TITLE II—ADMINISTRATION

CHAPTER 5—TAXATION

ARTICLE 1—PROPERTY TAX

Sec. 2600 Property Taxes - assessment and collection.

The duties of assessing property and collecting taxes provided by law to be performed by the Assessor and Tax Collector of the City shall be performed pursuant to Sections 51500 and 51501 of the Government Code.

Sec. 2601 Tax rate.

Within the limitations of state law, the City Council shall establish the tax rate within the City.

ARTICLE 1.5—UTILITY USERS TAX

(Ord. 1209, adopted 7/21/1993)

(Res. No. 967-06 - Measure “N” of 11/5/1996 General Election repealed #1209 and adopted new utility user tax to expire 11/30/2000)

(Res. No. 990-64 adopted 6/21/2000 & approved by 57% of electorate at 11/7/2000 Municipal Election - Expires 11/30/2004)

(Res. No. 034-17 adopted 10/15/2003 to again place on ballot; approved by 66.64% of electorate at 3/02/2004 Special Municipal Election - Effective 12/01/2004, expires 11/30/2008)

(Amended 10/4/2006 by Ordinance No. 1356)

(Res. No. 078-21 adopted 10/17/2007, to again place on ballot; approved by 60.16% of electorate at 2/05/2008 Special Municipal Election. Effective 12/01/2008, expires 11/30/2016)

(Res. No. 112-52, adopted 7/11/2012, placed the Excessive Residential Electricity Users Tax on the ballot; approved by 68.96% of electorate at 11/6/2012 General Municipal Election. Effective 12/10/2012; expires 11/30/2024)

(Res. No. 156-63, adopted 6/15/2016, to again place on ballot as Measure F; approved by 51.73% of the electorate at the 11/8/2016 General Municipal Election. Effective 12/1/2016, expires 11/30/2024)

Sec. 2625 Definitions.

The following words and phrases whenever used in this ordinance shall be construed as defined in this section.

(a)    “Communication Services” shall mean and include the following:

(1)    “Telecommunications Services” including any telephonic type and quality of communication including that which is interconnected to the public switched network, which allows people to talk to each other without the necessity of conversing in Person. In determining whether a service constitutes a Telecommunication Service, all technology used to transmit voice communications from one Person to another shall be included irrespective of whether, for example, such technology utilizes computer processing applications on the form, code or protocol of the content of the communication or where the origination and/or termination points of the transmission, conveyance or routing are not fixed. Such means of transmission shall include, without limitation, for the purpose of transmitting messages or information (including but not limited to voice, telegraph, teletypewriter, data facsimile, video, or test) by electronic, radio or similar means whether such transmission occurs by wire, cable, fiber-optic, light wave, laser, microwave, radio wave [including, but not limited to, cellular service, personal communications service (PCS), specialized mobile radio (SMR), and other types of personal wireless service regardless of radio spectrum used], switching facilities, satellite or any other similar facilities.

(2)    “Ancillary Telecommunication Service” including services that are associated with or incidental to the provision or delivery of Telecommunication Services;

(3)    “Video Services” including any and all services related to the providing or delivering of Video Programming (including origination programming and programming using Internet protocol, e.g., IP-TV and IP-Video) using one or more channels by a Video Service Supplier, regardless of the technology used to deliver or provide such services, and regardless of the manner or basis on which such services are calculated or billed, and includes data, Telecommunication Services, or interactive Communication Services, which are functionally integrated with Video Services;

(4)    “Ancillary Video Services” including services associated with or incidental to the provision or delivery of Video Services, search functions, or other interactive services or communications that are ancillary, necessary or common to the use or enjoyment of Video Programming.

(b)    “Electrical Corporation,” “Gas Corporation” and “Telephone Corporation” shall have the same meanings as defined in Sections 218, 222, and 234, respectively, of the California Public Utilities Code, except “Electrical Corporation,” and “Gas Corporation” shall also be construed to include any municipality, public agency or Person engaged in the selling or supplying of electrical power or Gas to a Service User.

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

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

(e)    “Non-utility Service Supplier” shall mean:

(1)    A Service Supplier, other than an Electric Corporation serving within the City, which generates electrical energy in capacities of at least 50 kilowatts for its own use or for sale to others; and a supplier of electric distribution services to all or a significant portion of the City, including but not limited to any publicly-owned electric utility, investor-owned utility, cogenerator, distributed generation provider, exempt wholesale generator, municipal utility district, federal power marketing agency, or other supplier or seller of electricity;

(2)    An electric service provider (ESP), electricity broker, marketer, aggregator, pool operator; or

(3)    A Gas supplier other than a Gas Corporation that sells or supplies Gas or supplemental services to users within the City, including but not limited to an aggregator, marketer, broker, other than a supplier of Gas distribution services to all or a significant portion of the City.

(f)    “Person” shall mean any domestic or foreign corporation, firm, association, syndicate, joint stock company, partnership of any kind, joint venture, club, Massachusetts business or common law trust, society, individuals, local, state or federal government agency.

(g)    "Place of Primary Use" shall mean the street address where the customer’s use of Communication Service primarily occurs, generally, the residential street address or the primary business address of the customer.

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

(i)    "Prepaid Communication Service" shall mean the right to access Communication 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 that is sold in predetermined units or dollars of which the number declines with use in a known amount.

(j)    "Service Supplier" shall mean any Person that provides Communication, electric, Gas, water or wastewater Services to a user of such services within the City. The term shall include any Person required to collect or self-impose and remit a tax as imposed by this Article, including its billing agent.

(k)    "Service User" shall mean any Person who uses utility services within the City’s boundaries for which a tax is imposed by this Article. For metered utilities, each metered service shall be treated as a single Service User for that particular utility. For non-metered service, each address of service usage shall be treated as a single Service User for that particular utility.

(l)    "Tax Administrator" shall mean the Finance Director of the City of Arcata.

(m)    "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, 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.

(n)    "Video Service Supplier" means any Person, company, or Service Supplier which provides or sells one or more channels or Video Programming, or provides or sells the capability to receive one or more channels of Video Programming, including any communications that are ancillary, necessary or common to the use and 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 the 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 552(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 Programming or communications (including two-way communications), whatever their technology.

Sec. 2626 Exemptions.

(a)    Nothing in this Article shall be construed as imposing a tax upon any Person when imposition of such tax upon that Person would be in violation of the Constitution of the United States or that of the State of California.

(b)    The City Council may, by ordinance or resolution, establish one or more classes of Persons or one or more classes of utility service otherwise subject to payment of a tax imposed by this chapter and provide that such classes of Persons or service shall be exempt, in whole or in part from such tax.

(c)    Service Users who receive Low Income Rate Assistance (LIRA) from a Gas and/or Electric Corporation are exempt from paying electricity and Gas utility users taxes as imposed by this Article. As used herein, Low Income Rate Assistance is defined as a monthly discount given by a Gas and/or Electric Corporation to eligible low income customers on their Gas and electricity charges.

(d)    The use of utility services by the City, other local government agencies, state agencies, federal agencies, public schools and state universities is exempt from the levy of taxes imposed by this Article.

(e)    Service Users who receive "universal lifeline service" from a Telephone Corporation are exempt from paying the utility users tax as provided in this Article on the basic telephone service. As used herein, "universal lifeline service" is identified as a monthly discount on the basic service charge given by a Telephone Corporation to eligible low-income customers on their basic telephone service.

(f)    It is the responsibility of any Person who claims a tax exemption under the provisions of this Article to notify the Tax Administrator and provide sufficient proof of such exempt status.

Sec. 2627 Communication Users Tax.

(a)    There is hereby imposed a tax upon every Person in the City using Communication Services. The tax imposed by this section shall be at the rate of three percent (3%) of the charges made for such Communication Services unless the Service User is exempt from paying the tax under Section 2626 of this Article. The tax shall be collected from the Service User by the Communication Services supplier or its billing agent. There is a rebuttable presumption that the tax on Communication Services, which are billed to a billing or service address within the City’s boundaries, are used, in whole or in part within the City, 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.

(b)    Notwithstanding subdivision (a), the tax on charges for Post-paid Communication Service is sourced to the origination point of the communication signal as first identified by either (i) the Service Supplier’s communication system, or (ii) information received by the seller of the service from the Service Supplier, where the system used to transport such signals is not that of the seller. The tax on charges for Prepaid Communication Service is sourced to the location associated with the service number.

(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 Communication Services. If a non-taxable service and a taxable service are billed together under a single charge, the entire charge shall be deemed taxable unless the Service Supplier can identify, by verifiable data, non-taxable charges based upon its books and records that are kept in the regular course of business, which shall be consistent with generally accepted accounting principles. The Service Supplier has the burden of proving the proper apportionment of taxable and non-taxable charges.

(d)    Charges for Communication Services shall include, but not be limited to, charges for the following:

(1)    Franchise fees and access fees (PEG);

(2)    Initial installation of equipment necessary for provision and receipt of Communication Services;

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

(4)    Activation fees, reactivation fees, and reconnection fees;

(5)    All Video Programming services (e.g., basic services, premium services, audio services, video games, pay-per view services, on demand programming);

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

(7)    Equipment leases (e.g., converters, remote devices); and

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

(e)    As used in this section, the term "charges" shall not include:

(1)    Charges for any type of service or equipment furnished by a Service Supplier subject to public utility regulation during any period in which the same or similar services or equipment are also available for sale or lease from Persons other than a Service Supplier subject to public utility regulation;

(2)    Charges for services paid for by inserting coins in coin-operated telephones except that where such coin-operated telephone service is furnished for a guaranteed amount, the amounts paid under such guarantee plus any fixed monthly or other periodic charge shall be included in the base for computing the amount of tax due; and

(3)    Charges for private mobile radio service. For purposes of this Article "private mobile radio service" is a radio Communication Service which is not a commercial mobile service. A "mobile service" means a radio Communication Service carried on between mobile stations or receivers and land stations, and by mobile stations communicating amongst themselves, and includes (A) both one-way and two-way radio Communication Services, (B) a mobile service which provides a regularly interacting group of base, mobile, portable, and associated control and relay stations (whether licensed on an individual, cooperative, or multiple basis) for private one-way or two-way land mobile radio communications by eligible users over designated areas of operation, and (C) any service for which a license is required in a personal communications service established pursuant to the proceeding entitled "Amendment to the Commission’s Rules to Establish New Personal Communications Services" (GEN Docket No. 90-314; ET Docket No. 92-100), or any successor proceeding. A "commercial mobile service" is a "mobile service" that is provided for profit and makes interconnected service available (A) to the public or (B) to such classes of eligible users as to be effectively available to a substantial portion of the public.

(f)    To prevent actual multi-jurisdictional taxation of Communication 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 Communication 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. For purposes of establishing sufficient legal nexus for the imposition and collection of utility users’ tax on charges for Communication Services pursuant to this Article, "minimum contacts" shall be construed broadly in favor of the imposition and collection of the utility users’ tax to the fullest extent permitted by California and federal law, and as it may change from time to time.

(g)    The tax on Communication Services imposed by this section shall be collected from the Service User by the Service Supplier. The amount of tax collected in one Month shall be remitted to the Tax Administrator on or before the last day of the following Month; and must be received by the Tax Administrator on or before the last day of the following Month.

Sec. 2628 Electricity Users Tax.

(a)    There is hereby imposed a tax on the use of electrical energy supplied by a Service Supplier or a Non-utility Service Supplier which is used within the City’s boundaries, unless the service user is exempt from paying the tax under section 2626 of this Article. The tax imposed by this section shall be at the rate of three percent (3%) 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. The tax shall be paid by the

Person responsible for paying for such service, and shall be collected from the service user by the Service Supplier or Non-utility Service Supplier, or its billing agent. An Electric Corporation using electrical energy within the City’s boundaries is exempt from paying the taxes imposed by this section.

(b)    The tax applicable to electrical energy provided by a Non-utility Service Supplier shall be determined by applying the tax rate to the equivalent charge the service user would have incurred if the energy used had been provided by the electrical corporation franchised by the City. Rate schedules for this purpose shall be available from the City. Non-utility Service Suppliers shall install, maintain and use an appropriate utility-type metering system which will enable compliance with this section.

(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 electricity services. If a non-taxable service and a taxable service are billed together under a single charge, the entire charge shall be deemed taxable unless the Service Supplier can identify, by verifiable data, non-taxable charges based upon its books and records that are kept in the regular course of business, which shall be consistent with generally accepted accounting principles. The Service Supplier has the burden of proving the proper apportionment of taxable and non-taxable charges.

(d)    As used in this section, “charges” shall apply to all services, components, and items that are (i) necessary for or common to the receipt, use, or enjoyment of electrical service; or (ii) 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)    Stand-by, reserves, firming, ramping, voltage support, regulation, emergency, or other similar minimum charges for services;

(5)    Customer charges, late charges, service establishment or reestablishment charges, demand 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 or surcharges which are necessary for or common to the receipt, use, or enjoyment of electric service; and

(6)    All other charges, fees, surcharges which are mandated by the California Public Utilities Commission or the Federal Energy Regulatory Commission, whether or not such charges, fees or surcharges appear on a bundled or line item basis on the customer billing.

(e)    As used in this section, the term “use of electrical energy” shall not be construed to mean the use of such energy by a storage battery; provided, however, that the term shall include the receipt of such energy for the charging of storage batteries. Nor shall the words “use of electrical energy” be construed to mean the receipt of such energy by an electrical corporation or a governmental agency at a point within the City for resale.

(f)    The tax imposed in this section shall be collected from the Person responsible for paying for the electrical energy service by the Person selling such electrical energy. The amount of tax collected in one Month shall be remitted to the Tax Administrator on or before the last day of the following month.

Sec. 2628.5 Excessive Residential Electricity Users Tax.

(a)    When a residential customer’s electrical energy use exceeds six hundred percent (600%) of the baseline allowance, the tax imposed pursuant to Section 2628 shall be imposed at the rate of forty-five percent (45%) of the total charges made for electrical energy, and for any supplemental services or other associated activities directly related to and/or necessary for the provision of electricity to the service user. The tax shall be paid by the person responsible for the paying for such service, and shall be collected from the service user by the service supplier or non-utility service supplier, or its billing agent.

(b)    The following words whenever used in this Section shall be construed as defined in this subsection (b):

(1)    “Baseline allowance” shall mean the rate structure mandated by the California Legislature and approved by the California Public Utilities Commission that insures all residential customers of an electricity service supplier are provided a minimum necessary quantity of electricity at the lowest possible cost.

(2)    “Residential customer” shall mean the class of service supplier customers whose dwellings are single-family units, multifamily units, mobile homes or other similar living establishments, such as residential dwelling units or residential hotels; provided, that fifty percent (50%) or more of the annual energy use on the meter is for residential end-uses.

(3)    “Residential dwelling unit” shall mean a room or group of rooms, such as a house, a flat, or an apartment, which provides complete family living facilities in which the occupant(s) normally cooks meals, eats, sleeps, and carries on the household operations incidental to domestic life.

(4)    “Residential hotel” means a hotel establishment which provides lodging as a primary or permanent residence and has at least fifty percent (50%) of the units or rooms leased for a minimum period of one (1) month and said units are occupied for nine (9) months of the year, excluding those establishments such as guest or resort hotels, resort motels or resort ranches, tourist camps, recreational vehicle parks, halfway houses, rooming houses, boarding houses, dormitories, rest homes, military barracks, or a house, apartment, flat or any residential unit which is used as a residence by a single family or group of persons.

(c)    All provisions contained in Article 1.5, Utility Users Tax, of Chapter 5, Taxation, Title II, Administration, of the Arcata Municipal Code shall apply to this Section except as expressly stated otherwise in this Section. In the event of conflict between this Section and other provisions in Article 1.5, this Section shall control.

(d)    Exemptions. Service users who rely on life support equipment, or those who have life threatening illnesses or compromised immune systems, and therefore receive an extended medical baseline allowance from an electrical corporation, are exempt from paying the tax imposed by this Section upon application to the City Manager or his or her designee.

(e)    Service users subject to the tax imposed by this Section are not eligible for the exemption found at Section 2626(c) for service users receiving low income rate assistance.

(f)     Service users subject to the tax imposed by this Section may not apply the tax levied pursuant to this Section toward the maximum amount of tax as otherwise authorized in Section 2632.

(g)    Notwithstanding Section 2642(a), the levy of taxes imposed by this Section shall expire on November 30, 2024. (Res. 112-52, eff. 12/10/2012)

Sec. 2629 Gas Users Tax.

(a)    There is hereby imposed a tax upon the use of Gas supplied by a Service Supplier or Non-utility Service Supplier which is transported through mains or pipes or by mobile transport, and which is used within the City’s boundaries, unless the service user is exempt from paying the tax under section 2626 of this Article. The tax imposed by this section shall be at the rate of three percent (3%) of the charges made for the Gas and shall be paid by the Person responsible for paying for such service. A Gas Corporation using Gas within the City’s boundaries is exempt from paying the tax imposed by this section.

(b)    The tax applicable to Gas or Gas transportation provided by Non-utility Service Suppliers shall be determined by applying the tax rate to the equivalent charges the service user would have incurred if the Gas or Gas transportation had been provided by the Gas Corporation franchised by the City. Rate schedules for this purpose shall be available from the City. Non-utility Service Suppliers shall install, maintain and use an appropriate utility-type metering system which will enable compliance with this section.

(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 Gas service. If a non-taxable service and a taxable service are billed together under a single charge, the entire charge shall be deemed taxable unless the Service Supplier can identify, by verifiable data, non-taxable charges based upon its books and records that are kept in the regular course of business, which shall be consistent with generally accepted accounting principles. The Service Supplier has the burden of proving the proper apportionment of taxable and non-taxable charges.

(d)    As used in this section, “charges” shall apply to all services, components, and items that are (i) necessary for or common to the receipt, use, or enjoyment of Gas service; or (ii) 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 gas), which is delivered through mains or pipes;

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

(3)    Capacity or demand charges, late charges, service establishment or reestablishment charges, transition charges, customer charges, annual and monthly charges, and other charges, fees or surcharges which are necessary for or common to the receipt, use, or enjoyment of Gas service; and

(4)    Charges, fees or surcharges for Gas services or programs which are mandated, by the California Public Utilities Commission or the Federal Energy Regulatory Commission whether or not such charges, fees or surcharges appear on a bundled or line item basis on the customer billing.

(e)    As used in this section, "charges" shall not include: (1) charges made for Gas which is to be resold and delivered through mains and pipes; (2) charges made for Gas used in the propulsion of a motor vehicle, as authorized in the Vehicle Code of the State of California; or (3) charges made for Gas used in the generation of electrical energy by a public utility or a governmental agency.

(f)    The tax imposed in this section shall be collected from the Person responsible for paying for the Gas service by the Person selling the Gas. The amount collected in one Month shall be remitted to the Tax Administrator on or before the last day of the following Month.

Sec. 2630 Water Users Tax.

(a)    There is hereby imposed a tax upon the use of water supplied by the City which is delivered through mains or pipes to a service user located within the City’s boundaries, unless the service user is exempt from paying the tax under section 2626 of this Article. The tax imposed by this section shall be at the rate of three percent (3%) of the charges made for such water and shall be paid by the Person responsible for paying for such water service.

(b)    There shall be excluded from the tax imposed in this section charges made for water which is to be resold and delivered through mains or pipes.

(c)    As used in this section, "charges" shall include monthly service and usage fees, and shall not include connection or installation fees or charges.

(d)    The tax imposed in this section shall be collected from the Person paying for such water service by the City. The amount collected in one Month shall be remitted to the Tax Administrator on or before the last day of the following Month.

Sec. 2631 Wastewater Collection System Users Tax.

(a)    There is hereby imposed a tax upon the use of the City’s wastewater collection system, unless the service user is exempt from paying the tax under section 2626 of this Article. The tax imposed by this section shall be at the rate of three percent (3%) of the charges made for such service and shall be paid by the Person responsible for paying for such wastewater collection service.

(b)    As used in this section, "charges" shall include monthly service and usage fees, and shall not include connection or installation fees or charges.

(c)    The tax imposed in this section shall be collected from the Person responsible for paying for such wastewater collection service by the City. The amount collected in one Month shall be remitted to the Tax Administrator on or before the last day of the following Month.

Sec. 2632 Maximum Amount of Tax.

(a)    The taxes levied in this Article shall be limited for each service user to a combined total utility users tax of $1,500.00 per fiscal year. This amount shall be subject to an adjustment each fiscal year, beginning on July 1, 2010, based on the Consumer Price Index (CPI) - All Urban Consumers, U.S. All Items, 1982-84 = 100 (CUUROOOOSAO), Annual from prior calendar year.

(b)    Persons who use a particular utility service at a single location, but have more than one meter for such service may combine service usage from all meters at that location to compute the maximum tax. Such Persons shall apply to the Tax Administrator for treatment in accordance with this section.

(c)    It shall be the responsibility of the Person responsible for paying the tax imposed by this Article to present to the Tax Administrator sufficient evidence to prove that combined taxes levied under this Article reach or exceed $1,500.00 per fiscal year for a particular service user. Sufficient evidence includes billing receipts or other proof as determined appropriate by the Tax Administrator.

(d)    Once the Tax Administrator has determined that the total utility users tax for a particular service user has reached or exceeded the limitation described in this section, the City will inform the Service Suppliers and thereafter bill the Person responsible for paying the tax imposed by this Article directly on a quarterly basis for the $1,500.00 per fiscal year combined tax.

(e)    It is the responsibility of the Person responsible for paying the tax imposed by this Article to notify the Tax Administrator if service usage for a particular service user drops below such levels that the tax limitation imposed in this section is no longer appropriate.

Sec. 2633 Remittance of Tax.

Taxes collected from a Person responsible for paying the tax imposed by this Article which are not remitted to the Tax Administrator on or before the due dates provided in this Article are delinquent. Should the due date occur on a weekend or legal holiday, the return may be postmarked on the first regular working day following a Saturday/Sunday, or legal holiday.

Sec. 2634 Effects of Commingling Nontaxable Items With Taxable Items.

If any one or more nontaxable items are bundled or billed together with one or more taxable items (as provided for by the Article) under a single charge on a customer’s bill, the entire single charge shall be deemed taxable unless, upon the written request of the customer, the Service Supplier can reasonably identify the nontaxable component of the single charge based upon one or more of the following methodologies, as elected by the tax administrator:

(a)    The average industry charges for the individual nontaxable items included in the entire single charge;

(b)    The amount of the entire single charge less the average industry charges for the individual taxable items in the entire single charge; or

(c)    The Service Supplier’s books and records that are kept in the regular course of business, which must be consistent with generally accepted accounting principles.

Sec. 2635 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" 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 Communication Service (including voice over Internet protocol, VoIP) used by a Person with a service address in the City, which service is capable of terminating a call to another Person or the general telephone network, shall be subject to a rebuttable presumption that "substantial nexus/minimum contacts? Exists for the purposes of imposing a tax, or establishing a duty to collect and remit a tax under this Article.

Sec. 2636 Actions to Collect.

Any tax and/or penalty required to be paid by a service user under the provisions of this Article shall be deemed a debt owed by the Person responsible for paying the tax imposed by this Article to the City. Any such tax collected from a Person responsible for paying the tax imposed by this Article which has not been remitted to the Tax Administrator shall be deemed a debt owed to the City by the Service Supplier. Any Person owing money to the City under the provisions of this Article shall be liable to an action brought in the name of the City for the recovery of such amount.

Sec. 2637 Duty to Collect - Procedures.

The duty to collect and remit the taxes imposed by this Article shall be performed as follows:

(a)    The tax shall be collected insofar as practicable at the same time as and along with the charges made in accordance with the regular billing practices of the Service Supplier. Except in those cases where a Person responsible for paying for services pays the full amount of said charges but does not pay any portion of a tax imposed by this Article, if the amount paid is less than the full amount of the charge and the tax which has accrued for the billing period, a proportionate share of both the charge and the tax shall be deemed to have been paid.

(b)    The duty to collect the tax from a Person responsible for paying the tax imposed by this Article shall commence with the beginning of the first full regular billing period applicable to that Person who starts on or after the operative date of this ordinance. Where a Person receives more than one billing, one or more being for different periods than another, the duty to collect shall arise separately for each billing period.

Sec. 2638 Additional Power and Duties of 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 shall have the power to adopt rules and regulations not inconsistent with provisions of this Article for the purpose of carrying out and enforcing the payment, collection and remittance of the taxes herein imposed. This administrative ruling shall be consistent with and shall not impose a new tax, or increase an existing tax without voter approval if such administrative ruling is (1) consistent with the existing Arcata Municipal Code tax language; and, (2) merely reflects a change in, clarification to, or new rendition of (i) the definition, interpretation, or application of substantial nexus by a court of competent jurisdiction or by preemptive state or federal law, for purposes of taxation; or, (ii) the sourcing of taxable transactions based upon industry custom and practice, which furthers administrative efficiency and minimizes multi-jurisdictional taxation. A copy of such rules and regulations shall be on file in the Tax Administrator’s office. The Tax Administrator may, from time to time, issue and disseminate to Service Suppliers, which are subject to the tax collection requirements of this Article, such administrative ruling identifying those services, or charges therefor, that are subject to the tax of this Article.

(c)    The Tax Administrator may make administrative agreements to vary the strict requirements of this Article so that collection of any tax imposed herein may be made in conformance with the billing procedures of a particular Service Supplier so long as said agreements result in collection of the tax in conformance with the general purpose and scope of this Article. A copy of each such agreement shall be on file in the Tax Administrator’s office.

(d)    The Tax Administrator shall determine the eligibility of any Person who asserts a right to exemption from the tax imposed by this ordinance. The Tax Administrator shall provide the Service Supplier with the name of any Person who the Tax Administrator determines is exempt from the tax imposed hereby, together with the address and account number to which service is supplied to any such exempt Person. The Tax Administrator shall notify the Service Supplier of termination of any Person’s right to exemption hereunder, or the change of any address to which service is supplied to any exempt Person.

(e)    The Tax Administrator shall provide notice to all Service Suppliers at least ninety (90) days prior to any annexation or other change in the City’s boundaries. Said notice shall set forth the revised boundaries by street and address, along with a copy of the final annexation order from the Local Area Formation Commission (LAFCO).

(f)    The Tax Administrator may, from time to time, survey Service Suppliers to identify the various unbundled billing components of service that they may 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 service. The Tax Administrator, thereafter, may issue and disseminate to such Service Suppliers an administrative ruling identifying those components and items which are: (1) necessary for or common to the receipt, use or enjoyment of service; or (2) currently are or historically have been included in a single or bundled rate for 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 this Article.

Sec. 2639 Collection of Tax by Tax Administrator.

(a)    Whenever the Tax Administrator determines that a Person responsible for paying the taxes imposed by this Article has deliberately withheld the amount of the tax owed from the amounts remitted to a Service Supplier for a period of four (4) or more billing periods, or that a Person responsible for paying the taxes imposed by this Article has refused to pay the amount of tax to such Person, the Tax Administrator may relieve such Service Supplier of the obligation to collect such taxes due under this Article from certain named Persons for specific billing periods.

(b)    The Service Supplier shall provide the City with a report of the amounts refused along with the names and addresses of the service users refusing to pay the tax.

(c)    The Tax Administrator shall notify the Person responsible for paying the taxes imposed by this Article that the Tax Administrator has assumed responsibility to collect the taxes due for the stated periods and demand payment of such taxes. The notice shall be served on the Person responsible for paying the taxes imposed by this Article by handing it to him or her personally or by deposit of the notice in the United States mail, postage prepaid thereon, addressed to such Person at the address to which billing was made by the Service Supplier; or, should such Person’s address change, to the last known address.

(d)    If a Person responsible for paying the taxes imposed by this Article fails to remit the tax to the Tax Administrator within fifteen (15) days from the date of the service of the notice upon such Person in accordance with subsection (c) herein, which shall be the date of mailing if service is not accomplished in Person, a penalty of twenty-five percent (25%) of the amount of the tax set forth in the notice shall be imposed, but not less than Five Dollars ($5.00). The penalty shall become part of the tax herein required to be paid.

Sec. 2640 Records.

It shall be the duty of every Person required to collect and remit to the City any tax imposed by this ordinance 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 such Person may have been liable for the remittance to the Tax Administrator, which records the Tax Administrator shall have the right to inspect at all reasonable times.

Sec. 2641 Refunds.

(a)    A Service Supplier who has collected any amount of tax illegally, erroneously, or more than once may refund such amount to the Person responsible for paying such tax and claim credit for such overpayment against the amount of tax which is due upon any other monthly returns, providing such credit is claimed in a return dated no later than three (3) years from the date of overpayment.

(b)    Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once, or has been erroneously or illegally collected or received by the City under this Article, it may be refunded to a Service Supplier or Person responsible for paying such tax by the City, provided a claim in writing, therefor, stating under penalty of perjury the specified grounds upon which the claim is founded, is filed with the Tax Administrator within three (3) years of the date of payment. The claim shall be on forms furnished by the Tax Administrator. No refund shall be paid under the provisions of this Section unless the claimant establishes his right thereto by written records, and, in the case of a Person responsible for paying the taxes imposed by this Article, that such Person has been unable to obtain a refund or adjustment from the Service Supplier who collected the tax. Nothing herein shall permit the filing of a refund claim on behalf of a group of a class or group of taxpayers. The filing of a written claim is a prerequisite to any suit thereon. Any action brought against the City pursuant to this section shall be subject to the provisions of the Government Code sections 945.6 and 946.

(c)    Notwithstanding other provisions of this section, whenever a Service Supplier, pursuant to an order of the California Public Utilities Commission or a court of competent jurisdiction, makes a refund to Persons responsible for paying taxes imposed by this Article of charges for past utility services, the taxes paid pursuant to this Article on the amount of such refunded charges may also be refunded to such Persons by the Service Suppliers, and the Service Supplier can claim credit for such refunded taxes against the amount which is due upon any monthly returns. In the event this Article is repealed, the amounts of any refundable taxes will be borne by the City.

Sec. 2642 Termination of Tax.

(a)    The levy of taxes as provided in this Article shall expire on November 30, 2016. The use of utility services thereafter shall no longer be subject to utility users taxes.

(b)    The termination of the levy of taxes on November 30, 2016, shall not terminate the obligation to pay taxes levied on services used prior to such date. Taxes levied prior to such date shall remain a debt payable to the City. All provisions in this Article, except those relating to the levy of taxes, shall continue with full force and effect after such date.

Sec. 2643 Severability.

If any section, subsection, subdivision, paragraph, sentence, clause or phrase of this Article or any part thereof is for any reason held to be unconstitutional, such decision shall not affect the validity of the remaining portion of this ordinance or any part thereof. The City Council hereby declares that it would have passed each section, subsection, subdivision, paragraph, sentence, clause or phrase thereof, irrespective of the fact that any one or more section, subsection, subdivision, paragraph, sentence, clause of phrases be declared unconstitutional.

Sec. 2644 Limitation on Actions.

Any action to challenge the validity or legality of any provision of this Ordinance on any grounds whatsoever including, without limitation, the proceedings by which it was adopted, any substantive provision or any other defect shall be brought by court action commenced within ninety (90) days of the date of adoption of this Ordinance.

Sec. 2645 Operative Date.

All taxes levied by this ordinance are to be used for the usual and current general fund expenses of the City. This Article will go into effect on December 1, 2008, as it was ratified by a majority of the electorate at the February 5, 2008, general election.

ARTICLE 2—SALES AND USE TAXES

(Ord. 807, eff. 11/16/1973)

Sec. 2650 Rate.

The rate of sales tax and use tax imposed by this Article shall be 1%.

Sec. 2651 Purpose.

The City Council hereby declares that this article is adopted to achieve the following, among other, purposes, and directs that the provisions hereof be interpreted in order to accomplish those purposes: a) To adopt sales and use tax provision which complies with the requirements and limitations contained in Part 1.5 of Division 2 of the Revenue and Taxation Code;

(b)    To adopt a sales and use tax provision which 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 1.5 of Division 2 of the Revenue and Taxation Code;

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

(d)    To adopt a sales and use tax provision 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.

Sec. 2652 Contract with State.

Prior to the operative date, this city shall contract with the State Board of Equalization to perform all functions incident to the administration and operation of this sales and use tax article; provided, that if this 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 rather than the first day of the first calendar quarter following the adoption of this article.

Sec. 2653 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 stated in Section 2650 of the gross receipts of the retailer from the sale of all tangible personal property sold at retail in this city on and after the operative date.

Sec. 2654 Place of Sale.

For the purposes of this resolution, 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, the place or places at which the retail sales are consummated shall be determined under the rules and regulations to be prescribed and adopted by the State Board of Equalization.

Sec. 2655 Use Tax.

An excise tax is hereby imposed on the storage, use or other consumption in this city of tangible personal property purchased from any retailer on and after the operative date for storage, use or other consumption in this city at the rate stated in Section 2650 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.

Sec. 2656 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, all of the provisions of Part 1 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.

Sec. 2657 Limitations on adoption of State Law.

In adopting the provisions of Part 1 of Division 2 of the Revenue and Taxation Code, wherever the State of California is named or referred to as the taxing agency, the name of this City shall be substituted therefore. The substitution, however, shall 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 Cons of the State of California; 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 this resolution; the substitution shall not be made 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 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 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 that 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.

Sec. 2658 Permit not required.

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

Sec. 2659 Exclusions and Exemptions.

(a)    The amount subject to tax shall not include any sales or use tax imposed by the State of California 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 resolution enacted in accordance with Part 1.5 of Division 2 of the Revenue and Taxation Code by any city and county, county, or city in this state shall be exempt from the tax due under this resolution.

(c)    There are 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 this state, the United States, or any foreign government.

(d)    In addition to the exemptions provided in Sections 6366 and 6366.1 of the Revenue and Taxation Code the storage, use, or other consumption of tangible personal property purchased by the 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 is exempted from the use tax.

Sec. 2660 Exclusions and Exemptions.

(a)    The amount subject to tax shall not include any sales or use tax imposed by the State of California 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 article enacted in accordance with Part 1.5 of Division 2 of the Revenue and Taxation Code by any city and county, county, or city in this state shall be exempt from the tax due under this article.

(c)    There are exempt from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to operators of water borne 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 water borne vessels and used or consumed by such operators directly and exclusively in the carriage of persons or property of such vessels for commercial purposes is exempt from the use tax.

(e)    There are exempt from the computation of the amount of the sales tax the gross receipts from the sale of tangible personal property to the 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 this state, the United States, or any foreign government.

(f)    In addition to the exemptions provided in Sections 6366 and 6366.1 of the 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 this state, the United States, or any foreign government is exempt from the use tax.

Sec. 2661 Application of provisions relating to exclusions and exemptions.

(a)    Section 2660 of this article shall become operative on January 1st 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, at which time Section 2659 of this article shall become inoperative.

(b)    In the event that Section 2660 of this article becomes 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 the Revenue and Taxation Code, Section 2659 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 Section 2660 of this article shall be inoperative until the first day of the month following the month in which the 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 Section 2660 shall again become operative and Section 2659 shall become inoperative.

Sec. 2662 Amendments.

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

Sec. 2663 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 this City, or against any officer of the State or this 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.

Sec. 2664 Penalties.

Any person violating any of the provisions of this Article shall be deemed guilty of a misdemeanor, and upon conviction thereof shall be punishable by a fine of not more than $500.00 or by imprisonment for a period of not more than six months, or by both such fine and imprisonment.

Sec. 2665 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.

Sec. 2666 Operative Date.

Section 2659 shall be operative January 1, 1984.

Section 2660 shall be operative on the operative date of any act of the Legislature of the State of California which amends Section 7202 of the Revenue and Taxation Code or which repeals and reenacts Section 7202 of the Revenue and Taxation Code to provide an exemption from city sales and use taxes for operators of water borne vessels in the same, or substantially the same, language as that existing in subdivisions (i)(7) and (i)(8) of Section 7202 of the Revenue and Taxation Code as those subdivisions read on October 1, 1983.

Sec. 2667 Effective Date.

This Article relates to taxes for the usual and current expenses of the City and shall take effect immediately.

ARTICLE 3—DOCUMENTARY STAMP TAX

Sec. 2675 Documentary Stamp Tax Imposed.

There is hereby imposed on each deed, instrument or writing by which any lands, tenements, or other realty sold within the City of Arcata shall be granted, assigned, transferred or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his or their direction, when the consideration or value of the interest or property conveyed (exclusive of the value of any lien or encumbrances remaining thereon at the time of sale) exceeds one hundred dollars ($100), tax at the rate of twenty-seven and one-half cents ($0.275) for each five hundred dollars ($500) or fractional part thereof.

Sec. 2676 Persons Liable.

Any tax imposed pursuant to Section 2675 shall be paid by any person who makes, signs or issues any documents or instrument subject to the tax, or for whose use or benefit the same is made, signed, or issued.

Sec. 2677 Exception.

Any tax imposed pursuant to this article shall not apply to any instrument in writing given to secure a debt.

Sec. 2678 United States Not Liable.

The United States or any agency or instrumentality thereof, any state or territory, or political subdivision thereof, or the District of Columbia shall not be liable for any tax imposed pursuant to this resolution with respect to any deed, instrument, or writing to which it is a party, but the tax may be collected by assessment from any other party liable therefore.

Sec. 2679 No Tax for Reorganizations.

Any tax imposed pursuant to this article shall not apply to the making, delivering or filing of conveyances to make effective any plan of reorganization or adjustment.

(a)    Confirmed under the Federal Bankruptcy Act, as amended;

(b)    Approved in an equity receivership proceeding in a court involving a railroad corporation, as defined in subdivision (m) of Section 205 of Title 11 of the United States Code, as amended;

(c)    Approved in an equity receivership proceeding in a court involving a corporation, as defined in subdivision (3) of Section 506 of Title 11 of the United States Code, as amended; or

(d)    Whereby a mere change in identity, form or place of organization is effected.

Subdivisions (a) to (d), inclusive, of this section shall only apply if the making, delivery or filing of instruments of transfer or conveyances occurs within five years from the date of such confirmation, approval or change.

Sec. 2680 Securities and Exchange Commission Orders.

Any tax imposed pursuant to this article shall not apply to the making or delivery of conveyances to make effective any order of the Securities and Exchange Commission, as defined in subdivision (a) of Section 1083 of the Internal Revenue Code of 1954, but only if:

(a)    The order of the Securities and Exchange Commission in obedience to which such conveyance is made recites that such conveyance is necessary or appropriate to effectuate the provisions of Section 79k of Title 15 of the United States Code, relating to the Public Utility Holding Company Act of 1935;

(b)    Such order specifies the property which is ordered to be conveyed;

(c)    Such conveyance is made in obedience to such order.

Sec. 2681 Partnership Assets.

(a)    In the case of any realty held by a partnership, no levy shall be imposed pursuant to this article by reason of any transfer of any interest in a partnership or otherwise, if:

(1)    Such partnership (or another Partnership) is considered a continuing partnership within the meaning of Section 708 of the Internal Revenue Code of 1954; and

(2)    Such continuing partnership continues to hold the realty concerned.

(b)    If there is a termination of any partnership within the meaning of Section 708 of the Internal Revenue Code of 1954, for purposes of this article, such partnership shall be treated as having executed an instrument whereby there was conveyed, for fair market value (exclusive of the value of any lien or encumbrance remaining thereon), all realty held by such partnership at the time of such termination.

Sec. 2682 County Recorder to Administer.

The County Recorder shall administer this article in conformity with the provisions of Part 6.7 of Division 2 of the Revenue and Taxation Code and the provisions of any county resolution adopted pursuant thereto.

Sec. 2683 Claims for Refunds.

Claims for refund of taxes imposed pursuant to this article shall be governed by the provisions of Chapter 5 (commencing with Section 5096) of Part 9 of Division 1 of the Revenue and Taxation Code of the State of California.

ARTICLE 5 - TRANSACTIONS AND USE TAX

(Ord. No. 1379, approved by majority vote of the electorate on 11/04/2008, effective immediately. Ord. 1387, eff. 1/7/2009 correcting termination date.)

Sec. 2684 Title.

This ordinance shall be known as the City of Arcata Transactions and Use Tax Ordinance. The City of Arcata hereinafter shall be called "City." This ordinance shall be applicable in the incorporated territory of the City.

Sec. 2684.1 Operative date.

"Operative Date" means the first day of the first calendar quarter commencing more than 110 days after the adoption of this ordinance, the date of such adoption being as set forth below.

Sec. 2684.2 Purpose.

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

A.    To impose a retail transactions and use tax in accordance with the provisions of Part 1.6 (commencing with Section 7251) of Division 2 of the Revenue and Taxation Code and Section 7285.9 of Part 1.7 of Division 2 which authorizes the City to adopt this tax ordinance 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 ordinance.

Sec. 2684.3 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 this transactions and use tax ordinance; 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.

Sec. 2684.4 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 three-quarter percent (3/4%) of the gross receipts of any retailer from the sale of all tangible personal property sold at retail in said territory on and after the operative date of this ordinance.

Sec. 2684.5 Place of Sale.

For the purposes of this ordinance, 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.

Sec. 2684.6 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 this ordinance for storage, use or other consumption in said territory at the rate of three-quarter percent (3/4%) 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.

Sec. 2684.7 Adoption of Provisions of State Law.

Except as otherwise provided in this ordinance 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 ordinance as though fully set forth herein.

Sec. 2684.8 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 Ordinance.

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

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

b.    Impose this tax with respect to certain sales, storage, use or other consumption of tangible personal property which would not be subject to tax by the state under the said provision of that code.

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

B.    The word "City" 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.

Sec. 2684.9 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 ordinance.

Sec. 2684.10 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 paragraph, delivery to a point outside the City shall be satisfied:

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

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

3.    The sale of tangible personal property if the seller is obligated to furnish the property for a fixed price pursuant to a contract entered into prior to the operative date of this ordinance.

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 this ordinance.

5.    For the purposes of subparagraphs (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 are exempted from the use tax imposed by this ordinance, 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 this ordinance.

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 this ordinance.

5.    For the purposes of subparagraphs (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 subparagraph (7), 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 ordinance 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.

Sec. 2684.11 Amendments.

All amendments subsequent to the effective date of this ordinance 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 ordinance, provided, however, that no such amendment shall operate so as to affect the rate of tax imposed by this ordinance.

Sec. 2684.12 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 ordinance, 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.

Sec. 2684.13 Severability.

If any provision of this ordinance 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.

Sec. 2684.14 Effective Date.

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

Sec. 2684.15 Termination Date.

The authority to levy the tax imposed by this ordinance shall expire on March 31, 2029.