Recommendation of the Economic Development and Finance Committee to consider changes to the Sales Tax Resolution, including consolidating the current ordinances into a single ordinance and clarifying the appropriate staff and officials who should have access to this information.
Okay. Now we are going to item 33, which is the last item on the agenda. Item 33 is a communication from Councilwoman Stacey Mingo, chair of the Economic Development and Finance Committee, with a recommendation of the committee to consider changes to the city's sales tax resolution. So moved. Okay. Can I get a second? Second? Okay. There's been a motion and a second. It's important for council members to know that this does need to come back to the council a second time next week. So if you want to discuss now or then, those are both options. And I think this is the first step in a long pathway to revising first our 1976 ordinance, which I'm so thankful to our city attorneys who dug it out of the old files and a fax version that we were able to interpret. And I look forward to next steps being a revision to the 1992 economic development policy and a citywide plan where we can invite great business leaders to invest in Long Beach so that we can invest in ourselves. Thank you. Thank you. Councilmember O'Donnell. You just want to be clear, is this the item that would allow sales tax receipt data to be reviewed by public officials? Is that is that the intent of this items were. So so they're the new verbiage of the way that we decided as a committee to present this to council is better in line with what is currently happening in our neighboring cities Los Angeles, Huntington Beach, Corcoran and several others. And this broadens the scope to include the Economic Development Department. It changes the purpose usage from strictly for revenue recovery to revenue recovery and economic development. As many other cities in the state of California have done. And then it gives the power of the city attorney to, when necessary, for police specific reasons, to open up certain data for those considerations. Currently, for us to review the data for the whom an agreement this evening we would have needed. Mr.. We would need a human to present the data to us of his own accord. This would allow us to, in closed chambers, review that information in a timely manner. Right now we trust the businesses, and while we would like to trust the businesses. We also trust and verify. And we would be able to do that with this new ordinance resolution. So so city staff couldn't look at the human data. Not for economic development purposes, unless otherwise provided by the business which was requesting the agreement. I think, you know, the the where I'm coming from, I don't I'm not comfortable with having councilmembers see data from specific businesses around the city. That to me gets a little scary. I think it's scary for the business community, too. Could be very anti business, could scare them out of Long Beach. So, I mean, maybe the city manager or the city attorney can address my concern that elected officials would then be reviewing certain businesses tax data. And that's reminiscent of a, you know, command economy, from my perspective. And it could be kind of anti-free market and could go to places where it could be used against certain businesses. Will this allow this or this? This is a new policy kind of take care of my concerns. Mayor members of the Council of Councilmember McDonald, the. O'DONNELL and I. MCDONALD Yes, sorry. The as proposed the revised resolution would authorize review of the data. For additional. Financial planning, economic development and business tax compliance. Misuse of the information is a misdemeanor pursuant to 7056 of the California Revenue and Taxation Code. So there is limited use in addition to the collection of sales tax information in which we verify that they're paying the appropriate tax for use of this data. The proposal would allow the city attorney to determine on a case by case basis when access to retail specific sales data is appropriate for elected officials for policy formation in compliance with either financial planning, economic development or business tax compliance. That's the proposed resolution with the business. To be notified when a specific elected official has reviewed their sales tax data. The specific business is not required to be notified, but the body is required to be notified. So we would our office would submit a letter notifying the board of Equalization that the designated official has been given the authority to look at the data. Listen, I'm comfortable with using this data on an economic development basis. I'm just concerned about the, you know, the SPI factor here and what ultimately could happen with this data. That's my concern. That's always been my concern. Are you relatively comfortable or more comfortable with this policy as it sits this evening? I think both ways are legal. So it's a policy decision for the Council to decide on. If you'd like to expand who has access to this data. And use this data, but we. Are comfortable that what is proposed as a draft resolution is a legal alternative for the Council to consider. Not so concerned about what? Well, I am concerned about what's legal, but are also concerned about what sound policy. So you're saying that the policy has as put forward tonight, as has a number of safeguards put in it? Yes, the safeguards that are put in it are notification to the individuals who are going to have access to this data. That misuse is is a misdemeanor. And then also the notification to the VOA. Obviously, there's always the chance that the data is misused or is released to those who aren't entitled to it. But we believe the resolution addresses those issues as as other cities have. Thank you. Thank you, Councilman Richardson. Thank you. So if I go back to the initial discussion on this, I think some of the direction in the discussion was to see if there was a way to arrive at the outcome, the sought out outcome, without actually releasing that data to electeds. For example, if it were if we're discussing sales tax leakage, which was what I understood to be the purpose, could city staff craft a report based on the data to show where we need to place a specific area of focus? And I've seen that report and they did that. So the first question I have is, barring that that specific case where city staff can provide a report without actually exposing our city to that liability, what other circumstances would the city attorney need? And this is a question for you, Charlie. What circumstances would you anticipate the need to include that specific elected officials have that specific data that I. I don't have a specific example for you. I would anticipate that someone who is on or trained for economic development or business tax compliance may be asked to look at that data. But as a specific case, I don't have it. Okay. So then I'll ask the maker of the motion. I think we need to determine. I want to better understand. I don't think has been articulated clearly enough for me what the purpose of this is and the specific outcomes that we're seeking out by taking this path. Because, in my opinion, heading this pattern, heading down this path and exposing ourselves to potentially exposing ourselves to these this legal scrutiny needs to have a justified purpose and specific outcomes. And we need to evaluate other ways to get there before we take this. Like this is like the nuclear option, right? I think I would completely disagree. Councilmember Richardson. So help me understand a specific purpose and specific outcomes. Would our finance staff like to go through some of the details of our previous discussions which led us here? Or would you like me to take that? I'll turn it over to Leah ERICKSEN. To counsel women Mongo. There were just discussions trying to for the council women to understand better the picture. Of of sales tax and in terms of of. Trying to craft an. Economic development strategy. And she found that she couldn't couldn't ask. I couldn't give answers that provided some some. Of the specific data. So there were some scenarios. There where we could, using the current rules, tap dance around it. But this resolution provides. A little bit more broader access. The other thing other. Points were that the resolution. Doesn't clear right now. It does need to be changed because it doesn't clearly say economic. Development is allowed. So, you know, just to. Strengthen the resolution to allow economic development is is actually recommended by the administration, because that that was a of a concern of the older 1960 resolution, because it didn't quite specify that. I think times have changed over the years and how the data has been used as the chair of Economic Development Finance Committee. I could envision that the chair would have more more cause to be asking. But what would not. Happen with this data. Because of the controls that are put in this resolution, that we would not be turning over reports monthly? You know, with all the sales tax data, it would be on. A specific case by case basis related to council members official duties. And as the city attorney has mentioned, it would be disclosed publicly who has access? So what is this specific example of one of those questions that could not be answered? No, you can't do that. So specifically right now. I can't recall exactly the questions, but I've sat in rooms with John GROSS and Leah Erikson, and we've talked about potential revisions to the 1992 policy, which dictates the sales tax revenue agreements that we offer to organizations and businesses that can help grow our tax base. And there were several times during the conversation where he said we would be in an uncomfortable position answering that question at this time. So specifically, we lost Nordstrom Rack. What kind of financial economic impact does that have on the budget by quarter and annually? I can't answer that question. Why can't you answer that question? Because that would give too much information about a specific business. However, if you call a broker and most of the brokers and developers in the area will tell you a business of this type can bring in gross receipts of the state of the other. But our own city staff cannot tell us that information under the way the rule is currently written. However, what we're looking to do in this case is come forward with specific questions. Prepare them for John and the city attorney. The city attorney will review them and ensure that the questions are within the outlines of the updated resolution if we pass it here next week. Then we would take that information. He would be able to answer our questions and then we would be able to revise the policy. Currently, the policy to bring businesses here is very restrictive and we're in discussions with certain businesses that would like help but are would need a different and more diverse policy. And while we want to trust every business to bring forth information, it actually is quite a burden to them to gather and provide the data when it's easily available to our staff, and we're just not able to see it at this time. And so I'm also uncomfortable that in the past sales tax revenue agreements and the documentation were discussed with council. And from what I understand, we were kind of teetering on whether it was economic development or whether it was within the code of the 1976 resolution. So I think that this clears all of that up and puts us in a safer position. It allows the documentation of who's receiving what and when to be reviewed by the city attorney, which would be a public document which would be available to the public for public records requests. So I hope that that cleared that up. And I know that on your previous question, Councilmember Price, the maker of the motion, may have had something to add, and I know she's cued up next. So just to get clarity before I release the floor. The example, specific example you gave was a specific business leaving. How would that question inform a strategy to attract a similar business, to restore that sales tax that was lost? And secondly, I've been involved in conversations, numerous conversations with city management staff where I can ask a general question to bring a big box to the community. What is the general impact, sales tax impact that we will receive as a city? And they can give these numbers. They can say on average to bring you know, we would project to bring a best buy to the city of Long Beach. This is the impact to the general fund. This is this is what the benefit is. And so so I guess I would feel more comfortable just to bring this to where I would feel more comfortable if there was a larger discussion about specific purpose and goals of this policy before we start crafting out who gets what information, because that's a longer conversation and we're having an 11:00 at night and it's our second time attempting this while in general, I think I understand where you want to go, but this is the Constitution. The United States was put in place for certain protections. Right. And this bill, this law was put in place to protect the city. Right. And we can update it. We can certainly update it. But the reason has been in place since the 17th is to protect us from this liability. So it's warranted. The discussion is warranted. And I'll just end it there. Councilwoman Pryce. Thank you. Well, I appreciate all of your comments. Council Councilman Richardson and Councilman O'Donnell. I will say that staff put together a very comprehensive report here. It's it's dense. It takes a while to go through. But I think it's really educational in terms of what this resolution does. There is a lot of information that with this revised ordinance, staff will be able to provide for us by by virtue of the purpose of the data, which is economic development. It's all spelled out here under Section two. For the purposes of financial planning, economic development and business tax compliance, we will have access if you. Look at the page. 20 of 23 of the report that was prepared. I'm sorry. Page 22 of 23 of the report. It talks, for example, of economic activity reports. These are reports that staff will be able to provide for us without the city attorney having to make that determination on a case by case basis as to whether or not the electeds should have access to the information. So the circumstances wherein the electeds would make a request for access to information would be extremely rare, because if you look at the the data that would be provided by virtue of this ordinance, current sales tax performance and sales tax leakage by sector top 25 sales tax generators and top 25 fastest growing sales tax generators. If you go down to these number of business licenses issued, all of this data will be available to us as a council and on Economic Development Committee in terms of the economic activity reports. This data here doesn't require the city attorney to go in and do the case by case analysis to determine if the electeds would get access to certain information. So, like you, I wonder what would be the scenario where we as electeds would want to have specific data? I think that scenario would be very rare because what this information will allow us to do would be to draw some conclusions regarding trends and patterns and things in terms of leakage. I also note that the report is very inclusive in terms of talking about the amount of leakage. It's not as much as we talked about at the last time that we were here. They actually did a pretty thorough analysis of what the leakage really is and what specific industries we need to target as a city. So, you know, when. You look at what. The ordinance needs to be revised, I mean, it just does it's it's it's it's it's consolidating out of date language. And so it's consolidating and it's cleaning up. If you look under section two, the only part that impacts access to electeds is under subsection three, which says, furthermore, allow city attorney determine on a case by case basis when access to retail. Specific sales tax data is. Appropriate for elected officials for policy formation and decision making related to the above governmental functions and Grant said access so the city attorney would really have to determine is is a specific information about of one particular retailer something that cannot be provided under the access and public information type access that the city staff would have. Is it something that beyond goes above and beyond what we would get otherwise? And that would be his determination. And I think that puts into place a safeguard. So for me, I felt very comfortable with that particular language because I think it does take away what's a concern that many of us had, which is, you know, we don't want a specific elected to have access or to specific electeds to have access. That doesn't seem right. This would be all electeds would have access at the determination of the city attorney, which is a person that we entrust to make those calls. The other thing is that, you know, I think after reading this this memorandum, it really brought home to me that we actually, you know what, we actually pay our staff to have specialty in this area. And by revising the ordinance and requesting the regular economic reports, our staff is actually we're allowing them to do their job, which is something that that, frankly, we haven't really focused on in terms of this issue. So I think our staff is more than capable of doing the analysis here and directing us as a council on where we can improve our leakage issues. But I do want to say that, you know, if you look at it very broadly and take it out of context and think, oh, my gosh, electeds are going to have access to sales tax data, then it does sound a lot more concerning. But if you look at the actual language, I'm comfortable with it because of the city attorney safeguard. Thank you. Councilmember O'Donnell. You know, I'm going to I'm going to pass on this again. My my main concern is not that we update an ordinance and not that we allow staff, especially the economic side, to have the information they need to do their job. That, to me is a no brainer. It has always been the specific allowance for elected officials to review specific tax data from specific businesses. That's always given me a scare. So with that, I think I've made my point, and I think the city attorney's drawn up some some some language to address some concerns. Thank you. Captain Ranga. And I'll make this very short. As a third wheel in the in the in the committee. I too, raised those questions when we were having a committee meeting, and I was very much impressed with the fact that this. Ordinance has, as it is currently proposed, it does cover those safeguards. It's more of a it protects. The elected officials. In regards to reviewing any kind of data and where and what they're going to do with. It. It's a it's a also a proactive way of allowing the city when we're looking at establishing an economic development and business development department. We need to have this in order to be able to go out and attract businesses to come into Long Beach knowing what the tax base is going to be. It's a predictor. And I think if we are able to know what we need to go after, for example, auto sales or retail sales. We can we can use. That data to to. Go after. A Nordstrom's again or maybe put them in a better location. We have that that information there that will only be accessible. At the at the. Recommendation of the city attorney, because we want to see that that and we want we want to approach these companies. So that that's. How it's helpful. And I think. Without this ordinance. Our economic development department, newly created, will be able to have the tools in order to do that. In terms of. Projections for what a company. That wants to come or relocate into line with can can do. So I support this this amendment. And finally, we have Councilman Richardson. So I just wanted to chime in and say I think that so I think it's number one is bold, very bold and courageous. And I think this is a very worthwhile discussion. So I want to just say thank you for driving this. And but I feel like it is my responsibility to bring up some of these questions and talk through it. I do understand committees go through some of this stuff and they do. And this is just a big issue. We're all passionate about it, all interested in it. I think I want to encourage you to keep pushing and keep driving. I think what ultimately is going to come through this process, what ultimately is going to come out is going to benefit every part of the city. So I do want to just jump out jump out and say I do acknowledge I do acknowledge and admire your effort on this. Councilmember Mundo. Okay. Thank you. And Mr. Parker, in your final comment. Yes, Mayor, remember that just for point clarification. The motion, then, as I understand it, will direct the city attorney to prepare and bring back to the council a revised resolution. There's been discussion here of an ordinance. There is no actual ordinance that is related to this. It's a resolution. And so if this motion carries today, our office would bring it the next scheduled meeting, a resolution back to the council. Excellent. Thank you. Any public comment on the item? CNN members, please cast your vote. Motion carries nine votes. Yes. Okay. We're going to have a new business council in Boston.