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CAO 00-07 (,..:.." L', -, v ~d' CITY OF MIAMI BEACH OFFICE OF THE CITY ATTORNEY MEMORANDUM C.A.O. NO. 00-07 TO: Lawrence A, Levy City Manager I Muttay H. Duhbm , City Attorney ~r \\1'- Raul 1. Aguila:p \" First Assistant City Attorney C.M.O. NO. 1-5/00 FROM: SUBJECT: Menu of potential funding sources which could be used as additional revenue if legaDy permissible. DATE: June 28, 2000 The following legal opinion has been prepared pursuant to the Budget Advisory Committee's (the BAC) request, as transmitted in a memorandum by City Manager Lawrence Levy to this Office, dated May 22, 2000. The BAC has requested that the Administration explore various funding mechanisms which will help to offset the costs associated with special events and the associated impacts on City services, To that end, the BAC came up with a "menu" of potential funding sources which could be utilized as additional revenue, subject to being legally permissible, as follows: 1. Resort Taxes, Pursuant to Chapter 67-930, Laws of Florida, any funds received under and by virtue of the municipal resort tax must be used for the following purposes only: Creating a maintenance of convention and publicity bureaus, cultural and arts centers, enhancement of tourism, publicity and advertising purposes, and for the future cost, purchase, building, designing, engineering, planning, repairing, reconditioning, altering, expanding, maintaining, servicing and otherwise operating auditoriums, community houses, convention halls, convention buildings or structures, and other related purposes, including relief from ad valorem taxes hereto levied for such purposes, (Emphasis Supplied) Any proposed use of resort tax monies to offset City costs associated with special events must be used and/or applied in conformance with the allowable uses pursuant to the aforestated provision, As it has done when determining whether other proposed City uses of the municipal resort tax have been considered, this Office would recommend that the Administration identify said uses (with specificity) so that the issue of whether same are legally permissible may be determined on a case by case basis. 2. Parkin~ surcharies (to be imposed beyond current fee levels during certain peak periods such as holidays, special events, etc.). All revenues derived from the City's Parking System, including parking charges and surcharges, must be retained within the Parking System, separate from all other funds and accounts of the City or any of its departments, as they are pledged toward the Parking Revenue Bonds (the Bonds). The use of such revenues for any other purpose, so long as any of the Bonds secured thereby shall be outstanding, would be prohibited as it would impair or diminish the rights of bond holders and would therefore be prohibited. 3, Increase in occupational license char~es to businesses who attract a substantial number of visitors. Chapter 205, Florida Statutes, also known as the "Local Occupational License Tax Act", provides that the governing body of a municipality may levy, by appropriate resolution or ordinance, an occupational license tax for the privilege of engaging or managing any business, profession, or occupation within its jurisdiction (F,S. ~ 205,042), Section 205,043 (Conditions for levies; municipalities therein) includes, but is not limited to, the requirement that an occupational license tax must be based upon reasonable classifications and must be uniform throughout any class, Section 205.0535 (Reclassification and rate structure revisions) provides that any municipality or county may, by ordinance, reclassify businesses, professions, and occupations and may establish new rate structures, suQject to specific conditions, as set forth in said subsection, As those conditions are self-explanatory, a copy of Section 205,0535 is attached and incorporated as Exhibit A hereto. The City of Miami Beach's Occupational License Tax Ordinance is codified in Chapter 18 of the City Code. Section 18-1 therein provides that no person shall engage in any business within the City for which a license is required by the Code unless the City license has been procured from the City Manager or his designee, The purpose of the local occupational license tax is not to regulate, but to raise general revenue for local governments. A municipal license for revenue and one for regulation under the police power are set apart by distinguishing characteristics, A license for revenue is a tax and should be construed under the tenets and rules governing the authority to tax, while one for regulation is under the police power and is concerned with the protection of the health, morals, safety, or general welfare of a community. Where the power to license is granted for revenue purposes, the amount of the tax is within the discretion and judgment of the municipal authority; if granted merely for regulation of police power, the construction is 2 narrowed to exercise of the power as a means of regulation and does not fundamentally embrace it for revenue purposes, See Sandstrom v. City of Ft. Lauderdale, 133 So,2d 755 (2d DCA); 23 Fla.Jur. Municipal Corporations, Section 150, Page 161. Caution must be exercised so that the fee in question is neither discriminatory nor excessive. Judicial intervention as to the amount imposed by a municipality for license tax requirements is limited, but classifications for local occupational license taxes must be uniform and applied equally within a given class. A court will not interfere unless the amounts assessed are so unequal and unjustly discriminatory by comparison with like conditions as to deny the equal protection of the laws, or unless they are so unreasonably large as to constitute an arbitrary and oppressive exercise of governmental power. See Gillis v. Crof\, 92 Fla. 267; 109 So. 446. In City of North Miami v. Williams, 555 So,2d 399 ( Fla. 3d DCA), the City's $1,875.00 annual occupational license fee for fortune tellers, which was more than ten times greater than fees assessed for most other occupations, was invalid. The fee went beyond the necessities of a reasonable revenue raising device, and the City had made no other provision for regulation offortune tellers (and had, in fact, assessed the instant fee as an occupational license fee and nothing else); therefore it could not be sustained as a valid occupational regulatory fee, and was therefore unauthorized under Chapter 205, Florida Statutes. 4, An increase in fees charied in association with the issuance of a !ij)ecial events permit. Included in this revenue is a study of event concession alP'eements iIl\Pact fees. and a potential char~e for use of public prQperty. An increase in the fees charged to promoters in association with the issuance of a special events permit would probably be the most viable and, among the alternatives outlined by the BAC, the most expedient method of offsetting City costs associated with said events; particularly since the special event itself is the generator of the increased "impact" on City services, This could be accomplished through a review and amendment of the City's current Special Events Policies and Procedures, 5. A toll imposed on vehicular traffic crossin~ eastbound on the Mc Arthur Causew~, This issue was previously raised with regard to special events planned in and around the Millennium, In conversations with Miami-Dade County and the Florida Department of Transportation at that time, the City of Miami Beach had no jurisdiction and/or authority to, unilaterally assess such a toll. 6, Poolini funds eJWended on off-duty police eIl\Ployed in the entertainment district. More detailed information is needed prior to determining whether this is a legally permissible funding source; as of the date of this memorandum, no additional information has been provided to this Office. 3 7. IlllPosition of a sanitation iIllPact fee based upon occupancy of premises or e}ij)ected attendance at events. In St. Lucie County v. City ofFt. Pierce, 676 So.2d 35 (4th DCA 1996), the Court held that counties retained the right to use fees collected for solid waste disposal services in any manner constituting a waste related purpose, and lack of direct benefit will not invalidate the user fee, despite the requirement that the party paying received a unique benefit through payment of the fee. As set forth by the Court, a yafu1 user fee must: 1, be for governmental services; 2. benefit the paying party in a manner not shared by the common public; and 3. be paid voluntarily. (Emphasis Supplied), While flexible, user fees, tolls, and service charges may not exceed relevant costs, the rationale being that these fees could easily be used as impermissible alternatives to taxes and could become problematic. The example presented in the instant request, however, contemplates a sanitation impact fee, which is based on occupancy of premises or expected attendance at events, By its terms, payment of the contemplated impact fee is not voluntary, therefore it does not qualify as a valid user fee. In the alternative, in analyzing the proposed payment as an impact fee (analogous, for example, to the standards and methodology applied toward the assessment of a road impact fee or a parking impact fee), the purpose for assessment of an impact fee is that the party being assessed be only responsible for the difference between the existing impact and the proposed impact as a result of the new project, etc, This is based upon the basic premise that one only pays for the impact that one generates, Under the set of circumstances presented by the BAC, the party generating the contemplated additional impact on City services (i.e, sanitation) would, in a special events scenario, be the promoter, Pursuant to the City's existing Special Events Policies and Procedures, promoters are already required to provide funds for event clean-up costs, They contractually arrange ahead of time for disposal of sanitation generated (i.e, the additional impact) by their event, To that end, where the promoter is already accommodating for the additional impact generated by its event as a condition precedent to issuance of a permit, an additional sanitation impact fee would likely be viewed as something akin to a "double tax," The imposition of a sanitation impact fee based upon occupancy of premises or expected attendance, and therefore takes on the guise of an unlawful "exaction". Should you have any questions, please feel free to contact me, RJA\kw F:"'tTO\A~.CAO cc: Ronnie Singer, Executive Assistant to the City Manager James Quinlan, Director of Arts, Culture and Entertainment 4 Ch. 205 LOCAL OCCUPATIONAL LICENSE TAXES F.S, 1999 (3) Any person who engages in any business, occupation, or profession covered by this chapter, who does not pay the required occupational license tax within 150 days after the initial notice of tax due, and who does not obtain the required occupational license is subject to civil actions and penalties, including court costs, reasonable attomeys' fees, additional adminis- trative costs incurred as a result 01 collection efforts, and a penalty of up to $250. HiMOfY.--s.. 1. ch. 72.306~ s. 1. th. '73-1"; S, ~. ch. 83-204; s. 7, eft 93-180. '205.0532 Revocation or refusal to renew; doing business with Cuba.-Any local goveming authority issuing an occupational license to any individual, busi. ness, or entity under this chapter may revoke or refuse to renew such license if the individual, business, or entity, or parent company 01 such individual, business, or entity, is doing business with Cuba. Hlololy.-s. 4. ch. 93-2'8. '_.-5oc:liOn 8, ch. 93-2'8. poovKlOs _ "1"0 Govomor moy _iYO lho l1tQuirernemS ot this act WI '1M event th8t there is a conaPM ot the e)tilt~ regime in Cuba and there isa need lor imme:tiateP:f to CUbe pnor to, the ccn\l'ef1&ng of the LegiSlature or for humanitarian reatonl as a ruult of a nlftOmlt dtsas<<8l' on tne Istoncl 01 Cube: ,j; r!:.\..l 11 ,'~ 205,0535 Reclassification and rate structure revi- sions.- (1) By October 1. 1995, any municipality or county may, by ordinance, reclassify businesses. professions, and occupations and may establish new rate struc- tures, if the conditions specified in subsections (2) and (3) are met. A person who is engaged in the business of providing local exchange telephone service or a pay telephone service in a municipality or in the unincorpo- rated area of a county and who pays the occupational license tax under the category designated for tele- phone companies or a pay telephone service provider certified pursuant to s. 364.3375 is deemed to have but one place of business or business location in each municipality or unincorporated area of a county. Pay telephone service providers may not be assessed an occupational license tax on a per-instrument basis. (2) Before adopting a reclassification and revision ordinance, the municipality or county must establish an equity study commission and appoint its members. Each member of the study commission must be a rep- resentative of the business community within the local govemment's jurisdiction. Each equity study commis- sion shall recommend to the appropriate local govern- ment a classification system and rate structure for local occupational license taxes. (3)(a) After the reclassification and rate structure revisions have been transmitted to and considered by the appropriate local goveming body, it may adopt by majority vote a new occupational license tax ordinance. Except that a minimum license tax of up to $25 is per- mitted, the reclassification shall not increase the occu- pational license tax by more than the following: for licenses costing $150 or less, 200 percent; tor licenses costing more than $150 but not more than $500, 100 percent; for licenses costing more than $500 but not more than $2,500, 75 percent; for licenses costing more than $2,500 but not more than $10,000. 50 per- cent; and tor licenses costing more than $10,000. 10 percent; however, in no case may any license be increased more than $5,000. :1 d (b) The total annual revenue generated by the new rate structure for the fiscal year following the fiscal year during which the rate structure is adopted may not exceed: 1. For municipalities, the sum of the revenue base and 10 percent of that revenue base. The revenue base is the sum of the occupational license tax revenue gen- erated by licenses issued for the most recently com- pleted local fiscal year or the amount of revenue that would have been generated Irom the authorized increases under s. 205.043(1 )(b), whichever is greater, plus any revenue received from the county under s. 205.033(4). 2. For counties, the sum of the revenue base, 10 percent 01 that revenue base, and the amount of reve- nue distributed by the county to the municipalities under s. 205.033(4) during the most recently com- plE!ted local fiscal year. The revenue base is the occu- pational license tax revenue generated by licenses issued for the most recently completed local fiscal year or the amount of revenue that would have been gener- ated from the authorized increases under s. 205.033(1)(b), whichever is greater, but may not include any revenues distributed to municipalities under s. 205.033(4). (c) In addition to the revenue increases authorized by paragraph (b), revenue increases attributed to the increases in the number of licenses issued are author- ized. (4) After the conditions specified in subsections (2) and (3) are met. municipalities and counties may, every other year thereafter, increase by ordinance the rates of focal occupational license taxes by up to 5 percent. The increase, however, mey not be enacted by less than a majority plus one vote ot the governing body. (5) No license shall be issued unless the federal employer identification number or social security num- ber is obtained from the person to be licensed. HIoIOly.-s. 8, ch. 93-180; s. 60. ch. 99-419. 205.0536 Distribution of county revenues,-A county that establishes a new rate structure under s. 205.0535 shall retain all occupational license tax reve- nues coRected from businesses. professions, or ~u- pations whose places of business are located With'n the unincorporated portions of the county. Any occupa- tionallicense tax revenues collected by a county that establishes a new rate structure under s. 205.0535 from businesses, professions, or occupatio~ ~ose places of business are located within a mUniCIpality, exclusive of the costs of collection, must be appor- tioned between the unincorporated area of the county and the incorporated municipalities located therel~ by a ratio derived by dividing their respecti~e populatl~ by the population of the county. As used ~n.thlS sectlon~ the term "population" means the latest offiCial state est. mate of population certified under s. 186.901. The rev- enues so apportioned shall be sent to th~ governing authority of each municipality, according to Its ratlt?, a~d to the goveming authority of the county,. a~ordlng 0 the ratio of the unincorporated area, WIthin 15 days after the month of receipt. _.-11.9. c1t.93.'80. 1680 EXHIBIT A F.S. 1999 j ~ 205,0537 The busine, token-ope rat ucts, march, ment or garr any requirec for the ma. machine" de sets owned t viding local , the occupati, for telephon or a pay tell to s. 364.33: ment mach highest nUIT premises on lng year or, i: an estimate vending mil< ing year do, year, unfeSl occupations higher tax n or county ( vending mE located in f municipalit) such machi provide not affected Ill. located. T license if it Hlotory,-1I. 1 205.054 lion for en prlsezone (1) No 205.033(1 of a count ate resolu procedure exemptior levied for' business, jUrisdictio, privilege i: or branch (2) 51 for which t . jurisdictic enterpriSl county 01 the exem same ge occupatj( as those license i section i in this se in s. 205