TO:
Honorable Mayor and Members of the City Council
THROUGH:
John Jalili, Interim City Manager
FROM:
Bruce Moe, Finance Director
SUBJECT:Title
Letter of Opposition to Senate Bill (SB983 - Hernandez) Regarding Reallocation of Sales Tax from Card Lock Fuel Systems (Finance Director Moe).
AUTHORIZE LETTER OF OPPOSITION
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Recommended Action
RECOMMENDATION:
Staff recommends that the City Council authorize the Mayor to sign a letter of opposition to SB983 (Hernandez).
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FISCAL IMPLICATIONS:
If the bill becomes law the City of Manhattan Beach would lose $350,000 annually in sales tax revenues. This represents approximately 4% of the City's sales tax, and .6% of General Fund revenues.
BACKGROUND:
Card lock systems are fleet fueling locations where members (customers operating fleets) purchase fuel at a network of non-retail fueling stations using a fleet (credit) card. The stations service members only and are not open to the general public.
Under existing state law, the credit for fuel sales (and the tax) generated by card lock systems is credited to the jurisdiction in which the sales office is located. If it becomes law, SB983 would reallocate the sales tax revenues to the points of distribution (e.g., the locations where the fuel is dispensed).
DISCUSSION:
In 2010, the City entered into a location agreement with DeWitt Petroleum (Attachment #2). DeWitt Petroleum operates card lock fueling systems in eleven cities, while their main sales office is located in Manhattan Beach (there are no DeWitt fueling locations in Manhattan Beach). The agreement provides for a sharing of the sales tax revenue generated by DeWitt Petroleum in exchange for a long term commitment to maintain a sales office in Manhattan Beach. The initial term is twenty years with renewal options. Other cities have entered into similar arrangements with other card lock fueling system operators, inclu...
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