplex, fourplex, apartment, motel studio hotel, bachelor hotel, lodging house, rooming house, dormitory, public or private club, mobile home or house trailer at a fixed location, or other similar structure, or any portion thereof.

(c) “Occupancy” shall mean the use or possession, or the right to the use or possession, of any room, or portion thereof, in any transient occupancy facility for dwelling, lodging, or sleeping purposes for any time period.

(d) “Transient” shall mean any person who exercises occupancy or is entitled to occupancy by reason of concession, permit, right of access, license, or other agreement for a period of thirty (30) consecutive calendar days or less, counting portions of calendar days as full days. Any such person so occupying space in a transient occupancy facility shall be deemed to be a transient until the period of thirty (30) days has expired, unless there is an agreement in writing between the operator and the occupant providing for a long period of occupancy. In determining whether a person is transient, uninterrupted periods of time extending both before and after the effective date of this article may be considered.

(e) “Rent” shall mean the consideration charged, whether received, for the occupancy of space in a transient occupancy facility valued in money, whether to be received in money, goods, labor, or otherwise, including all receipts, cash, credits, property, and services of any kind or nature, without any deduction therefrom whatsoever.

(f) “Operator” shall mean the person who is the proprietor of the transient occupancy facility, whether in the capacity of owner, lessee, sublessee, mortgagee in possession, licensee, trustee, receiver, or any other capacity including such arrangements as “Airbnb” or similar. Where the operator performs his functions through a managing agent of any type or character other than an employee, the managing agent shall also be deemed an operator for the purposes of this article and shall have the same duties and liabilities as his principal. Compliance with the provisions of this article by either the principal or the managing agent, however, shall be considered to be compliance by both.

(g) “Finance Director” shall mean the City Finance Director.

(h) “Certificate” shall mean the transient occupancy registration certificate as described in Section 3-6.306.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.303 Tax imposed.

For the privilege of occupancy in any transient occupancy facility, each transient shall be subject to and shall pay a tax in the amount of twelve (12%) percent of the rent charged by the operator. Such tax shall constitute a debt owed by the transient to the City which debt shall be extinguished only by payment to the operator or to the City. The transient shall pay the tax to the operator of the transient occupancy facility at the time the rent is paid. If the rent is paid in installments, a proportionate share of the tax shall be paid with each installment. The unpaid tax shall be due upon the transient’s ceasing to occupy space in the transient occupancy facility. If for any reason the tax due is not paid to the operator of the transient occupancy facility, the City Finance Director may require that such tax shall be paid directly to the City Finance Director.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017, as amended by § 1, Ord. 1368-18 (CM), eff. January 1, 2019)

3-6.304 Exemptions.

No tax shall be imposed upon:

(a) Any person as to whom, or any occupancy as to which, it is beyond the power of the City to impose the tax provided for in this article; or

(b) Any officer or employee of a foreign government who is exempt by reason of an express provision of Federal law or international treaty.

No exemption shall be granted except upon a claim therefor made at the time the rent is collected and under penalty of perjury upon a form prescribed by the City Finance Director.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.305 Operator’s duties.

Each operator shall collect the tax imposed by the provisions of this article to the same extent and at the same time as the rent is collected from every transient. The amount of tax shall be separately stated from the amount of the rent charged, and each transient shall advertise or state in any manner, whether directly or indirectly, that the tax or any part thereof will be assumed or absorbed by the operator, or that it will not be added to the rent, or that, if added, any part will be refunded, except in the manner provided in this article.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.306 Registration certificate required.

Within thirty (30) days after the effective date of the ordinance codified in this chapter, or within thirty (30) days after commencing business, whichever is later, each operator of any transient occupancy facility renting occupancy to transients shall register said transient occupancy facility with the City Finance Director and obtain a “transient occupancy registration certificate” to be at all times posted in a conspicuous place on the premises. Such certificate shall, among other things, state the following:

(a) The name of the operator;

(b) The address of the transient occupancy facility;

(d) The certificate number; and

(e) The following statement:

This transient occupancy registration certificate signifies that the person named on the face hereof has fulfilled the requirements of the Uniform Transient Occupancy Tax Ordinance by registering with the City Finance Director for the purpose of collecting from transients the Transient Occupancy Tax and remitting said tax to the City Finance Director. This Certificate does not authorize any person to conduct any unlawful business or conduct any lawful business in an unlawful manner, nor to operate a transient occupancy facility without strictly complying with all local applicable laws, including but not limited to those requiring a permit from any board, commission, department or office of this City. This Certificate does not constitute a permit.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.307 Registration.

On or before August 13, 1964, or within thirty (30) days after commencing business, whichever is later, each operator of any transient occupancy facility renting an occupancy to transients shall register such transient occupancy facility with the City Finance Director and obtain a “transient occupancy registration certificate” which shall at all times be posted in a conspicuous place on the premises. Such certificate shall, among other things, set forth the following information:

(a) The name of the operator;

(b) The address of the transient occupancy facility;

(d) A statement as follows:

This Transient Occupancy Registration Certificate signifies that the person named on the face hereof has fulfilled the requirements of the Uniform Transient Occupancy Tax Law by registering with the City Finance Director for the purpose of collecting from transients the Transient Occupancy Tax and remitting such tax to the City Finance Director. This certificate shall not authorize any person to conduct any unlawful business or to conduct any lawful business in an unlawful manner, nor to operate a transient occupancy facility without strictly complying with all local applicable laws, including, but not limited to, those requiring a permit from any board, commission, department, or office of this City. This certificate shall not constitute a permit.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.308 Certificate number required on all advertisements.

The operator must include the certificate number in all forms of advertisement.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.309 Reporting and remitting.

Each operator shall, on or before the last day of the month following the close of each calendar quarter, or at the close of any shorter reporting period which may be established by the City Finance Director, make a return to the City Finance Director, on forms provided by him, of the total rents charged and received and the amount of tax collected for transient occupancies. At the time the return is filed, the full amount of the tax collected shall be remitted to the City Finance Director. The City Finance Director may establish shorter reporting periods for any certificate holder if he deems it necessary in order to ensure collection of the tax, and he may require further information in the return. Returns and payments shall be due immediately upon cessation of business for any reason. All taxes collected by operators pursuant to the provisions of this article shall be held in trust for the account of the City until payment thereof is made to the City Finance Director.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.310 Failure to file—Penalties.

Any operator who holds a certificate but does not rent the transient occupancy facility during any month is still required under Section 3-6.309 to file a return on or before the last day of the month following the close of each calendar month. Any operator who fails to file the return as required shall pay a nonfiling penalty of Twenty-Five and no/100ths ($25.00) Dollars. The penalty is waived for the first offense in a twelve (12) month period, but shall apply to each subsequent offense.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.311 Penalties and interest.

(a) Original Delinquency. Any operator who shall fail to remit any tax imposed by the provisions of this article within the time required shall pay a penalty in the amount of ten (10%) percent of the tax in addition to the amount of the tax.

(b) Continued Delinquency. Any operator who shall fail to remit any delinquent remittance on or before a period of thirty (30) days following the date on which the remittance first became delinquent shall pay a second delinquency penalty in the amount of ten (10%) percent of the tax in addition to the amount of the tax and the ten (10%) percent penalty first imposed.

(c) Fraud. If the City Finance Director shall determine that the nonpayment of any remittance due pursuant to the provisions of this article is due to fraud, a penalty in the amount of twenty-five (25%) percent of the amount of the tax shall be added thereto in addition to the penalties set forth in subsections (a) and (b) of this section.

(d) Interest. In addition to the penalties imposed, any operator who shall fail to remit any tax imposed by the provisions of this article shall pay interest at the rate of one-half of one (0.5%) 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, pursuant to the provisions of this section shall become a part of the tax required to be paid by the provisions of this article.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.312 Failure to collect and report tax—Determination of tax by City Finance Director.

If any operator shall fail or refuse to collect such tax and to make, within the time provided in this article, any report and remittance of such tax, or any portion thereof, required by the provisions of this article, the City Finance Director shall proceed in such manner as he or she may deem best to obtain the facts and information on which to estimate the tax due. As soon as the City Finance Director shall procure such facts and information as he is able to obtain upon which to base the assessment of any tax imposed by the provisions of this article and payable by any operator who has failed or refused to collect the same and to make such report and remittance, the City Finance Director shall proceed to determine and assess against such operator the tax, interest, and penalties provided for by this article. If such determination is made, the City Finance Director shall give notice of the amount so assessed by serving the notice personally or by depositing it in the United States mail, postage prepaid, addressed to the operator so assessed at his last known place of address. Such operator may, within ten (10) days after the service or mailing of such notice, apply in writing to the City Finance Director for a hearing on the amount assessed. If an application by the operator for a hearing is not made within the time prescribed, the tax, interest, and penalties, if any, determined by the City Finance Director shall become final and conclusive and immediately due and payable. If such an application is made, the City Finance Director shall give not less than five (5) days’ written notice in the manner prescribed in this section to the operator to show cause at a time and place fixed in such notice why the amount specified therein should not be fixed for such tax, interest, and penalties. 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 City Finance Director 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. The amount determined to be due shall be payable after fifteen (15) days unless an appeal is filed as provided in Section 3-6.313.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.313 Appeals.

Any operator aggrieved by any decision of the City Finance Director with respect to the amount of such tax, interest, and penalties, if any, may appeal to the Council by filing a notice of appeal with the City Clerk within fifteen (15) days after the service or mailing of the determination of the tax due. The Council shall fix a time and place for hearing such appeal, and the City Clerk shall give notice in writing to such operator at his last known place of address. The findings of the Council shall be final and conclusive and shall be served upon the appellant in the manner prescribed in this article for the service of the notice of hearing. Any amount found to be due shall immediately become due and payable upon the service of the notice.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.314 Records.

It shall be the duty of every operator liable for the collection and payment to the City of any tax imposed by the provisions of this article to keep and preserve, for a period of three (3) years, all records as may be necessary to determine the amount of such tax as he may have been liable for the collection of and payment to the City, which records the City Finance Director shall have the right to inspect at all reasonable times.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.315 Refunds.

(a) Whenever the amount of any such tax, interest, or penalty has been overpaid, or paid more than once, or erroneously or illegally collected or received by the City, such amount 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 City Finance Director within three (3) years after the date of payment. The claim shall be on forms furnished by the City Finance Director.

(b) An operator may claim a refund or take as credit against taxes collected and 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 City Finance Director that the person from whom the tax has been collected was not a transient; provided, however, neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the transient or credited to rent subsequently payable by the transient to the operator.

(c) A transient may obtain a refund of taxes overpaid, 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 transient directly to the City Finance Director, or when the transient, having paid the tax to the operator, establishes to the satisfaction of the City Finance Director that the transient has been unable to obtain a refund from the operator who collected the tax.

(d) No refund shall be paid pursuant to the provisions of this section unless the claimant establishes his right thereto by written records showing entitlement thereto.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.316 Actions to collect.

Any tax required to be paid by any transient pursuant to the provisions of this article shall be deemed a debt owed by the transient to the City. Any such 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. Any person owing money to the City pursuant to the provisions of this article shall be liable to an action brought in the name of the City for the recovery of such amount.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

3-6.317 Violation—Revocation.

The City Finance Director may revoke the certificate from any operator or other person who is in violation of the provisions of this article. To revoke the certificate, the City Finance Director shall serve the operator with a notice of revocation of the certificate, with a copy to the Director of Community Development, Police Chief and City Attorney.

(§ 1, Ord. 1332-16 (CM), eff. January 1, 2017)

Article 4. Cigarette Tax

(Sections 3-6.401 through 3-6.412, added by Ordinance No. 130 C-M, effective October 1, 1966, suspended by Section 1, Ordinance No. 155 C-M, effective October 1, 1967)

Article 5. Parks and Recreation Facilities Tax*

* Article 5 entitled “Dwelling Unit and Mobile Home Construction Tax,” consisting of Sections 3-6.501 through 3-6.506, added by Ordinance No. 221 C-M, effective April 23, 1970, repealed by Section 1, Ordinance No. 327 C-M, effective July 11, 1974.

Code reviser’s note: Article 5 entitled “Parks and Recreation Facilities Tax,” consisting of Sections 3-6.501 through 3-6.507, added by Ordinance No. 327 C-M, effective July 11, 1974, as amended by Ordinance 596-83 C-M, effective June 11, 1983, Ordinance 966-95 C-M, effective February 9, 1995 and Ordinance 1026-97 C-M, effective May 8, 1997, superseded by Ordinance No. 1426-22 (CM), per the intent of the city.

Article 6. Dedication of Land or Payment of In Lieu Fees*

* Article 6 entitled “Dedication of Land or Payment of Excise Tax in Lieu Thereof’, consisting of Sections 3-6601 through 3-6.613, codified from Ordinance No. 331-74 C-M, effective July 25, 1974. amended in its entirety by Ordinance No. 786-88 C-M, effective October 27, 1988.

Code reviser’s note: Article 6 entitled “Dedication of Land or Payment of In Lieu Fees,” consisting of Sections 3-6.601 through 3-6.613, added by Ordinance No. 786-88, effective October 27, 1988, as amended by Ordinance No. 966-95 C-M, effective February 9, 1995, superseded by Ordinance No. 1426-22 (CM), per the intent of the city.

Article 7. School Facilities Fees

3-6.701 Title.

This article shall be known and may be cited as the “School Facilities Fee Law of the City of Watsonville”.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.702 Authority.

This article is adopted pursuant to the provisions of Chapter 4.7 (commencing with Section 65970) of Division 1 of Title 7 of the Government Code of the State.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.703 Purpose.

The purpose of this article is to provide a method for financing temporary school facilities necessitated by new residential developments causing conditions of overcrowding. The intention of this article is to establish a service fee to provide adequate school facilities for residents of new dwelling units.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.704 Supplemental regulations.

The Council, from time to time, by resolution, may issue regulations to provide for the administration and implementation of the provisions of this article.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.705 Definitions.

For the purposes of this article, unless otherwise apparent from the context, certain words and phrases used in this article are defined as follows:

(a) “Conditions of overcrowding” shall mean that the total enrollment of an attendance area school or schools, including the enrollment from proposed development, exceeds the capacity of such school or schools within the attendance area as determined by the governing body of the school district.

(b) “Decision-making body” shall mean the Council or its designee.

(c) “Dwelling unit” shall mean a building, or portion thereof, or a mobile home designed for residential occupation by one person or a group of two (2) or more persons living together as a domestic unit.

(d) “Reasonable methods or mitigating conditions of overcrowding” shall include, but not be limited to, concepts such as:

(1) Any agreement entered into by the affected school district which would alleviate conditions of overcrowding caused by new residential development;

(2) The use of relocatable structures, student transportation, and school boundary realignments;

(3) The use of available bond or State loan revenues to the extent authorized by law;

(4) The use of funds which could be available from the sale of surplus school district real property and funds available from other appropriate sources, as determined by the governing body of the school district; and

(5) Agreements between a subdivider or other developer of residential developments in the school district whereby temporary-use buildings will be leased to or for the benefit of the school district, or temporary-use buildings owned by the school district will be used.

(e) “Residential development” shall mean a project containing residential dwellings, including mobile homes, of one or more units or a division of land for the purpose of constructing one or more residential units. “Residential development” shall include, but not be limited to, a preliminary or final development plan, a subdivision tentative or final map, a parcel map, a conditional use permit, a building permit, or any other discretionary permit for a new residential use.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.706 Findings: Notices.

Pursuant to Sections 56970 et seq. of the Government Code of the State, the governing body of the school district may make a finding supported by clear and convincing evidence that:

(a) Conditions of overcrowding exist in one or more attendance areas within the district which will impair the normal functioning of educational programs, including the reason for such conditions existing;

(b) All reasonable methods of mitigating conditions or overcrowding have been evaluated; and

Upon making such findings, the school district shall provide the Council with written notice of its findings as provided in Section 3-6.707 of this article.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.707 Findings: Requirements.

Any notice of findings sent by the school district to the Council shall specify:

(a) The findings set forth in Section 3-6.706 of this article;

(b) Findings of facts and a summary of the evidence upon which the findings set forth in Section 3-6.706 of this article were based;

(c) The mitigation measures and methods, including those set forth in subsection (d) of Section 3-6.705 of this article, considered by the school district in any determination made concerning them by the district;

(d) The precise geographic boundaries of the overcrowded attendance area or areas; and

(e) Such other information as may be required by a Council regulation.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.708 Findings: Concurrence by the City.

After the receipt of any notice of findings complying with the requirements of Section 3-6.707 of this article, the Council, if it concurs with such school district findings, shall do so by resolution.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.709 Findings for development approval.

Within an attendance area, where the Council has concurred in a school district’s notice of finding that conditions of overcrowding exist, no decision-making body shall approve an application for a residential development within such area, unless such decision-making body makes one of the following findings;

(a) That pursuant to this article, provision has been made for the payment of fees, or some other provision has been agreed upon by the applicant for a residential development in the school district to mitigate the conditions of overcrowding within that attendance area; or

(b) That there are specific, overriding physical, economic, social, or environmental factors which, in the judgment of the decision-making body, would benefit the City, thereby justifying the approval of a residential development otherwise subject to the provisions of this article without requiring the payment of fees or other alternate provision required by this chapter.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.710 Payment of fees.

In an attendance area where the Council has concurred that overcrowding exists, the applicant for a proposed residential development, as a condition of approval or the obtaining of a building permit, shall pay fees or make an equivalent arrangement in lieu thereof, unless excepted as provided in subsection (b) of Section 3-6.709 of this article, as determined by the decision-making body during the hearings and other proceedings on the specific residential development applications falling within its respective jurisdiction. Prior to the imposition of the fees, it shall be necessary for the decision-making body acting on the application to make the following determination: that the facilities to be constructed, purchased, leased, or rented from such fees are consistent with the General Plan.

(§ l, Ord. 462 C-M, eff. May 10, 1979)

3-6.711 Standards for fees.

Any requirement imposed pursuant to this article shall bear a reasonable relationship and will be limited to the needs of the community for temporary, elementary, or high school facilities and shall be reasonably related and limited to the need for the schools caused by the residential development.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.712 Amount of fees.

When fees are required by this article to be paid, such fees shall be in the amount fixed by resolution of the Council.

(§ 1, Ord. 462 C-M, eff. May 10, 1979, as amended by § 1, Ord. 545-82 C-M, eff. February 25, 1982)

3-6.713 Fee payments.

If the payment of a fee is required, such payment for each dwelling unit shall be due and paid at the time the building permit is approved and issued. The fees shall be held in trust by the City until transferred to the school district.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.714 Refunds.

If a residential development approval is vacated or voided, and if the City still retains the fees collected there for, and if the applicant so requests, the Council shall order the fees returned to the applicant.

(§ l, Ord. 462 C-M, eff. May 10, 1979)

3-6.715 School district schedules.

Following concurrence by the Council pursuant to Section 3-6.708 of this article, the City Clerk shall notify the school district. The governing body of the school district shall then submit a schedule specifying how it will use the fees to solve the conditions of overcrowding. The schedule shall include the school sites to be used, the classroom facilities to be made available, and the time when such facilities will be available. In the event the governing body of the school district cannot meet the schedule, it shall submit modifications to the Council and the reasons for the modifications.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.716 Use of fees.

All fees collected pursuant to this article and transferred to the school district shall be used only by the district for the purpose of providing the temporary elementary or high school classrooms and facilities necessary for the operation of such classrooms within the City.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.717 Accounting.

The school district, upon receiving funds pursuant to this article, shall maintain a separate account for the fees paid and shall file a report with the Council on the balance in the account at the end of the previous fiscal year and the facilities leased, purchased, or constructed during the previous fiscal year. In addition, the report shall specify which attendance areas will continue to be overcrowded when the fall term begins and where conditions of overcrowding will no longer exist. Such report shall be filed by August 1 of each year and shall be filed more frequently at the request of the Council.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

3-6.718 Termination of fee requirements.

When it is determined by resolution of the Council that conditions of overcrowding no longer exist in an attendance area, decision-making bodies shall cease the imposition of any requirements under this article.

(§ 1, Ord. 462 C-M, eff. May 10, 1979)

Article 8. Storm Drainage Facilities Fees

3-6.801 Purpose.

The Council hereby declares that the fees required to be paid by the provisions of this article are imposed pursuant to the taxing powers of the City and Section 66483 of the Government Code of the State solely for the purpose of producing revenue. The continued increase in residential, commercial, and industrial development in the City creates a need to impose fees for the purposes of defraying the actual or estimated costs of constructing planned drainage facilities for the removal of surface and storm waters from local or neighborhood drainage areas.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.802 Storm Drainage Master Plan.

The Council adopted a drainage plan entitled “Storm Drainage Master Plan, 1980” by James M. Montgomery, Consulting Engineers, Inc., which contains estimates of the total costs of constructing the local drainage facilities required by said Master Plan and maps of areas showing the boundaries and locations of such facilities. Said Master Plan is subject to amendment, which amendments shall be subject to the provisions of this article.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.803 Imposition of storm drainage fees.

Storm drainage fees, to be called the “Storm Drainage Facilities Fees”, are hereby imposed on the privilege of constructing in the City any residential, commercial, or industrial unit or structure and any subdivision, and every person to whom a permit to construct any such unit or structure in the City is issued shall pay to the City such fee as established by resolution of the Council.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.804 Time of payment.

The storm drainage facilities fees required by the provisions of this article to be paid shall be due and payable upon the issuance by the City of a building permit for the construction of any residential, commercial, or industrial unit or structure or upon the approval of a final subdivision map or minor land division as a condition thereof.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.805 Place of payment.

The storm drainage facilities fees shall be paid to the Director of Finance or to an authorized agent at the office of the Director of Finance.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.806 Exemptions.

The fees imposed by the provisions of this article shall not apply to the following:

(a) The reconstruction of a unit or structure which was damaged or destroyed by earthquake, fire, flood, or other cause over which the owner had no control (provided that compliance with any Building Code or other law of the City or of any other applicable law shall not be deemed a cause over which the owner has no control;

(b) The remodeling or alteration of a unit or structure if the building area of such unit or structure is not increased; or

(c) If the Council provides by resolution, in its discretion, for the acceptance of considerations in lieu of the payment of fees.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.807 Use of fees.

All of the storm drainage facilities fees collected pursuant to the provisions of this article shall be placed into the “Storm Drainage Facilities Fund” which is hereby created and established for such purpose. The fees collected pursuant to the provisions of this article shall be used and expended solely for land acquisition and the improvement, construction, and installation of storm drainage facilities according to the Storm Drainage Master Plan. It shall be the policy of the City to expend such fees within the area covered by the City’s Master Plan. The fees shall provide for the implementation of the plan based upon the maximum benefit to the entire City. The reasonable implementation of the plan shall be reflected in the City’s Capital Improvement Program.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.808 Reimbursement of advanced costs.

The City may advance money from its various funds to pay the costs of constructing such storm drainage facilities within an area and shall be authorized to reimburse such various funds for such advances from the Storm Drainage Facilities Fund for the storm drainage in which the storm drainage or facility was constructed. The City may incur an indebtedness for the construction of storm drainage facilities within a storm drainage area so long as the sole security for the repayment of such indebtedness shall be the moneys in the Storm Drainage Facilities Fund.

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

3-6.809 Disposition of surplus.

After the completion of the facilities and the payment of all claims from any Storm Drainage Facilities Fund, the Council shall determine by resolution the amount of any surplus remaining in such fund for an area. Any surplus shall be used, in those amounts as the Council may determine, for one or more of the following purposes:

(a) For transfer to the General Fund provided the amount of transfer shall not exceed five (5%) percent of the total amount expended from the fund, and provided the funds transferred are used to support the operation and maintenance of those facilities for which the fees were collected;

(b) For the construction of additional or modified facilities within the particular storm drainage area; and

(§ 1, Ord. 626-83 C-M, eff. January 26, 1984)

Article 9. Utility Users’ Tax*

* Code reviser’s note: Sections 3-6.901 through 3-6.927 were voter approved on November 8, 2016.

* Former Article 9 entitled “Utility Users’ Tax,” consisting of Sections 3-6.901 through 3-6.930, codified from Ordinance No. 805-89 C-M, effective June 15, 1989, and amended by Ordinance Nos. 1116-01 C-M, eff. November 8, 2001; 972-95 C-M, eff. September 1, 1995; 930-93 C-M, eff. August 24, 1993; and 841-90 C-M, eff. June 26, 1990, was repealed and replaced by § 1, Ord. No. 1335-16 (CM), eff. December 23, 2016.

3-6.901 Title and purpose.

This article shall be known as the Utility Tax Ordinance for the City. This article is adopted pursuant to the powers of the City as a charter city, as authorized by the Constitution of the State of California, and is adopted as a tax levy to meet the usual current expenses of the City.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.902 Definitions.

The following words and phrases, whenever used in this article, shall be construed as defined in this section:

(a) “Ancillary telecommunication services” shall mean services that are associated with or incidental to the provision, use or enjoyment of telecommunications services, including but not limited to the following services:

(1) “Conference bridging service” shall mean an ancillary service that links two (2) or more participants of an audio or video conference call and may include the provision of a telephone number. Conference bridging service does not include the telecommunications services used to reach the conference bridge.

(2) “Detailed telecommunications billing service” shall mean an ancillary service of separately stated information pertaining to individual calls on a customer’s billing statement.

(3) “Directory assistance” shall mean an ancillary service of providing telephone number information, and/or address information.

(4) “Vertical service” shall mean an ancillary service that is offered in connection with one (1) or more telecommunications services, which offers advanced calling features that allow customers to identify callers and to manage multiple calls and call connections, including conference bridging services.

(5) “Voice mail service” shall mean an ancillary service that enables the customer to store, send or receive recorded messages. Voice mail service does not include any vertical services that the customer may be required to have in order to utilize the voice mail service.

(b) “Ancillary video services” means services that are associated with or incidental to the provision or delivery of video services, including but not limited to electronic program guide services, recording services, search functions, or other interactive services or communications that are associated with or incidental to the provision, use or enjoyment of video services.

(c) “Billing address” shall mean the mailing address of the service user where the service provider submits invoices or bills for payment by the service users.

(d) “City” shall mean the City of Watsonville.

(e) “City Manager” shall mean the City Manager, or his or her authorized representative.

(f) “CPI” shall mean the Consumer Price Index for the San Francisco-Oakland-San Jose Area.

(g) “Gas” shall mean natural or manufactured gas or any alternative hydrocarbon fuel, which may be substituted therefor.

(h) “Mobile telecommunications service” shall mean commercial mobile radio service, as defined in Section 20.3 of Title 47 of the Code of Federal Regulations, and as set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124) and the regulations thereunder.

(i) “Month” shall mean a calendar month.

(j) “Non-utility service supplier” shall mean:

(1) A service supplier, other than a supplier of electric distribution services to all or a significant portion of the City, which generates electricity for sale to others, and shall include but not be limited to any publicly owned electric utility, investor-owned utility, cogenerator, distributed generation provider, exempt wholesale generator (15 U.S.C. Section 79z-5a), municipal utility district, Federal power marketing agency, electric rural cooperative, or other supplier or seller of electricity;

(2) An electric service provider (ESP), electricity broker, marketer, aggregator (including a community choice aggregator), pool operator, or other electricity supplier other than a provider of electric distribution services to all or a significant portion of the City, which sells or supplies electricity or supplemental services to electricity users within the City; and

(3) A gas service supplier, aggregator, marketer or broker, other than a supplier of gas distribution services to all or a significant portion of the City, which sells or supplies gas or supplemental services to gas users within the City.

(k) “Paging service” means a “telecommunications service” that provides transmission of coded radio signals for the purpose of activating specific pagers; such transmissions may include messages and/or sounds.

(l) “Person” shall mean, without limitation, any domestic, nonprofit or foreign corporation; firm; association; syndicate; joint stock company; partnership of any kind; limited liability company; joint venture; club; trust; Massachusetts business or common law trust; estate; society; cooperative; receiver, trustee, guardian or other representative appointed by order of any court; any natural individual; joint power agency, municipal district or municipal corporation, other than the City.

(m) “Place of primary use” shall mean the street address representative of where the customer’s use of the telecommunications service primarily occurs, which must be the residential street address or the primary business street address of the customer.

(n) “Post-paid telecommunication service” shall mean the telecommunication service obtained by making a payment on a communication-by-communication basis either through the use of a credit card or payment mechanism such as a bank card, travel card, credit card, or debit card, or by charge made to a service number which is not associated with the origination or termination of the telecommunication service.

(o) “Prepaid telecommunication service” shall mean the right to access telecommunication services, which must be paid for in advance and which enables the origination of communications using an access number or authorization code, whether manually or electronically dialed, and shall include “prepaid mobile telephone services” as defined in Revenue and Taxation Code Section 42004(k).

(p) “Private telecommunication service” shall mean a telecommunication service that entitles the customer to exclusive or priority use of a communications channel or group of channels between or among termination points, regardless of the manner in which such channel or channels are connected, and includes switching capacity, extension lines, stations, and any other associated services that are provided in connection with the use of such channel or channels. A communications channel is a physical or virtual path of communications over which signals are transmitted between or among customer channel termination points (i.e., the location where the customer either inputs or receives the communications).

(q) “Service address” shall mean the residential street address or the business street address of the service user. For a telecommunications or video service user, “service address” means either:

(1) The location of the service user’s telecommunication or video equipment from which the communication originates or terminates, regardless of where the communication is billed or paid; or

(2) If the location in subsection (q)(1) of this definition is unknown (e.g., mobile telecommunications service or VoIP service), the service address shall mean the location of the service user’s place of primary use.

(3) For prepaid telecommunication service, “service address” means the point of sale of the services where the point of sale is within the City, or, if unknown, the known address of the service user (e.g., billing address or location associated with the service number), which locations shall be presumed to be the place of primary use.

(r) “Service supplier” shall mean any person, including the City, who provides or sells telecommunication, video, electric, gas or water service to a user of such services within the City. The term shall include any person required to collect, or self-collect under Section 3-6.908, and remit a tax as imposed by this article, including its billing agent in the case of electric or gas suppliers.

(s) “Service user” shall mean a person required to pay a tax imposed by this article.

(t) “State” shall mean the State of California.

(u) “Tax Administrator” shall mean the Finance Director, or his or her authorized representative.

(v) “Telecommunications services” shall mean the transmission, conveyance, or routing of voice, data, audio, video, or any other information or signals to a point, or between or among points, whatever the technology used, and includes broadband service (e.g., digital subscriber line (DSL), fiber optic, coaxial cable, and wireless broadband, including Wi-Fi, WiMAX, and Wireless MESH) to the extent Federal and/or State law permits taxation of such broadband services, now or in the future. The term “telecommunications service” includes such transmission, conveyance, or routing in which computer processing applications are used to act on the form, code or protocol of the content for purposes of transmission, conveyance or routing without regard to whether such service is referred to as voice over Internet protocol (VoIP) services or is classified by the Federal Communications Commission as enhanced or value added, and includes video and/or data service that is functionally integrated with “telecommunication services.” Telecommunications services include, but are not limited to, the following services, regardless of the manner or basis on which such services are calculated or billed: ancillary telecommunication services; intrastate, interstate and international telecommunication services; all forms of VoIP service; mobile telecommunications service; prepaid telecommunication service; post-paid telecommunication service; private telecommunication service; paging service; 800 service (or any other toll-free numbers designated by the Federal Communications Commission); 900 service (or any other similar numbers designated by the Federal Communications Commission for services whereby subscribers who call in to prerecorded or live service).

(w) “Video programming” means those programming services commonly provided to subscribers by a “video service supplier” including but not limited to basic services, premium services, audio services, video games, pay-per-view services, video on demand, origination programming, or any other similar services, regardless of the content of such video programming, or the technology used to deliver such services, and regardless of the manner or basis on which such services are calculated or billed.

(x) “Video services” means “video programming” and any and all services related to the providing, recording, delivering, use or enjoyment of “video programming” (including origination programming and programming using Internet Protocol, e.g., IP-TV, IP-Video, and over the top TV or OTT) by a “video service supplier,” regardless of the technology used to deliver, store or provide such services, and regardless of the manner or basis on which such services are calculated or billed, and includes ancillary video services, data services, “telecommunication services,” or interactive communication services that are functionally integrated with “video services.”

(y) “Video service supplier” means any person, company, or service which provides or sells video programming, or provides or sells the capability to receive video programming, including any communications that are ancillary, necessary or common to the provision, use or enjoyment of the video programming, to or from a business or residential address in the City, where some fee is paid, whether directly or included in dues or rental charges for that service, whether or not public rights-of-way are utilized in the delivery of the video programming or communications. A “video service supplier” includes, but is not limited to, multichannel video programming distributors (as defined in 47 U.S.C.A. Section 522(13)); open video systems (OVS) suppliers; and suppliers of cable television; master antenna television; satellite master antenna television; multichannel multipoint distribution services (MMDS); video services using Internet protocol (e.g., IP-TV and IP-Video, which provide, among other things, broadcasting and video on demand), direct broadcast satellite to the extent Federal law permits taxation of its video services, now or in the future; and other suppliers of video services (including two (2) way communications), whatever their technology.

(z) “VoIP” (voice over Internet protocol) means the digital process of making and receiving real-time voice transmissions over any Internet protocol network.

(aa) “800 service” means a “telecommunications service” that allows a caller to dial a toll-free number without incurring a charge for the call. The service is typically marketed under the name “800,” “855,” “866,” “877,” and “888” toll-free calling, and any subsequent numbers designated by the Federal Communications Commission.

(bb) “900 service” means an inbound toll “telecommunications service” purchased by a subscriber that allows the subscriber’s customers to call in to the subscriber’s prerecorded announcement or live service. “900 service” does not include the charge for: collection services provided by the seller of the “telecommunications services” to the subscriber, or service or product sold by the subscriber to the subscriber’s customer. The service is typically marketed under the name “900” service, and any subsequent numbers designated by the Federal Communications Commission.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.903 Constitutional and statutory exemptions.

(a) The taxes imposed by this article shall not apply to:

(1) Any person or service if imposition of such tax upon that person or service would be in violation of a Federal or State statute or the Constitution of the State of California, or the Constitution of the United States; or

(2) The City, and the State of California and its subdivisions.

(3) Low Income Exemption. A residential service user shall be exempt from the gas and electric tax of this chapter if he or she is qualified and is enrolled in Pacific Gas & Electric Company’s (PG&E) CARE Program (“California Alternate Rates for Energy” program). Individuals receiving the exemption granted by this subsection must reside at the location receiving the service; the exemption shall not apply to any nonresidential service location.

(4) Senior/Disabled Exemptions. A residential service user who is sixty-five (65) years old or older and is the head of the household; or any residential service user who meets the criteria of disability as established by the Social Security Administration’s Supplemental Income Program for the Aged, Blind and Disabled (Title XVI of the Social Security Act, as amended), shall be exempt from the gas and electric tax of this chapter.

(b) Any service user that is exempt from the tax imposed by this article pursuant to subsection (a) of this section shall file an application with the Tax Administrator for an exemption; provided, however, this requirement shall not apply to a service user that is a State or Federal agency or subdivision with a commonly recognized name for such service. Said application shall be made upon a form approved by the Tax Administrator and shall state those facts, declared under penalty of perjury, which qualify the applicant for an exemption, and shall include the names of all service suppliers serving that service user. If deemed exempt by the Tax Administrator, such service user shall give the Tax Administrator timely written notice of any change in service suppliers so that the Tax Administrator can properly notify the new service supplier of the service user’s tax exempt status. A service user that fails to apply and obtain an exemption pursuant to this section shall not be entitled to a refund of a users’ tax collected and remitted to the Tax Administrator from such service user as a result of such noncompliance.

(c) The decision of the Tax Administrator regarding an exemption application may be appealed pursuant to Section 3-6.921. Filing an application with the Tax Administrator and appeal to the City Manager, or designee, pursuant to Section 3-6.921 is a prerequisite to a suit thereon.

(d) The City Council may, by resolution, establish one (1) or more classes of persons or one (1) or more classes of utility service otherwise subject to payment of a tax imposed by this article and provide that such classes of persons or service shall be exempt, in whole or in part from such tax for a specified period of time.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.904 Telecommunication users’ tax.

(a) There is hereby imposed a tax upon every person in the City using telecommunication services. The tax imposed by this section shall be at the rate of five and one-half (5.5%) percent of the charges made for such services and shall be collected from the service user by the telecommunication services supplier or its billing agent, or as otherwise provided by law. There is a rebuttable presumption that telecommunication services, which are billed to a billing or service address in the City, are used, in whole or in part, within the City’s boundaries, and such services are subject to taxation under this section. There is also a rebuttable presumption that prepaid telecommunication services sold within the City are primarily used, in whole or in part, within the City and are therefore subject to taxation under this section. If the billing address of the service user is different from the service address, the service address of the service user shall be used for purposes of imposing the tax. As used in this section, the term “charges” shall include the value of any other services, credits, property of every kind or nature, or other consideration provided by the service user in exchange for the telecommunication services.

(b) “Mobile telecommunications service” shall be sourced in accordance with the sourcing rules set forth in the Mobile Telecommunications Sourcing Act (4 U.S.C. Section 124). The Tax Administrator may issue and disseminate to telecommunication service suppliers, which are subject to the tax collection requirements of this section, sourcing rules for the taxation of other telecommunication services, including but not limited to post-paid telecommunication services, prepaid telecommunication services, and private telecommunication services; provided, that such rules are based upon custom and common practice that further administrative efficiency and minimize multi-jurisdictional taxation.

(c) The Tax Administrator may issue and disseminate to telecommunication service suppliers, which are subject to the tax collection requirements of this section, an administrative ruling identifying those telecommunication services, or charges therefor, that are subject to the tax of subsection (a) of this section. This administrative ruling shall not impose a new tax, revise an existing tax methodology as stated in this section, or increase an existing tax, except as allowed by California Government Code Section 53750(h)(2)(A).

(d) As used in this section, the term “telecommunication services” shall include, but is not limited to, charges for: connection, reconnection, termination or early termination charges; movement or change of telecommunication services; late payment fees; detailed billing; central office and custom calling features (including but not limited to call waiting, call forwarding, caller identification and three (3) way calling); voice mail and other messaging services; directory assistance; access and line charges; universal service charges; fees, charges or surcharges, imposed by any State or Federal agency or law (whether such charges or surcharges are imposed on the service supplier or the customer); local number portability charges; and text and instant messaging. “Telecommunication services” shall not include digital downloads that are not “ancillary telecommunication services,” such as music, ringtones, games, and similar digital products.

(e) To prevent actual multi-jurisdictional taxation of telecommunication services subject to tax under this section, any service user, upon proof to the Tax Administrator that the service user has previously paid the same tax in another state or city on such telecommunication services, shall be allowed a credit against the tax imposed to the extent of the amount of such tax legally imposed in such other state or city; provided, however, the amount of credit shall not exceed the tax owed to the City under this section.

(f) The tax on telecommunication services imposed by this section shall be collected from the service user by the service supplier. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth day of the following month.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.905 Video users’ tax.

(a) There is hereby imposed a tax upon every person in the City using video services from a video provider. The tax imposed by this subsection shall be at the rate of five and one-half (5.5%) percent of the charges made for such services, and shall be collected from the service user by the video service supplier or its billing agent. There is a rebuttable presumption that video services, which are billed to a billing or service address in the City, are used, in whole or in part, within the City’s boundaries, and such services are subject to taxation under this article. If the billing address of the service user is different from the service address, the service address of the service user shall be used for purposes of imposing the tax.

(b) As used in this section, the term “charges” shall include, but is not limited to, charges for the following:

(1) Fees, charges or surcharges imposed by any State or Federal agency or law; including franchise fees and access fees (PEG): whether such fees, charges or surcharges are imposed on the service supplier or the customer;

(2) Initial installation of equipment necessary for provision and receipt of video services;

(3) Late fees, collection fees, bad debt recoveries, and return check fees;

(4) Activation fees, reactivation fees; termination or early termination charges; and reconnection fees;

(5) Video programming and video services;

(6) Ancillary video programming services (e.g., electronic program guide services, search functions, recording functions, or other interactive services or communications that are ancillary, necessary or common to the use or enjoyment of the video services);

(7) Equipment leases (e.g., remote, set box, recording and/or search devices; converters); and

(8) Service calls, service protection plans, name changes, changes of services, and special services.

(c) As used in this section, the term “charges” shall include the value of any other services, credits, property of every kind or nature, or other consideration provided by the service user in exchange for the video services.

(d) The Tax Administrator may issue and disseminate to video service suppliers, which are subject to the tax collection requirements of this article, an administrative ruling identifying those video services, or charges therefor, that are subject to or not subject to the tax of subsection (a) of this section.

(e) The tax imposed by this section shall be collected from the service user by the video service supplier, its billing agent, or a reseller of such services. In the case of video service, the service user shall be deemed to be the purchaser of the bulk video service (e.g., an apartment owner), unless such service is resold to individual users, in which case the service user shall be the ultimate purchaser of the video service. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth day of the following month.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.906 Electricity users’ tax.

(a) There is hereby imposed a tax upon every person using electricity in the City. The tax imposed by this section shall be at the rate of six (6%) percent of the charges made for such electricity, and for any supplemental services or other associated activities directly related to and/or necessary for the provision of electricity to the service user, which are provided by a service supplier or non-utility service supplier to a service user. The tax shall be collected from the service user by the service supplier or non-utility service supplier, or its billing agent.

(b) As used in this section, the term “charges” shall apply to all services, components and items that are: (1) necessary or common to the receipt, use and enjoyment of electric service; or (2) currently, or historically have been, included in a single or bundled rate for electric service by a local distribution company to a class of retail customers. The term “charges” shall include, but is not limited to, the following charges:

(1) Energy charges;

(2) Distribution or transmission charges;

(3) Metering charges;

(4) Standby, reserves, firming, voltage support, regulation, emergency, or other similar charges for supplemental services to self-generation service users;

(5) Customer charges, late charges, service establishment or reestablishment charges, termination or early termination charges, demand charges, fuel or other cost adjustments, power exchange charges, independent system operator (ISO) charges, stranded investment or competitive transition charges (CTC), public purpose program charges, nuclear decommissioning charges, trust transfer amounts (bond financing charges), franchise fees, franchise surcharges, annual and monthly charges, and other charges, fees and surcharges which are necessary to or common for the receipt, use and enjoyment of electric service; and

(6) Fees, charges or surcharges imposed by any State or Federal agency or law, whether or not such fees, charges or surcharges appear on a bundled or line item basis on the customer billing, or whether they are imposed on the service provider or the customer.

(d) The Tax Administrator, from time to time, may survey the electric service suppliers to identify the various unbundled billing components of electric retail service that they commonly provide to residential and commercial/industrial customers in the City, and the charges therefor, including those items that are mandated by State or Federal regulatory agencies as a condition of providing such electric service. The Tax Administrator, thereafter, may issue and disseminate to such electric service providers an administrative ruling identifying those components and items which are: (1) necessary or common to the receipt, use or enjoyment of electric service; or (2) currently, or historically have been, included in a single or bundled rate for electric service by a local distribution company to a class of retail customers. Unbundled charges for such components and items shall be subject to the tax of subsection (a) of this section.

(e) As used in this section, the term “using electricity” shall not be construed to include the mere receiving of such electricity by an electric public utility or governmental agency at a point within the City for resale.

(f) The tax on electricity provided by self-production or by a non-utility service supplier not under the jurisdiction of this article shall be collected and remitted in the manner set forth in Section 3-6.908. All other taxes on charges for electricity imposed by this section shall be collected from the service user by the electric service supplier or its billing agent. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth day of the following month; or, at the option of the person required to collect and/or remit the tax, such person shall remit an estimated amount of tax measured by the tax billed in the previous month or upon the payment pattern of the service user, which must be received by the Tax Administrator on or before the twentieth day of following month; provided, that the service user shall submit an adjusted payment or request for credit, as appropriate, within sixty (60) days following each calendar quarter. The credit, if approved by the Tax Administrator, may be applied against any subsequent tax bill that becomes due.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.907 Gas users’ tax.

(a) There is hereby imposed a tax upon every person using gas in the City, which is delivered through a pipeline distribution system or by mobile transport. The tax imposed by this section shall be at the rate of six (6%) percent of the charges made for such gas, including all services related to the storage, transportation and delivery of such gas. The tax shall be collected from the service user by the service supplier or non-utility service supplier, or its billing agent, and shall apply to all uses of gas, including but not limited to heating, electric generation by a nonpublic utility, and the use of gas as a component of a manufactured product.

(b) As used in this section, the term “charges” shall apply to all services, components and items for gas service that are: (1) necessary or common to the receipt, use and enjoyment of gas service; or (2) currently, or historically have been, included in a single or bundled rate for gas service by a local distribution company to a class of retail customers. The term “charges” shall include, but is not limited to, the following charges:

(1) The commodity charges for purchased gas, or the cost of gas owned by the service user (including the actual costs attributed to drilling, production, lifting, storage, gathering, trunkline, pipeline, and other operating costs associated with the production and delivery of such gas), which is delivered through a gas pipeline distribution system;

(2) Gas transportation charges (including interstate charges to the extent not included in commodity charges);

(3) Storage charges; provided, however, that the service provider shall not be required to apply the tax to any charges for gas storage services when the service providers cannot, as a practical matter, determine the jurisdiction where such stored gas is ultimately used; but it shall be the obligation of the service user to self-collect the amount of tax not applied to any charge for gas storage by the service supplier and to remit the tax to the appropriate jurisdiction;

Capacity or demand charges, late charges, service establishment or reestablishment charges, termination or early termination charges, marketing charges, administrative charges, transition charges, customer charges, minimum charges, annual and monthly charges, and any other charges which are necessary or common to the receipt, use and enjoyment of gas service; and

(4) Fees, charges or surcharges imposed by any State or Federal agency or law, whether or not such fees, charges or surcharges appear on a bundled or line item basis on the customer billing, or whether they are imposed on the service provider or the customer.

(d) The Tax Administrator, from time to time, may survey the gas service suppliers to identify the various unbundled billing components of gas retail service that they commonly provide to residential and commercial/industrial customers in the City, and the charges therefor, including those items that are mandated by State or Federal regulatory agencies as a condition of providing such gas service. The Tax Administrator, thereafter, may issue and disseminate to such gas service suppliers an administrative ruling identifying those components and items which are: (1) necessary or common to the receipt, use or enjoyment of gas service; or (2) currently, or historically have been, included in a single or bundled rate for gas service by a local distribution company to a class of retail customers. Charges for such components and items shall be subject to the tax of subsection (a) of this section.

(e) As used in this section, the term “using gas” shall not be construed to include the mere receiving of such gas by a gas public utility or governmental agency at a point within the City for resale.

(f) The tax on gas provided by self-production or by a non-utility service supplier not under the jurisdiction of this article shall be collected and remitted in the manner set forth in Section 3-6.908. All other taxes on charges for gas imposed by this section shall be collected from the service user by the gas service supplier or its billing agent. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth day of the following month; or, at the option of the person required to collect and/or remit the tax, such person shall remit an estimated amount of tax measured by the tax billed in the previous month or upon the payment pattern of the service user, which must be received by the Tax Administrator on or before the twentieth day of the following month; provided, that the service user shall submit an adjusted payment or request for credit, as appropriate, within sixty (60) days following each calendar quarter. The credit, if approved by the Tax Administrator, may be applied against any subsequent tax bill that becomes due.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.908 Collection of tax from service users receiving direct purchase of gas or electricity.

(a) Any service user subject to the tax imposed by Section 3-6.906 or 3-6.907, which produces gas or electricity for self-use; which receives gas or electricity, including any related supplemental services, directly from a non-utility service supplier not under the jurisdiction of this article; or which, for any other reason, is not having the full tax collected and remitted by its service supplier, a non-utility service supplier, or its billing agent on the use of gas or electricity in the City, including any related supplemental services, shall report said fact to the Tax Administrator and shall remit the tax due directly to the Tax Administrator within thirty (30) days of such use. In lieu of paying said actual tax, the service user may, at its option, remit to the Tax Administrator within thirty (30) days for such use an estimated amount of tax measured by the tax billed in the previous month, or upon the payment pattern of similar customers of the service supplier using similar amounts of gas or electricity; provided, that the service user shall submit an adjusted payment or request for credit, as appropriate, within sixty (60) days following each calendar quarter. The credit, if approved by the Tax Administrator, may be applied against any subsequent tax bill that becomes due.

(b) The Tax Administrator may require said service user to identify its non-utility service supplier and provide, subject to audit, invoices, books of account, or other satisfactory evidence documenting the quantity of gas or electricity used, including any related supplemental services, and the cost or price thereof. If the service user is unable to provide such satisfactory evidence, or, if the administrative cost of calculating the tax in the opinion of the Tax Administrator is excessive, the Tax Administrator may determine the tax by applying the tax rate to the equivalent charges the service user would have incurred if the gas or electricity used, including any related supplemental services, had been provided by the service supplier that is the primary supplier of gas or electricity within the City.

(c) If the service user or its agent produces electricity for self-use and fails to meter the amount of electricity used by the service user, or fails to meter the amount of electricity that is taken against electricity provided by a service supplier (e.g., net-metering), the Tax Administrator may, for purposes of calculating the tax hereunder, estimate the amount of electricity that is self-produced based on the manufacturer’s estimate of annual electricity generation for the facility used by the service user to generate electricity.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.909 Nonresidential rebate (gas and electricity).

Except as otherwise provided herein, any nonresidential service user, other than an electrical corporation or gas corporation, with combined electric and gas taxes of more than the amount established by resolution of the Council but not to exceed Nine Thousand Nine Hundred and no/100ths ($9,900.00) Dollars, which amount shall be annually adjusted each fiscal year to reflect the Consumer Price Index (CPI), shall receive a rebate from taxes collected in excess of the amount established by resolution of the Council during a fiscal year for such use. Rebates shall be made monthly. Businesses eligible for the decreased tax described above shall advise the City of any rebate due by submitting a copy of each month’s electric and gas bills to the City Finance Director.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.910 Water users’ tax.

(a) There is imposed a tax upon every person using water in the City which is transported and delivered through a pipeline distribution system. The tax imposed by this section shall be at the rate of six (6%) percent of the charges made for such water.

(b) As used in this section, the term “charges” shall apply to all services, components and items that are: (1) necessary for or common to the receipt, use or enjoyment of water service; or (2) currently are or historically have been included in a single or bundled rate for water service by a local distribution company to a class of retail customers. The term “charges” shall include, but is not limited to, the following charges: water commodity charges (potable and nonpotable); distribution or transmission charges; metering charges; customer charges; fire protection services; late charges; service establishment or reestablishment charges; franchise fees; franchise surcharges; annual and monthly charges; and other charges, fees and surcharges which are necessary for or common to the receipt, use or enjoyment of water service; and charges, fees, or surcharges, which are mandated by any State or Federal agency or law, or a water district, whether or not such charges, fees, or surcharges appear on a bundled or line item basis on the customer billing.

(d) The Tax Administrator, from time to time, may survey the water service suppliers in the City to identify the various unbundled billing components of water retail service that they commonly provide to residential and commercial/industrial customers in the City, and the charges therefor, including those items that are mandated by a water district or a State or Federal agency as a condition of providing such water service. The Tax Administrator, thereafter, may issue and disseminate to such water service suppliers an administrative ruling identifying those components and items which are: (1) necessary for or common to the receipt, use or enjoyment of water service; or (2) currently are or historically have been included in a single or bundled rate for water service by a local distribution company to a class of retail customers. Charges for such components and items shall be subject to the tax of subsection (a) of this section.

(e) The tax on water service imposed by this section shall be collected from the service user by the water service supplier or its billing agent. The amount of tax collected in one (1) month shall be remitted to the Tax Administrator, and must be received by the Tax Administrator on or before the twentieth day of the following month.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.911 Effect of commingling taxable items with nontaxable items.

If any nontaxable service charges are combined with and not separately stated from taxable service charges on the customer bill or invoice of a service supplier, the combined charge is subject to tax unless the service supplier is able to establish reasonable values for the portions of the combined charge that are nontaxable and taxable. If the service supplier offers a combination of taxable and nontaxable services, and the charges are separately stated, the service supplier shall assign reasonable values for the taxable and nontaxable services. In assigning reasonable values for taxable and nontaxable services under this section, the service supplier may use reasonable and verifiable standards, as approved by the Tax Administrator, such as: (a) the books and records kept in the regular course of business and in accordance with generally accepted accounting principles (not created and maintained for tax purposes); (b) the market value of such taxable and nontaxable services when offered on a stand-alone basis by the supplier or its competitors; or (c) other similar evidence of value. The service supplier has the burden of proving to the satisfaction of the Tax Administrator the proper valuation and apportionment of taxable and nontaxable charges under this section.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.912 Substantial nexus/minimum contacts.

For purposes of imposing a tax or establishing a duty to collect and remit a tax under this article, “substantial nexus,” “substantial economic presence,” and “minimum contacts” shall be construed broadly in favor of the imposition, collection and/or remittance of the utility users’ tax to the fullest extent permitted by State and Federal law, and as it may change from time to time by judicial interpretation or by statutory enactment. Any telecommunication service (including VoIP) used by a person with a service address in the City, which service is capable of terminating a call to another person on the general telephone network, shall be subject to a rebuttable presumption that “substantial nexus/minimum contacts” exists for purposes of imposing a tax, or establishing a duty to collect and remit a tax, under this article. A service supplier shall be deemed to have sufficient activity in the City for tax collection and remittance purposes if its activities include, but are not limited to, any of the following: maintains or has within the City, directly or through an agent, affiliate or subsidiary, a place of business of any nature; solicits business in the City by employees, independent contractors, resellers, agents, affiliates or other representatives; solicits business in the City on a continuous, regular, seasonal or systematic basis by means of advertising that is broadcast or relayed from a transmitter within the City or distributed from a location within the City; or advertises in newspapers or other periodicals printed and published within the City or through materials distributed in the City by means other than the United States mail; or if there are activities performed in the City on behalf of the service supplier that are significantly associated with the service supplier’s ability to establish and maintain a market in the City for the provision of utility services that are subject to a tax under this article (e.g., an affiliated person engaging in activities in the City that inure to the benefit of the service supplier in its development or maintenance of a market for its services in the City).

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.913 Duty to collect—Procedures.

(a) Collection by Service Suppliers. The duty of service suppliers to collect and remit the taxes imposed by the provisions of this article shall be performed as follows:

(1) The tax shall be collected by service suppliers insofar as practicable at the same time as, and along with, the collection of the charges made in accordance with the regular billing practice of the service supplier. Where the amount paid by a service user to a service supplier is less than the full amount of the charge and tax that was accrued for the billing period, a proportionate share of both the charge and the tax shall be deemed to have been paid. In those cases where a service user has notified the service supplier of refusal to pay the tax imposed on said charges, Section 3-6.916 shall apply.

(2) The duty of a service supplier to collect the tax from a service user shall commence with the beginning of the first regular billing period applicable to the service user where all charges normally included in such regular billing are subject to the provisions of this article. Where a person receives more than one (1) billing, one (1) or more being for different periods than another, the duty to collect shall arise separately for each billing period.

(b) Filing Return and Payment. Each person required by this article to remit a tax shall file a return to the Tax Administrator, on forms approved by the Tax Administrator, on or before the due date. The full amount of the tax collected shall be included with the return and filed with the Tax Administrator. The Tax Administrator is authorized to require such additional information as he or she deems necessary to determine if the tax is being levied, collected, and remitted in accordance with this article. Returns are due immediately upon cessation of business for any reason. Pursuant to Revenue and Tax Code Section 7284.6, the Tax Administrator, and its agents, shall maintain such filing returns as confidential information that is exempt from the disclosure provisions of the Public Records Act.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.914 Collection penalties—Service suppliers or self-collectors.

(a) Taxes collected from a service user, or owed by a service user subject to Section 3-6.908, are delinquent if not received by the Tax Administrator on or before the due date. Should the due date occur on a weekend or legal holiday, the return must be received by the Tax Administrator on the first regular working day following the weekend or legal holiday. A direct deposit, including electronic fund transfers and other similar methods of electronically exchanging monies between financial accounts, made by a service supplier in satisfaction of its obligations under this section shall be considered timely if the transfer is initiated on or before the due date, and the transfer settles into the City’s account on the following business day.

(b) If the person required to collect and/or remit the utility users’ tax fails to collect the tax (by failing to properly assess the tax on one (1) or more services or charges on the customer’s billing) or fails to remit the tax collected on or before the due date, or, in the case of a service user that fails to properly self-collect and remit the tax under Section 3-6.908 on or before the due date, the Tax Administrator shall attach a penalty for such delinquencies or deficiencies at the rate of fifteen (15%) percent of the total tax that is delinquent or deficient in the remittance, and shall pay interest at the rate of three-quarters (0.75%) percent per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the date on which the remittance first becomes delinquent, until paid.

(c) The Tax Administrator shall have the power to impose additional penalties upon persons required to collect and remit taxes pursuant to the provisions of this article for fraud or gross negligence in reporting or remitting at the rate of fifteen (15%) percent of the amount of the tax collected and/or required to be remitted, or as recomputed by the Tax Administrator.

(d) For collection purposes only, every penalty imposed and such interest that is accrued under the provisions of this section shall become a part of the tax herein required to be paid.

(e) Notwithstanding the foregoing, the Tax Administrator may, in his or her discretion, modify the due dates and/or penalty and interest provisions of this section to be consistent with any uniform standards or procedures that are mutually agreed upon by UUT public agencies, or otherwise legally established, to create a UUT central payment location or mechanism.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.915 Deficiency determination and assessment—Tax application errors.

(a) The Tax Administrator shall make a deficiency determination if he or she determines that any person required to pay or collect taxes pursuant to the provisions of this article has failed to pay, collect, and/or remit the proper amount of tax by improperly applying or failing to apply the tax to one or more taxable services or charges. Nothing herein shall require that the Tax Administrator institute proceedings under this section if, in the opinion of the Tax Administrator, the cost of collection or enforcement likely outweighs the tax benefit.

(b) The Tax Administrator shall mail a notice of such deficiency determination to the person required to pay or remit the tax, which notice shall refer briefly to the amount of the taxes owed, plus interest at the rate of three-quarters (0.75%) percent per month, or any fraction thereof, on the amount of the tax from the date on which the tax should have been received by the City. Within fourteen (14) calendar days after the date of service of such notice, the person may send a request in writing to the Tax Administrator asking for a hearing on the matter.

(c) If the person fails to request a hearing within the prescribed time period, the amount of the deficiency determination shall become a final assessment, and shall immediately be due and owing to the City. If the person requests a hearing, the Tax Administrator shall cause the matter to be set for hearing, which shall be scheduled within thirty (30) days after receipt of the written request for hearing. Notice of the time and place of the hearing shall be mailed by the Tax Administrator to such person at least ten (10) calendar days prior to the hearing, and, if the Tax Administrator desires said person to produce specific records at such hearing, such notice may designate the records requested to be produced.

(d) At the time fixed for the hearing, the Tax Administrator shall hear all relevant testimony and evidence, including that of any other interested parties. At the discretion of the Tax Administrator, the hearing may be continued from time to time for the purpose of allowing the presentation of additional evidence. Within a reasonable time following the conclusion of the hearing, the Tax Administrator shall issue a final assessment (or nonassessment), thereafter, by confirming, modifying or rejecting the original deficiency determination, and shall mail a copy of such final assessment to person owing the tax. The decision of the Tax Administrator may be appealed pursuant to Section 3-6.921. Filing an application with the Tax Administrator and appeal to the City Manager, or designee, pursuant to Section 3-6.921 is a prerequisite to a suit thereon.

(e) Payment of the final assessment shall become delinquent if not received by the Tax Administrator on or before the thirtieth day following the date of receipt of the notice of final assessment. The penalty for delinquency shall be fifteen (15%) percent on the total amount of the assessment, along with interest at the rate of three-quarters (0.75%) percent per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the date of delinquency, until paid. The applicable statute of limitations regarding a claim by the City seeking payment of a tax assessed under this article shall commence from the date of delinquency as provided in this subsection (e).

(f) All notices under this article may be sent by regular mail, postage prepaid, and shall be deemed received on the third calendar day following the date of mailing, as established by a proof of mailing.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.916 Administrative remedy—Nonpaying service users.

(a) Whenever the Tax Administrator determines that a service user has deliberately withheld the amount of the tax owed by the service user from the amounts remitted to a person required to collect the tax, or whenever the Tax Administrator deems it in the best interest of the City, he or she may relieve such person of the obligation to collect the taxes due under this section from certain named service users for specific billing periods. Whenever the service user has failed to pay the amount of tax owed for a period of two (2) or more billing periods, the service supplier shall be relieved of the obligation to collect taxes due. The service supplier shall provide the City with the names and addresses of such service users and the amounts of taxes owed under the provisions of this section. Nothing herein shall require that the Tax Administrator institute proceedings under this section if, in the opinion of the Tax Administrator, the cost of collection or enforcement likely outweighs the tax benefit.

(b) In addition to the tax owed, the service user shall pay a delinquency penalty at the rate of fifteen (15%) percent of the total tax that is owed, and shall pay interest at the rate of three-quarters (0.75%) percent per month, or any fraction thereof, on the amount of the tax, exclusive of penalties, from the due date, until paid.

(c) The Tax Administrator shall notify the nonpaying service user that the Tax Administrator has assumed the responsibility to collect the taxes due for the stated periods and demand payment of such taxes, including penalties and interest. The notice shall be served on the service user by personal delivery or by deposit of the notice in the United States mail, postage prepaid, addressed to the service user at the address to which billing was made by the person required to collect the tax; or, should the service user have a change of address, to his or her last known address.

(d) If the service user fails to remit the tax to the Tax Administrator within thirty (30) days from the date of the service of the notice upon him or her, the Tax Administrator may impose an additional penalty of fifteen (15%) percent of the amount of the total tax that is owed.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.917 Actions to collect.

Any tax required to be paid by a service user under the provisions of this article shall be deemed a debt owed by the service user to the City. Any such tax collected from a service user which has not been remitted to the Tax Administrator shall be deemed a debt owed to the City by the person required to collect and remit and shall no longer be a debt of the service user. Any person owing money to the City under the provisions of this article shall be liable in an action brought in the name of the City for the recovery of such amount, including penalties and interest as provided for in this article, along with any collection costs incurred by the City as a result of the person’s noncompliance with this article, including, but not limited to, reasonable attorney’s fees. In the event that a service user or service supplier owing a tax under this article files bankruptcy, then such debt to the City shall be deemed an unsecured priority excise tax obligation under 11 U.S.C.A. Section 507(a)(8)(C). Service suppliers who seek to collect charges for service in bankruptcy proceedings shall also include in any such claim the amount of taxes due the City for those services, unless the Tax Administrator determines that such duty is in conflict with any Federal or State law, rule, or regulation or that such action would be administratively impractical.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.918 Additional powers and duties of the Tax Administrator.

(a) The Tax Administrator shall have the power and duty, and is hereby directed, to enforce each and all of the provisions of this article.

(b) The Tax Administrator may adopt administrative rules and regulations consistent with provisions of this article for the purpose of interpreting, clarifying, carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. The administrative ruling shall not impose a new tax, revise an existing tax methodology as stated in this article, or increase an existing tax, except as allowed by California Government Code Section 53750(h)(2). A copy of such administrative rules and regulations shall be on file in the Tax Administrator’s office. To the extent that the Tax Administrator determines that the tax imposed under this article shall not be collected in full for any period of time from any particular service supplier or service user, that determination shall be considered an exercise of the Tax Administrator’s discretion to settle disputes and shall not constitute a change in taxing methodology for purposes of Government Code Section 53750 or otherwise. The Tax Administrator is not authorized to amend the City’s methodology for purposes of Government Code Section 53750 and the City does not waive or abrogate its ability to impose the utility users’ tax in full as a result of promulgating administrative rulings or entering into agreements.

(c) Upon a proper showing of good cause, the Tax Administrator may make administrative agreements, with appropriate conditions, to vary from the strict requirements of this article and thereby: (1) conform to the billing procedures of a particular service supplier (or service user subject to Section 3-6.908) so long as said agreements result in the collection of the tax in conformance with the general purpose and scope of this article; or (2) to avoid a hardship where the administrative costs of collection and remittance greatly outweigh the tax benefit. A copy of each such agreement shall be on file in the Tax Administrator’s office, and are voidable by the Tax Administrator or the City at any time.

(d) The Tax Administrator may conduct an audit, to ensure proper compliance with the requirements of this article, of any person required to collect and/or remit a tax pursuant to this article. The Tax Administrator shall notify said person of the initiation of an audit in writing. In the absence of fraud or other intentional misconduct, the audit period or review shall not exceed a period of three (3) years next preceding the date of receipt of the written notice by said person from the Tax Administrator. Upon completion of the audit, the Tax Administrator may make a deficiency determination pursuant to Section 3-6.915 for all taxes (and applicable penalties and interest) owed and not paid, as evidenced by information provided by such person to the Tax Administrator. If said person is unable or unwilling to provide sufficient records to enable the Tax Administrator to verify compliance with this article, the Tax Administrator is authorized to make a reasonable estimate of the deficiency. Said reasonable estimate shall be entitled to a rebuttable presumption of correctness.

(e) Upon receipt of a written request of a taxpayer, and for good cause, the Tax Administrator may extend the time for filing any statement required pursuant to this article for a period of not to exceed forty-five (45) days; provided, that the time for filing the required statement has not already passed when the request is received. No penalty for delinquent payment shall accrue by reason of such extension. Interest shall accrue during said extension at the rate of three-quarters (0.75%) percent per month, prorated for any portion thereof.

(f) The Tax Administrator shall determine the eligibility of any person who asserts a right to exemption from, or a refund of, the tax imposed by this article.

(g) The Tax Administrator, with the written approval of the City Attorney, may compromise a claim pursuant to this article where the portion of the claim proposed to be released is equal to or less than Four Thousand Nine Hundred Ninety-Nine and no/100ths ($4,999.00) Dollars; and, with the approval of the City Attorney and the City Council, may compromise such a claim where the portion proposed to be released is greater than Four Thousand Nine Hundred Ninety-Nine and no/100ths ($4,999.00) Dollars.

(h) Notwithstanding any provision in this article to the contrary, the Tax Administrator may waive any penalty or interest imposed upon a person required to collect and/or remit for failure to collect the tax imposed by this article if, in the opinion of the Tax Administrator, the noncollection occurred in good faith. In determining whether the noncollection was in good faith, the Tax Administrator may take into consideration the uniqueness of the product or service, industry practice or other precedence, or whether the person offers to voluntarily disclose its tax liability. To encourage voluntary full disclosure and on-going cooperation on tax collection and remittance, the Tax Administrator, and its agents, may enter into agreements with the tax-collecting service providers and grant prospective only effect on any changes regarding the taxation of services or charges that were previously deemed by the service provider, in good faith and without gross negligence, to be nontaxable. In determining whether the noncollection was in good faith and without gross negligence, the Tax Administrator may take into consideration the uniqueness of the product or service, industry practice or other precedence, and whether the disclosure was voluntarily made by the service provider or its agent.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.919 Records.

(a) It shall be the duty of every person required to collect and/or remit to the City any tax imposed by this article to keep and preserve, for a period of at least three (3) years, all records as may be necessary to determine the amount of such tax that such person may have been liable for the collection of and remittance to the Tax Administrator, which records the Tax Administrator shall have the right to inspect at a reasonable time.

(b) The Tax Administrator may issue an administrative subpoena to compel a person to deliver, to the Tax Administrator, copies of all records deemed necessary by the Tax Administrator to establish compliance with this article, including the delivery of records in a common electronic format on readily available media if such records are kept electronically by the person in the usual and ordinary course of business. As an alternative to delivering the subpoenaed records to the Tax Administrator on or before the due date provided in the administrative subpoena, such person may provide access to such records outside the City on or before the due date; provided, that such person shall reimburse the City for all reasonable travel expenses incurred by the City to inspect those records, including travel, lodging, meals, and other similar expenses, but excluding the normal salary or hourly wages of those persons designated by the City to conduct the inspection.

(c) The Tax Administrator is authorized to execute a nondisclosure agreement approved by the City Attorney to protect the confidentiality of customer information pursuant to California Revenue and Tax Code Sections 7284.6 and 7284.7. The Tax Administrator may request from a person providing transportation or distribution services of gas or electricity to service users within the City, a list of the names, billing and service addresses, quantities of gas or electricity delivered, and other pertinent information, of its transportation customers within the City pursuant to Section 6354(e) of the California Public Utilities Code.

(d) If a service supplier uses a billing agent or billing aggregator to bill, collect, and/or remit the tax, the service supplier shall: (1) provide to the Tax Administrator the name, address and telephone number of each billing agent and billing aggregator currently authorized by the service supplier to bill, collect, and/or remit the tax to the City; and (2) upon request of the Tax Administrator, deliver, or effect the delivery of, any information or records in the possession of such billing agent or billing aggregator that, in the opinion of the Tax Administrator, is necessary to verify the proper application, calculation, collection and/or remittance of such tax to the City.

(e) If any person subject to record-keeping under this article unreasonably denies the Tax Administrator, or the Tax Administrator’s designated representative, access to such records, or fails to produce the information requested in an administrative subpoena within the time specified, the Tax Administrator may impose a penalty of Five Hundred and no/100ths ($500.00) Dollars on such person for each day following: (1) the initial date that the person refuses to provide such access; or (2) the due date for production of records as set forth in the administrative subpoena. This penalty shall be in addition to any other penalty imposed under this article.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.920 Refunds/credits.

Whenever the amount of any tax has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this article, it may be refunded or credited as provided in this section:

(a) The Tax Administrator may refund any tax that has been overpaid or paid more than once or has been erroneously or illegally collected or received by the Tax Administrator under this article; provided, that no refund shall be paid under the provisions of this section unless the claimant or his or her guardian, conservator, executor, or administrator has submitted a written claim to the Tax Administrator within one (1) year of the overpayment or erroneous or illegal collection of said tax. Such claim must clearly establish claimant’s right to the refund by written records showing entitlement thereto. To the extent allowed by law, nothing herein shall permit the filing of a claim on behalf of a class or group of taxpayers unless each member of the class has submitted a written claim under penalty of perjury as provided by this section.

(b) The submission of a written claim, which is acted upon by the City Council, shall be a prerequisite to a suit thereon. (See Section 935 of the California Government Code). The Tax Administrator, or the City Council where the claim is in excess of Four Thousand Nine Hundred Ninety-Five and no/100ths ($4,995.00) Dollars shall act upon the refund claim within the time period set forth in Government Code Section 912.4. If the City Council fails or refuses to act on a refund claim within the time prescribed by Government Code Section 912.4, the claim shall be deemed to have been rejected by the City Council on the last day of the period within which the City Council was required to act upon the claim as provided in Government Code Section 912.4. The Tax Administrator shall give notice of the action in a form that substantially complies with that set forth in Government Code Section 913.

(c) Notwithstanding the notice provisions of subsection (a) of this section, the Tax Administrator may, at his or her discretion, give written permission to a service supplier, who has collected and remitted any amount of tax in excess of the amount of tax imposed by this article, to claim credit for such overpayment against the amount of tax which is due the City upon a subsequent monthly return(s) to the Tax Administrator; provided, that, prior to taking such credit by the service supplier: (1) such credit is claimed in a return dated no later than one (1) year from the date of overpayment or erroneous collection of said tax; (2) the Tax Administrator is satisfied that the underlying basis and amount of such credit has been reasonably established; and (3) in the case of an overpayment by a service user to the service supplier that has been remitted to the City, the Tax Administrator has received proof, to his or her satisfaction, that the overpayment has been refunded by the service supplier to the service user in an amount equal to the requested credit.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.921 Appeals.

(a) The provisions of this section apply to any decision (other than a decision relating to a refund pursuant to Section 3-6.920), deficiency determination, assessment, or administrative ruling of the Tax Administrator. Any person aggrieved by any decision (other than a decision relating to a refund pursuant to Section 3-6.920), deficiency determination, assessment, or administrative ruling of the Tax Administrator, shall be required to comply with the appeals procedure of this section. Compliance with this section shall be a prerequisite to a suit thereon. (See Government Code Section 935(b)). To the extent allowed by law, nothing herein shall permit the filing of a claim or action on behalf of a class or group of taxpayers.

(b) If any person is aggrieved by any decision (other than a decision relating to a refund pursuant to Section 3-6.920), deficiency determination, assessment, or administrative ruling of the Tax Administrator; he or she may appeal to the City Manager by filing a notice of appeal with the City Clerk within fourteen (14) days of the date of the decision, deficiency determination, assessment, or administrative ruling of the Tax Administrator which aggrieved the service user or service supplier.

(c) The matter shall be scheduled for hearing before an independent hearing officer selected by the City Manager, or designee, no more than thirty (30) days from the receipt of the appeal. The appellant shall be served with notice of the time and place of the hearing, as well as any relevant materials, at least five (5) calendar days prior to the hearing. The hearing may be continued from time to time upon mutual consent. At the time of the hearing, the appealing party, the Tax Administrator, the City Manager, and any other interested person may present such relevant evidence as he or she may have relating to the determination from which the appeal is taken.

(d) Based upon the submission of such evidence and the review of the City’s files, the City Manager shall issue a written notice and order upholding, modifying or reversing the determination from which the appeal is taken. The notice shall be given within fourteen (14) days after the conclusion of the hearing and shall state the reasons for the decision. The notice shall specify that the decision is final and that any petition for judicial review shall be filed within ninety (90) days from the date of the decision in accordance with Code of Civil Procedure Section 1094.6.

(e) All notices under this section may be sent by regular mail, postage prepaid, and shall be deemed received on the third calendar day following the date of mailing, as established by a proof of mailing.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.922 No injunction/writ of mandate.

No injunction or writ of mandate or other legal or equitable process shall issue in any suit, action, or proceeding in any court against this City or against any officer of the City to prevent or enjoin the collection under this article of any tax or any amount of tax required to be collected and/or remitted.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.923 Remedies cumulative.

All remedies and penalties prescribed by this article and Chapter 1-2, or which are available under any other provision of law or equity, including but not limited to the California False Claims Act (Government Code Section 12650 et seq.) and the California Unfair Practices Act (Business and Professions Code Section 17070 et seq.), are cumulative. The use of one (1) or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this section.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.924 Notice of changes to ordinance.

If a tax under this article is added, repealed, increased, reduced, or the tax base is changed, the Tax Administrator shall follow the notice requirements of Public Utilities Code Section 799.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.925 Future amendment to cited statute.

Unless specifically provided otherwise, any reference to a State or Federal statute in this article shall mean such statute as it may be amended from time to time. To the extent that the City’s authorization to collect or impose any tax imposed under this article is expanded or limited as a result of an amendment or new enactment of a State or Federal law, no amendment or modification of this article shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this article.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.926 Annual rate review and independent audit of tax collection, exemption, remittance and expenditure.

The City shall annually verify that the taxes owed under this section have been properly applied, exempted, collected, and remitted in accordance with this section, and properly expended according to applicable municipal law. The annual verification shall be performed by a qualified independent third party and the review shall employ reasonable, cost-effective steps to assure compliance, including the use of sampling audits. The verification shall not be required of tax remitters where the cost of the verification may exceed the tax revenues to be reviewed.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

3-6.927 No increase in tax percentage or change in methodology without voter approval—Amendment or repeal.

This article may be repealed or amended by the City Council without a vote of the people. However, as required by Chapter XIIIC of the California Constitution, voter approval is required for any amendment provision that would increase the rate of any tax levied pursuant to this article,; provided, however, the following actions shall not constitute an increase of the rate of a tax:

(a) The restoration of the rate of the tax to a rate that is no higher than that set by this article, if the City Council has acted to reduce the rate of the tax;

(b) An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as such interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this article;

(c) The establishment a class of persons that is exempt or excepted from the tax or the discontinuation of any such exemption or exception (other than the discontinuation of an exemption or exception specifically set forth in this article); and

(d) The collection of the tax imposed by this article, even if the City had, for some period of time, failed to collect the tax.

(§ 1, Ord. 1335-16 (CM), eff. December 23, 2016)

Article 10. Transactions and Use Tax*

* Approved by voters at November 7, 2006 Special Municipal Election.

3-6.1001 Title.

This article shall be known as the City of Watsonville Transactions and Use Tax Ordinance. The City of Watsonville hereinafter shall be called “City.” This article shall be applicable in the incorporated territory of the City of Watsonville.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1002 Operative date.

“Operative Date” shall mean the first day of the first calendar quarter commencing more than 110 days after the adoption of the ordinance codified in this article, the date of such adoption being as set forth below.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1003 Purpose.

This article is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish these purposes:

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

(b) To adopt a retail transactions and use tax ordinance 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 a retail transactions and use tax ordinance that imposes a tax and provides a measure therefor 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 article.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1004 Contract with State.

Prior to the operative date, the City shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of the transactions and use tax ordinance codified in this article; provided, that if the City shall not have contracted with the State Board of Equalization prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1005 Transactions Tax Rate.

For the privilege of selling tangible personal property at retail, a tax is hereby imposed upon all retailers in the incorporated and unincorporated territory of the City at the rate of one quarter of one percent 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 the ordinance codified in this article.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1006 Place of sale.

For the purposes of this article, 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 shall include delivery charges, when such charges are subject to the state sales and use tax, regardless of the place to which delivery is made. If 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 shall be determined under rules and regulations to be prescribed and adopted by the State Board of Equalization.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1007 Use tax rate.

An excise tax is hereby 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 the ordinance codified in this article for storage, use or other consumption in said territory at the rate of one quarter of one percent of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1008 Adoption of provisions of State law.

Except as otherwise provided in this article 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 hereby adopted and made a part of this article as though fully set forth herein.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1009 Limitations on adoption of State law and collection of use taxes.

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

(a) Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be 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 article;

(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:

(i) 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

(ii) 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” shall be 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.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1010 Permit not required.

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 shall not be required by this article.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1011 Exemptions and exclusions.

(a) There shall be 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 shall be satisfied:

(i) 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

(ii) 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 prior to the operative date of the ordinance codified in this article;

(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 prior to the operative date of the ordinance codified in this article;

(5) For the purposes of subsections (b)(3) and (b)(4) of this section, the sale or lease of tangible personal property shall be 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 article, 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 prior to the operative date of the ordinance codified in this article;

(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 prior to the operative date of the ordinance codified in this article;

(5) For the purposes of subsections (b)(3) and (b)(4) of this section, storage, use, or other consumption, or possession of, or exercise of any right or power over, tangible personal property shall be 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 (b)(7) of this section, a retailer engaged in business in the City shall not be 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, but not limited to, 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” shall also include 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 shall be 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 article 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.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1012 Amendments.

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

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1013 Enjoining collection forbidden.

No injunction or writ of mandate or other legal or equitable process shall 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 article, 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.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1014 Severability.

If any provision of this article or the application thereof to any person or circumstance is held invalid, the remainder of the ordinance and the application of such provision to other persons or circumstances shall not be affected thereby.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

3-6.1015 Effective date.

This article relates to the levying and collecting of the City transactions and use tax and shall take effect immediately.

(§ 1, Ord. 1196-06 (CM), eff. August 8, 2006)

Article 11. Transactions and Use Tax: Public Safety Sales Tax Measure*

* Code reviser’s note: Sections 3-6.1101 through 3-6.1117 were voter approved on March 3, 2020, rescinding Ordinance 1301-14 (CM).

3-6.1101 Title.

This article shall be known as the City of Watsonville transactions and use tax: public safety sales tax measure. The City of Watsonville hereinafter shall be called “City.” This article shall be applicable in the incorporated territory of the City of Watsonville.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1102 Program restrictions.

The public safety sales tax measure will provide a secure, local revenue stream to the City of Watsonville that shall be used entirely to provide additional police and fire personnel, update public safety equipment, facilities and services, and enhance youth violence prevention programs to protect our community. Detailed expenditure plans shall be developed to explain how the funds will be spent if the one-half of one (0.50%) percent sales tax is renewed by voters. These program restrictions are established to govern how the money shall be spent, to specify the accounting, audit and oversight methods that will be implemented to make certain that the funds are spent according to the voters’ direction, and to ensure the public is well informed of the progress and process.

(a) Public Safety Services. The public safety sales tax measure will enable the City to maintain: police officer staffing levels; police emergency response times; neighborhood patrols; anti-gang and youth violence prevention, intervention and suppression efforts including the Police Activities League program and other youth programs. The public safety sales tax measure will enable the upgrade of equipment and technology to help solve crimes, combat crime and fight gangs and expand programs to identify and shut down drug and gang houses. It will also help maintain: firefighter staffing levels to ensure enough are on duty, fire and paramedic emergency response times and replace inadequate and outdated life-saving equipment. Funds may be used to improve, maintain or develop services or facilities (e.g., East Side Emergency Services) based on demand for services as demonstrated by call volumes, response times or other measurable indicators of community need. The public safety sales tax measure will enable the City to hire more parks and recreation staff for youth prevention programs, increase recreation services to neighborhoods, and upgrade equipment and facilities to increase and improve safe places for youth in the Watsonville community.

(b) The City shall commission an independent third-party fire facility and operational needs assessment at least once every decade, no later than two years after final decennial census data is available. The facility and operational needs assessment shall be used to update the City’s Fire Department and Police Department short-term and long-term facility and operational needs. The first assessment should be conducted by July 2020, paid for by the measure.

(c) Fiscal Accountability Protections. An independent auditor shall annually review and audit expenditures of funds specifically derived from the public safety sales tax measure, to disclose how the money was used and ensure compliance with the expenditures plans and to ensure that revenues are spent within prudent, established accounting procedures and practices. The results shall be part of the City’s annual audit.

(1) The City Revenue Measure Oversight Committee shall serve in an oversight capacity to at least biannually review revenues and expenditures and provide second independent verification that all expenditures are being made as promised to Watsonville residents. The findings of both the Revenue Measure Oversight Committee and the independent auditor shall be reviewed by the City Council at a publicly noticed meeting of the Council and made available to the public.

(2) The public safety tax measure will be in effect until repealed by Watsonville voters.

(d) Dedicated Accounting Structure. The public safety sales tax measure annual budget appropriation shall specify that all revenues from the public safety sales tax measure shall be used only for improving our community’s public safety, with the revenue to be directed in support of the Police, Fire and Parks and Community Service Departments, in the proportions of fifty-four (54%) percent to Police, thirty-eight (38%) percent to Fire and eight (8%) percent to Parks and Community Services.

The City shall establish separate funds into which these specific monies shall be deposited. These funds shall be separate for Police, Fire and Parks and Community Services and shall be the source of their respective expenditures as established in the annual budget appropriation reviewed by the Revenue Measure Oversight Committee and approved by resolution of the Council.

(e) Maintenance of Effort. The City Council shall not use public safety sales tax measure funds to replace General Fund operating budget contributions for the Police and Fire. The baseline maintenance of effort budgets for this purpose shall be the fiscal year 2013-2014 adopted General Fund budgeted City contribution amounts for Police and Fire operations inflated by the change in Consumer Price Index not to exceed three (3%) percent beginning in the fiscal year 2020-2021 budget. The Police Department fiscal year 2013-2014 adopted General Fund operating City budget contribution amount is Twelve Million Three Hundred Fifty-Nine Thousand Nine Hundred Twenty-Four and no/100ths ($12,359,924.00) Dollars; and the Fire Department fiscal year 2013-2014 adopted General Fund operating City budget contribution amount is Five Million Six Hundred Seventy-Two Thousand Two Hundred Ninety-Nine and no/100ths ($5,672,299.00) Dollars. The Consumer Price Index shall be for all urban consumers for the San Francisco Bay Area for the preceding April to April change.

(f) Administrative Costs. Administrative overhead costs for accounting, payroll and human resources related to the public safety sales tax measure shall not exceed two (2%) percent of the annually budgeted revenues.

(g) Contingency/Reserve Fund. Because the public safety sales tax measure is used for essential services that are needed during both good and bad economic times, the City Council shall establish a contingency/reserve fund adequate to ensure that services are maintained in the event sales tax revenues decline. There shall be a separate public safety sales tax measure contingency/reserve fund for the Police Department, the Fire Department and the Parks and Community Services Department.

(1) A public safety sales tax measure contingency/reserve fund shall be established as follows: A contingency/reserve fund containing ten (10%) percent of the annually budgeted revenues will be established. In any given year when the contingency/reserve fund holds less than the required ten (10%) percent of annual revenues, the first use of funds will be to implement the plan’s current year program and then to establish or reestablish the contingency/reserve fund.

(2) If actual revenues in any given year are less than budgeted revenues, the City Council may use the contingency/reserve fund to make up the difference between budgeted revenues and actual revenues for the approved annual budget appropriation.

(h) Priorities if Additional Revenues Are Available. If the contingency/reserve fund is fully funded and all annual planned expenditures have been implemented, any additional unanticipated sales tax revenues shall be used first to accelerate the implementation of the expenditure plans and then to provide additional public safety facilities, personnel, and equipment and youth violence prevention and Parks and Community Services based upon the specific needs of the community with the review and recommendation of the Revenue Measure Oversight Committee and approval of the City Council.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1103 Operative date.

“Operative date” shall mean 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 article.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1104 Purpose.

This article is adopted to achieve the following, among other purposes, and directs that the provisions hereof be interpreted in order to accomplish these purposes:

(a) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) and Section 7285.91 of Part 1.7 both in Division 2 of the Revenue and Taxation Code which authorizes the City to adopt this tax ordinance which shall be operative if two-thirds (2/3) of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose.

(c) To adopt a retail transactions and use tax ordinance that imposes a tax and provides a measure therefor that can be administered and collected by the California Department of Tax and Fee Administration 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 California Department of Tax and Fee Administration in administering and collecting the California State sales and use taxes.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1105 Contract with State.

Prior to the operative date, the City shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this transaction and use tax ordinance; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1106 Transactions tax rate.

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 one-half of one (0.50%) percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory until repealed by voters from the operative date of the ordinance codified in this article.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1107 Place of sale.

For the purposes of this article, 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 shall include delivery charges, when such charges are subject to the State sales and use tax, regardless of the place to which delivery is made. If a retailer has no permanent place of business in the State or has more than one (1) place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1108 Use tax rate.

An excise tax is hereby imposed on the storage, use or other consumption in the incorporated territory of the City of tangible personal property purchased from any retailer after the operative date of the ordinance until repealed by the voters as codified in this article for storage, use or other consumption in said territory at the rate of one-half of one (0.50%) percent of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1109 Adoption of provisions of State law.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1110 Limitations on adoption of State law and collection of use taxes.

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

(a) Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when:

(1) The word “State” is used as a part of the title of the State Controller, State Treasurer, State Board of Control, California Department of Tax and Fee Administration, 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 California Department of Tax and Fee Administration, in performing the functions incident to the administration or operation of this article;

(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:

(i) 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 remains subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code; or

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

(1) “A retailer engaged in business in the District” shall also include any retailer that, in the preceding calendar year or the current calendar year, has total combined sales of tangible personal property in this State or for delivery in the State by the retailer and all persons related to the retailer that exceeds Five Hundred Thousand and no/100ths ($500,000.00) Dollars. For purposes of this section, a person is related to another person if both persons are related to each other pursuant to Section 267(b) of Title 26 of the United States Code and the regulations thereunder.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1111 Permit not required.

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 shall not be required by this article.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1112 Exemptions and exclusions.

(a) There shall be 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:

(i) 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

(ii) 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.

(5) For the purposes of subsections (b)(3) and (4) of this section, the sale or lease of tangible personal property shall be 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 is exempted from the use tax imposed by this article 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.

(3) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of the ordinance codified in this article.

(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 shall be 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) of this section, a retailer engaged in business in the City shall not be 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, but not limited to, 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.

(d) Any person subject to use tax under this article 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.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1113 Amendments.

All amendments subsequent to the effective date of the ordinance codified in this article 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, shall automatically become a part of this article; provided, however, that no such amendment shall operate so as to affect the rate of tax imposed by this article.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1114 Enjoining collection forbidden.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1115 Severability.

If any provision of this article or the application thereof to any person or circumstance is held invalid, the remainder of the article and the application of such provision to other persons or circumstances shall not be affected thereby.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1116 Effective date.

The ordinance codified in this article relates to the levying and collecting of the City transactions and use tax and shall take effect immediately.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

3-6.1117 Termination date.

The tax levied by this article shall continue until repealed by voters from the operative date of the ordinance codified in this article.

(§ 1, Ord. 1393-19 (CM), eff. March 3, 2020)

Article 12. Watsonville Cannabis Business Tax*

* Code reviser’s note: Sections 3-6.1200 through 3-6.1232 were voter approved on November 8, 2016.

3-6.1200 Purpose.

This article shall be known as the “Watsonville Cannabis Business Tax” and is enacted solely to raise revenue for the general governmental purposes of the City and not for purposes of regulation or of raising revenues for regulatory purposes. All of the proceeds from the tax imposed by this chapter shall be placed in the City’s general fund and used for the usual current expenses of the City.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1201 Tax imposed.

There is established and imposed a business tax at the rate set forth in this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1202 Definitions.

The definitions in this section shall govern the application and interpretation of this chapter.

The definitions promulgated for the California Cannabis Cultivation Program in Division 8 (Cannabis Cultivation) of Title 3 (Food and Agriculture) of the California Code of Regulations Section 8000 et seq., 3 CCR 8000.

The definitions promulgated for the California Bureau of Cannabis Control in Division 42 (Bureau of Cannabis Control) of Title 16 (Professional and Vocational Regulations) of the California Code of Regulations Section 5000 et seq., 16 CCR 5000.

(a) “Business” shall include all activities engaged in or caused to be engaged in within the City, including any commercial or industrial enterprise, trade, profession, occupation, vocation, calling, or livelihood, whether or not carried on for gain or profit, but shall not include the services rendered by an employee to his or her employer.

(b) “Cultivated area” shall mean any area indoors that is the greater of either:

(1) The total area of a property that is densely or primarily occupied by cannabis cultivation; or

(2) One (1) square foot per juvenile or mature cannabis plant on the parcel.

(c) “Employee” shall mean each and every person engaged in the operation or conduct of any business, whether as owner, member of the owner’s family, partner, associate, agent, manager or solicitor, and each and every other person employed or working in such business for a wage, salary, commission or room and board.

(d) “Engaged in business” shall mean the commencing, conducting, operating, managing or carrying on of a cannabis business and the exercise of corporate or franchise powers, whether done as owner, or by means of an officer, agent, manager, employee, or otherwise, whether operating from a fixed location in the City or coming into the City from an outside location to engage in such activities. A person shall be deemed engaged in business within the City if:

(1) Such person or person’s employee maintains a fixed place of business within the City for the benefit or partial benefit of such person;

(2) Such person or person’s employee owns or leases real property within the City for business purposes;

(3) Such person or person’s employee regularly maintains a stock of tangible personal property in the City for sale in the ordinary course of business;

(4) Such person or person’s employee regularly conducts solicitation of business within the City;

(5) Such person or person’s employee performs work or renders services in the City on a regular and continuous basis involving more than five (5) working days per year;

(6) Such person or person’s employee utilizes the streets within the City in connection with the operation of motor vehicles for business purposes.

The foregoing specified activities shall not be a limitation on the meaning of “engaged in business.”

(e) “Evidence of doing business” shall mean whenever any person shall, by use of signs, circulars, cards or any other advertising media, including the use of internet or telephone solicitation, represent that such person is engaged in cannabis business in the City, then these facts may be used as evidence that such person is engaged in business in the City.

(f) “Gross receipts,” except as otherwise specifically provided, shall mean the total amount actually received or receivable from all sales; the total amount or compensation actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise; discounts, rents, royalties, fees, commissions, dividends, and gains realized from trading in stocks or bonds, however designated. Included in “gross receipts” shall be all receipts, cash, credits and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever, except that the following shall be excluded therefrom:

(1) Cash discounts allowed and taken on sales;

(2) Credit allowed on property accepted as part of the purchase price and which property may later be sold, at which time the sales price shall be included as gross receipts;

(3) Any tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;

(4) Such part of the sale price of any property returned by purchasers to the seller as refunded by the seller by way of cash or credit allowances or return of refundable deposits previously included in gross receipts;

(5) Receipts from investments where the holder of the investment receives only interest and/or dividends, royalties, annuities and gains from the sale or exchange of stock or securities solely for a person’s own account, not derived in the ordinary course of a business;

(6) Receipts derived from the occasional sale of used, obsolete or surplus trade fixtures, machinery or other equipment used by the taxpayer in the regular course of the taxpayer’s business;

(7) Cash value of sales, trades or transactions between departments or units of the same business;

(8) Whenever there are included within the gross receipts amounts which reflect sales for which credit is extended and such amount proved uncollectible in a subsequent year, those amounts may be excluded from the gross receipts in the year they prove to be uncollectible; provided, however, if the whole or portion of such amounts excluded as uncollectible are subsequently collected, they shall be included in the amount of gross receipts for the period when they are recovered;

(9) Receipts of refundable deposits, except that such deposits when forfeited and taken into income of the business shall not be excluded when in excess of One and no/100ths ($1.00) Dollar;

(10) Amounts collected for others where the business is acting as an agent or trustee and to the extent that such amounts are paid to those for whom collected. These agents or trustees must provide the Finance Department with the names and the addresses of the others and the amounts paid to them. This exclusion shall not apply to any fees, percentages, or other payments retained by the agent or trustees.

(g) “Gross receipts” subject to the business tax shall be that portion of gross receipts relating to business conducted within the City.

(h) “Cannabis business” or “medical cannabis business” shall mean either of the following:

(1) Any location where cannabis is distributed, delivered, dispensed, sold or given away to a qualified patient, a person with an identification card, or a primary caregiver.

(2) Any vehicle or other mode of transportation, stationary or mobile, which is used to transport, distribute, deliver, dispense, or give away cannabis to a qualified patient, a person with an identification card, or a primary caregiver.

(3) Notwithstanding subsections (h)(1) and (h)(2) of this section, “medical cannabis business” shall not include any of the following:

(i) A residence or dwelling unit in which a resident may possess and cultivate amounts of cannabis in compliance with State law.

(i) “Cannabis business tax,” “business tax” or “cannabis tax” shall mean the tax due for engaging in cannabis business in the City of Watsonville.

(j) “Person” shall mean, without limitation, any natural individual, organization, firm, trust, common law trust, estate, partnership of any kind, association, syndicate, club, joint stock company, joint venture, limited liability company, corporation (including foreign, domestic, and nonprofit), cooperative, receiver, trustee, guardian, or other representative appointed by order of any court.

(k) “Sale” shall mean and includes any sale, exchange, or barter.

(l) “Finance Director” shall mean the Director of Finance for the City of Watsonville or such other person designated by the City Manager from time to time to administer this chapter.

(§ 1, Ord. 1417-21 (CM), eff. April 22, 2021)

3-6.1203 Other licenses, permits, taxes, fees or charges.

Nothing contained in this chapter shall be deemed to repeal, amend, be in lieu of, replace or in any way affect any requirements for any license or permit required by, under or by virtue of any provision of any other title or chapter of this code or any other ordinance or resolution of the City, nor be deemed to repeal, amend, be in lieu of, replace or in any way affect any tax, fee or other charge imposed, assessed or required by, under or by virtue of any other title or chapter of this code or any other ordinance or resolution of the City. Any references made or contained in any other title or chapter of this code to any licenses, license taxes, fees or charges, or to any schedule of license fees, shall be deemed to refer to the licenses, license taxes, fees or charges, or schedule of license fees, provided for in other titles or chapters of this code.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1204 Payment of tax does not authorize unlawful business.

(a) The payment of a business tax required by this chapter, and its acceptance by the City, shall not entitle any person to carry on any cannabis business unless the person has complied with all of the requirements of this code and all other applicable laws, nor to carry on any cannabis business in any building or on any premises if such building or premises is situated in a zone or locality in which the conduct of such cannabis business is in violation of any law.

(b) No tax paid under the provisions of this chapter shall be construed as authorizing the conduct or continuance of any illegal or unlawful business, or any business in violation of any ordinance of the City.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1205 Payment—Location.

The tax imposed under this chapter shall be paid to the Finance Director in lawful money of the United States, at the offices of the City of Watsonville Finance Department. Lawful money shall mean any coin, currency or negotiable instrument, exchangeable for said coin or currency, which the United States Congress has declared to be a national legal tender.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1206 Amount of tax owed.*

(a) Cultivation. Every person who engages in the business of cannabis cultivation in the City shall pay an annual tax not to exceed Twenty and no/100ths ($20.00) Dollars per square foot per year ($20.00/SF/YR) of canopy area. The tax shall be paid monthly to the Finance Director. Notwithstanding the maximum tax rate of Twenty and no/100ths ($20.00) Dollars per square foot per year imposed under this subsection, the City Council may, in its discretion, at any time by ordinance, adopt a lower tax rate for cannabis cultivation, as defined in such ordinance, subject to the maximum rate set forth in this subsection. The Council may by ordinance also increase the tax from time to time, not to exceed the maximum tax of this subsection.

(1) The cannabis tax shall be set at Ten and no/100ths ($10.00) Dollars per square foot for flowering canopy, and One and no/100ths ($1.00) Dollar per square foot for immature and/or nursery plants.

(b) Manufacturers. Every person who engages in the business of manufactured cannabis or manufacture of cannabis products in the City shall pay to the City a tax of not more than two and one-half (2.5%) percent of gross receipts. The tax shall be paid monthly in arrears to the Finance Director at the rate of eight and thirty-three-one-hundredths (8.33%) percent of the annual tax per month or any portion of a month. Notwithstanding the maximum tax rate of two and one-half (2.5%) percent of gross receipts imposed under this subsection, the Council may, in its discretion, at any time by ordinance, implement a lower tax rate for all cannabis manufacture businesses as defined in such ordinance, subject to the maximum rate set forth in this subsection. The Council may by ordinance also increase any such tax rate from time to time, not to exceed the maximum tax rate established in this subsection. The cannabis business tax for manufacturers is set at two and one-half (2.5%) percent of gross receipts from the manufacture of cannabis or manufactured cannabis products in the City through and including February 2018 to allow collection and analysis of such data as may be determined by the City Council to be appropriate to consider any change in the initial two and one-half (2.5%) percent rate after February 2018.

(c) Retail Sales. Every person engaged in retail cannabis sales business, including but not limited to a retail cannabis business in the City, shall pay a business tax of no more than ten (10%) percent of gross receipts. The tax shall be paid monthly to the Finance Director. Notwithstanding the maximum tax rate of ten (10%) percent of gross receipts imposed under this subsection, the Council may, in its discretion, at any time by ordinance, implement a lower tax rate for all retail cannabis sales, as defined in such ordinance, subject to the maximum ten (10%) percent above. The Council may by ordinance also increase any such tax rate from time to time, not to exceed the maximum tax rate established under this subsection. The cannabis business tax for retail sales is set at five (5%) percent of gross receipts from retail sales of cannabis and cannabis products.

(§ 1, Ord. 1417-21 (CM), eff. April 22, 2021)

* Code reviser’s note: This article may be amended in accordance with Section 3-6.1206.

3-6.1207 Payment—Time limits.

The business tax imposed by this chapter shall be due and payable as follows:

(a) Each person owing a tax under this chapter shall, on or before the fifth day of each calendar month, prepare and submit a tax statement to the Finance Director for the amount of tax owed for the preceding calendar month. At the time the tax statement is filed, on or before the fifth day of the succeeding month, the full amount of the tax owed for the preceding calendar month shall be remitted to the Finance Director.

(b) All tax statements shall be completed on forms provided by the Finance Director.

(c) Tax statements and payments for all outstanding taxes owed the City are immediately due to the Finance Director upon cessation of business for any reason.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1208 Payments and communications made by mail.

Whenever any payment, statement, report, request or other communication received by the Finance Director is received after the time prescribed by this chapter for the receipt thereof, but is in an envelope bearing a postmark showing that it was mailed on or prior to the date prescribed in this chapter for the receipt thereof, or whenever the Finance Director is furnished substantial proof that the payment, statement, report, request or other communication was in fact deposited in the United States mail on or prior to the date prescribed for receipt thereof, the Finance Director may regard such payment, statement, report, request or other communication as having been timely received. If the due date falls on Saturday, Sunday or a holiday, the due date shall be the next regular business day on which the City Building at 250 Main Street, Watsonville, is open to the public.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1209 Payment—When taxes deemed delinquent.

Unless otherwise specifically allowed under other provisions of this chapter, the taxes required to be paid pursuant to this chapter shall be deemed delinquent if not paid on or before the due date specified in Section 3-6.1207.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1210 Notice not required by City.

The Finance Director is not required to send a delinquency or other notice or bill to any person subject to the provisions of this chapter and failure to send such notice or bill shall not affect the validity of any tax or penalty due under the provisions of this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1211 Payment—Penalty for delinquency.

(a) Any person who fails or refuses to pay any business tax required to be paid pursuant to this chapter on or before the due date shall pay penalties and interest as follows:

(1) A penalty equal to twenty-five (25%) percent of the amount of the tax in addition to the amount of the tax, plus interest on the unpaid tax calculated from the due date of the tax at a rate established by resolution of the Council; and

(2) An additional penalty equal to twenty-five (25%) percent of the amount of the tax if the tax remains unpaid for a period exceeding one (1) calendar month beyond the due date, plus interest on the unpaid tax and on the unpaid penalties, calculated at the rate established by resolution of the Council.

(3) Interest shall be applied at the monthly rate on the first day of the month for the full month, and will continue to accrue monthly on the tax and penalty until the balance is paid in full.

(4) Only payments for the full amount due shall be accepted. Partial payments shall not be accepted.

(b) Whenever a check is submitted in payment of a business tax and the check is subsequently returned unpaid by the bank upon which the check is drawn, and the check is not redeemed prior to the due date, the taxpayer will be liable for the tax amount due plus the return check fee; penalties and interest as provided for in this section; and any amount allowed under State law.

(c) The business tax due shall be that amount due and payable from the first date on which the person was engaged in cannabis business in the City, together with applicable penalties and interest calculated in accordance with subsection (a) of this section.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1212 Waiver of penalties.

The Finance Director may waive the first instances of the twenty-five (25%) percent penalty imposed upon any person for good cause if:

(a) The person provides evidence satisfactory to the Finance Director that failure to pay on time was due to circumstances beyond the control of the person and occurred notwithstanding the exercise of ordinary care and the absence of willful neglect, and the person paid the delinquent business tax and accrued interest owed the City before applying to the Finance Director for a waiver.

(b) The waiver specified in this section shall not apply to interest accrued on the delinquent tax.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1213 Refunds—Credits.

(a) No refund shall be made of any tax collected pursuant to this chapter, except as provided in Section 3-6.1214; or

(b) No refund of any tax collected pursuant to this chapter shall be made because of the discontinuation, dissolution or other termination of a business.

(c) Any person entitled to a refund of taxes paid pursuant to this chapter may elect in writing to have such refund applied as a credit against such person’s business taxes for the next calendar month.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1214 Refunds and procedures.

(a) Whenever the amount of any business tax, penalty or interest has been overpaid, paid more than once, or has been erroneously or illegally collected or received by the City under this chapter, it may be refunded to the claimant who paid the tax; provided, that a written claim for refund is filed with the Finance Director within three (3) years of the date the tax was originally due and payable, and the provisions of Chapter 3-1, Claims and Warrants, commencing with Section 3-1.01, are satisfied.

(b) The Finance Director or the Finance Director’s authorized agent, as a condition prior to eligibility for a refund, has the right to examine and audit all the books and business records of the claimant in order to determine the eligibility of the claimant to the claimed refund. No claim for refund shall be allowed if the claimant refuses to allow such examination of claimant’s books and business records after request by the Finance Director to do so.

(c) If the business tax was erroneously paid and the error is attributable to the City, the entire amount of the tax erroneously paid shall be refunded to the claimant. If the error is attributable to the claimant, the City shall retain the amount set forth in the schedule of fees and charges established by resolution of the Council from the amount to be refunded to cover expenses.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1215 Exemptions—Application—Issuance—Conditions.

Any person desiring to claim exemption from the payment of the tax set forth in this chapter shall apply upon forms prescribed by the Finance Director and shall furnish such information and make such affidavits as may be required by the Finance Director.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1216 Exemptions—General.

Except as may be otherwise specifically provided in this chapter, the terms hereof shall not be deemed or construed to apply to any person when imposition of the tax upon that person would violate the Constitution of the United States or that of the State of California or preemptive Federal or State laws.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1217 Exemptions—Occasional transactions.

(a) This chapter shall not apply to persons having no fixed place of business within the City who come into the City to transact a specific item of business at the request of a specific patient, client or customer; provided, that such person does not come into the unincorporated area for the purpose of transacting business on more than five (5) days during any calendar year.

(b) For any person not having a fixed place of business within the City who comes into the City for the purpose of transacting business and who is not exempt as provided in subsection (a) of this section, the business tax payable by such person may be apportioned by the Finance Director in accordance with Section 3-6.1220.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1218 Enforcement—Duties of Finance Director.

It shall be the duty of the Finance Director to enforce each and all of the provisions of this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1219 Rules and regulations.

For purposes of apportionment as may be required by law and for purposes of administration and enforcement of this chapter generally, the Finance Director, with the concurrence of the City Attorney, may from time to time promulgate administrative rules and regulations implementing this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1220 Apportionment.

(a) None of the tax provided for by this chapter shall be applied so as to occasion an undue burden upon interstate commerce or violate the equal protection or due process clauses of the Constitutions of the United States or the State of California.

(b) If a business tax is believed by a taxpayer to place an undue burden upon interstate commerce or violate such constitutional clauses, the taxpayer may apply to the Finance Director for an adjustment of the tax. It shall be the taxpayer’s obligation to request in writing for an adjustment within one (1) year after the date of payment of the tax. If the taxpayer does not request in writing within one (1) year from the date of payment, then taxpayer shall be conclusively deemed to have waived any adjustment for that year and all prior years.

(c) The taxpayer shall, as a condition precedent to be entitled to apportionment, by sworn statement and supporting testimony, show the method of business and the gross volume of business and such other information as the Finance Director may deem necessary to determine the extent, if any, of such undue burden or violation. The Finance Director shall then conduct an investigation, and shall fix as the tax for the taxpayer an amount that is reasonable and nondiscriminatory, or if the tax has already been paid, shall order a refund of the amount over and above the tax so fixed. In fixing the tax to be charged, the Finance Director shall have the power to base the tax upon a percentage of gross receipts or any other measure which will assure that the tax assessed shall be uniform with that assessed on businesses of like nature, so long as the amount assessed does not exceed the tax as prescribed by this chapter.

(d) Should the Finance Director determine that the gross receipt measure of tax to be the proper basis, the Finance Director may require the taxpayer to submit a sworn statement of the gross receipts and pay the amount of tax as determined by the Finance Director.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1221 Audit and examination of records and equipment.

(a) The Finance Director shall have the power to audit and examine all books and records of persons engaged in cannabis business described in this chapter including both State and Federal income tax returns, California sales tax returns, or such other evidence documenting the gross receipts of persons engaged in cannabis business, and, where necessary, all equipment of any person engaged in cannabis business in the City, for the purpose of ascertaining the amount of business tax, if any, required to be paid by the provisions hereof, and for the purpose of verifying any statements or any item thereof when filed by any person pursuant to the provisions of this chapter. If such person, after written demand by the Finance Director, refuses to make available for audit, examination or verification such books, records or equipment as the Finance Director requests, the Finance Director may, after full consideration of all information within his or her knowledge concerning the cannabis business and activities of the person so refusing, make an assessment in the manner provided in Sections 3-6.1224 through 3-6.1226 of any taxes estimated to be due.

(b) It shall be the duty of every person liable for the collection and payment to the City of any tax imposed by this chapter to keep and preserve, for a period of at least three (3) years, all records as may be necessary to determine the amount of such tax as he or she may have been liable for the collection of and payment to the City, which records the Finance Director shall have the right to inspect at all reasonable times.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1222 Tax deemed debt to City.

The amount of any tax, penalties and interest imposed by the provisions of this chapter shall be deemed a debt to the City and any person carrying on any cannabis business without first having paid such tax shall be liable in an action in the name of the City in any court of competent jurisdiction for the amount of the tax, and penalties and interest imposed on such business.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1223 Deficiency determinations.

If the Finance Director is not satisfied that any statement filed as required under the provisions of this chapter is correct, or that the amount of tax is correctly computed, he or she may compute and determine the amount to be paid and make a deficiency determination upon the basis of the facts contained in the statement or upon the basis of any information in his or her possession or that may come into his or her possession within three (3) years of the date the tax was originally due and payable. One (1) or more deficiency determinations of the amount of tax due for a period or periods may be made. When a person discontinues engaging in a business, a deficiency determination may be made at any time within three (3) years thereafter as to any liability arising from engaging in such business whether or not a deficiency determination is issued prior to the date the tax would otherwise be due. Whenever a deficiency determination is made, a notice shall be given to the person concerned in the same manner as notices of assessment are given under Sections 3-6.1224 through 3-6.1226.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1224 Tax assessment—Authorized when—Nonpayment—Fraud.

(a) Under any of the following circumstances, the Finance Director may make and give notice of an assessment of the amount of tax owed by a person under this chapter at any time:

(1) If the person has not filed any statement required under the provisions of this chapter;

(2) If the person has not paid any tax due under the provisions of this chapter;

(3) If the person has not, after demand by the Finance Director, filed a corrected statement, or furnished to the Finance Director adequate substantiation of the information contained in a statement already filed, or paid any additional amount of tax due under the provisions of this chapter; or

(4) If the Finance Director determines that the nonpayment of any business tax due under this chapter is due to fraud, a penalty of twenty-five (25%) percent of the amount of the tax shall be added thereto in addition to penalties and interest otherwise stated in this chapter.

(b) The notice of assessment shall separately set forth the amount of any tax known by the Finance Director to be due or estimated by the Finance Director, after consideration of all information within the Finance Director’s knowledge concerning the business and activities of the person assessed, to be due under each applicable section of this chapter, and shall include the amount of any penalties or interest accrued on each amount to the date of the notice of assessment.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1225 Tax assessment—Notice requirements.

The notice of assessment shall be served upon the person either by handing it to him or her personally, or by a deposit of the notice in the United States mail, postage prepaid thereon, addressed to the person at the address of the location of the business or to such other address as he or she shall register with the Finance Director for the purpose of receiving notices provided under this chapter; or, should the person have no address registered with the Finance Director for such purpose, then to such person’s last known address. For the purposes of this section, a service by mail is complete at the time of deposit in the United States mail.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1226 Tax assessment—Hearing—Application and determination.

Within ten (10) days after the date of service of the notice, such person may apply in writing to the Finance Director for a hearing on the assessment. If application for a hearing before the City is not made within such ten (10) days, the tax assessed by the Finance Director shall become final and conclusive. Within thirty (30) days of the receipt of any application for hearing, the Finance Director shall cause the matter to be set for hearing before him or her not later than thirty-five (35) days after the receipt of the application, unless a later date is agreed to by the Finance Director and the person requesting the hearing. The Finance Director notice shall give notice of such hearing to the person requesting such hearing not later than five (5) days before such hearing. At such hearing said applicant may appear and offer evidence why the assessment as made by the Finance Director should not be confirmed and fixed as the tax due. After such hearing the Finance Director shall determine and reassess the proper tax to be charged and shall give written notice to the person in the manner prescribed in Section 3-6.1225 for giving notice of assessment.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1227 Conviction for chapter violation—Taxes not waived.

The conviction and punishment of any person for failure to pay the required tax shall not excuse or exempt such person from any civil action for the tax debt unpaid at the time of such conviction. No civil action shall prevent a criminal prosecution for any violation of the provisions of this chapter or of any State law requiring the payment of all taxes.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1228 Violation deemed misdemeanor—Penalty.

Any person violating any of the provisions of this chapter or any regulation or rule passed in accordance herewith shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than Five Hundred and no/100ths ($500.00) Dollars or by imprisonment for a period of not more than six (6) months, or by both such fine and imprisonment.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1229 Severability.

Should any provision of this chapter, or its application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any other provision of this chapter or the application of this chapter to any other person or circumstance and, to that end, the provisions hereof are severable.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1230 Effect of State and Federal reference/authorization.

(a) Unless specifically provided otherwise, any reference to a State or Federal statute in this chapter shall mean such statute as it may be amended from time to time; provided, that such reference to a statute herein shall not include any amendment thereto, or to any change of interpretation thereto by a State or Federal agency or court of law with the duty to interpret such law, to the extent that such amendment or change of interpretation would, under California law, require voter approval of such amendment or interpretation, or to the extent that such change would result in a tax decrease. To the extent voter approval would otherwise be required or a tax decrease would result, the prior version of the statute (or interpretation) shall remain applicable; for any application or situation that would not require voter approval or result in a decrease of a tax, provisions of the amended statute (or new interpretation) shall be applicable to the maximum possible extent.

(b) To the extent that the City’s authorization to collect or impose any tax imposed under this chapter is expanded as a result of changes in State or Federal law, no amendment or modification of this chapter shall be required to conform the tax to those changes, and the tax shall be imposed and collected to the full extent of the authorization up to the full amount of the tax imposed under this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1231 Remedies cumulative.

All remedies and penalties prescribed by this chapter or which are available under any other provision of law or equity, including but not limited to the California False Claims Act (Government Code Section 12650 et seq.) and the California Unfair Practices Act (Business and Professions Code Section 17070 et seq.), are cumulative. The use of one (1) or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this chapter.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

3-6.1232 Amendment or repeal.

This chapter may be repealed or amended by the Council without a vote of the people. However, as required by Chapter XIIIC of the California Constitution, voter approval is required for any amendment provision that would increase the rate of any tax levied pursuant to this chapter. The people of the City of Watsonville affirm that the following actions shall not constitute an increase of the rate of a tax:

(a) The restoration of the tax rate to a rate no more than set by this chapter, if the Council has acted to reduce tax rate;

(b) The increase of the tax rate from a prior rate if the increase is to a rate no more than allowed by this chapter;

(c) An action that interprets or clarifies the methodology of the tax, or any definition applicable to the tax, so long as interpretation or clarification (even if contrary to some prior interpretation or clarification) is not inconsistent with the language of this chapter;

(d) The establishment of a class of persons that is exempt or excepted from the tax or the discontinuation of any such exemption or exception (other than the discontinuation of an exemption or exception specifically set forth in this chapter); or

(e) The collection of the tax imposed by this chapter, even if the City had, for some period of time, failed to collect the tax.

(§ 1, Ord. 1330-16 (CM), eff. January 1, 2017)

Article 13. Companion Advisory Tax Revenue Apportionment Measure*

* Code reviser’s note: Section 3-6.1301 was voter approved on November 8, 2016.

3-6.1301 Cannabis business tax revenue apportionment—Advisory.

If Measure L (codified as Article 12) is approved by the voters, (a) twenty (20%) percent of its proceeds shall be used only to pay for law enforcement and crime prevention services, (b) fifteen (15%) percent used only to pay for fire services, (c) twenty (20%) percent used only to pay for community development, (d) twenty-five (25%) percent used only to pay for parks and community services, (e) eight (8%) percent used only for the City libraries, and (f) twelve (12%) percent only for nonprofit social and community services.

Department
Police	20%
Fire	15%
Community Development	20%
Parks and Community Service	25%
Library	8%
Non Prof Sector Social and Community Services	12%
Total:	100%

(§ 1, Ord. 1331-16 (CM), eff. January 1, 2017)

Article 14. Alcohol Sales Education and Regulatory Fee

3-6.1400 Alcohol sales education and regulatory fee.

An annual alcohol sales education and regulatory fee is hereby established to recover all or a portion of the cost of the annual inspections and education subject to the following provisions of this article.

(§ 1, Ord. 1386-19 (CM), eff. July 11, 2019)

3-6.1401 Fee imposed.

(a) Each licensee shall pay an annual fee in accordance with this chapter to fund a portion of a police officer and accountant to provide annual alcohol sales education and administer the program.

(b) The amount of the fee shall be determined annually based on cost recovery for staff time in implementing the program. The fees required to be paid pursuant to the provisions of this chapter shall be those fees established by resolution of the Council. The annual increase on the regulatory fee shall be raised annually by the Consumer Price Index (CPI) and the cost of service.

(d) The Finance Director or their designee shall be responsible for administering funds derived from the fee, for purposes of enforcement activities that are authorized by this chapter.

(e) Total of Fees to Be Collected. “Total of fees to be collected” shall mean the aggregate of all alcohol sales education and regulatory fees to be collected in the next billing cycle by the City.

(§ 1, Ord. 1386-19 (CM), eff. July 11, 2019)

3-6.1402 Collection of fees.

The fee will be paid annually for a calendar year from July 1st to June 30th. Licensees will be billed annually with a statement setting forth the amount of the fee.

(a) The statement will be sent on or before July 1st. Payment will be due on or before July 31st.

(b) The fee shall be nonrefundable for partial years of operation.

(c) The Finance Director may arrange payment plans upon demonstrated financial hardship. When appropriate, a payment plan may include a waiver, in whole or part, of a delinquency penalty and/or the interest obligation imposed by Section 3-6.1403.

(§ 1, Ord. 1386-19 (CM), eff. July 11, 2019)

3-6.1403 Penalties and interest.

(a) Any person or business who fails or refuses to pay the alcohol fee required to be paid pursuant to this chapter on or before the due date shall pay penalties and interest as follows:

(1) A penalty equal to twenty-five (25%) percent of the amount of the fee; and

(2) An additional penalty equal to twenty-five (25%) percent of the amount of the fee if the fee remains unpaid for a period exceeding one (1) calendar month beyond the due date.

(3) Only payments for the full amount due shall be accepted. Partial payments shall not be accepted.

(4) The fee imposed under this chapter shall constitute a debt to the City, and any person owing such fee shall be liable in an action brought in the name of the City for its recovery. Should any person fail to pay the fees assessed pursuant to the provisions of this chapter, the City may institute legal action in any court of competent jurisdiction to collect any fees and charges. Such fees and charges may be due, payable and collected in the same manner as any other debt owed to the City. Where the City is a prevailing party in such legal action, it reserves the right, on a case-by-case basis, to seek to recover costs, including reasonable attorney fees as set forth in Government Code Section 25845(c).

(§ 1, Ord. 1386-19 (CM), eff. July 11, 2019)

3-6.1404 Place of payment.

The alcohol sales education and regulatory fee shall be payable to the Finance Director or his/her authorized agent at the Finance Department.

(§ 1, Ord. 1386-19 (CM), eff. July 11, 2019)

Article 15. Community Investment Transactions and Use Tax Measure

3-6.1501 Title.

This article shall be known as the City of Watsonville community investment transactions and use tax. The City of Watsonville hereinafter shall be called “City.” This article shall be applicable in the incorporated territory of the City of Watsonville.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1502 Program priorities.

The community investment transactions and use tax measure will provide a secure, local revenue stream to the City of Watsonville that will be used for general fund purposes to support investment in our community such as: repair and expand aging parks, playgrounds and trails; create safe places for kids; maintain after-school and gang prevention programs; fix potholes and maintain streets; expand library access and services for seniors; create employment opportunities; invest in community partners; and general government use. Detailed expenditure plans shall be developed to explain how the funds will be spent if the one-half of one (0.50%) percent sales tax is approved by voters.

The revenue generated by this transactions and use tax measure will enable the City to invest, maintain, improve and sustain general fund expenses that directly affect the quality of life of Watsonville residents as prioritized by the community needs assessment survey.

(a) The City shall commission an independent third party to conduct a community needs assessment survey at least once every decade, no later than two (2) years after final decennial census data is available. This survey shall be used to update the short-term and long-term investment of the revenue generated by this transactions and use tax measure in a way that is consistent with current community needs. The first assessment should be conducted by July 2032, paid for by the measure.

(b) Oversight. The City Revenue Measure Oversight Committee shall serve in an oversight capacity to at least biannually review revenues and expenditures and provide second independent verification that all expenditures are being made as promised to Watsonville residents. The findings of both the Revenue Measure Oversight Committee shall be reviewed by the City Council at a publicly noticed meeting of the Council and made available to the public.

(d) Contingency/Reserve Fund. A community investment sales tax measure contingency/reserve fund shall be consistent with the General Fund reserve policy of the City.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1503 Operative date.

“Operative date” shall mean the first day of the first calendar quarter commencing more than one hundred ten (110) days after the adoption of this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1504 Purpose.

This article is adopted to achieve the following purposes, among others, and directs that the provisions hereof be interpreted in order to accomplish these purposes:

(a) To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) and Section 7285.91 of Part 1.7 both in Division 2 of the Revenue and Taxation Code which authorizes the City to adopt the tax ordinance codified in this article which shall be operative if a majority of the electors voting on the measure vote to approve the imposition of the tax at an election called for that purpose. This tax is a general tax whose proceeds shall be deposited in the City’s general fund and expended for any lawful purpose of the City.

(b) To adopt a retail transactions and use tax 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 a retail transactions and use tax that imposes a tax and provides a measure therefor that can be administered and collected by the California Department of Tax and Fee Administration 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 California Department of Tax and Fee Administration in administering and collecting the California State Sales and Use Taxes.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1505 Contract with State.

Prior to the operative date, the City shall contract with the California Department of Tax and Fee Administration to perform all functions incident to the administration and operation of this transaction and use tax article; provided, that if the City shall not have contracted with the California Department of Tax and Fee Administration prior to the operative date, it shall nevertheless so contract and in such a case the operative date shall be the first day of the first calendar quarter following the execution of such a contract.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1506 Transactions tax rate.

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 one-half of one (0.50%) percent of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in the City on and after the operative date and until repealed by voters.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1507 Place of sale.

For the purposes of this article, 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 shall include delivery charges, when such charges are subject to the State sales and use tax, regardless of the place to which delivery is made. If a retailer has no permanent place of business in the State or has more than one (1) place of business, the place or places at which the retail sales are consummated shall be determined under rules and regulations to be prescribed and adopted by the California Department of Tax and Fee Administration.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1508 Use tax rate.

An excise tax is hereby imposed on the storage, use or other consumption in the incorporated territory of the City of tangible personal property purchased from any retailer on or after the operative date and until repealed by the voters, for storage, use or other consumption in the City at the rate of one-half of one (0.50%) percent of the sales price of the property. The sales price shall include delivery charges when such charges are subject to State sales or use tax regardless of the place to which delivery is made.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1509 Adoption of provisions of State law.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1510 Limitations on adoption of State law and collection of use taxes.

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

(a) Wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefor. However, the substitution shall not be made when:

(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:

(i) 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 remains subject to tax by the State under the provisions of Part 1 of Division 2 of the Revenue and Taxation Code; or

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

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1511 Permit not required.

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 shall not be required by this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1512 Exemptions and exclusions.

(a) There shall be excluded from 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:

(i) 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

(ii) With respect to commercial vehicles, by registration to a place of business out of the 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 prior to the operative date of this article.

(c) There is exempted from the use tax imposed by this article 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.

(3) If the purchaser is obligated to purchase the property for a fixed price pursuant to a contract entered into prior to the operative date of this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1513 Amendments.

All amendments subsequent to the effective date of this article 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, shall automatically become a part of this article; provided, however, that no such amendment shall operate so as to affect the rate of tax imposed by this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1514 Enjoining collection forbidden.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1515 Annual audit and public report.

Annually the City Council retains an independent auditor to conduct an audit of and provide audited financial statements for all of the City’s financial activities. The auditor shall include an accounting of the revenue received from the tax collected pursuant to this article and expenditures therefor in the audited financial statements. The auditor’s report shall be presented to the Council and made available to the public. Additionally, the City Manager or his or her designee shall annually prepare and present to the Council and the public a report in conjunction with the audit that reviews the status and performance of the programs and services funded wholly or partially with proceeds of the tax authorized by this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

3-6.1516 Termination date.

The tax levied by this article shall continue until repealed by voters from the operative date of this article.

(§ 2, Ord. 1452-22 (CM), eff. January 22, 2023)

Chapter 6TAXATION

3-6.101 Continuance of existing ordinances.

3-6.201 Title.

3-6.202 Rate.

3-6.203 Operative date.

3-6.204 Purpose.

3-6.205 Contract with State.

3-6.206 Sales tax.

3-6.207 Place of sale.

3-6.208 Use tax.

3-6.209 Adoption of provisions of State law.

3-6.210 Limitations on adoption of State law.

3-6.211 Permit not required.

3-6.212 Exclusions and exemptions.

3-6.213 Exclusions and exemptions.

3-6.214 Application of provisions relating to exclusions and exemptions.

3-6.215 Amendments.

3-6.216 Enjoining collection forbidden.

3-6.217 Existing sales and use tax ordinances suspended.

3-6.301 Title.

3-6.302 Definitions.

3-6.303 Tax imposed.

3-6.304 Exemptions.

3-6.305 Operator’s duties.

3-6.306 Registration certificate required.

3-6.307 Registration.

3-6.308 Certificate number required on all advertisements.

3-6.309 Reporting and remitting.

3-6.310 Failure to file—Penalties.

3-6.311 Penalties and interest.

3-6.312 Failure to collect and report tax—Determination of tax by City Finance Director.

3-6.313 Appeals.

3-6.314 Records.

3-6.315 Refunds.

3-6.316 Actions to collect.

3-6.317 Violation—Revocation.

3-6.701 Title.

3-6.702 Authority.

3-6.703 Purpose.

3-6.704 Supplemental regulations.

3-6.705 Definitions.

3-6.706 Findings: Notices.

3-6.707 Findings: Requirements.

3-6.708 Findings: Concurrence by the City.

3-6.709 Findings for development approval.

3-6.710 Payment of fees.

3-6.711 Standards for fees.

3-6.712 Amount of fees.

3-6.713 Fee payments.

3-6.714 Refunds.

3-6.715 School district schedules.

3-6.716 Use of fees.

3-6.717 Accounting.

3-6.718 Termination of fee requirements.

3-6.801 Purpose.

3-6.802 Storm Drainage Master Plan.

3-6.803 Imposition of storm drainage fees.

3-6.804 Time of payment.

3-6.805 Place of payment.

3-6.806 Exemptions.

3-6.807 Use of fees.

3-6.808 Reimbursement of advanced costs.

3-6.809 Disposition of surplus.

3-6.901 Title and purpose.

3-6.902 Definitions.

3-6.903 Constitutional and statutory exemptions.

3-6.904 Telecommunication users’ tax.

3-6.905 Video users’ tax.

3-6.906 Electricity users’ tax.

3-6.907 Gas users’ tax.

3-6.908 Collection of tax from service users receiving direct purchase of gas or electricity.

3-6.909 Nonresidential rebate (gas and electricity).

3-6.910 Water users’ tax.

3-6.911 Effect of commingling taxable items with nontaxable items.

3-6.912 Substantial nexus/minimum contacts.

3-6.913 Duty to collect—Procedures.

3-6.914 Collection penalties—Service suppliers or self-collectors.

3-6.915 Deficiency determination and assessment—Tax application errors.

3-6.916 Administrative remedy—Nonpaying service users.

3-6.917 Actions to collect.

Chapter 6
TAXATION