Report to City Council. Martin Koczanowicz, City Attorney Marshall Eyerman, Chief Financial Officer

Transcription

1 Report to City Council TO: FROM: Mayor and City Council Martin Koczanowicz, City Attorney Marshall Eyerman, Chief Financial Officer AGENDA DATE: June 19, 2018 TITLE: CONSIDER ADOPTION OF RESOLUTIONS PLACING A COMMERCIAL CANNABIS ACTIVITY TAX MEASURE ON THE BALLOT (RESO NOS , ) RECOMMENDED ACTION Recommendations: 1. That the City Council consider whether to place on the ballot for the November 6, 2018 election the proposed Initiative Ordinance, "An Initiative Ordinance of the Voters of the City of Moreno Valley adding Chapter 3.28 to the Moreno Valley Municipal Code to Establish a Commercial Cannabis Activity Tax with a maximum tax rate of 8% and $15.00 per square foot for cultivation." 2. That, if the Council decides to place such initiative on the ballot, the City Council adopt the following resolutions: SUMMARY, calling, for the submission to the voters of the City at the general municipal election on Tuesday, November 6, 2018, which will be consolidated with the special and general municipal elections held within Riverside County on that date, per City s Resolution No adopted at this Council meeting. Resolution No , directing the City Attorney to prepare an impartial analysis, setting priorities for filing written arguments, and providing for rebuttal arguments regarding the Moreno Valley Commercial Cannabis Activity Tax measure. ID#3166 Page 1

2 In order to continue to fund the essential public services for the residents of the City of Moreno Valley and in order to off-set the large amounts of locally generated revenues retained by the State of California, the City must consider other sources of locally controlled general fund revenues. By approving the proposed resolutions, the City Council will place a measure on the November 6, 2018 general municipal election ballot for Moreno Valley voters to consider approving a tax on the commercial cannabis businesses with a maximum rate of 8% and $15.00 per square foot for cultivation. DISCUSSION The proposed Local Moreno Valley Commercial Cannabis Activity Tax is a general tax and cannot be established without a vote of the people pursuant to State law. If the City Council approves the proposed resolutions, the voters of Moreno Valley will have the opportunity to approve this new source of general fund revenue. Under existing law, only a majority is required to pass the tax. There is most likely going to be an initiative placed on the November Ballot that if passed, would require two/thirds super majority vote for any taxes, general or special. Staff is proceeding with the assumption that such super majority will be required in this case in order for the tax not to be nullified later. In short, a passage rate of over 66.6% is the only guarantee that this measure would not be subject to a challenge or invalidation. The proposed ordinance establishes the maximum tax rate at 8% of gross revenues and $15 per square foot for cultivation. Staff recommends that if adopted by the voters, the initial applied tax rate would be 5% of gross revenues (1% for Testing facilities) and $7 per square foot for cultivation. The maximum rate has to be included in the attached resolution and the question submitted to the voters for the approval of Local Moreno Valley Commercial Cannabis Activity Tax on the ballot would be as follows: Shall an ordinance be adopted maintaining safe, clean public areas/improving local services including neighborhood police patrols, fire, 911 response; gang, youth violence prevention, after-school programs; combat robberies/burglaries; repair potholes; unrestricted general revenue purposes; by establishing a tax not exceeding 8% of gross receipts / $15 per square foot for cultivation, generating approximately $2,200,000 annually until ended by voters, with independent audits, public review, all funds used locally? This tax would be levied on commercial cannabis businesses and will not affect the residents of the City. This is most likely one of the reasons why commercial cannabis tax ballot measures have had a very high success rate in other jurisdictions. Understanding that only majority vote was needed, over 90% of the cannabis tax ballot measures have been passed by the voters in California in the past 8 years. With the potential new requirement of a super majority vote the passage will be more difficult to achieve. Page 2

3 ALTERNATIVES 1. Place a measure on the November 6, 2018 ballot to establish the Local Moreno Valley Cannabis Activity Tax at the maximum rate of 8% and $15 per square foot for cultivation: Adopt Resolution No , calling for the submission to the voters of the City at the general municipal election on Tuesday, November 6, 2018 a proposed ordinance establishing Local Moreno Valley Commercial Cannabis Activity tax; and Adopt Resolution No , directing the City Attorney to prepare an impartial analysis, setting priorities for filing written arguments, and providing for rebuttal arguments regarding the Moreno Valley Commercial Cannabis Activity tax measure. 2. Not place a measure on the November 6, 2018 ballot. FISCAL IMPACT If adopted by the voters the Commercial Cannabis Activity Tax would provide an estimated $2,200,000 of locally controlled revenues to the General Fund to be used for any lawful expenditure, including but not limited to, maintaining emergency response times; maintaining robbery and burglary suppression programs; maintaining safe and clean public areas; repairing potholes, local streets, and roads; and enhancing recreation and youth programs and facilities. NOTIFICATION Agenda was posted in accordance with the Brown Act PREPARATION OF STAFF REPORT Prepared By: Martin D. Koczanowicz City Attorney Marshall Eyerman Chief Financial Officer CITY COUNCIL GOALS Public Safety. Provide a safe and secure environment for people and property in the community, control the number and severity of fire and hazardous material incidents, and provide protection for citizens who live, work and visit the City of Moreno Valley. Public Facilities and Capital Projects. Ensure that needed public facilities, roadway improvements, and other infrastructure improvements are constructed and maintained. Page 3

4 Positive Environment. Create a positive environment for the development of Moreno Valley's future. Community Image, Neighborhood Pride and Cleanliness. Promote a sense of community pride and foster an excellent image about our City by developing and executing programs which will result in quality development, enhanced neighborhood preservation efforts, including home rehabilitation and neighborhood restoration. CITY COUNCIL STRATEGIC PRIORITIES 1. Economic Development 2. Public Safety 3. Library 4. Infrastructure 5. Beautification, Community Engagement, and Quality of Life 6. Youth Programs ATTACHMENTS 1. Impartial analysis reso 2018taxfinal 2. Ordinance Chapter3.28 final draft (004) (2) 3. Resolution 2018 Putting Cannabis Tax on Ballot final draft APPROVALS Budget Officer Approval Approved. 6/13/18 8:44 AM City Attorney Approval Approved. 6/14/18 9:16 AM City Manager Approval Approved. 6/14/18 2:00 PM RESULT: APPROVED [4 TO 1] MOVER: David Marquez, Council Member SECONDER: Ulises Cabrera, Council Member AYES: Dr. Yxstian A. Gutierrez, Victoria Baca, David Marquez, Ulises Cabrera NAYS: Jeffrey J. Giba Page 4

5 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORENO VALLEY, CALIFORNIA, DIRECTING THE CITY ATTORNEY TO PREPARE AN IMPARTIAL ANALYSIS, SETTING PRIORITIES FOR FILING WRITTEN ARGUMENTS, AND PROVIDING FOR REBUTTAL ARGUMENTS REGARDING THE LOCAL MORENO VALLEY COMMERCIAL CANNABIS ACTIVITY TAX MEASURE WHEREAS, an election shall be held in the City of Moreno Valley, California, on November 6, 2018, at which there will be submitted to the voters a ballot measure to consider establishing a Local Moreno Valley Commercial Cannabis Activity Tax for the purpose of raising general fund revenue to provide basic City services for residents; and WHEREAS, whenever a municipal ballot measure is authorized, State law provides that the City Council may direct the City Attorney to prepare an impartial analysis and provide for the filing of written arguments for and against a measure and for rebuttal arguments to be filed with the City elections official. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORENO VALLEY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: Section 1. The City Council directs the City Attorney to prepare an impartial analysis of the measure which would establish a Local Moreno Valley Commercial Cannabis Activity Tax ordinance with a maximum rate of eight percent (8%) and $15 per square foot for cultivation for the aforementioned purposes as follows: a. The City Attorney shall prepare an impartial analysis of the measure not exceeding 500 words showing the effect of the measure on the existing law and the operation of the measure. If the measure affects the organization or salaries of the office of the City Attorney, the City Clerk shall prepare the impartial analysis. (Impartial Analysis due August 20, 2018) b. The analysis shall include a statement indicating whether the measure was placed on the ballot by a petition signed by the requisite number of voters or by the governing body of the city. c. The entire text of the measure is to be printed in the voter information portion of the sample ballot. d. The impartial analysis shall be filed by the date set by the City Clerk for the filing of primary arguments. 1 Resolution No Date

6 Section 2. The City Council authorizes all members of that body, collectively or individually, to file written arguments not exceeding 300 words in favor of the Local Moreno Valley Commercial Cannabis Activity Tax measure specified above, accompanied by the printed name(s) and signature(s) of the author(s), and to change the argument until and including the date fixed by the City Clerk after which no arguments for or against the City measure may be submitted to the City Clerk. The City Clerk shall follow Elections Code sections 9281 through 9287 in determining the printing of all arguments in favor and against. Section 3. If no member of the City Council files written arguments in favor of said Measure, then any voter of the City may submit an argument in favor to the City Clerk for consideration in accordance with State law. Section 4. Any argument filed for or against said Measure not exceeding 300 words shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is author of the argument. (Arguments due August 20, 2018) Section 5. The City Clerk shall make the selection of arguments in accordance with the Elections code and local procedure. When the City Clerk has selected the arguments for and against the Measure which will be printed and distributed to the voters, the City Clerk shall send a copy of an argument in favor of the Measure to the authors of any argument against the measure and a copy of the argument against the measure to the authors of any argument in favor of the measure. Section 6. The author or a majority of the authors of an argument relating to the Measure may prepare and submit a rebuttal argument not exceeding 250 words or may authorize in writing any other person or persons to prepare, submit, or sign the rebuttal. A rebuttal argument may not be signed by more than five persons. The rebuttal arguments shall be filed with the City Clerk, signed, with the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers. Any rebuttal argument must be filed within 10 days after the final date for filing direct arguments. Section 7. Rebuttal arguments are limited to 250 words shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut. (Rebuttals due August 30, 2018) Section 8. The City Clerk shall cause the City Attorney's Impartial Analysis, and duly selected arguments and rebuttals, to be printed and distributed to voters in accordance with State law regarding same. 2 Resolution No Date

7 Section 9. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions. APPROVED AND ADOPTED this 19th day of June Dr. Yxstidui rre Mayor City of Moreno Valley ATTEST: APPROVED AS TO FORM: s27--z-e Kgrtin D. KocOnowicz, City Attorney 3 Resolution No Date

8 RESOLUTION JURAT STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF MORENO VALLEY ) I, Pat Jacquez-Nares, City Clerk of the City of Moreno Valley, California, do hereby certify that Resolution No was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 19 th day of June, 2018 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Council Member Marquez, Council Member Cabrera, Mayor Pro Tern Baca, and Mayor Gutierrez Council Member Giba None None (Council Members, Mayor Pro Tern, Mayor) (SEAL) 4 Resolution No Date

9 RESOLUTION NO A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MORENO VALLEY, CALIFORNIA, CALLING FOR THE SUBMISSION TO THE VOTERS OF THE CITY AT THE NOVEMBER 6, 2018 CONSOLIDATED ELECTION, A PROPOSED BALLOT MEASURE WHICH WOULD ESTABLISH A LOCAL MORENO VALLEY COMMERCIAL CANNABIS ACTIVITY TAX IN THE MAXIMUM AMOUNT OF 8% AND $15.00 PER SQUARE FOOT FOR CULTIVATION WHEREAS, The State of California has taken more than $50 million from Moreno Valley over the last 10 years, impacting the city's ability to provide services at the levels residents need and want; and WHEREAS, the City Council has determined that it should present to City voters the question of whether to establish a Local Moreno Valley Commercial Cannabis Activity tax for the purpose of raising local general fund revenue to continue to provide essential City services for residents; and WHEREAS, the City Council prioritizes services that keep Moreno Valley an excellent place to live, work, and raise a family; and WHEREAS, safe neighborhoods and parks, libraries, programs for children, youth, and seniors, and well-maintained roads all lead to a better quality of life; and WHEREAS, fast response times to calls are critical for saving lives, and this measure will help maintain the rapid response times of our city's paramedics, firefighters, and emergency medical workers who are the first to respond and save lives; and WHEREAS, studies show that between 3 & 6 PM the hours after school ends and before parents typically return home from work children without an afterschool activity are three times more likely to get in trouble; and WHEREAS, this measure will provide the funding to help maintain supervised afterschool park, recreation, and library programs to keep children safe, off the streets, and out of trouble; and WHEREAS, violent crime remains a great concern as the State allows more and more individuals to be released from prisons throughout Southern California communities; and WHEREAS, this measure will provide the funding needed to maintain gang prevention programs, maintain high police presence on our streets and keep Moreno Valley safe; and Page 1

10 WHEREAS, Moreno Valley voters as well as those State-wide, legalized cannabis in November With cannabis use legalized, the City of Moreno Valley should tax the sale, cultivation, manufacturing, testing and distribution of commercial marijuana to raise funds for essential city services; and WHEREAS, the cannabis industry should pay its fair share for the right to conduct business within our city to support essential services our residents rely on, such as police and fire emergency response, street maintenance, and youth and senior programs; and WHEREAS, Moreno Valley needs a source of locally controlled funding that is required by law to stay local and cannot be taken by the State; and WHEREAS, this measure will NOT increase taxes for local Moreno Valley residents. The tax will only be paid by those who are in the business of providing commercial cannabis products and/or services; and WHEREAS, this measure includes strict accountability provisions such as annual independent financial audits, which will be available online for public review; and WHEREAS, these accountability measure will ensure that funds are spent properly and used locally for the benefit of the residents of Moreno Valley only. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MORENO VALLEY, CALIFORNIA, DOES HEREBY RESOLVE AS FOLLOWS: Section 1. Pursuant to the requirement of the laws of the State of California relating to general law cities, there is called and ordered to be held in the City of Moreno Valley, California on Tuesday, November 6, 2018, a General Municipal Election for the purpose of submitting to the voters of the City of Moreno Valley, a ballot measure for the purpose of approving an ordinance adding Chapter 3.28, Commercial Cannabis Activity Tax to the Moreno Valley Municipal Code to establish Local Moreno Valley Commercial Cannabis Activity Tax in an amount not to exceed 8% percent of gross receipts and $15.00 per square foot for cultivation. Pursuant to Government Code Section 53724(d) and Elections Code Section 9222, it is the intent of the City Council that the measure be submitted to the voters of Moreno Valley at the aforementioned General Municipal Election. Section 2. The proposed ordinance is attached hereto as Exhibit "A" and incorporated herein by this reference and such ordinance shall be printed in the voter pamphlet. The question to be submitted to the voters on the ballot shall be as follows: Page 2

11 Local Moreno Valley Commercial Cannabis Activity Tax. Shall an ordinance be adopted maintaining safe, clean public areas/improving local services including neighborhood police patrols, fire, 911 response; gang, youth violence prevention, after-school programs; combat robberies/burglaries; repair potholes; unrestricted general revenue purposes; by establishing a tax not exceeding 8% of gross receipts / $15 per square foot for cultivation, generating approximately $2,200,000 annually until ended by voters, with independent audits, public review, all funds used locally? Section 3. Upon approval of the voters of the City of Moreno Valley, the Moreno Valley Municipal Code, Chapter 3.28, shall be added to establish the tax at a maximum rate of 8% percent and $15.00 per square foot for cultivation. Section 4. The City Council of the City of Moreno Valley further does resolve, declare and order: YES (a) That notice of time and place of holding said election is hereby given and the City Clerk is hereby authorized, instructed and directed to give such further or additional notice of said election in the time, form and manner as required by California law. (b) That pursuant to Sections and of the Elections Code, the Riverside County Board of Supervisors is hereby requested to consent and agree to the consolidation of the General Municipal Election with the election conducted by Riverside County to be held on Tuesday, November 6, (c) That the Riverside County Election Department is authorized to canvass the returns of the General Municipal Election. The election shall be held in all respects as if there were only one election. (d) That the Riverside County Board of Supervisors is requested to issue instructions to the County Election Department to take any and all necessary steps for holding of this consolidated election. (e) That the City of Moreno Valley recognizes that additional costs will be incurred by Riverside County by reason of this consolidation and agrees to reimburse Riverside County for those costs. (f) That the City Clerk is directed to file a certified copy of this resolution with the Riverside County Board of Supervisors and with the Riverside County Election Department. NO Page 3

12 (g) That the City Council authorizes the City Clerk to administer said election, including but not limited to, contracting with the County of Riverside to assist with conducting the election, and otherwise take all reasonably necessary steps to ensure the proper handling and conduct of the general municipal election authorized by this resolution, and all reasonable and actual election expenses shall be paid by the City upon presentation of a properly submitted bill. (h) That this resolution shall be effective immediately upon passage and adoption. APPROVED AND ADOPTED this 19th day of June, Dr. Yxs 1tfan A. Gutier Mayor City of Moreno Valley, ATTEST: APPROVED AS TO FORM: rt)li D. KocOnowicz, City Attorney Page 4

13 RESOLUTION JURAT STATE OF CALIFORNIA COUNTY OF RIVERSIDE CITY OF MORENO VALLEY ) ss. I, Pat Jacquez-Nares, City Clerk of the City of Moreno Valley, California, do hereby certify that was duly and regularly adopted by the City Council of the City of Moreno Valley at a regular meeting thereof held on the 19th day of June, 2018 by the following vote: AYES: NOES: Council Member Marquez, Council Member Cabrera, Mayor Pro Tem Baca, and Mayor Gutierrez Council Member Giba ABSENT: None ABSTAIN: None (Council Members, Mayor Pro Tem, Mayor) (SEAL) Page 5

14 EXHIBIT A ORDINANCE NO. AN ORDINANCE OF THE PEOPLE OF THE CITY OF MORENO VALLEY, CALIFORNIA, AMENDING MORENO VALLEY MUNICIPAL CODE TO ADD CHAPTER 3.28 "COMMERCIAL CANNABIS ACTIVITY TAX" SETTING THE MAXIMUM AMOUNT OF TAX RATE AT EIGHT PERCENT (8%) AND $15.00 PER SQUARE FOOT FOR CULTIVATION BUSINESSES FOR THE PURPOSE OF FUNDING LOCAL GENERAL MUNICIPAL SERVICES THE PEOPLE OF THE CITY OF MORENO VALLEY ORDAIN AS FOLLOWS: Section 1. ELECTIONS CODE SECTION STATEMENT That the establishment of the Commercial Cannabis Activity Tax at the maximum rate from 8% of gross receipts and $15.00 per square foot for cultivation is expected to produce an additional $2,200,000 annually in General Fund revenue and that the tax will remain in place unless subsequently repealed by the voters. Section 2. LOCAL USE OF PROCEEDS That the additional revenue produced by the Commercial Cannabis Activity Tax may be used for any local general municipal purpose including, but not limited to, maintaining emergency response times; maintaining robbery and burglary suppression programs; maintaining safe and clean public areas; repairing potholes, local streets and roads; and enhancing recreation and youth programs and facilities within the City of Moreno Valley. Section 3. ANNUAL INDEPENDENT AUDITS That the financial records, accounting practices and internal controls related to the collection, deposit and expenditure of the additional revenue produced by the Local Moreno Valley Commercial Cannabis Activity Tax rate shall be examined by means of an annual audit conducted by an independent auditor whose services shall be retained by the City through a contract for services as an independent contractor and available to the public for review. Section 4. ESTABLISH COMMERCIAL CANNABIS ACTIVITY TAX That Section 3.28 "Commercial Cannabis Activity Tax" be added to the Moreno Valley Municipal Code to read as follows: Chapter 3.28 COMMERCIAL CANNABIS ACTIVITY TAX Short Title Definitions Page 6

15 Tax Imposed Operator's duties Registration and Permitting Returns and Remittances Reporting and Remitting Cessation of the Business Delinquency Fraud Appeal Records Refunds Recording certificates-lien Priority and lien of tax Warrant for collection of tax Seizure and sale Successor's liability- withholding by purchaser Liability of purchaser-release Responsibility for payment Withhold notice Violation misdemeanor Extension of time Divulging of information forbidden Short title. The short title of this chapter shall be the "Commercial Cannabis Activity Tax." Definitions. Except where the context otherwise requires or with exceptions below, the definitions given in this section shall be governed by definitions set forth in Chapter 5.05 of this Code. (a)"operator" means an Owner or any other person or entity that is engaged in Operation of a commercial cannabis business per definitions in Section of this Code" (b) "Tax administrator" means the City Manager or his designated agent, whether a city employee or county officer or employee Tax imposed. For the privilege of operating a Commercial Cannabis Business in the City of Moreno Valley such business shall pay a tax in the maximum amount of eight (8) percent of the gross receipts of the business and or in the case of a cannabis business engaged in cultivation, fifteen dollars ($15.00) for every square foot of canopy cultivated. Insofar as the business owner is concerned, the tax constitutes a debt owed to the city. Page 7

16 Operator's duties. Each operator shall, on or before the last working day of the month following the close of each calendar month, file a return with the tax administrator on the forms provided by him or her, of the total monthly gross receipts and the amount of tax collected for commercial cannabis activities. Each such return shall contain a declaration under penalty of perjury, executed by the operator or his authorized agent, that to the best of the signatory's knowledge, the statements in the return are true, correct and complete. At the time the return is filed, the tax fixed at the prevailing commercial cannabis tax rate for shall be remitted to the tax administrator. The tax administrator may establish other reporting periods and may require a cash deposit or bond or a separate trust fund bank account for any permit holder if he or she deems it necessary in order to insure collection of the tax and he or she may require further information in the return. All taxes collected by operators pursuant to this chapter shall be held in trust for the account of the city until remittance thereof is made to the tax administrator Registration and Permitting. Every person desiring to engage in or conduct a commercial cannabis business within the city shall file with the tax administrator an application for a Commercial Cannabis Business Permit for each place of business. Every application for such a permit shall be made upon a form prescribed by the city and shall set forth the name under which the applicant transacts or intends to transact business, and be in full compliance of the provisions of Chapter 5.05 of this Code. This Permit does not relieve the operator from having such other permits which are otherwise required for the operation of a commercial cannabis business in the city, including but not limited to a Conditional Use Permit and a State issued license Returns and remittances. The tax imposed under Section is: A. Due to the tax administrator on a monthly basis; and B. Becomes delinquent and subject to penalties if not received by the tax administrator on or before the last working day of the month following the close of each month Reporting and remitting. The reporting, auditing and remitting procedures and protocols shall be established through policies adopted by the Tax Administrator or Chief Financial Officer Cessation of business. Each operator shall notify the tax administrator, ten days prior to the sale or cessation of business for any reason and returns and remittances are due immediately upon the sale or cessation of business. Page 8

17 Delinquency. Any operator who fails to remit any tax to the city or any amount of tax required to be collected and remitted to the city including amounts based on determination made by the tax administrator under Section , within the time required, shall pay a penalty of ten percent of the tax or amount of the tax in addition to the tax or amount of tax plus interest at the rate of one-half percent per month, or fraction thereof, from the date on which the tax or the amount of tax required to be collected becomes delinquent until the date of remittance or payment. Any Operator who fails to pay any penalty imposed under this section within ten days after receipt of notice thereof shall pay interest thereon at the rate of one-half of one percent per month, or fraction thereof from the date on which the penalty becomes due and payable to the city until the date of payment Fraud. If the tax administrator determines that the failure to make any remittance or payment due under this chapter is due to fraud, a penalty of one hundred (100) percent of the amount of the tax and penalties shall be added thereto in addition to the penalties stated in Section Appeal. Any operator aggrieved by any decision of the tax administrator with respect to the amount of any tax, interest and penalties, if any, may appeal to the city council by filing a notice of appeal with the city clerk within fifteen (15) days of serving of the assessment or determination of tax and penalties, if any, due. The city council shall fix a time and place for hearing the appeal, and the city clerk shall give notice in writing to the operator at his last known address. The findings of the city council shall be final and conclusive and shall be served upon the appellant in the manner prescribed above for service of notice of hearing. Any amount found to be due shall be immediately due and payable upon the service of notice Records. It shall be the duty of every operator liable for the collection and remittance to the city of any tax imposed by this chapter to keep and preserve, in the city, for a period of three years, records in such form as the tax administrator may require under Section to determine the amount of such tax. The tax administrator shall have the right to inspect such records at all reasonable times and may subpoena the records of any operator who refuses to make them available for examination Refunds. A. Whenever the amount of any tax, interest or penalty has been overpaid or paid more than once or has been erroneously collected or received by the city under this Page 9

18 chapter, it may be refunded as provided in subsections B and C of this section, provided a claim in writing therefor, stating under penalty of perjury the specific grounds upon which the claim is founded, is filed with the tax administrator within three years of the date of payment. The claims shall be on forms furnished by the tax administrator. B. An operator may claim a refund or take as credit against taxes and remitted the amount overpaid, paid more than once or erroneously collected or received when it is established in,a manner prescribed by the tax administrator that such tax was collected in error. C. No refund shall be paid under the provisions of this section unless the claimant establishes his right thereto by written records Revocation of permit. Whenever any operator fails to comply with any provision of this chapter relating to commercial cannabis activity tax or any rule or regulation of the tax administrator relating to such tax, as established by Section of this Chapter, the tax administrator upon hearing, after giving the operator ten days' notice in writing specifying the time and place of hearing and requiring him or her to show cause why his permit or permits should not be revoked, may suspend or revoke any one or more of the permits held by the operator. The tax administrator shall give to the operator written notice of the suspension or revocation of any of his permits. The notices herein required may be served personally or by mail in the manner prescribed for service of notice of a deficiency determination. The tax administrator shall not issue a new permit after the revocation of a permit unless he or she is satisfied that the former holder of the permit will comply with the provisions of this chapter relating to the commercial cannabis activity tax and regulations of the tax administrator Recording certificate lien. If any amount required to be remitted or paid to the city under this chapter is not remitted or paid when due, the tax administrator may, within three years after the amount is due, file for record in the office of the county of Riverside recorder a certificate specifying the amount of tax, penalties and interest due, the name and address as it appears on the records of the tax administrator of the operator liable for the same and the fact that the tax administrator has complied with all provisions of this chapter in the determination of the amount required to be remitted and paid. From the time of the filing for record, the amount required to be remitted together with penalties and interest constitutes a lien upon all real property in the county owned by the operator or afterwards and before the lien expires acquired by him or her. The lien has the force, effect and priority of a judgment lien and shall continue for ten years from the time of filing of the certificate unless sooner released or otherwise discharged. Page 10

19 Priority and lien of tax. A. The amounts required to be remitted and/or paid by any operator under this chapter with penalties and interest shall be satisfied first in any of the following cases: 1. Whenever the person is insolvent; 2. Whenever the person makes a voluntary assignment of his assets; 3. Whenever the estate of the person in the hands of executors, administrators or heirs is insufficient to pay all the debts due from the deceased; 4. Whenever the estate and effects of an absconding, concealed or absent person required to pay any amount under this chapter are levied upon by process law. This chapter does not give the city a preference over any recorded lien which attached prior to the date when the amounts required to be paid became a lien. B. The preference given to the city by this section shall be subordinate to the preferences given to claims for personal services by Sections 1204 and 1206 of the Code of Civil Procedure Warrant for collection of tax. At any time within three years after any operator is delinquent in the remittance or payment of any amount herein required to be remitted or paid or within three years after the last recording of a certificate under Section , the tax administrator may issue a warrant for the enforcement of any liens and for the collection of any amount required to be paid to the city under this chapter. The warrant shall be directed to any sheriff, marshal, or constable and shall have the same effect as a writ of execution. The warrant shall be levied and sale made pursuant to it in the same manner with the same effect as a levy of and a sale pursuant to a writ of execution. The tax administrator may pay or advance to the sheriff, marshal or constable the same fees, commissions and expenses for his services as are provided by law for similar services pursuant to a writ of execution. The tax administrator, and not the court, shall approve the fees for publication in a newspaper Seizure and sale. At any time within three years after any operator is delinquent in the remittance or payment of any amount, the tax administrator may forthwith collect the amount in the following manner. The tax administrator shall seize any property, real or personal, of the operator and sell the property, or a sufficient part of it, at public auction to pay the amount due together with any penalties and interest imposed for the delinquency and any costs incurred on account of the seizure and sale. Any seizure made to commercial cannabis activity taxes due shall be only of property of the operator not exempt from execution under the provisions of the Code of Civil Procedure. Page 11

20 Successor's liability Withholding by purchaser. If any operator liable for any amount under this chapter sells out his business or quits the business, his successor or assigns shall withhold sufficient of the purchase price to cover such amount until the former owner produces a receipt from the tax administrator showing that it has been paid or a certificate stating that no amount is due Liability of purchaser Release. If the purchaser of the business fails to withhold purchase price as required, he or she shall become personally liable for the payment of the amount required to be withheld by him or her to the extent of the purchase price, valued in money. Within sixty (60) days after receiving a written request from the purchaser for a certificate, or within sixty (60) days from the date the former owner's records are made available for audit, whichever period expires the later, but in any event not later than ninety (90) days after receiving the request, the tax administrator shall either issue the certificate or mail notice to the purchaser at his address as it appears on the records of the tax administrator of the amount that must be paid as a condition of issuing the certificate. Failure of the tax administrator to mail the notice will release the purchaser from any further obligation to withhold purchase price as above provided. The time within which the obligation of the successor may be enforced shall start to run at the time the operator sells his business or at the time that the determination against the operator becomes final, whichever event occurs the later Responsibility for payment. Any tax required to be paid under the provisions of this chapter shall be deemed a debt owed by the operator to the city. Any such tax owed by an operator which has not been remitted to the city is a fiduciary obligation of the operator to the city and collectible in the same manner as a debt. Any person owing money to the city under the provisions of this chapter shall be liable to an action brought in the name of the city of Moreno Valley for the recovery of such amount Withhold notice. If any person or operator is delinquent in the remittance or payment of the amount required to be remitted or paid by him or her or in the event a determination has been made against him or her for the remittance of tax and payment of the penalty, the city may, within three years after the tax obligation became due, give notice thereof personally or by registered mail to all persons, including the state or any political subdivision thereof, having in their possession or under their control any credits or other personal property belonging to the taxpayer. After receiving the withholding notice, the person so notified shall make no disposition of the taxpayer's credits, other personal property or debts until the city consents to a transfer or disposition or until sixty (60) days elapse after the receipt of the notice, whichever expires earlier. All Page 12

21 persons, upon receipt of the notice, shall advise the city immediately of all such credits, other personal property or debts in their possession, under their control or owing by them. If such notice seeks to prevent the transfer or other disposition of a deposit in a bank or other credits or personal property in the possession or under the control of the bank, to be effective the notice shall be delivered or mailed to the branch or office of such bank at which such deposit is carried or at which such credits or personal property is held. If any person so notified makes transfer or disposition of the property or debts required to be held hereunder during the effective period of the notice to withhold, he or she shall be liable to the city to the extent of the value of the release up to the amount of the indebtedness owed by the taxpayer to the city Violations Misdemeanor. A. Except for failure of an operator to pay to the tax administrator taxes owed under this chapter which is punishable as a felony pursuant to Section 424 of the Penal Code, every violation of this chapter is a misdemeanor and punishable by a fine not exceeding five hundred dollars ($500.00) or imprisonment in the county jail for not more than six months or by both such fine and imprisonment. B. If such offense is not otherwise punishable as mentioned in subsection A of this section, any person willfully failing to comply with, or knowingly violating, any of the provisions of this chapter shall be guilty of a misdemeanor. C. Any operator or other person who willfully fails or refuses to register as required herein, or to furnish any return required to be made, or who fails or refuses to furnish a supplemental return or other data required by the tax administrator, or who renders a false or fraudulent return or claim is guilty of a misdemeanor. Any person required to make, render, sign or verify any report or claim who willfully makes any false or fraudulent report or claim with intent to defeat or evade the determination of any amount due required by this chapter to be made, is guilty of a misdemeanor Extension of time. The tax administrator, for good cause, may extend for not to exceed one month the time for making any return or paying any amount required to be paid under this chapter. The extension may be granted at any time, provided a request therefor is filed with the tax administrator within or prior to the period for which the extension may be granted. Any person to whom an extension is granted shall pay, in addition to the tax, interest at the rate of one percent per month or fraction thereof, from the date on which the tax would have been due without the extension until the date of payment Divulging of information forbidden. It is unlawful for any person having an administrative duty under this chapter to make known in any manner whatever the business affairs, operations or information obtained by an investigation of the records of any operator or any other person visited Page 13

22 or examined in the discharge of official duty, or the amount or source of income, profits, losses, expenditures or any particular thereof, set forth or disclosed in any return, or to knowingly permit any return or copy thereof or any abstract or particulars thereof to be seen or examined by any person. Successors, receivers, trustees, executors, administrators, assignees and guarantors, if directly interested, may be given information as to the items included in the amounts of any unpaid tax or amounts of tax, penalties and interest required to be collected. Section 5. SEVERABILITY That should any provision, section, paragraph, sentence or word of this ordinance be rendered or declared invalid by any final court action in a court of competent jurisdiction or by reason of any preemptive legislation, the remaining provisions, sections, paragraphs, sentences or words of this ordinance as hereby adopted shall remain in full force and effect. Section 6. REPEAL OF CONFLICTING PROVISIONS That all the provisions of the Municipal Code as heretofore adopted by the City of Moreno Valley that are in conflict with the provisions of this ordinance are hereby repealed. Section 7. CERTIFICATION That the City Clerk shall certify to the passage of this ordinance and shall cause the same to be published according to law. Section 8. EFFECTIVE DATE That this ordinance shall take effect ten (10) days following the City Council's certification of the results of the November 6,2018 election. PASSED AND ADOPTED by the People of the City of Moreno Valley at a general municipal election held on November 6, ATTESTED BY: Mayor City Clerk Page 14