Measure I, The Grow House Electricity Tax: City Council Resolution, Municipal Code Section, City Attorney Analysis and Ballot Argument In Favor – August 3, 2012
RESOLUTION NO. 112-52
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ARCATA PLACING AN EXCESSIVE RESIDENTIAL ELECTRICITY USERS TAX MEASURE ON THE BALLOT FOR THE ELECTION TO BE HELD NOVEMBER 6, 2012
WHEREAS, in 2006, the City of Arcata adopted the Community Greenhouse Gas Reduction Plan which established a greenhouse gas emission reduction target of 20% below the emissions level of 2000 to be achieved by 2012; and
WHEREAS, the City’s Community Greenhouse Gas Reduction Plan identifies energy efficiency as one of seven action areas in which to obtain reductions in greenhouse gas emissions, including implementation of measures to conserve or reduce electrical energy use such as encouraging adjustments to personal behavior and living patterns so that less energy is required for daily needs; and
WHEREAS, when the City completed comparison emissions inventories in 2000 and 2006, it discovered that residential sector energy use in Arcata had increased by 30% (24% per capita) or 9,236,897 kilowatt-hours per year; and
WHEREAS, the California Public Utilities Commission (CPUC) establishes baseline quantities for average residential electricity use, measured in daily allowances of kilowatt hours (kwh) of electric power within climate based regions of service territories that insures all residential customers are provided a minimum necessary quantity of electricity at the lowest possible cost (“Baseline Allowance”); and
WHEREAS, the CPUC permits extra allowances of electricity at the lowest billing rate for residential customers who rely on life support equipment, or those who have life threatening illnesses or compromised immune systems (“Medical Baseline”); and
WHEREAS, the CPUC also permits subsidized billing rates for low income residential customers, and is considering disallowing such low-income subsidy for residential electricity use in excess of 600% over the Baseline Allowance, based on determinations that residential use in excess of 600% of the Baseline Allowance represents egregious electricity use; and
WHEREAS, electricity usage at levels of 600% over the Baseline Allowance equals more than three times the average household electricity usage in Arcata; and
WHEREAS, the average residential household in Arcata uses 5,868 kilowatt hours per year; and
WHEREAS, out of 9,500 residential electricity meters in Arcata, 633 meters exceeded 600% over the Baseline Allowance in 2011; and
WHEREAS, in 2011, each residential household in Arcata whose electricity usage exceeded 600% over the Baseline Allowance used on average 10,231 kilowatt hours in excess of 600% over the Baseline Allowance; andPage 2 of 5
WHEREAS, in 2011, those residential households in Arcata whose electricity usage exceeded 600% over the Baseline Allowance used 6,476,332 kilowatt hours of electricity in excess of 600% over the Baseline Allowance, which is equivalent to 2,279 tons of carbon dioxide emissions; and
WHEREAS, Government Code section 37100.5 authorizes the legislative body of a city to levy a tax on the consumption of utility services (a “utility users tax” or UUT) subject to voter approval; and
WHEREAS, Government Code section 37100.5 also authorizes a city levying a UUT to require collection of the tax by the service provider; and
WHEREAS, beginning in 1993, the City of Arcata has imposed a 3% UUT on the consumption of electricity, gas, telecommunication, water and wastewater services within the City; and
WHEREAS, an increased tax rate imposed on residential electricity usage in excess of 600% over the Baseline Allowance will further the goals of the City’s Community Greenhouse Gas Reduction Plan by reducing greenhouse gas emissions and promoting energy efficiency; and
WHEREAS, the City Council finds that imposing such an increased tax rate is consistent with CPUC pending policy identifying egregious residential electricity usage at levels in excess of 600% over baseline.
NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Arcata hereby places the following question before the voters of Arcata at the election to be held November 6, 2012:
Shall the City of Arcata impose an electricity users tax rate of 45% on residential customers whose electricity usage exceeds 600% over the established Baseline Allowance with a sole exemption for households receiving an extended Medical Baseline from the electricity service supplier, and automatically terminating in twelve years (City of Arcata Resolution No. 112-52)?
BE IT FURTHER RESOLVED, that upon approval of the foregoing question by a majority vote of the electorate, the City shall adopt the Excessive Residential Electricity Users Tax attached hereto and incorporated herein, and shall direct the City Clerk to codify said tax by adding Section 2628.5 to Article 1.5, Utility Users Tax, Chapter 5, Taxation, Title II, Administration, of the Arcata Municipal Code.
BE IT FURTHER RESOLVED, that in the event a majority vote of the electorate fails to approve the adoption of an Excessive Residential Electricity Users Tax, no provision of the City’s existing Users Utility Tax shall be affected.
This Resolution shall be effective upon its adoption.
DATED: July 11, 2012
/s/ Randal J. Mendosa /s/ Michael Winkler
City Clerk, City of Arcata Mayor, City of Arcata
I hereby certify that the foregoing is a true and correct copy of Resolution No. 112-52, passed and adopted at a regular meeting of the City Council of the City of Arcata, County of Humboldt, State of California, held on the 11th day of July, 2012, by the following vote:
AYES: WINKLER, BRINTON, ORNELAS, STILLMAN, WHEETLEY
/s/ Randal J. Mendosa City Clerk, City of Arcata
ARTICLE 1.5—UTILITY USERS TAX
SECTION 2628.5—EXCESSIVE RESIDENTIAL ELECTRICITY USERS TAX
(Measure to be submitted to voters November 6, 2012)
(a) When a Residential Customer’s electrical energy use exceeds six hundred percent (600%) of the Baseline Allowance, the tax imposed pursuant to Section 2628 shall be imposed at the rate of forty-five (45%) of the total charges made for electrical energy, and for any supplemental services or other associated activities directly related to and/or necessary for the provision of electricity to the Service User. The tax shall be paid by the Person responsible for the paying for such service, and shall be collected from the Service User by the Service Supplier or Non-utility Service Supplier, or its billing agent.
(b) The following words whenever used in this Section 2628.5 shall be construed as defined in this sub-Section 2628(b):
(1) “Baseline Allowance” shall mean the rate structure mandated by the California Legislature and approved by the California Public Utilities Commission that insures all Residential Customers of an electricity Service Supplier are provided a minimum necessary quantity of electricity at the lowest possible cost.
(2) “Residential Customer” shall mean the class of Service Supplier customers whose dwellings are single-family units, multi-family units, mobilehomes or other similar living establishments, such as Residential Dwelling Units or Residential Hotels, provided that 50% or more of the annual energy use on the meter is for residential end-uses.
(3) “Residential Dwelling Unit” shall mean a room or group of rooms, such as a house, a flat, or an apartment, which provides complete family living facilities in which the occupant(s) normally cooks meals, eats, sleeps, and carries on the household operations incidental to domestic life.
(4) “Residential Hotel” means a hotel establishment which provides lodging as a primary or permanent residence and has at least 50 percent of the units or rooms leased for a minimum period of one month and said units are occupied for nine months of the year, excluding those establishments such as guest or resort hotels, resort motels or resort ranches, tourist camps, recreational vehicle parks, halfway houses, rooming houses, boarding houses, dormitories, rest homes, military barracks, or a house, apartment, flat or any residential unit which is used as a residence by a single family or group of persons.
(c) All provisions contained in Article 1.5, Utility Users Tax, of Chapter 5, Taxation, Title II, Administration, of the Arcata Municipal Code shall apply to this Section 2628.5 except as expressly stated otherwise in this Section 2628.5. In the event of conflict between this Section 2628.5 and other provisions in Article 1.5, this Section 2628.5 shall control.
(d) Exemptions: Service Users who rely on life support equipment, or those who have life threatening illnesses or compromised immune systems, and therefore receive an extended Medical Baseline Allowance from an Electrical Corporation, are exempt from paying the tax imposed by this Section 2628.5 upon application to the City Manager or his or her designee.
(e) Service Users subject to the tax imposed by this Section 2628.5 are not eligible for the exemption found at Section 2626(c) for Service Users receiving low income rate assistance.
(f) Service Users subject to the tax imposed by this Section 2628.5 may not apply the tax levied pursuant to this Section 2628.5 toward the maximum amount of tax as otherwise authorized in Section 2632.
(g) Notwithstanding Section 2642(a), the levy of taxes imposed by this Section 2628.5 shall expire on November 30, 2024.
AN INITIATIVE ESTABLISHING AN
EXCESSIVE RESIDENTIAL ELECTRICITY USERS TAX
IMPARTIAL ANALYSIS BY CITY ATTORNEY, CITY OF ARCATA
Measure I would impose a 45% tax on excessively high residential electricity usage, pursuant to City of Arcata Resolution No. 112-52. The tax would be imposed only on residential usage which exceeds 600% over the established “baseline allowance.”
The “baseline allowance” is established by the California Public Utilities Commission (CPUC) in order to ensure a low cost to residential users for a minimum quantity of electricity. It reflects an average quantity of residential electricity use measured in kilowatt hours (kWh) of electric power. The CPUC designates the “baseline allowance” for specific climate-based regions within the different service territories.
The average residential household use in Arcata uses 5,868 kWh per year. Electricity usage at 600% over the “baseline allowance” equals more than three times this average usage. Out of a total 9,500 residential meters in Arcata, 633 meters exceeded 600% over the “baseline allowance” in 2011 and would have been subject to the tax if it had then existed.
The Measure proposes an exemption for those on an extended “medical baseline,” which is an extra allowance of electricity at the lowest billing rate established by the CPUC for residential users who rely on life support equipment, who have life threatening illnesses, or who have compromised immune systems. No exemption would be provided to low-income residential customers.
The tax is consistent with the City’s Community Greenhouse Gas Reduction Plan which established a greenhouse gas emission target of 20% below 2000 emission levels to be achieved by 2012. Emission inventories completed for years 2000 and 2006 indicate that residential electric use in Arcata increased by 30% per year over this time period. The City’s Greenhouse Gas Reduction Plan includes implementation measures to conserve or reduce electrical energy including encouraging adjustments to personal behavior and living patterns.
Based on 2011 usage data, the tax would net approximately $1,249,000 per year, and is expected to decrease over time as residential customers implement energy efficient measures. PG&E would be responsible for collecting the tax and remitting it to the City as it does currently with the City’s 3% utility users tax. PG&E estimates its cost to the City to implement the Excessive Electricity Users Tax to be a one-time amount not to exceed $650,000.
If approved by a majority of the voters at the November 6, 2012, election, the ordinance would go into effect upon adoption. There will be an unspecified delay before the tax is charged to and collected from residential users to allow PG&E to implement its collection procedures. The tax will automatically terminate 12 years after its adoption.
A YES vote approves the measure.
A NO vote rejects the measure.
/s/ Nancy Diamond
City Attorney, City of Arcata
Arguments in support or opposition of the proposed laws are the opinions of the authors.
Argument in Favor of Measure I
A YES vote on Measure I is our community standing up for a healthy environment, safe neighborhoods, and fair taxation.
Arcata is known for its longstanding commitment to sustainability, but excessive residential electricity use undermines our goals. We must take action as a community before it’s too late. This is why we support Measure I:
Residential electricity use in Arcata increased 30% between 2000 and 2006 and remains high. In 2011, 633 households exceeded 600% of baseline—that’s three times the average residential electricity use in Arcata. Measure I will discourage excessive energy consumption and encourage conservation.
Large-scale marijuana grow houses are primarily responsible or Arcata’s dramatic increase in residential electricity use. They can also attract violent crime, start house fires, and erode the character of our neighborhoods. Measure I will make Arcata a less appealing place for large-scale residential marijuana cultivation.
Measure I is a fair tax. It closes a loophole that has allowed unpermitted, high energy using businesses operating in residential areas to go undertaxed. Measure I will ensure that these unpermitted businesses contribute their fair share to our tax base, as do other types of businesses.
Measure I will generate funds for important public services without taxing the vast majority of Arcata residents. Only those households using more than 600% of baseline will pay the tax—those are users with a minimum average annual electricity cost of $7,995 (with gas heat) or $16,570 (with electric).
This measure has gained broad approval from throughout our community. The Arcata City Council voted unanimously to support it and many other prominent individuals and organizations have endorsed it. Please join us in voting YES on Measure I.
/s/ Shane Brinton, Vice-Mayor, City of Arcata
/s/ Julie Vaissade-Elcock, Local Business Owner
/s/ James I. Zoellick, Energy Research Engineer
/s/ Carl E. Pellatz, Former Mayor of Arcata
/s/ Kate Christensen, Local Business Owner