DATE: December 18, 2024
TO: Honorable Mayor and City Councilmembers
FROM: City Manager's Office
TITLE: MEASURE X AGREEMENTS WITH THE CALIFORNIA DEPARTMENT OF TAX AND FEE ADMINISTRATION
RECOMMENDATION
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Staff recommends that the City Council approve the resolution to execute the Preparatory Agreement and the Administration Agreement with the California Department of Tax and Fee Administration (CDTFA); and approve the resolution authorizing the examination of Transactions (Sales) and Use Tax Records of the CDTFA.
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BACKGROUND AND ANALYSIS
On November 6, 2018, Oceanside voters approved Measure X (34,133 votes in favor and 27,166 votes opposed - or 55.7%). Measure X was initially approved as a 7-year, one-half percent transactions and use tax (sales tax), effective April 1, 2019 to provide funding to maintain and improve general city services including: police patrols, crime, drug, and gang prevention, fire, paramedic and 9-1-1 response, pothole repair, street maintenance, improved infrastructure, maintain safe, clean parks and beaches, and address homelessness.
The provisions of Measure X are contained in Ordinance 18-OR03341-1 which added Chapter 34, Article II, Sections 34.6.1 through 34.6.17 to the Oceanside Municipal Code. The ordinance established a transactions and use tax district which went into effect April 1, 2019.
In November 2024, Oceanside voters approved a 10-year extension of Measure X (55,360 votes in favor and 24,104 votes opposed - or 69.67%).
The provisions of the extension of Measure X are contained in Ordinance 24-OR0391-1, amending Chapter 34, Article II, Sections 34.6.5 and 34.6.16(b) of the Oceanside Municipal Code. The ordinance extends the transactions and use tax for an additional ten years, effective April 1, 2026
As of November 2024, Measure X has generated $89.32 million in revenue and is projected to generate $190 million more over the additional ten-year term.
In order to implement Measure X, the City must provide the following information to the California Department of Tax and Fee (CDTFA) Administration:
1. Agreement for Preparation to Administer and Operate District’s Transactions and Use Tax Ordinance
2. Agreement for State Administration of District Transactions and Use Taxes
3. Certification of Final Election Results
4. Certified copies of the local Transactions and Use Tax Ordinance
5. Resolution of the City Council authorizing the agreements and designating who may sign the agreements
6. Resolution authorizing the examination of transactions (sales) and use tax records
7. Additional administrative information including a Designation Letter and various administrative forms
FISCAL IMPACT
The City’s sales tax consultant, HdL Companies, estimates the half-cent transaction and use tax (sales tax) could generate $19 million in annual revenue, with actual revenues determined by economic conditions.
The CDTFA charges a fee to setup the transactions and use tax district, this fee is based on the CDTFA’s costs to set up the district and the City will be billed after the operative date of the ordinance. The Preparatory Agreement provides that these set up costs shall not exceed $175,000. This fee will be paid from Measure X revenues. Additionally, the CDTFA charges an administrative fee which is deducted from the taxes collected. This fee is capped at 1.5% for rates .50% and greater.
COMMISSION OR COMMITTEE REPORT
Does not apply.
CITY ATTORNEY’S ANALYSIS
The referenced agreements have been approved as to form by the City Attorney.
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Prepared by: Michael Gossman, Assistant City Manager
Submitted by: Jonathan Borrego, City Manager
ATTACHMENTS:
1. Staff Report
2. Resolution authorizing agreements
3. Resolution authorizing the examination of transactions (sales) and use tax records
4. Measure X Extension Ordinance
5. Certification
6. Official Results