HomeMy WebLinkAbout2004-10-26 - AGENDA REPORTS - TAX SHARING AGMT CMTY COLLEGE (2)Agenda Item: I
CITY OF SANTA CLARITA
AGENDA REPORT
CONSENT CALENDAR City Manager Approval:
Item to be presented by:
Dennis Luppens
DATE: October 26, 2004
SUBJECT: REVIEW OF USE TAX SHARING AGREEMENT BETWEEN THE
SANTA CLARITA COMMUNITY COLLEGE DISTRICT AND
THE CITY OF SANTA CLARITA
DEPARTMENT: Administrative Services
RECOMMENDED ACTION
City Council approve staff s recommendation to continue the Santa Clarita Community College
District/City of Santa Clarita Use Tax Sharing Program per the executed Agreement, without
changes.
BACKGROUND
Nearly one year ago, the City Council adopted Resolution 03-132 which approved a four-year
Use Tax Sharing Agreement (Agreement) between the City and the Santa Clarita Community
College District (District). Under the Agreement, the District would create a Use Tax Sharing
Program, market the Program to Santa Clarita businesses, and in turn the City would share 50%
of the revenue received under the Use Tax Agreement with the District. The Agreement requires
that after 12 months from its execution, the City Council is to conduct a review of the Program.
Should Council approve staff s recommendation, the Agreement would continue unaltered for
the next three years.
As you may recall, the purpose of the Use Tax Program under the Agreement is to help the
District fund the University Center planned for the College of the Canyons campus. It is
important to note, the Program does not increase taxes but allows the City to collect its full share
of Use Tax. To do this, Santa Clarita businesses need to complete paperwork with the State
Board of Equalization. When this is done, the Use Tax resulting from the purchase of eligible
items and equipment goes directly to the City. When this is not done, the Use Tax resulting from
the same purchase goes into a County Use Tax Pool to be redistributed to Los Angeles County
cities. Under this scenario, Santa Clarita receives a reduced share of the Use Tax.
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L d D R OWED
Under the Program, participating Santa Clarita companies are coached by a Use Tax consultant
on what purchases are eligible and bow to complete the proper documentation with the State
Board of Equalization. The City and District share the consultant's fee (10% of the net Use Tax).
The fee is contingent on the City receiving Use Tax payments.
To date, the District has entered into eight Use Tax MOUs with Santa Clarita businesses, and
$23,795.04 has been collected by the City. Pursuant to the Agreement, 50% or $11,897.52 has
been forwarded to the District for the University Center project. Without the Agreement and the
District's efforts, Use Tax to the City through the County pool would have been approximately
$714.00.
ALTERNATIVE ACTIONS
1. Modify the terms of the Use Tax Sharing Agreement.
2. Other action as determined by the City Council.
FISCAL IMPACT
It is difficult at this time to assess the amount of additional revenue the Agreement will bring to
the City. Staff believes it will take at least two years of revenue history to project future revenue.
Staff reports the Agreement does not negatively impact the budget. Revenues received by the
City from the Program via the Agreement go into the General Fund balance and are allocated
during the Budget process.
ATTACHMENTS
Resolution No. 03-132 (Use Tax Sharing Agreement) available in the City Clerk's Reading File
Use Tax Update on Business Participation
Use Tax Update
10/12104
Company
Status
ADI
Signed MOU in place
HR Textron
Signed MOU in place
UVDI
Signed MOU in place
Gruber Systems
Signed MOU in place
DiFatta Graphics
Signed MOU in place
Wesco Aircraft
Signed MOU in place
HMNMH
OU in place
COC Contractors
Vendors notified
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