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Minutes 79-04-16265 MINUTES OF AN ADJOURNED REGULAR MEETING OF THE CYPRESS CITY COUNCIL HELD April 16, 1979 The adjourned regular meeting of the Cypress City Council was called to order at 7:35 p.m. on Monday, April 16, 1979 in the Administrative Conference Room of the Cypress City Hall, 5275 Orange Avenue, Cypress, California, Mayor Howard Rowan presiding. PRESENT: ABSENT: Councilmemhers Evans, Hudson and Rowan Councilmembers MacLain and Lacayo PRESENTATION: Mayor Rowan presented a cormnunity service plaque to Mr. Robert Simmons in recognition of his past service to the community as a member of the Recreation and Park Commission. CONSIDERATION OF REQUEST FROM CONGRESSMAN PATTERSON TO SUPPORT H.R. 2505 ESTAB- LISHING A NEW FEDERAL JUDICIAL DISTRICT IN CALIFORNIA: It was moved by Councilman Hudson, seconded by Councilwoman Evans and unanimously carried that the City Council go on record in support of H.R. 2505 and that staff be directed to prepare a response for the Mayor's signature to Congressman Patterson. CONSIDERATION OF BUSINESS LICENSE ORDINANCE: Members of the Cypress Chsmber of Commerce were present to discuss the new Business License Ordinance which is scheduled to go into effect on July 1, 1979. The City Manager stated that, sub- sequent to the Council's adoption of the ordinance on June 23, 1978, the City staff and Chamber representatives have held several meetings to review the ordinance and discuss concerns prior to its implementation on July 1. The Finance Officer summarized the meetings which were held and stated the concerns expressed by the Chamber at the last meeting were responded to in a staff report dated April 12. He reported that the ordinance, drafted over two years ago, is not intended to be a new revenue source measure for the City but is a restructuring of the current tax rate schedule. The ordinance would tax businesses on a proportionate gross receipts basis, rather than a flat rate basis, and staff indicated it is a good long-term ordinance since it will grow with inflationary conditions. Mr. Powell stated the staff report contained a table showing which businesses will receive an increase or a decrease in the business license fee; he reported that 100 businesses' fees will remain the same. He stated the Chamber expressed concern over the Professional business category whose fee will be changed from a flat rate to a gross receipts basis. He reported many professional businesses will receive a decreased fee, particularly those which operate out of a home. Mr. Maylor and Mr. Simmons stated the Chamber was suggesting that the Professional category be given the option of a flat rate or gross receipts basis. They indi- cated that the primary objection of those in this category was having to report gross receipts to another governmental agency. The staff reported that many businesses already report their gross receipts to the City and the ordinance proposes the addition of the Professional category. The staff stated the City will receive the same amount of revenue with the new ordinance, but since the ordinance contains a growth factor it ultimately will provide more revenue. They indicated that the ordinance includes businesses which are not currently taxed. Mr. Powell reported on the number of businesses which will receive an increased fee in different dollar amount categories. In the Professional category, he stated those earning less than $77,000 annually will receive a decrease, and those earning over $77,000 will receive an increase. He reported that 90 Professional businesses operating out of the home or from outside the City under a Home Occupation Permit will have a decreased tax. In response to questions from the Chamber, t}~e staff reported that professional businesses were defined as those which provide a service. The staff also clarified the proposed fees for the General Retail category, specifically for supermarkets and car dealerships, and indicated they were based on differences in the profit margin from other retail businesses. Cit~cil Minutes April 16, 1979 Councilwoman Evans asked if the Chamber felt the ordinance was equitable for all businesses and how it related to ordinances of other cities. The representative from Mervyn's stated he researched other communities and the new rate would be above average from what they pay in other communities. He stated his increase would be 160%. Councilman Hudson stated the intent of the ordinance was to create equity among all categories of business. He indicated that the business categories in the ordinance were based on Federal classifications. The Council and Chamber dis- cussed the equity aspects of the ordinance. One member of the Chamber stated several businesses view the ordinance as a new, or added tax, and he asked if its adoption was necessary at this time. The Council explained the necessity of the ordinance in view of the passage of Proposition 13. Councilman Hudson stated that under the current ordinance, new businesses which could be developed on vacant property in the south part of the City would pay a disproportionately lower tax. The Council also indicated that the inequities in the current ordinance could be subject to challenge by businessmen. The Chamber represen- tatives indicated that the proposed ordinance may discourage businesses from locating within Cypress. The Council commented that there are on-going changes at the State level relating to taxing that impact the City's financial picture. Mayor Rowan reported on a State proposal which would remove the sales tax from cities and counties and also eliminate the State's annual bail-out subven- tions. The sales tax revenue was proposed to fund school districts. The Council indicated that sales tax generating businesses may not provide the City with the same benefit as in the past. Mr. Simmons stated the Chamber opposes the split tax rate proposed in the General Retail category and requests that other alternatives be considered such as charging the same tax rate for all businesses within this category. The Chamber also asked that consideration be given to phasing the tax increases for those businesses which will receive a substantial increase. The Chamber provided the Council with responses they received from businesses in regard to the new ordinance. Mrs. Van Den Raadt suggested that the City send a communication to all businesses explaining the impact of the ordinance. The Council and Chamber proceeded to review the Business Tax Rate Matrix contained in the January 17 staff report. With regard to the Professional category, the Chamber requested that the option be provided for a flat rate or a fee based on gross receipts. The Chamber did not suggest a specific flat rate fee. They indicated that the Professional businesses' main objection was disclosure of their gross receipts. The Council asked that staff investigate having a flat rate fee which could be escalated. With regard to the Money Lending category, the Chamber felt a flat rate would be more equitable. The staff explained that the tax would be paid by the business which approves a loan, irregardless of the location from which the loan check Councilman Hudson requested that he be excused from the meeting and Mayor Rowan brought up other items of business for the Council's consideration. Mayor Rowan reported on additional nominations he received for City Selection Committee appointments. The Councilmembers agreed to support Garden Grove Councilmember Krieger as the nominee to the Airport Land Use Commission; Anaheim Councilmember Roth as the nominee to the South Coast Air Quality Management District; and La Palma Council- member Van Dyke as the nominee to the Criminal Justice Council. -2- City Council Minutes April 16, 1979 Mayor Rowan also reported on the South Coast Air Quality Management District hearings on April 26 and 27 and Councilman Hudson stated he planned to attend the hearings. He stated he would prepare recormmendations and submit them to the Council for their input prior to the hearings. ~ayor Rowan reported on a request from the Council on Environmental and Economic Balance for the City Council to take a position opposing the proposed procedure of the State Air Resources Board. It was moved carried that of the State response for by Councilman Hudson, seconded by Councilwoman Evans and unanimously the City Council go on record in opposition to the proposed action Air Resources Board and direct the staff to prepare an appropriate the Mayor's signature. Hearing no objections, Mayor Rowan stated he would also prepare a letter urging support for proposed legislation which seeks to retain local authority with respect to the Air Quality Management District. The Council approved a request and proclaimed the month of April 1979 as "Cancer Control Month" in the City of Cypress. COUNCILMAN HUDSON LEFT THE MEETING AT 9:55 P.M. ADJOURNMENT: With the lack of a quorum, Mayor Rowan adjourned the meeting at 9:55 p.m. The Council continued informal discussion with the Chamber representatives regarding the Business License Ordinance. With regard to the Vending Machines category, the staff noted that the proposed ordinance contains the same provision as the existing ordinance which would require that the owner of the business where the vending machine is located shall be responsible for paying the tax, if it is not paid by the vending machine company. Mr. Simmons stated the Chamber objected since they felt businessmen should not be placed in the position of tax collector. With regard to the Property Development category for which the ordinance proposes a tax rate of $50.00 per unit, the Chamber recommended that the fee be based on the size of units developed. The Council agreed to have staff study the areas of concern identified by the Chamber and to schedule further meetings with the Chamber to discuss the ordinance. ATTEST: CITY CLERK OF THE CITY OF CYPRESS -3-