HomeMy WebLinkAbout10/02/2006 B A K E R S F I E L D
Mike Maggard, Chair
Irma Carson
Harold Hanson
Staff: John W. Stinson
MEETING NOTICE
BUDGET AND FINANCE COMMITTEE
of the City Council - City of Bakersfield
Monday, October 2, 2006 - 10:00 a.m.
City Manager's Conference Room, Suite 201
Second Floor - City Hall, 1501 Truxtun Avenue, Bakersfield, CA
AGENDA
1. ROLL CALL
2. ADOPT AUGUST 28, 2006 AGENDA SUMMARY REPORT
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Discussion and Committee recommendation regarding WiFi (wireless Internet
service) - Stinson/Trammell
B. Discussion and Committee recommendation regarding PG&E Smart Meter
Project use of City light poles - Rojas
5. NEW BUSINESS
A. Discussion and Committee recOmmendation regarding Business Licensing for
Real Estate Firms- Smith
6. COMMITTEE COMMENTS
7. ADJOURNMENT
B A K E R S F I E L D
~v~ ~ Mike Maggard, Chair
John Stinson, Assistant City Manager Irma Carson
For: Alan Tandy, City Manager Harold Hanson
AGENDA SUMMARY REPORT
BUDGET AND FINANCE COMMITTEE MEETING
Monday, August 28, 2006 - 1:00 p.m.
City Manager's Conference Room - Suite 201
City Hall, 1501 Truxtun Avenue, Bakersfield, CA
1. ROLL CALL
The meeting'was Called to Order at 1:04 p.m.
Present: Councilmembers Mike Maggard, Chair; and Harold Hanson
Councilmember Irma Carson arrived at 1:10 p.m.
2. ADOPT JUNE 19, 2006 AGENDA SUMMARY REPORT
Adopted as submitted.
3. PUBLIC STATEMENTS
4. DEFERRED BUSINESS
A. Update Report and Committee recommendation regarding Refuse Hauling
.Contract extension negotiations
'Public Works Director Raul Rojas thanked Kevin Barnes,. Janice Scanlan, and
~ all the haulers for their hard work. Agreement has been reached by both sides
on the contract issues. He noted the Laborde area is serviced totally by the
contract haulers and it was not included in the 50-50 split; this was an
agreement made by the City prior to the Laborde annexation and has been
carried over.
Solid Waste Director Kevin Barnes gave an overview on the changes to the
contract. The haulers approached the City with a request to extend the term of
their contract from 2014 to 2025, which will make it easier for the haulers to get
AGENDA SUMMARY REP~JRT Page 2
BUDGET AND FINANCE COMMITTEE MEETING
Monday, August 28, 2006
long-term financing for their operations/equipment. Extending the contract to
2025 would also make the term of the contract consistent with the haulers'
contract with the County. In consideration for the contract term extension,
successful negotiations were reached on other contract issues. Highlights
include:
· Customer rate increases will be based on the Consumer Price Index (CPI)
· The cap on the index and exception language was removed
· The CPI as it is adjusted up.or down will be uSed for customer rate
increases
· Replacement of green and tan cads was clarified and defined
· The date for the construction materials recycling facility to be opened to
the public will be 2008
· The 50-50 split and the boundary language for new annexed areas was
defined and clarified
Public Works Director Raul Rojas stated the haulers prOvide good service and
staff is recommending the changes to the contract.
Mr. Larry Moxley, representing the haulers, thanked City staff for working with
the haulers on the contract and stated the haulers are in agreement with staff's
recommendation on the proposed changes to the contract.
'Committee Chair Mike Maggard spoke regarding the grant funds that may be
.available from the Air Pollution Control District for the prOposed transfer station.
He stated the District may also have unused grant funding for engine retrOfits to
clean, burning fuel and offered his assistance with the grant funding
requirements.
Solid Waste Director Kevin Barnes explained Air Pollution Control District staff
has provided the City with some general grant application guidelines for the
transfer station. City and County staffs have been WOrking with an air emission
consultant to draft a grant application.
Committee Member HarOld Hanson made a motion the Committee apprOve the
changes to the contract as recommended by staff and forward the contract to
the Council. The Committee unanimously apprOved the motion.
B. Discussion and Committee recommendation regarding WiFi (wireless
Internet service)
Assistant City Manager Alan Chdstensen prOvided an update.' At the last
Committee meeting the Committee reviewed a proposal from MetroFi
requesting to lease City light poles to provide free wireless Intemet service,
"WiFi," to local customers throughout Bakersfield. The Committee had several
questions. MetroFi representatives were not available to attend the meeting
today, but have prOvided responses to the questions.
AGENDA SUMMARY REPORT - Page 3
BUDGET AND FINANCE COMMITTEE MEETING
Monday, .August 28, 2006
Information Technology Director Bob Trammell, provided an overview of the
responses.
- MetroFi does not provide spam or porn filtering. MetroFI is proposing to
provide Internet service to anyone at no cost,'so there are no profits to
provide extra services.
- There is no way to mask or hide the antennas to be placed on the light
poles. There is a fixed format for the equipment and all that could be
done would be put something bigger around it.
- MetroFi would prefer a license agreement instead of a franchise.
- The new regulations being proposed by PG&E to charge for electricity
used by equipment on the light poles would not affect MetroFi, as
MetroFi has a separate contract with PG&E to cover the electricity their
equipment uses.
- MetroFi does not have defined language to determine "family-friendly
advertising" on the banner ads across the top of the screen. However, 'if
the'City writes language, they have agreed to sign off on it.
Public Works Director Raul Rojas informed the Committee that the City has
received an additional request for the use of approximately 30 light poles
throughout the City from PG&E to mount similar equipment to read gas meters.
Staff has requested additional information.
David Rogers, Electronic Towne Crier, stated he is a local Internet provider. He
spoke in opposition to the City giving MetroFi a franchise and in support of his
Internet service and other local Internet vendors.
City Manager Alan Tandy suggested Mr. Rogers provide the City with a
proposal from his company.
Committee Member Harold Hanson confirmed with staff that the City would be
requiring a bond to cover the cost of removing the equipment from the light
poles in the event MetroFi is not successful in Bakersfield.
Committee Member Irma Carson suggested a public hearing be held to receive
input from local providers before any agreement is finalized. She asked staff to
complete a very thorough background check on MetroFi.
Committee Chair Mike Maggard expressed concerns about the City allowing a
company to provide free Internet service without a way for .parents to control
access in order to protect their children from predators on the Intemet. He also
agreed with having a public hearing.
AGENDA SUMMARY REPORT Page 4
BUDGET AND FINANCE COMMITTEE MEETING
Monday, August 28, 2006
Assistant City Manager Alan Christensen stated staff is recommending that
MetroFi 'representatives attend the next Committee meeting to present their
proposal/agreement and answer questions.
The Committee agreed with the staff recommendation and took no further
action.
5. COMMITTEE COMMENTS
6. ADJOURNMENT
The meeting adjourned at 2:15 p.m.
Attendance: Staff: City Manager Alan Tandy;'Assistant City Manager John W. Stins°n;
Assistant City Manager Alan Christensen; Assistant City Attorney Janice Scanlan; Finance
Director Nelson Smith; Public Works Director Raul Rojas; Public Works Operations Manager'
Brad Underwood; Solid Waste Director Kevin Barnes; Solid Waste Superintendent Sal Moretti;
General Services Superintendent Steve Hollingsworth; and IT Director Bob Trammell
Others: David Rogers, Electronic Towne Crier; Troy Squiney, Bright House Networks; Danielle
Wade, Bright House Networks; Joe Schoenstein, Bright House Networks; Walter Morton, ICT
Consultants; Larry Moxley, Kern Refuse Disposal Inc.; Bernard LeBeau, Kern.Refuse Counsel;
and Dan :Panero, Varner Brothers
cc: Honorable Mayor and City Council
S:\JOHN\Council Committees\06Budget&Finance\06 Aug 28summary. doc
Page 1 of 2
John W. Stinson - Re: Free Wi Fi System
From: John W. Stinson
To: Jonsen, Robert
Date: 9/21/2006 2:43 PM
Subject: Re: Free Wi Fi System
CC: Bob Trammell
Mr. Jonsen:
Thanks for you ·interest in this matter. The Budget and Finance Committee of the City Council
is still reviewing this issue. They are scheduled to meet Monday, October 2, 2006 at 1:00
p.m. to discuss this and other matters. The meeting is open to the public. The
representatives frOm the company requesting access to the City's light poles is to be in
attendance at this meeting to respond to questions regarding their prOposal. I will prOvide the
Committee a copy of your correspondance.
Thank you
John W. Stinson
Assistant City Manager
John W. Stinson
Assistant City Manager
City of Bakersfield
1501 Truxtun Avenue
Bakersfield; CA 93301
661-326-3751
661-852-2052 fax
jwstinson@bakersfieldcity.us
>>> "Robert Jonsen" <robsen@engineer. com> 9/20/2006 9:59 PM >>>
It has been several months since the article appeared in the Bakersfield
Californian concerning the "Free Wi Fi system" a Silicon Valley company wants to
install in Bakersfield. I have heard very little about this since reading that article.
I personally believe this would be a very positive endeavor to support. Although some
will say the City Council is not supporting this because of "BIG BUSINESS" pressure. I know
you will think about all the citizens that cannot afford the high price of a high speed
connection, and you will support this "FREE SYSTEM".
My question: Has a decision been made concerning this deal, and if
so what is the latest news about this?
Thank You
file://C:~Documents and Settings\jwstinson\Local Settings\Temp\GW}00001 .HTM 9/25/2006
B A K E R S F I E L D
DIVISION OF INFORMATION TECHNOLOGY
MEMORANDUM
August 23, 2006
TO: Alan Tandy, City Manager
CC: John Stinson, Assistant City Manager
FROM: Bob Trammell, Director of Information Technology
SUBJECT: Status of MetroFi Project
After the last Budget & Finance committee meeting, I submitted the following questions
to Ben Zifrony at MetroFi and got these answers:
1. Can you do SPAM or Porn filtering?
a. No, that is up to the individual user
2. Can we mask or hide the antennas better?
a. No. Any covering would necessarily be larger than the antenna
3. Can we do a license agreement instead of franchise agreement?
a. Yes. MetroFi actually prefers a license agreement.
4. Will the new rate filing by PG&E affect them?
a. No. They have a separate contract with PG&E
5. How do they actually define 'lamily friendly advertising"?
a. They prefer that we provide the definition andthey will stick to our
definition if it is agreeable.
Since the last meeting, MetroFi has expanded and is now installed in the following
Cities in California:
Cupertino, Santa Clare, Sunnyvale, San Jose, and Concord.
They are currently installing their network in these Cities:
Foster City (CA), Ontario (CA), Corona (CA), Portland (OR), Aurora (IL), Naperville (IL)
They have also signed a contract in Piano (TX), but have not begun their build out.
The City Attorney's office is currently reviewing their proposed contract.
Pacific Gas and Electric Company 245 Market Street
San Francisco, CA 94115
Mailing Address
Mail Code N10A
P.O. Box 770000
San Francisco, CA 94177
June 27, 2006
City of Bakersfield
Attention: Steve Hollingsworth
City Corporation Yard
4101 Truxtun Avenue
Bakersfield, CA
(661) 326-3282
' RE: · License for attachment of communication equipment on City of Bakersfield
streetlights. SmartMeter project.
Dear Mr. Hollingsworth:
Pacific Gas and Electric Company ("PG&E") has filed an apPlication with the
California Public Utilities Commission to implement SmartMeter technology
("SmartMeter") throughout PG&E's service territory. SmartMeter is technology that
allows gas and electric meters to be read via a remote meter reading network. The
technology will allow time-of-use data to be recorded and meter reading to be handled
daily and even hourly, instead of monthly. This technology is employed by numerous
utilities within the United States and around the world today.
I have enclosed a STREETLIGHT LICENSE AGREEMENT ("AGREEMENT") that
proposes an AGREEMENT to allow PG&E to attach communication equipment to
streetlights owned by the City of Bakersfield. Please make arrangements to have this
AGREEMENT signed. Please call me at (415) 973-2813 so that I may make
arrangements come by and pick up the signed AGREEMENT, or you can mail it to me
at the address listed below.
Pacific Gas and Electric Company
Corporate Real Estate
Jerry Hall, Mail Code N10A
P.O. Box 770000
San Francisco, CA 94177
Please feel free to phone me at (415) 973-2813 if you have questions about this project
or our entry onto your property. Thank you for your cooperation.
Very truly yours,
Prop~jC/gent
Lettertothe City of Bakersfield
June 27,2006
page 2
cc: Scott Lox~eless
Pacific Gas and
Electric Company,.
STREETLIGHT LICENSE AGREEMENT
This Streetlight License Agreement (Agreement) is entered into by and between the CITY OF
BAKERSFIELD (CITY), a municipal corporation, and PACIFIC GAS & ELECTRIC
COMPANY (PG&E), a California corporation, as of the execution date written below.
CITY owns, operates and. maintains certain streetlight facilities located in the geographic areas
within the political jurisdiction of CITY.
PG&E desires to enter into an Agreement for the attachment, of communication equipment used
for the operation and maintenance ofPG&E's SmartMeter gas network, to CITY's existing
streetlight poles. PG&E's SmartMeter equipment consists of telecommunications equipment
including, but not limited to, a Data Collector Unit, whip antenna, coaxial cable and photovoltaic
adaptor. It is understood and agreed that this Agreement permits the location of the SmartMeter
communication equipment on CITY's existing streetlight poles. CITY is willing to permit
attachment of the SmartMeter equipment to CITY streetlight poles under the following terms and
conditions:
l. STREETLIGHT LICENSE. CITY does hereby confer on PG&E a non-exclusive,
revocable license to attach, replace, operate, maintain, and use SmartMeter communication
equipment and attach said SmartMeter equipment to the photocells, support arms and
streetlight pole(s) owned by CITY. Permission to attach to CITY-owned streetlight facilities
shall be memorialized in the form of the Streetlight Permit, attached to this Agreement as
Exhibit A.
2. SAFETY PRECAUTIONS. PG&E shall perform all work on CITY-owned streetlight
facilities in a workmanlike manner and in compliance with applicable federal, state, and local.
laws, rules and regulations. All work on such streetlight facilities shall be performed by
PG&E's personnel or contractor operating from either a ladder or bucket truck.
3. IN~DEMNIFICATION. PG&E shall indemnify and hold harmless CITY, its agents,
officials, and employees, against all loss, damage, expense and liability resulting from injury
to or death of person, including but not limited to employees of CITY, PG&E, or any third
party, or any damage to property, including but not limited to, property of CITY, PG&E, or
any third party, arising out of or in any way connected with the performance of this
Agreement and any and all construction, repair or maintenance activities however caused,
except to the extent caused by the active negligence or willful misconduct of CITY, its
agents, officials and employees. PG&E shall, on CITY's request, defend any suit asserting a
claim covered by this indemnity. In any action within the scope of this indemnity
agreement, PG&E shall be responsible for CITY's attorney's fees and costs incurred from the
date of tender.
4. TERM OF AGREEMENT. This Agreement shall be and remain in effect for an initial
period of twenty (20) years from the date of execution of this Agreement, and shall extend
thereafter for successive terms of one (1) year each, unless otherwise terminated by either
party on not less than sixty (60) days advance written notice to the other party.
5. TERMINATION. The parties hereto agree that either party may terminate this
Agreement at any time during the term hereof by giving written notice to the other party, not
less than six (6) months prior to the date when such termination shall become effective. Any
termination of this Agreement shall not relieve PG&E of any obligations, whether of
indemnity or otherwise, Which has accrued prior to such termination or completion of
removal of PG&E's equipment, whichever is later, or which arises out of an occurrence
happening prior thereto.
6. INDEPENDENT CONTRACTORS. It is understood and agreed that PG&E and CITY
are independent contractors and not an agent or employee of the other.
7. INSURANCE REQUIREMENTS. PG&E shall maintain the following insurance or
sel~f-insurance throughout the term of this Agreement: Commercial General Liability coverage
with respect to the use, occupancy and activities of PG&E, its employees and agents authorized
under this Agreement with limits of not less than Two Million Dollars ($2,000,000) per
occurrence and Two Million Dollars ($2,000,000) aggregate for bodily injury, property
damage, and personal injury liability. By request, PG&E shall submit a letter of self-insurance
signed by a duly authorized representative, evidencing that the self-insurance program is in full
force and effect and in compliance with and subject to all the terms, agreements, covenants,
conditions and provisions of this Agreement.
8. WAIVER. PG&E agrees that waiver by CITY of any breach or violation of any term or
condition of this Agreement shall not be deemed to be a waiver of any other term or condition
contained herein or a waiver of any subsequent breach or violation of the same or any other
term or condition.
9. NOTICES. All notices and other communications required or permitted to be given under
this Agreement shall be in writing and shall be personally served or mailed, postage prepaid
and addressed to the respective parties as follows:
To CITY:
City of Bakersfield
4101 Truxtun Avenue
Bakersfield, CA'
Attn: Steve Hollingsworth
TO PG&E:
Pacific Gas and Electric Company
77 Beale Street
San Francisco CA.94105
Attn: SMARTMETER Operations
Notice shall be deemed effective on the date personally delivered or, if mailed, three (3) days
after deposit in the mail.
11. SIGNATOR¥'S AUTHORITY. Each party warrants to each other party that he or she is
fully authorized and competent to enter into this Agreement in the capacity indicated by his
or her signature and agrees to be bound by this Agreement;
12. AMENDMENTS. This Agreement, including all Exhibits attached hereto, represents the
entire understanding of the parties as to those matters contained herein. No prior or written
,understanding shall be of any force or effect with respect to those matters covered hereunder.
This Agreement may only be modified by a written amendment duly executed by the parties
to this Agreement.
Execution Date: ., 2006
PACIFIC GAS AND ELECTRIC COMPANY
BY: BY:
Richard A. Gigliotti
Manager, Land Energy Delivery
Technical & Land Services
Attachment: Exhibit A. Streetlight Contact Permit Form
Pacific Gas and
Electric Company,,
EXHIBIT A
STREETLIGHT PERMIT
(Part 1 to be completed by licensee)
To CITY OF BAKERSFIELD: Date
Street: Agreement Number
In accordance with that certain Streetlight License Agreement between the City of Bakersfield (City) and PG&E dated ,2006
(the "Agreement") we hereby request permission to place attachments on the City streetlights designated below.
1. Location of the >oles
Pole# I Location [ Pole # ] Location
2. Attach a schematic drawing of the attachments to be contacted under this permit.
Permittee: Pacific Gas and Electric Company
Authorizing Engineer Name: Kevin McSweeney Company or Department: SmartMeter Operations
Address: 77 Beale Street, San Francisco, CA 94105 Phone # (415) 973-1141
(Pan 2 to be completed by City)
Subject to the te~s and conditions of the Agreement, you are hereby authorized to install the aRac~ents described in this E~ibit.
CITY OF BAKERSFIELD:
BY: Execution Date: (Authorized Signature)
(Type or Print Name)
Title: Division:
B A K' E R S F-I E L D
PUBIJC WORKS DEPARTMENT
150'1 TRUXTUN AYL:NUE
BAKERSFIEI.D, CA 93301
.................................. (661) 326-3724
RAUL M. ROJAS. DIRECTOR · CITY ENGINI*~ER
July 17, 2006
Mr, Scott Loveless
Pacific Gas and Electric Company
Mail Code B29R
P.O. BOx 770000
San Francisco, Ca. 94177-0001
RE: Smart Meter Project
Mr. Loveless:
The City of Bakersfield understands the immense nature of your Smart Meter Project and
appreciates your request to place your data gathering and communicating equipment on
designated city owned street light poles.
As you are aware, the City of Bakersfield has recently been approached by a third party
vendor with a proposal to attach "telecommunication" transmitters on our city owned
street light poles. This' third party proposal was presented to the Council's Budget and
Finance Committee. Because of the questions and concerns raised on that proposal, the
City would like PG&E to understand our concerns and respond to the following
questions:
The City will.require the exact locations PG&E requires as this would directly
impact some if not all of our seven council wards and respective council
members. A major concern raised by the committee was the aesthetics of the
devices and will certainly be a concern with your proposal.
· What would be PG&E's contingency plan if the City denies your request to place
these devices on city owned facilities?
· Per PG&E's tariff schedule for LS-2A facilities, an "Agreement for Unmetered
Low Wattage Equipment Connected to Customer-Owned Street Light Faculties",
PG&E Form 79-1048, is required. This agreement basically states that the owner
is responsible for the energy payment for energy used by any low wattage
equipment attached to the customer owned street light facilities and other
requirements concerning reporting, third party designations, etc. Does PG&E
plan to enforce this tariffon itself?. If not, What would be the requirements placed
on the City?
G:\GROtJ PDA'P, Letters~2006LPGE Smart Meter Project letter 7_13_06.doc
· Currently throughout the PG&E territory, third party vendors have entered into
contracts with various public and private entities that own their own street lighting
systems and pay that entity a fee to place their equipment on the street light poles.
In the City of Bakersfield's case, the third party vendor mentioned above has
offered to pay $36 per location per year.
The City will require a bond that would cover the expense ofremoving these
devices should PG&E default on the cOntract and/or discontinue the project and
not be able or willing to remove the devices from the City's facilities in a timely
manner.
Please understand that the City of BakerSfield is open to discussion on the proposal and is
aware of the aggressive timeline PG&E has Proposed for its implementation. Once the
City has received PG&E's response to this letter, we will forward your proposal to the
appropriate council committee for comment and action.
Because of the policies and procedures that must be followed, the City might not be able
to r. espond to your request prior to your anticipated implementation date.
Sincerely, .
Rani M. Rojas
Public Works Director
RMR/SHE
cc: Steve Hollingsw°rth
G:\GROUPDA'ISI,etter.s~OO6\PGE Smart Meter Project letter 7_ 13.06.doc
08/25/2006 03:13 4159735000 PG&E ANT OPERATIONS PAGE 02/03
Pacific Gas and
Electric Company
August 2fi, 2006
Mr. Raul M. Rojas, Director
Bakgrsfield Public Works Department
1501 Truxton Avenue
Bakersfield, CA 93301
RE: PG&E Smm'tM~ter
Mr. Rojas:
Thank you for your consideration of PG&E's request m install SmartMctcr
communications equipment on city-owned st~'eetlight polos. In response to your letter
dated July 17, 2006, I offer the following intbrmation:
Attached is a description of thc locations of thc city strcctlight poles PG&E is
requesting to install equipment.
IfPG&E is unable to attach to PG&E structures or the city-owned strcetlight
poles described in the attachment, PG&E will need to attach to other existing third
party stmcturcs, conunercial rooftops or install new poles.
- As PG&E's SmartMeter communications equipment is unmetered, the city is not
responsible for the energy used by PG&E. The city will continue to pay only for
usage derived from the streetlight facility itself.
., PG&E is willing to discuss a f~ for the use of the City's streetlight poles.
.* PG&E is willing to submit a bond to cover the expense of removing SmartMeter
equipment due to breach of contract or discontinuance of the project.
PG&E plans to commence SmartMeter installations on October 2, 2006 and hopes to
obtain city approval to install equipment on its streetlight polos prior to that date. I will
contact you in the next few days to discuss next st~s. Thanks again for your
Scott l.x>vele~
Senior Project Manager
PG&E SmartMeter Initiative
77 Beale Street, Mail Code B29R
San Francisco, CA 94105
Craig Se. hmtdt
John Newmau
Klm Lyl~t~
Serry Rail
88/25/2886 83:13 4155735888 PG&E AHI OPERATIONS PAGE 83/83
Structure ID Street City
3162t 12210 LENE PL BAKERSFIELD,,
41636, 41638 VALLEY ST AND HWY 178 BAKERSFIELD
42013 11001 UNSER CT BAKERSFIELD
31360 6400 E AUBURN BAKERSFIELD
313B9 EAGLE RIDGE AND MORNING DR BAKERSFIELD
31307 HILLDALE PLAZA AND HILLDALE ' BAKERSFIELD
10096 4600 UNIVERSITY AVE BAKERSFIELD
1776 ALTA VISTA DR AND KENTUCKY ST BAKERSFIELO
1637 ~'Fbk~E/~T~4-6T AND RIO VISTA DR BAKERSFIELD,
31936 3645 0 ST BAKERSFIELD,
1948 3142 AUDUBON BAKERSFIELD
9723 1800 CLUB VIEW DR BAKERSFIELD
3079 4813 TREANNA AVE BAKERSFIELD
11037 3400~~ BAKERSFIELD
12333 ~' ~..?2~I~0~'¢~LARI~A~RD AND HUGHES BAKERSFIELD
730S4 ~T~-~ 377 B~=~RE RD BAKERSFIELD,
§2664 7609 TANAGER BAKERSFIELD,
1353 FAMBROUC.-j~ AND IVAN BAKERSFIELD
622F6 6216 CART~GNA BAKERSFIELD
61996 OLD RIVER AND SHELBOURNE BAKERSFIELD
617N3 UMBRELLA PINE WY AND WHITE LANE BAKERSFIELD,
61802 SADDLE DR AND WHITE LANE BAKERSFIELD
13449 WARRENTON AND KINGWOOD BAKERSFIELD
2328 3500 PANORAMA DR BAKERSFIELD
635AB MCKEE AND STINE BAKERSFIELD
32812 1228 PACIFIC BAKERSFIELD.
50243 13000 Bt~RKC~F~L-B i~ ~ P~ ~.~Ol~cc. CO BAKERSFIELD
31441 3303 LA COSTA ST BAKERSFIELD
City streetlight poles Page 1 of 1
Steve Hollingsworth - City streetlight poles
From: "Loveless, Scott" <SxLn@pge.com>
To: <sholling @ bakersfieldcity.us>
Date: 9/21/2006 5:04 PM
Subject: City streetlight poles
CC: "Hall, Jerry" <GCH4@pge.com>, "Schrnidt, Craig" <COS 1 @pge.corn>, "Pollard, Cynthia D" <CDP0@pge.com>, "Haynes,
Cynthia" <CLH3 @pge.com>
Steve.
As discussed, we were able to relocate to PG&E structures all but four of the 30 locations originally designated to be installed on city-owned
streetlight poles for PG&E's SmartMeter gas network. The information for those remaining four city-owned streetlight poles is as follows:
· 1800 Club View Drive, #9723 ',
· Warrenton and Newberg, no #
· 3500 Panorama Drive, #2328
· 13000 Berkenfeld, #50243
Please let me know if we can expedite the process with these few sites or if we still need to submit the request to the city's Budget and
Finance Committee for review on October 2nd. Thanks.
Scott Loveless
SmartMeter Initiative
77 Beale Street, Mail Code B26Q
San Francisco, CA 94105
(415) 973-2071 (office)
(415) 320-4814 (mobile)
file://C:~Documents and Settings\shollingkLocal SettingsXTemp\GW } 00001.HTM 9/22/2006
MEMORANDUM
TO: Budget and Finance Committee ,
FRoMi Nelson K. Smith, Finance Director/q"~
Cheryl Perkins, City Treasurer
DATE: September 27, 2006
SUBJECT: Business Tax Certificates pertaining to Real Estate Brokers and Agents
Recent History of Events -
As part of a routine review of various groups and individuals that may be conducting business
within the City, our Treasury staff obtained a listing from the State of California of licensed real
estate brokers in Bakersfield. On or about August 28, 2006 approximately 120 letters were sent,
informing each broker that anyone conducting business within the City must possess a business
tax certificate (aka: business license).
At the City Council meeting of August 30, 2006 Councilmember Hanson requested staff provide
an explanatory memo on the process for assessing real estate agents and real estate offices
business tax licenses. Staff had been in contact with the Bakersfield Association of Realtors and
was in the process of drafting the explanatory memo when we were invited to attend a meeting
held at the Association offices on the morning of September 13, 2006. Cheryl Perkins
(Treasurer) and myself attended the meeting and attempted to answer a variety of questions
regarding the local business tax and how it applied to the independent brokers and agents who
transact bUsiness within the City.
Upon conclusion of the meeting there were a few unanswered questions that required additional
research. Members of the Association questioned why they were being "singled out" at this time
by the City. They also asserted that the subject of realtors paying a business tax had been
addressed by the previous City Attorney just a few years ago, and they were lead to believe that
the City Attorney issued an opinion to the effect that, as long as the brokerage firms were paying
the tax based on all commissions earned by all brokers, then each individual broker or agent did
not have to obtain their own tax certificate.
At the City Council meeting of September 13, 2006 Councilmember Hanson referred the issue of
realtors paying business tax to the Budget and Finance Committee.
Background and Follow Up - ·
The Bakersfield Municipal Code (BMC) has a very broad definition of a "business" in the
section associated with the local business tax, which is also known as a Business Tax Certificate
and/or a Business License.
The BMC specifically references real estate brokers and agents in the definitions section of the
code. The BMC also defines "evidence of doing business" as holding an active license or permit
issued by a governmental agency, in addition to the use of various forms of advertising.
The State of California Business and Professions code (section 16300) addresses the issue of
local business tax regarding when someone is disputing the concept that they are operating a
business. The State code says the manner in which a taxpayer reports income to the Franchise
Tax Board (FTB) and the Internal Revenue Service (IRS) shall create a presumption regarding
whether a taxpayer is an employee or operating a business.
Given this background, the Treasury division proceeded in comparing the list of State licensed
brokers ,to our current listing of Business License holders and sent out a batch of letters with an
applicatiOn package for the brokers to obtain their Business Tax Certificate.
Following our initial meeting at the Association of Realtors office, we came back to investigate
some of the questions raised at the meeting that were left unanswered (as referenced earlier in
this report). The first issue or impression was that the City was singling out realtors and not
pursuing other groups of businesses for collection of the local tax. During the last 12 months,
City staff has sent out over 2,400 letters to a wide variety of groups and individuals in efforts to
obtain Business Tax Certificates from those who are conducting business in Bakersfield. The
120 letters sent to the realty brokers accounts for about 5% of our total efforts in business tax
inquiries.
The other issue was kind of a two-fold question. First, some °fthe real estate brokerage
companies indicate they are paying the tax for all of their independent agents; therefore, why
should each agent be required to obtain their own Business License. Second, did the former City
Attorney actually issue some type of legal opinion on the matter. In an effort to respond to both
of these issues we approached the City Attorneys office to review their historical files for any
such prior opinion and they could not find any written evidence that such an opinion was ever
issued. We then asked them to review the BMC and provide a current legal opinion on whether
each real e~tate broker and agent should obtain their own business tax certificate and whether the
BMC supported the apparent practice of one broker paying the business tax for other brokers or
agents. 'The legal opinion is attached to this report, but the short answer is that the City
Attorneys opinion supports the interpretation and recent actions of the Treasury division.
During our September 25, 2006 follow up meeting with representatives from the ASsociation of
Realtors we discussed the findings of the City Attomey's office and explained that, since each
real estate broker and agent is technically in business for themselves (assuming they receive a
1099 inStead of a W-2 form and that they file a business tax remm (i.e. a Schedule "C" or similar
form ifa partnership or corporation) that each agent or broker should pay their own tax on their
own income and if a brokerage firm is paying the tax of others they should discontinue this
2
practice in the furore. The BMC specifically allows for the adjustment for "amounts collected
for others"; a subject addressed in the opinion letter from'the City Attorneys office.
Mr. Raymond Karpe, President Elect of the Association of Realtors, and the other representatives
felt that this legal interpretation was understandable and that their membership would be able to
comply with the City's existing BMC and follow the concept of "everyone pay their own taxes".
They suggested that their members be allowed to start "from here forward" with some time
allowed for City staff and the Association to work out some educational information and
possibly hold workshops to explain how to complete the forms and properly calculate the annual
taxes to be paid by each realtor. They again reiterated that, since they believe that the City has
been getting paid tax on most (if not all) the revenues, it would be illogical to attempt to go back
in time and it would be much cleaner to move forward with a fresh start at the beginning of the
next tax year (in the case of our local business tax, this would be July 1, 2007).
Summary -
Generally speaking, any person who is generating revenues is either an employee of they are in
business for themselves, whether a sole proprietOr or a member of a partnership or corporation.
Anyone who operates a business in Bakersfield should be paying an annual tax based on their
gross receipts in order to obtain an annual Business Tax Certificate (aka: Business License). The
Association representatives have confirmed the City's understanding that the vast majority of
real estate brokers and agents are independent contractors and not the employees of other
brokers. Further evidence of "conducting business" would include the receipt of an IRS Form
1099 (instead of a W-2 form) and the filing of a business tax return, such as an IRS Schedule "C"
(Income or Loss from Business).
We often run across individuals who claim they didn't know about the tax, so why should they
have to pay penalties and interest. We generally view this collection mechanism as a deterrent
for those who purposely evade the local tax, but understand that it really sometimes just never
occurred to someone that such a tax existed, which is an unfortunate reality to some.
In the particular instance with the realtors, we have no reason to doubt the Associations'
assertions that many of their realty companies have historically paid the tax for all of their
independent agents associated with their firm. We are also pleased to report that the ~
representatives of the Association have been very pleasant to work with and have communicated
openly and professionally with City staff in a mutual effort to bring clarity and understanding of
the issues for both the City and the members of the realty community. We look forward to our
continued interaction with the Association as we move forward in working out the various issues
associated with the Business License Tax.
Recommendation -
At the recent meeting with the representatives of the Association of Realtors, Mr. Karpe
proposed that the City consider picking a date in the future where,, from that point forward, the
real estate brokers and agents could begin complying with the new understanding of the BMC
where each broker and agent would be responsible for their own tax payments to the City.
The City would therefore ask each broker and agent to obtain their own Business Tax Certificate
and pay their own taxes on an annual basis, beginning on July 1, 2007. This option may require
some realty companies to change the way have handled their business tax calculations in the
past, but we believe this option is the most consistent with the application of the current structure
of the BMC.
We would suggest that, as a starting point, we take the realtors at their word as to whether or not
taxes have been paid on behalf of others in the past, and would not immediately require' an
individual broker or agent to obtain a Business License in the current fiscal year nor would we
ask them to pay back taxes and penalties or interest for prior years.
We would request that a reasonable amount of time be allowed for staffto work with the
Association of Realtors to educate their members regarding the business tax process and design
specific forms or other literature that may be of assistance to the brokers and agents in
calculating the appropriate amount of taxes due the City. We would institute the new process
effective with the July 1, 2007 Business Tax cycle, where each broker and agent would pay the
appropriate tax on or before July 31, 2007 to avoid any incurring of penalties or interest for the
new tax year. As currently outlined in the BMC (and referenced in the City Attorney opinion)
we would expect each broker who makes adjustments to their gross receipts figure for "amounts
paid to others" to provide the City with a listing of those adjustments (name, address and dollar
amount, of "amounts collected for others") as part of their tax payment documentation.
cc: Alan Tandy
Virginia Gennaro
Attachments
Current City Attorney Opinion
Example Copy of letter sent to the 120 brokers
State code section 16300 regarding whether someone is an employee or self employed.
IRS frequently asked question and answer information regarding whether a person is
an employee or self employed.
p:nks~nisc analysis~'nemo - bud fin report on business tax on realtors.doc
4
MEMORANDUM.
CITY ATTORNEY
September 26, 2006
TO: NELSON SMITH, FINANCE DIRECTOR ~
FROM: ROBERT M. SHERFY, DEPUTY CITY ATTORNEY
SUBJECT: BUSINESS TAX CERTIFICATE (BUSINESS LICENSE)
QUESTIONS PRESENTEr):
1. Under the Bakersfield MUnicipal Code, should each real estate
broker/agent obtain his or her own business tax certificate?
2. Is any broker or agent required to pay the tax of any other broker or
agent?
SHORT ANSWERS:
1. Yes.
2. No.
.DISCUSSION:
1, Bakersfield Municipal Code chapter 5.02 deals with obtaining business
tax certificates (business licenses) for all businesses transacting business in the City of
Bakersfield. It is unlawful for any person to transact or carry on any business in. the City
without first having obtained a business tax certificate (BMC § 5.02.060). A "person"
includes "individuals transacting and carrying on any business in the city, other than as
an employee" (§ 5.02.010 (E)). The manner in which a person reports income to the
Franchise. Tax Board or the IRS creates a presumption whether that person is an
employee (a city may not impose a business license tax on an employee) or is
operating a business (Bus. & Prof. Code § 16300). Other evidence that a person is
conducting business in the City consists of the person's use of signs, circUlars, cards,
telephone, book or newspapers whereby he advertises or holds himself out as being in
business in the City, or when said person holds an active license or permit issued by a
governmental agency indicating he is in business in the City (§ 5.02.090).
Each person who engages in business is to pay the annual business tax based
upon gross receipts (§ 5.02.240). For a real estate agent or broker, the sales price of
the real estate is excluded from the definition of "gross receipts" but that portion of
compensation which represents commission or other income to the agent or broker is
not excluded (§ 5.02.010 (D) (7)).
Nelson smith, Finance Director
September 26, 2006
Page 2
Based on an analysis of the above sections, under the Bakersfield MuniCipal
Code each real estate broker or agent must obtain his or her own business tax
certificate. The amount of tax due is determined based on commissions earned or, if no
commissions are earned, the agent or broker pays the minimum tax (§ 5.02.240).
2_. In the case where a broker or agent holds his or her license under another
real estate broker business, the latter is not required to pay the tax of the former.
Section 5.02.010 (D) (5) provides that the following is excluded from the definition of
"gross receipts":
Amounts collected for others where the business is acting as
an agent or trustee to the extent that such amounts are paid.
to those for whom collected, provided the agent or trustee
can furnish the collector with names and addresses of the
others and the amounts paid to them.
This section indicates that the broker company shOuld not be paying the
business tax owed by brokers or agents working under this company.
RMS:Isc
S:\Finance\MEMOS\O6-O7~Smith.BusinessTaxCert.doc
BAKERSFIELD
August 28, 2006
Dear .... . ,
It has come to our attention that you hold a Real Estate Brokers License from the State of
California Department of Real Estate. Title 5 of the Bakersfield Municipal Code requires
that any person conducting business within the City must possess a City of Bakersfield
Business Tax Certificate for each business location in the city.
i~i:"y'ourTcon~enience,' i'have-enclo'sed-'a BUsinesS Tax certificate applicatibn pa(~kage.
Once you have completed the application and Statement of Compliance, please call the
Treasury Division at {661) 326-3928 to determine the amount due. At that time, you
will be advised whether or not the application can be mailed in.
If you have questions, please co'act me at (661) 326-3928. I will calendar your response'
due within ten (10) business days~r by Tuesday, September 12, 2006.
Respectfully,
Cheryl L. Simpson
Financial Investigator
Enclosures
City of Bakersfield · Treasury Division · P.O. Box 2057
Bakersfield · California · 93303
(661) 326-3928
CA Codes (bpc:16300) Page 1 of 1
BUSINESS AND PROFESSIONS CODE
SECTION 16300
16300. (a) Notwithstanding any other provision of this part,
Chapter 1.5 (commencing with Section 7284) of Part 1.7 of Division 2
of the Revenue and Taxation Code, or Chapter 3 (commencing with
Section 37100) of Part 2 of Division 3 of Title 4 of the Government
Code, no. city, including a charter city, city and county, or county
may require an employee to obtain a business license or home business
occupation permit for, or impose a business tax or registration fee
based on income earned for services performed for an employer by the
employee in an employment relationship aR determined by reference to
the common law factors reflected in rulings or guidelines used by
either the Internal Revenue Service or the Franchise Tax Board. When
there is a dispute between a city, city and county, or county and a
taxpayer, the manner in which a taxpayer reports or reported income
to the Franchise Tax Board or the Internal Revenue Service shall
create a presumption regarding whether the taxpayer performed
services for an employer as an employee, or operated a business
entity. For.purposes of this section, "income" includes income paid
currently or deferred and income that is fixed or contingent.
(b) Nothing in this section shall be interpreted to limit the
authority of a city, city and county, or county to adopt and enforce
zoning, health and safety ordinances, or regulations that define and
limit activities that are permissible within its jurisdiction for the
purposes of health, safety, welfare, and the provisions of
applicable noise ordinances.
http://www.~eginf~.ca.g~v/cgi-bin/disp~ayc~de?secti~n=bp~&gr~up=~6~~~-~7~~~&~~e=~... 9/25/2006
Frequently Asked Questions - 12.2 Form 1099-MISC & Independent Contractors Page 1 of 2
12.2 Small Business/Self-Employed/Other Business: Form 1099-MISC & Independent Contractors
What is the difference between a Form W-2 and a Form 1099-MISC?
Both of these forms are called information returns. The Form W-2 is used by employers to report wages, tips
and other compensation paid to an employee. The form also reports the employee's income tax and Social
Security taxes withheld and any advanced earned income credit payments. The Form W-2 is provided by the
employer to the employee and the Social Security Administration. A Form 1099-MISC is used to report
payments made in the course of a trade or business to another person or business who is not an employee.
The form is required among other things, when payments of $10 or more in gross royalties or $600 or more
in rents or compensation are paid. The form is provided by the payor to the IRS and the person or business
that received the payment.
When you are finished with FAQs, please tell us if we have helped you by clicking here and taking a short
survey.
References:
· Tax Topic 752, Form W-2 - Where, When, and How to File
· Form W-2 and W-3 Instructions
· Form 1099-MISC Instructions
How do you determine if a person is an employee or an independent contractor?
The determination is complex, but is essentially made by examining the right to control how, when, and
where the person performs services. It is not based on how the person is paid, how often the person is paid,
or whether the person works part-time or full-time. There are three basic areas which determine employment
status:
· behavioral control
· financial control and
· relationship of the parties
For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, Circular E,.
Employer's Tax Guide and Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide. If you
would like the IRS to determine whether services are performed as an employee or independent contractor,
you may submit Form 8S-8 (PDF), Determination of Worker Status for Purposes of Federal Employment
Taxes and Income Tax Withholding.
unless you think you were an employee, you should report your nonemployee compensation on Form 1040,
Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF),
Net Profit From Business. You also need to complete Form 1040. Schedule SE (PDF), Self-Employment
Tax, and pay self-employment tax on your net earnings from self-employment, if you had net earnings from
self-employment of $400 or more. This is the method by which self-employed persons pay into the social
security and Medicare trust funds.
Generally, there are no tax withholdings on this income. Thus, you may have been subject to the requirement
to make quarterly estimated tax payments. If you did not make timely estimated tax payments, you may be
assessed a penalty for an underpayment of estimated tax. Employees pay into the social secudty and
Medicare trust funds, as well as income tax withholding, through payroll deductions.
If you are not sure whether you are an independent contractor or an employee, complete Form SS-8 (PDF),
Determination of Employee Work Status for Purposes of Federal Employment Taxes and Income Tax
Withholding. For more information on employer-employee relationships, refer to Chapter 2 of Publication 15,
http ://www.irs. gov/faqs/faq 12 -2.html 9/25/2006