HomeMy WebLinkAbout7/5/2017 - STAFF REPORTS - 4.A. Additional Revenue Options DRAFT
City of Palm Springs
Projected
Annual Revenue
Transactional Cannabis Tax TBD
(tax all cannabis related transactions on products, growing,
cultivation & testing to the full extent permitted by law)
Sales Tax - Add-On Sales Tax
Additional 112% $6,700,000
or Additional 1/4% $3,350,000
Utility User Tax - Raise rate to 6% $1,500,000
Documentary and Property Transfer Rax Rate - Increase total
fee from $1 .10 / $1,000 to $2.20 / $1,000 in value $1 ,500,000
Business License Tax (formalize by Prop 218 vote) TBD
Convert to sales & income basis
TOT - Raise rate by 1% $2,000,000
Fire District / Paramedic charge on every parcel in PS $8,085,000
($165/parcel: 50% of$16,170,000 /49,140 parcels in PS)
Tribal Tourism / Casino Impacts Agreement to be renegotiated TBD
Recreation Fees (requires formalized fee study)
Residents & children of people working in PS (nominal increases) TBD
Nonresidents -- cost recovery somewhere between 50% & 100% TBD
Special Recordation Fee (on real estate documents) TBD
(Statutorily thru Assembly bill for entire County or only City) (G.C.27388)
Available capacity in-process of being verified by City's Financial Advisor
and the City Attorney
Additional Revenue Options (06-27-2017) ITEM NO. IL
6/27/2017; 12:01 PIA
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CITY COUNCIL STAFF REPORT
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DATE: July 5, 2017 UNFINISHED BUSINESS
SUBJECT: AD HOC CITY COUNCIL SUBCOMMITTEE REPORTS, BALLOT
INITIATIVES AND MEDICAL CANNABIS
FROM: David H. Ready, City Manager
BY: Edward Z. Kotkin, City Attorney
SUMMARY
The City Council ad hoc committees for ballot initiatives and medical cannabis have been
in close communication with staff and legal counsel with respect to (1) addressing the
significant budgetary challenges that will soon arise from the City meeting its continuing
and increasing obligations to PERS retirees, and (2) ensuring that the City of Palm
Springs provides an ideal environment for the evolution and growth of medical and other
cannabis-related activities without compromising the City's capacity, based upon
resources, to effectively regulate and also address community logistics with respect to
those activities.
The Council is establishing its plan as to how to best address the municipal fiscal crisis
that will arise from pension liability in several years absent aggressive intervention
beforehand. The Council is considering how cuts in the fiscal year 2017-18 budget and
new revenue streams will play a part in that plan. June 27, 2017 the law changed, and
adult-use of cannabis is an imminent reality statewide. Staff is asking for the full Council's
input, upon discussion with the subcommittees and staff, as to how staff and legal counsel
should proceed with respect to potential ballot initiatives for November 2017 and the
future beyond.
RECOMMENDATION:
Receive and file this report, and provide direction to the subcommittees and staff as to
how the City should proceed with respect to desirable ballot initiatives and the evolution
and growth of medical and adult-use cannabis activities in the City
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DATE: July 5, 2017 UNFINISHED BUSINESS
SUBJECT: AD HOC CITY COUNCIL SUBCOMMITTEE REPORTS, BALLOT
INITIATIVES AND MEDICAL CANNABIS
FROM: David H. Ready, City Manager
BY: Edward Z. Kotkin, City Attorney
SUMMARY
The City Council ad hoc committees for ballot initiatives and medical cannabis have been
in close communication with staff and legal counsel with respect to (1) addressing the
significant budgetary challenges that will soon arise from the City meeting its continuing
and increasing obligations to PERS retirees, and (2) ensuring that the City of Palm
Springs provides an ideal environment for the evolution and growth of medical and other
cannabis-related activities without compromising the City's capacity, based upon
resources, to effectively regulate and also address community logistics with respect to
those activities.
The Council is establishing its plan as to how to best address the municipal fiscal crisis
that will arise from pension liability in several years absent aggressive intervention
beforehand. The Council is considering how cuts in the fiscal year 2017-18 budget and
new revenue streams will play a part in that plan. June 27, 2017 the law changed, and
adult-use of cannabis is an imminent reality statewide. Staff is asking for the full Council's
input, upon discussion with the subcommittees and staff, as to how staff and legal counsel
should proceed with respect to potential ballot initiatives for November 2017 and the
future beyond.
RECOMMENDATION:
Receive and file this report, and provide direction to the subcommittees and staff as to
how the City should proceed with respect to desirable ballot initiatives and the evolution
and growth of medical and adult-use cannabis activities in the City.
City Council Staff Report
July 5, 2017 -- Page 2
Ad Hoc Subcommittee Reports
STAFF ANALYSIS:
Discussion of Taxes vis a vis Elections
General statewide elections take place on the first Tuesday in November, after the first
Monday, in even-numbered years. General municipal elections are first Tuesday in
November in odd-numbered years. There is always a "general election" in November in
Palm Springs. Statewide elections can only be held during June and November of even-
numbered years.
As for special elections, they can take place on the
• second Tuesday of April in an even-numbered year,
• first Tuesday after first Monday in March in odd-numbered years, or the
• first Tuesday after first Monday in June every year (can be consolidated with a
general election), and first Tuesday after first Monday in November of every year
(can be consolidated with a general election).
A "general tax" is a tax imposed for general governmental purposes. A tax is a "special
tax' whenever expenditure of its revenues is limited to specific purposes; this is true even
though there may be multiple specific purposes for which the revenues may be spent.
The Constitution requires that a local government imposing, extending, or increasing any
"general tax" do so by majority vote of the electorate at an election consolidated with a
regularly scheduled election when governing body members are elected. For Palm
Springs, general taxes can only be voted upon on the first Tuesday in an odd-numbered
year, 2017 being no exception. Special taxes, by contrast, can be approved by the
electorate at any election, but must be approved by a two thirds (%) vote.
Cannabis Update Relevant to Discussion re a Potential Initiative
As the Council knows from its review of the staff report regarding the engagement of
special counsel on its consent calendar, on June 27, 2017, the Governor signed SB 94
("The Reconciliation Bill"), which will serve to reconcile the existing medical cannabis
regulatory framework under the Medical Cannabis Regulation and Safety Act (MCRSA)
with Proposition 64, the Adult-Use of Marijuana Act (AUMA). The Reconciliation Bill, also
known as the "Medicinal and Adult-Use Cannabis Regulation and Safety Act'
("MAUCRSA") provides a framework for the co-existence of licensing for adult-use (non-
medical) and medical cannabis, eliminates prior restrictions on cross-licensure, provides
for two (2)forms of taxation by the State of California (cultivation and excise), consolidates
State authority over cannabis, and establishes that there are two (2) types of licenses,
"A" licenses for adult use and "M" licenses for medical use. Testing and laboratory
licenses are universal.
Businesses related to adult-use of cannabis will be legal in the State of California as of
January 1, 2018. The subcommittee has directed that it is imperative that the City of Palm
Springs remain a municipal leader in the field of cannabis regulation, and provide the best
City Council Staff Report
July 5, 2017 -- Page 3
Ad Hoc Subcommittee Reports
possible platform from which cannabis businesses, whether medical and/or adult,
whether existing or new, can continue, commence, and/or expand their operations, and
prosper. In order to secure a permit/license from the State, our present and future
cannabis businesses will need a local permit/license. This requirement will apply whether
a business seeks an "A" or an "M" class permit/license, or both.
The subcommittee has directed that the City commence the review and issuance of
medical cannabis business activities by parties beyond the City's six (6)
permitted/licensed collectives/cooperatives as soon as possible. Depending upon the full
Council's direction, staff can be prepared to do that by the beginning of next week. Staff
requests the full Council's direction as to whether permit/license applications under
Chapter 5.45 of the municipal code (i.e., regarding medical cannabis business and
activities beyond our existing approved collectives/cooperatives) should commence after
or without a staff/Council screening process through which staff would rank applicants
and present them to the Council for review and approval by the Council, with no permit
being issued to any party without a Council approval. Staff has prepared a process for
ranking and applicant approval by the Council whereby the Council could start
considering applicants under Chapter 5.45 in October. Again, the alternative is simply
accepting all applicants, subject to the significant protections and procedures already in
the municipal code and required by State law.
In addition, staff will be presenting the Council with Chapter 5.55 of the Palm Springs
Municipal Code to regulate adult use of cannabis at the July 19, 2017 meeting. Since the
Council has decided to add a special meeting scheduled for July 26, 2017 to the calendar,
second reading of the enacting ordinance can take place before the Council takes its
August recess. Although it will be effective thirty (30) days after adoption, the permits
issued pursuant to Chapter 5.55 will not be effective January 1, 2018. However, staff will
begin accepting applications for adult-use permits as soon as Chapter 5.55 is effective.
The subcommittee's direction has been to take all steps practicable to ensure that Palm
Springs permit holders are "first in line" when the State begins issuing its permits.
Considering and adopting Chapter 5.55 months before anyone can take advantage of the
new State law keeps Palm Springs where the subcommittee has indicated it want the City
to be — in leadership on this issue. In addition to Chapter 5.55, staff will present several
cannabis-related zoning ideas to the Council on the nineteenth, and seek Council
direction in that regard.
ALTERNATIVES:
None — staff and legal counsel merely seek Council direction. A failure to give direction
at this time will prevent the staff from placing any ballot initiative on the ballot in November.
City Council Staff Report
July 5, 2017-- Page 4
Ad Hoc Subcommittee Reports
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA) DETERMINATION:
The direction staff and legal counsel seek is not a "project' for purposes of the California
Environmental Quality Act (CEQA), as that term is defined by CEQA guidelines
(Guidelines) section 15378. This direction is organizational or administrative activity by
the City of Palm Springs in furtherance of its police power, and will not result in a direct
or indirect physical change in the environment, per section 15378(b)(5) of the Guidelines.
FISCAL IMPACT:
Significant fiscal impacts may arise from the direction requested in this report. Staff is
available to respond to questions in that regard.
Edward Z. Kotkin,
City Attorney
David H. Ready, Esq
City Manager