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Home My WebLink About2010-04-19 Ordinance 5078Ordinance No. 5078 Ordinance of the City Council of the City of Palo Alto Amending Title 2 (Administrative Code) of the Palo Alto Municipal Code to Amend Section 2.28.230 (Claims) of Chapter 2.28 (Fiscal Procedures), Section 2.33.110 (Refunds; Credits) of Chapter 2.33 (Transient Occupancy Tax), Section 2.34.220 (Refunds) of Chapter 2.34 (Real Property Transfer Tax) and Section 2.35.190 (Refunds) of Chapter 2.35 (Utility Users Tax) The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. Findings. The City Council finds as follows: A. Article XIII, Section 32 of the California Constitution requires taxpayers to pay first before seeking judicial review of a tax in order to allow revenue collection to continue during litigation, to ensure that funds necessary for essential public services are not unnecessarily withheld and to allow local governments to predict future tax revenues. B. A long line of California Court cases have applied this "pay first, litigate later" requirement to local government taxes, fees and charges. C. This ordinance updates procedures for filing claims for refunds of taxes, fees and charges against the City, in order to codifY the local application of Article XIII, Section 32 of the California Constitution. D. Adoption of this ordinance will protect the City from the costly fiscal impacts of having to defend against tax and fee refund litigation before the taxes and fees that are the subject of the litigation are paid. E. Adoption of this ordinance is consistent with existing City policies and California Government Code Section 900. " SECTION 2. Section 2.28.030 (Claims) of Chapter 2.28 (Fiscal Procedures) of the Palo Alto Municipal Code is hereby amended to read as follows: Section 2.28.030 (Claims). (a) Authority. The ordinance codified in this section is enacted pursuant to Section 935 of the California Government Code. (b) Statement of Purpose. This ordinance is intended to apply the requirements of Article XIII, Section 32 of the California Constitution to disputes involving taxes, fees and other charges imposed by the City. These requirements include the "pay first, litigate later" rule that requires those who dispute their taxes, fees and other charges to pay them before suing for a 1 091117 syn 6051102 refund. In the absence of such a rule, any taxpayer could impose significant hardship on the City and undermine its ability to predict its revenues and manage its resources for the benefit of the public it serves. The absence of such a rule could result in the City's loss of substantial revenue due to a taxpayer's withholding payment due to spurious or unfounded refund claims. ( c) Claims Required. All claims against the city for money or damages not otherwise governed by the Government Claims Act, California Government Code Sections 900 et seq., or another state law (hereinafter in this ordinance, "claims") shall be presented within one year, and in the manner prescribed by Part 3 of Division 3.6 of Title 1 of the California Government Code (commencing with Section 900 thereof) for the claims to which that part applies by its own terms, as those provisions now exist or shall hereafter be amended, and as further provided by this chapter. (d) Form of Claim. All claims shall be made in writing and filed with the City Clerk. All claims shall state under penalty of perjury the specific grounds under which the claim is founded, and shall include written records establishing the claimant's entitlement to the amount claimed. All claims shall be verified by the claimant or by his or her guardian, conservator, executor or administrator. No claim may be filed on behalf of a class of persons unless verified by every member of that class as required by this section. In addition, all claims shall contain the information required by California Government Code Section 910. ( e) Claim Prerequisite to Suit. In accordance with California Government Code Sections 935(b) and 945.6, all claims shall be presented as provided in this section and acted upon by the city prior to the filing of any action on such claims and no such action may be maintained by a person who has not complied with the requirements of subdivision (c) of this section. (f) Exhaustion of Administrative Remedies. Prior to seeking judicial relief with respect to a dispute regarding a tax, fee or other charge imposed by the city, an aggrieved taxpayer, fee payer or any other person must: (i) exhaust any administrative remedies specified by any other provision of this code or other applicable law, (ii) pay the full amount owed, including applicable penalties and interest, and (iii) present a claim for refund as required by any or all of: section 2.28.230 of this code; the Government Claims Act, Government Code section 910 et seq.; and other applicable law. (g) Suit. Any action brought against the city upon any claim or demand shall conform to the requirements of Sections 940 -949 of the California Government Code. Any action brought against any employee of the city shall conform with the requirements of Section 950 -951 of the California Government Code. SECTION 3. Section 2.33.110 (Refunds; credits) of Chapter 2.33 (Transient Occupancy Tax) ofthe Palo Alto Municipal Code is hereby amended to read as follows: Section 2.33.110 Refunds. (a) Claim Required. Prior to seeking judicial relief with respect to a dispute regarding the amount of any tax, penalty, or interest collected or received by the city under this 2 091117 syn 6051102 chapter, an aggrieved taxpayer, fee payer, operator, transient or any other person must comply with the provisions of section 2.28.030 of this code. (b) Operators. An operator may claim as an overpayment any tax previously paid which was calculated on the basis of taxable consideration written off by the operator as a bad debt in accordance with generally accepted accounting principles and claimed as a deduction on a federal income tax return in accordance with provisions of the Internal Revenue Code, and regulations issued pursuant thereto. The bad debt claim may be taken as an adjustment to future taxes due the city after the operator's procedure and forms for adjustment of bad debt have been reviewed and approved by the supervisor of revenue collections. (c) Transients. A transient may only request a refund of taxes under this chapter when the transient, having paid the tax to the operator, establishes that the transient has been unable to obtain a refund from the operator who collected the tax. SECTION 4. Section 2.34.220 (Refunds) of Chapter 2.34 (Real Property Transfer Tax) of the Palo Alto Municipal Code is hereby amended to read as follows: Section 2.34.220 Refunds. (a) Claim Required. Prior to seeking judicial relief with respect to a dispute regarding the amount of any tax, penalty, or interest collected or received by the city under this chapter, an aggrieved taxpayer, fee payer or any other person must comply with the provisions of section 2.28.030 of this code. SECTION 5. Section 2.35.190 (Refunds) of Chapter 2.35 (Utility Users Tax) of the Palo Alto Municipal Code is hereby amended to read as follows: 2.35.190 Refunds. (a) Claim Required. Prior to seeking judicial relief with respect to a dispute regarding whether the amount of any tax has been overpaid, paid more than once or erroneously or illegally collected or received by the city under this chapter, an aggrieved taxpayer, fee payer, service supplier, service user or any other person must comply with the provisions of section 2.28.030 of this code. (b) Service Suppliers. A service supplier may claim a refund or take as credit against taxes collected and remitted, the amount overpaid, paid more than once, or erroneously or illegally collected or received when it is established in a manner prescribed by the director of finance that the service user from whom the tax has been collected did not owe the tax; provided, however, that neither a refund nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to the service user or credited to charges subsequently payable by the service user to the service supplier. SECTION 6. Severability. Should any provislOn of this ordinance, or its . application to any person or circumstance, be determined by a court of competent jurisdiction to be unlawful, unenforceable or otherwise void, that determination shall have no effect on any 3 091117 syn6051l02 other provision of this ordinance or the application of this ordinance to any other person or circumstance and, to that end, the provisions hereof are severable. SECTION 7. Environmental Review. The Council finds that adoption of this ordinance does not meet the definition of a "project" pursuant to California Public Resources Code Section 21065, thus no environmental review under the California Environmental Quality Act is required. SECTION 8. Effective Date; Impact on Current Lawsuits and Claims. This ordinance shall take effect on the thirty-first day after its passage and adoption as provided by Government Code Section 36937. However, any claim that would have been timely if presented on the day before this ordinance becomes effective which claim would be untimely under the requirements of the this ordinance may, notwithstanding this ordinance, be presented not later than the 45th day after the adoption of this ordinance. However, this ordinance shall have no impact on existing lawsuits to which the City is a party, nor will this ordinance have an impact on existing claims pending against the City. INTRODUCED: PASSED: AYES: NOES: ABSTENTIONS: ABSENT: April OS, 2010 April 19, 2010 BURT, ESPINOSA, HOMLAN, KLEIN, PRICE, SCHARFF, SCHMID, SHEPHERD,YEH ~P~OVED: , dtJl.1 Mayor APPROVED AS TO FORM: ~fN;,~ Deputy Cit Attorney 4 091117 syn 6051102