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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