Chapter 5.04
BUSINESS LICENSES AND FEES

Sections:

5.04.010    Purpose of this chapter.

5.04.020    Effect on other ordinances.

5.04.030    Definitions.

5.04.040    Basic business license classification and tax rate.

5.04.045    Special business license classification and tax rate.

5.04.050    Annual consideration of tax rate.

5.04.060    Review of classification.

5.04.070    Multiple businesses and branch establishments.

5.04.080    Exemptions.

5.04.090    License required.

5.04.100    Concessioner.

5.04.110    Violations.

5.04.120    License nontransferable.

5.04.130    License fee – How payable.

5.04.140    License application – Contents.

5.04.150    License fee – When payable.

5.04.160    Terms of license.

5.04.170    Delinquency penalty on new licenses.

5.04.180    Delinquency penalty on license renewal.

5.04.190    License fee – Debt to city.

5.04.200    Conviction – Effect on debt.

5.04.210    Exhibition of license.

5.04.220    City treasurer duties.

5.04.230    City attorney duties.

5.04.240    Enforcement.

5.04.250    Refund of overpayments.

5.04.260    Effect of annexation.

5.04.270    Rules and regulations.

5.04.010 PURPOSE OF THIS CHAPTER.

This chapter is enacted solely to raise revenue for municipal purposes, and not for purposes of regulation.

(Ord. 78-13 § 2 (part), 1978).

5.04.020 EFFECT ON OTHER ORDINANCES.

Persons required to pay a license fee for transacting and carrying on any business under this chapter shall not be relieved from the payment of any license tax for the privilege of doing such business required under any other ordinance of the city, and shall remain subject to the regulatory provisions of other ordinances.

(Ord. 78-13 § 2 (part), 1978).

5.04.030 DEFINITIONS.

For the purposes of this chapter, the following words and phrases shall have the meanings respectively ascribed to them by this section:

(1)    “Apartment” means a room or suite of rooms which is designed to be occupied by one family for living or sleeping purposes in an apartment house.

(2)    “Apartment house” means a building in which three or more families are living independently of each other.

(3)    Average Number of Persons Employed. Whenever in this chapter the annual license tax is based upon the “average number of persons employed” it shall mean the average number of employees engaged during the three-month period of maximum employment, excluding therefrom temporary seasonal employees not employed for a period in excess of two weeks.

(4)    “Business” includes any economic activity engaged in or caused to be engaged in within the city, including any commercial or industrial enterprise, trade, profession, independent contractor, occupation, vocation, calling, or livelihood, including without limitation the rental or lease of apartment houses, commercial, industrial or other nonresidential real estate, and the operation of games, machines or mechanical devices.

(5)    “City” means the city of Santa Cruz, a municipal corporation of the state of California, in its present incorporated form or in any later reorganized, consolidated, enlarged or reincorporated form.

(6)    “Concessioner” means the person who rents or leases a portion of a premises for some specific use.

(7)    “Construction contractor” means every person conducting or carrying on a business who is required to be licensed as a contractor by the state of California and who undertakes to, or offers to undertake to, or purports to have the capacity to undertake to, or submits bids to, or does himself or by or through others, construct, alter, repair, add to, subtract from, improve, move, wreck, or demolish any building, highway, railroad, excavation, or other structure, project, development or improvement, or to do any part thereof, including the erection of scaffolding, or other structures or works in connection therewith. The term contractor as used in this section also includes subcontractor and specialty contractor.

(8)    “Contract construction business” means all business activities carried out by construction contractors.

(9)    “Employee” means a person who works for an employer, where right or control exists with such employer, where directions on performance of work can be given by employer, and where breach of contract is not involved if work is halted by employer or employee; furthermore, if there is prima facie evidence that a person is included on the payroll deductions, such as federal taxes and social security, he may be considered to be an employee.

(10)    “Engaging in business” means the commencement, conduct, operation, management or carrying on of a business, as well as liquidating a business when the liquidators thereof hold themselves out to the public as conducting a business, and the exercise of corporate or franchise powers, whether done as an owner, or by means of an officer, agent, manager, employee, servant 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.

(11)    “Hotel” or “motel” means a building or series of buildings on one site, containing three or more units used for guest occupancy, and intended and designed to be used for occupancy by temporary guests, and having the usual characteristics of a hotel or motel.

(12)    “Manufacturing business” means and includes any business wherein persons are engaged in making materials, raw or partly finished, or assembling finished parts into articles suitable for use.

(13)    “Person” includes all domestic and foreign corporations, associations, syndicates, joint stock corporations, partnerships of every kind, clubs, businesses, or common law trusts, societies and individuals, transacting and carrying on any business in the city of Santa Cruz, other than as an employee.

(14)    “Professional” means any person engaged in business or activity characterized by or conforming to the technical or ethical standards of a profession, including, but not limited to, those listed below:

Appraiser

Architect

Assayer

Attorney

Chemist/pharmacist

Chiropractor

Dentist

Dermatologist

Designer

Electrologist

Engineer:

Chemical

Civil

Consulting

Electrical

Hydraulic

Mechanical

Mining

Structural

Entomologist

Geologist

Landscape architect

Optician

Optometrist

Osteopath

Physician

Physiotherapist

Podiatrist

Public accountant

Real estate broker

Roentgenologist

Surgeon

Veterinarian

Each person engaged in one of the above-entitled professions, and such other professions as may be defined by the treasurer, shall be deemed to be conducting a separate business for purposes of the business license tax. When two or more professionals employ persons jointly, or by joint agreement or arrangement, each such professional shall be jointly and severally responsible for the payment of the business license tax based on employees.

(15)    “Retail business” means every business conducted for the purpose of selling or offering for sale any goods, wares, or merchandise other than as part of a “wholesale business.”

(16)    “Treasurer” means the city finance director.

(17)    “Wholesale business” means every business conducted solely for the purpose of selling goods, wares, or merchandise in whole lots for resale.

(Ord. 96-22 § 1, 1996: Ord. 78-13 § 2 (part), 1978).

5.04.040 BASIC BUSINESS LICENSE CLASSIFICATION AND TAX RATE.*

*    Editor’s Note: Pursuant to Section 3 of Ordinance No. 97-06, the tax rate established in Section 5.04.040 shall be effective as of June 10, 1997.

(1)    Class A. Each retail, wholesale, contract, construction and manufacturing business, and each business for which no other classification is provided in this section, shall be treated as a Class A business. Each Class A business shall pay an annual basic license fee of $145.15, in addition to the annual payment of an amount determined by multiplying the average number of employees by $2.55.

(2)    Class B. Each service business, hotel and motel, apartment house, each business engaged in the leasing or renting of commercial or industrial space, each ambulance business and each business engaged in providing recreation and entertainment services and facilities, shall be treated as a Class B business. Each Class B business shall pay an annual basic license fee of $145.15, in addition to the annual payment of an amount determined by multiplying the average number of employees by $4.95.

(3)    Class C. Each professional shall be treated as a Class C business. Each Class C business shall pay an annual basic license fee of $145.15, in addition to the annual payment of an amount determined by multiplying the average number of employees by $7.40.

(Ord. 97-06 § 1, 1997: Ord. 95-19 § 1, 1995: Ord. 94-29 § 1, 1994: Ord. 93-30 § 1, 1993: Ord. 92-28 § 1, 1992: Ord. 91-17 § 1, 1991: Ord. 91-09 § 1, 1991: Ord. 90-28 § 1, 1990: Ord. 89-30 § 1, 1989: Ord. 88-35 § 1, 1988: Ord. 87-17 § 1, 1987: Ord. 84-42 § 1, 1984: Ord. 78-31 § 1, 1978).

5.04.045 SPECIAL BUSINESS LICENSE CLASSIFICATION AND TAX RATE.

Any business engaged in the activities identified in this section shall pay the business license fees set forth herein, in addition to any fees applicable under Section 5.04.040.

(1)    Arcade.

(a)    An arcade is a public place in which there are kept or maintained five or more amusement devices or machines which are activated by insertion of a coin or token.

(b)    The fee for ownership or operation of an arcade shall be in accordance with the following schedule:

Number of Amusement Machines or Devices

Rate Per Number of Machines

005 through 024 machines

$ 290.30

025 through 049 machines

1,451.40

050 through 099 machines

2,902.70

100 or more machines

5,805.35

(c)    If an arcade is operated in conjunction with retail sales or other services, then the fees set forth in this section shall be in addition to any business license fee applicable pursuant to Chapter 5.04.

(2)    Arts and Craft Association. The fee for an arts and craft association is a basic fee of $145.15 and $2.55 per employee.

(3)    Boxing or Wrestling. The fee for boxing or wrestling shall be a sum of $58.10 per show or exhibit payable in advance or an annual license fee of $580.55 payable in advance, at the option of the person conducting the show or exhibition, in addition to any other fees applicable pursuant to this section or Section 5.04.040.

(4)    Card Games. The fee for card games is a sum equal to $76.90 times the number of card tables used in such business, such sum to be payable annually, in addition to any other fees applicable pursuant to this section or Section 5.04.040.

(5)    Circus, Carnival or Menagerie. The fee is $290.30 daily for circuses, carnivals or menageries.

(6)    Coin-Operated Amusement Devices. The fee for coin-operated amusement devices shall be in addition to any other fees imposed pursuant to this section or Section 5.04.040. Any business in which there are five or more coin-operated amusement devices shall be considered an arcade, and the fees therefor shall be determined in accordance with subsection (1) of this section. If the charge for use of the device is less than five cents, the fee is $15.60 annually for each machine; if the charge is five cents or more the fee is $76.90 annually for each machine.

(7)    Dances or the Leasing of Halls for Dancing. The fees for dances or the leasing of halls for dancing are as follows:

Square Feet

Annual Fee

0000 – 2500 square feet

$ 72.60

2501 – 3500 square feet

145.15

Over 3500 square feet

290.30

(8)    Itinerant Vendor, Peddler or Jobber. The fee is $72.60 daily for itinerant vendors, peddlers or jobbers.

(9)    Vehicles for Hire. The fee for each taxicab, automobile or truck for hire is $72.60 annually.

(10)    Telephone Solicitation. The fee for each business where initial contacts or uninvited contacts are made with prospective customers by telephone solicitation in any form or manner, in addition to the basic $145.15 business license fee, shall be $290.30 annual minimum with an additional $2.55 fee for each employee.

(11)    Theaters. The fee for theaters each year is a sum equal to sixty-five cents times the number of seats in such theater, in addition to any other fees applicable pursuant to this section or Section 5.04.040.

(12)    Traveling Show. When not conducted in a duly licensed theater, a traveling show shall pay a fee of $58.10 per day, in addition to any other fees applicable pursuant to this section or Section 5.04.040.

(Ord. 97-06 § 2, 1997: Ord. 96-22 § 2, 1996: Ord. 95-19 § 2, 1995: Ord. 94-29 § 2, 1994).

5.04.050 ANNUAL CONSIDERATION OF TAX RATE.

Annually, the director of finance shall present to the city council information concerning changes in the Consumer Price Index, and other pertinent data, which will be considered by the city council. The city council shall determine from all appropriate data whether there is a need to increase the license fees set forth in this chapter, and shall make such adjustments as may be deemed reasonable.

(Ord. 94-29 § 3, 1994: Ord. 87-17 § 1, 1987: Ord. 84-42 § 1, 1984: Ord. 83-21 § 1, 1983: Ord. 78-24 § 1, 1978).

5.04.060 REVIEW OF CLASSIFICATION.

In any case where a licensee or an applicant for a license believes that his individual business is not assigned to the proper classification under this chapter because of circumstances peculiar to it, as distinguished from other businesses of the same kind, he may apply to the treasurer for reclassification. Such application shall contain such information as the treasurer may deem necessary and require in order to determine whether the applicant’s individual business is properly classified. The treasurer shall then conduct an investigation following which he shall assign the applicant’s individual business to a classification shown to be proper on the basis of such investigation. The proper classification is that which, in the opinion of the treasurer, most nearly fits the applicant’s individual business.

The reclassification shall not be retroactive but shall apply at the time of the next regularly ensuing calculation of the applicant’s tax, except where the applicant applies for reclassification within thirty days of his original classification, in which case the reclassification shall be retroactive.

The treasurer shall notify the applicant of the action taken on the application for reclassification. Such notice shall be given by serving it personally or by depositing it in the United States post office at Santa Cruz, California, postage prepaid, addressed to the applicant at his last known address. Such applicant may, within fifteen days after the mailing or serving of such notice, make written request to the treasurer for a hearing on his application for reclassification. If such request is made within the time prescribed, the treasurer shall cause the matter to be set for hearing before the city council within fifteen days. The treasurer shall give the applicant at least ten days’ notice of the time and place of the hearing in the manner prescribed above for serving notice of the action taken on the application for reclassification. The council shall consider all evidence adduced and its findings thereon shall be final. Written notice of such findings shall be served upon the applicant in the manner prescribed above for service of notice of the action taken on the application for reclassification.

(Ord. 78-13 § 2 (part), 1978).

5.04.070 MULTIPLE BUSINESSES AND BRANCH ESTABLISHMENTS.

(1)    Multiple Businesses at One Location. If a person engages in two or more separate businesses at the same establishment or location, there shall be a separate license issued for each business. Separate business operations are further defined as two or more separate and distinct business entities or names wherein separate sets of accounting records, bank accounts, and the like are maintained.

(2)    Single Business at Multiple Locations or Branch Establishments. A separate license must be obtained for each branch establishment or location at or from which a person carries on the same business, provided that warehouses and distributing plants used in connection with or incidental to a business licensed under the provisions of this chapter shall not be deemed to be separate places of business or branch establishments.

(3)    Rental or Lease of Real Property. A separate license must be obtained for each rental or lease of commercial, industrial or non-residential real property that is separately located within the city, provided that contiguous parcels of real property that share common amenities and improvements shall not be deemed to be separate places of business or branch establishments.

(Ord. 96-22 § 3, 1996: Ord. 78-13 § 2 (part), 1978).

5.04.080 EXEMPTIONS.

No tax or fee prescribed in this title shall be deemed or construed to apply to any of the following persons who are exempted from payment thereof:

(1)    Agricultural. When it applies to growers of livestock, poultry or agricultural products for sale or disposal by growers only;

(2)    Charitable and Nonprofit Organizations. Any church, school, charitable, benevolent or social organizations conducting any exhibition, show or performance for the exclusive benefit of such church, school, benevolent or social organization. Also any bona fide church, bona fide school, bona fide veterans organization or bona fide charity conducting any sale or business for the exclusive benefit of such church, school, veterans organization or charity, provided such school, church, veterans organization or charity is located within the corporate limits of the city. This exemption shall not apply to any person operating any business, show, sale, exhibition or enterprise for profit who shares such profit with any church, school, veterans organization, charity, or charitable benevolent or social organization;

(3)    Conflict with Federal and State Law. Any person conducting any business exempt by virtue of the Constitution or applicable statutes of the United States or of the State of California from the payment to municipal corporations of such taxes as are herein prescribed;

(4)    Disabled Veterans. Any honorably discharged soldier, sailor or marine from the military or naval services of the United States of America, who is unable to earn a livelihood by manual labor, and who hawks, peddles or vends any kind of goods in the city; provided, that he shall have obtained, in advance, a written permit issued by a veterans’ service officer of the county of Santa Cruz, and a written permit from the city manager;

(5)    Employees. No person who is an employee or who is the direct representative of a licensee shall be required to pay a license for doing any part of the work of such licensee;

(6)    Growers. Persons selling or otherwise disposing of livestock, poultry or agricultural products raised by the seller only;

(7)    Nurses. Nurses shall be exempt from license fees;

(8)    Roominghouses. Roominghouses with two rental rooms or less;

(9)    Teachers. Teachers or instructors, including but not limited to teachers or instructors of the fine arts such as painting, vocal and instrumental music, drawing, sculpture, ceramics, pottery, dancing, dramatics and arrangements, providing that all of the following conditions exist:

(a)    That instructions are given only in the homes of the teacher or instructor, or student;

(b)    That the teacher or instructor have no employee or employees;

(c)    That the teacher or instructor is not required to hold a city sales tax permit;

(10)    Vending Machines. Persons operating vending machines used for the sale of food, gum, tobacco, drinks or other merchandise, where operated in connection with a regularly licensed business and in the same premises;

(11)    Occasional Transactions. Persons engaging in business during no more than five calendar days in any fiscal year ending June 30th. 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 this subsection, the business tax payable by such person may be apportioned by the treasurer in accordance with administrative rules promulgated pursuant to Section 5.04.270 of this chapter.

(Ord. 2011-09 § 1, 2011: Ord. 96-22 § 4, 1996: Ord. 78-13 § 2 (part), 1978).

5.04.090 LICENSE REQUIRED.

No person shall conduct any business in the city without having an unrevoked license from the city to do so, valid and in effect at the time, and without complying with any and all regulations of such business contained within this chapter.

(Ord. 78-13 §2 (part), 1978).

5.04.100 CONCESSIONER.

Every person who operates any business, whether upon a cost, rental or commission basis as a concession or upon rented floor space in or upon the premises of any person licensed under any provision of this chapter, is required to obtain a separate and independent license pursuant to the appropriate provisions hereof, and shall be subject to all provisions of this title.

(Ord. 78-13 § 2 (part), 1978).

5.04.110 VIOLATIONS.

(a)    Business Violating Law. The issuance of a license under this title shall not entitle the licensee to engage in any business which for any reason is in violation of any law or ordinance.

(b)    Separate Violation. The conducting of business in the city without first having procured a license from the city to do so, or without complying with any and all regulations of such business contained in this code shall be a separate violation hereof for each and every day that such business is so carried on.

(c)    Penalty for Violations. Any person violating any of the provisions of this chapter or knowingly or intentionally misrepresenting to any officer or employee of the city, any material fact in procuring the license herein provided for shall be subject to the penalties provided in Chapter 1.08 of this code.

(Ord. 78-13 § 2 (part), 1978).

5.04.120 LICENSE NONTRANSFERABLE.

No license hereunder shall be transferred or assigned.

(Ord. 78-13 § 2 (part), 1978).

5.04.130 LICENSE FEE – HOW PAYABLE.

The license fee shall be paid to and collected by the treasurer who shall sign all licenses issued by the city and shall number and keep a record thereof. Such record shall show the numbers, dates thereof, to whom issued, the type of business licensed, the location thereof, the time of expiration and the amount of license fee.

(Ord. 78-13 § 2 (part), 1978).

5.04.140 LICENSE APPLICATION – CONTENTS.

Before any license is issued, a written application by the applicant shall be made upon a form prescribed by the city treasurer. The applicant shall supply any information which the treasurer may require to enable him to issue the type of license applied for. The application shall be signed by the owner, if a natural person, or, in the case of a corporation, by an executive officer or some person specifically authorized by resolution of the corporation to sign the application. The treasurer may require such information as may be necessary in order to issue a license renewing an existing license; provided, however, that if there is a change of ownership or operation of any business, the new owner or operator shall immediately notify the treasurer thereof.

(Ord. 78-13 § 2 (part), 1978).

5.04.150 LICENSE FEE – WHEN PAYABLE.

All annual license fees under the provisions of this chapter shall be due and payable at the time of commencement of business activity and such license shall expire twelve months after the date of issuance. Fees for the renewal of such licenses shall be due and payable upon the expiration of the prior license. No license fee paid hereunder shall be refundable by reason of the cessation of business during the license period.

(Ord. 99-07 § 1), 1999).

5.04.160 TERMS OF LICENSE.

The license term shall be, except as otherwise provided in this chapter, for a term of one year, commencing with the first of July, and ending with the thirtieth of June, and except as hereinafter otherwise provided, a full year’s license shall be paid, regardless of the time of the year in which the license shall be issued, and all licenses shall be paid for in advance, except that annual licenses first issued in the second half of the fiscal year shall pay one-half of the license fee.

(Ord. 78-13 § 2 (part), 1978).

5.04.170 DELINQUENCY PENALTY ON NEW LICENSES.

In the event that the licenses payable under this chapter are not applied for on or before the starting date of the business, a penalty of ten percent shall be added to the amount of such license; if not applied for within thirty days after the starting date of the business a penalty of twenty percent shall be added to the cost of such licenses. For fiscal year 1993-94 only, new businesses with a starting date in July 1993 will be given an extension of time to apply for the license until August 1, 1993 without incurring any penalties.

(Ord. 93-30 § 1, 1993: Ord. 78-13 § 2 (part), 1978).

5.04.180 DELINQUENCY PENALTY ON LICENSE RENEWAL.

If a license is not renewed within thirty days from the beginning of the fiscal year, a ten percent penalty shall be added to the cost of the license, and if not renewed within sixty days from the beginning of the fiscal year, a twenty percent penalty shall be added. For fiscal year 1993-94 only, if a license is not renewed within sixty days from the beginning of the fiscal year, a ten percent penalty shall be added to the cost of the license, and if not renewed within ninety days from the beginning of the fiscal year, a twenty percent penalty shall be added.

(Ord. 93-30 § 1, 1993: Ord. 78-13 § 2 (part), 1978).

5.04.190 LICENSE FEE – DEBT TO CITY.

The amount of any license fee imposed under this chapter shall constitute a debt to the city, and any person conducting business within the city without having a license from the treasurer to do so shall be subject to an action in the name of the city, in any court of competent jurisdiction, for the collection of the amount of the license fee imposed by this chapter.

(Ord. 78-13 § 2 (part), 1978).

5.04.200 CONVICTION – EFFECT ON DEBT.

The conviction and punishment of any person having conducted business without a license shall not excuse or exempt such person from the payment of any license fee due or unpaid at the time of such conviction, and nothing herein shall prevent criminal prosecution for any violation of any provisions of this chapter.

(Ord. 78-13 § 2 (part), 1978).

5.04.210 EXHIBITION OF LICENSE.

Every person having a license under the provisions of this chapter for conducting business at a fixed place shall keep such license posted for exhibition while in force in some conspicuous part of the place of business. Every person having such a license, and not having a fixed place of business, shall carry such license with him at all times while carrying on the business for which the same was granted. Every person having a license shall procure and exhibit the same, when applying for a renewal thereof, and whenever requested to do so by any police officer, or by any person authorized to issue or inspect licenses, or collect license fees.

(Ord. 78-13 § 2 (part), 1978).

5.04.220 CITY TREASURER DUTIES.

The treasurer shall make diligent effort to discover all persons conducting any business in the city for which a license is required by the provisions of this title.

(Ord. 78-13 § 2 (part), 1978).

5.04.230 CITY ATTORNEY DUTIES.

The treasurer may at any time request the city attorney to bring suit in the name of the city for the recovery of any license tax from any person who conducts a business without procuring the license required by this chapter, and without paying the prescribed license tax, for the recovery of such license tax and penalties due thereon.

(Ord. 78-13 § 2 (part), 1978).

5.04.240 ENFORCEMENT.

It shall be the duty of the treasurer and he is hereby directed to enforce each and all of the provisions of this chapter, and the chief of police shall render such assistance in the enforcement hereof as may from time to time be required by the treasurer or the city council.

The treasurer in the exercise of the duties imposed hereunder, and acting through deputies or duly authorized assistants, shall examine or cause to be examined all places of business in the city to ascertain whether the provisions of this chapter have been complied with.

The treasurer and all assistants and any police officers shall have the power and authority to enter, free of charge, and at any reasonable time during business hours, any place of business required to be licensed herein, and demand an exhibition of its license. Any person having such license theretofore issued, in his possession or under his control, shall exhibit the same on demand.

It shall be the duty of the treasurer and each assistant to enforce this chapter against any and all persons found to be violating any of its provisions.

(Ord. 78-13 § 2 (part), 1978).

5.04.250 REFUND OF OVERPAYMENTS.

No refund of an overpayment of taxes imposed by this chapter shall be allowed in whole or in part unless a claim for refund is filed with the treasurer within a period of three years from the last day of the calendar month following the period for which the overpayment was made, and all such claims for refund of the mount of the overpayment must be filed with the treasurer on forms furnished by him and in the manner prescribed by him. Upon the filing of such claim and when he determines that an overpayment has been made, the treasurer may refund the amount overpaid.

(Ord. 78-13 § 2 (part), 1978).

5.04.260 EFFECT OF ANNEXATION.

All existing businesses brought under the jurisdiction of the city ordinance by annexation procedures shall conform to the provisions of this chapter within ninety days of the effective date of such annexation.

(Ord. 78-13 § 2 (part), 1978).

5.04.270 RULES AND REGULATIONS.

For the purpose of apportionment as may be required by law and for the purpose of general administration and enforcement of this chapter, the treasurer, with the concurrence of the city attorney, may promulgate, from time to time, administrative rules and regulations consistent with the provisions of this chapter.

(Ord. 96-22 § 5, 1996: Ord. 78-13 § 2 (part), 1978).