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Home My Public Portal About05. Resumption of the City's Collection of Utility Users' Tax Claremont City Council Agenda Report File #:4798 Item No:5. TO:CLAREMONT CITY COUNCIL FROM:ADAM PIRRIE, CITY MANAGER DATE:SEPTEMBER 12, 2023 Reviewed by: City Manager:AP SUBJECT: ADOPTIONOFARESOLUTIONAPPROVINGTHERESUMPTIONOFTHE CITY’SCOLLECTION OFUTILITY USERS’TAXFROMTHESOUTHERNCALIFORNIAGASCOMPANYFOR RESIDENTIALANDCOMMERCIALCUSTOMERSINCLAREMONT(FUNDINGSOURCE: GENERAL FUND) SUMMARY TheCityofClaremonthasimposedautility users’tax(UUT)formanyyearsontheuseofgasutility servicestoprovideaportionoftheGeneralFundrevenuesrequiredtoprovideahostofessential services to the community. OnDecember29,2022,theSouthernCaliforniaGasCompany(SCG)issuedapressrelease,which inpartread: “January\[2023\]billsarelikelytobeshockinglyhigh.Anunprecedentedcoldsnap acrossthenationinparthascausednaturalgasmarketpricesintheWesttomorethandouble betweenDecemberandJanuary-tothetuneof128%since December.”Inresponsetothis,several ClaremontresidentscontactedtheCityaskinghowtheCitycouldreducethefinancialburdenof increasing natural gas costs on California’s ratepayers. CitystaffmetwithSCGstaffonApril18,2023,todiscussthefeasibilityofSCGtemporarilypausing the City’scollectionofUUTfromSCGcustomersforaperiodofthreemonths(forusagefromJuly1, 2023throughSeptember30,2023)inresponsetotheincreasedcoststhatClaremontresidentsand businessownershavebeenburdenedwith.OnApril25,2023,staffpresentedthisoptiontotheCity Councilfortheirconsideration,andtheCityCouncilvotedtopausecollectionforaperiodoffive months (for usage from July 1, 2023 through November 30, 2023). SCGrequiressixty-daynoticebywayofanapprovedResolutionorOrdinancetoresumethe City’s collectionofUUT.Assuch,iftheCityCouncilapprovestheattachedResolution,theCitywill effectivelyprovideSCGwithadequatenoticetoresumethe City’scollectionofUUTfrom ’s CLAREMONTPage 1 of 3Printed on 9/7/2023 powered by Legistar™ Claremont customers for usage beginning on December 1, 2023. RECOMMENDATION StaffrecommendsthattheCityCounciladoptARESOLUTIONOFTHECITYCOUNCILOFTHE CITYOFCLAREMONT,CALIFORNIA,APPROVINGTHERESUMPTIONOFTHE CITY’S COLLECTIONOFUTILITY USERS’TAXFROMTHESOUTHERNCALIFORNIAGASCOMPANY FOR RESIDENTIAL AND COMMERCIAL CUSTOMERS IN CLAREMONT. ALTERNATIVES TO RECOMMENDATION In addition to the recommendation, there is the following alternative: A.DirectstafftoextendthepauseonUUTcollectionforusagebeyondNovember30,2023.Ifthe CityCouncilprovidessuchdirectiononSeptember12,2023,staffwouldpresentanew Resolution to the City Council for its consideration at its meeting on September 26, 2023. FINANCIAL REVIEW FromJulythroughNovember2022,theCitycollectedapproximately$199,000inUUTrevenuesfrom SCGforgasusage.TheCitywouldexpecttoloseatleastasimilaramountofrevenuefromthe pauseinUUTcollectionsfromJuly1,2023,throughNovember30,2023.Thislossamountsto approximately 0.63 percent of budgeted General Fund revenues for 2023-24. Thecostofstafftimetopreparethematerialforthisitemisestimatedtobe$628.Thesecostsare included in the operating budget of the Administrative Services Department. ANALYSIS TheCityofClaremonthasimposedautility users’taxformanyyearsontheuseofgasutility servicesinordertoprovideaportionoftheGeneralFundrevenuesrequiredtoprovideahostof essential services to the community. OnDecember29,2022,theSouthernCaliforniaGasCompanyissuedapressrelease,whichinpart read: “January\[2023\]billsarelikelytobeshockinglyhigh.Anunprecedentedcoldsnapacrossthe nationinparthascausednaturalgasmarketpricesintheWesttomorethandoublebetween DecemberandJanuary-tothetuneof128%since December.”Inresponsetothis,several ClaremontresidentscontactedtheCityaskinghowtheCitycouldreducethefinancialburdenof increasing natural gas costs on California’s ratepayers. CitystaffmetwithSCGstaffonApril18,2023,todiscussthefeasibilityofSCGtemporarilypausing the City’scollectionofUUTfromSCGcustomersforaperiodofthreemonths(forusagefromJuly1, 2023throughSeptember30,2023)inresponsetotheincreasedcoststhatClaremontresidentsand businessownershavebeenburdenedwith.OnApril25,2023,staffpresentedthisoptiontotheCity Councilfortheirconsideration,andtheCityCouncilvotedtopausecollectionforaperiodoffive months (for usage from July 1, 2023through November 30, 2023). BothSCGandtheCityacknowledgethatsupplyanddemandfactorsimpactthecostofnaturalgas, andappreciatethatactionisbeingtakenattheStateandFederallevelstoaddressthesuddenspike ingaspricesthatCaliforniansexperiencedearlierthisyear.Further,bothagenciesrecognizethat CLAREMONTPage 2 of 3Printed on 9/7/2023 powered by Legistar™ highgasbillsaddtothefinancialhardshipsthatClaremontresidentsandbusinessownersare already facing, such as rising inflation and high cost of living. SCGrequiressixty-daynoticebywayofanapprovedResolutionorOrdinancetoresumethe City’s collectionofUUT.Assuch,iftheCityCouncilapprovestheattachedResolution,theCitywill effectivelyprovideSCGwithadequatenoticetoresumethe City’scollectionofUUTfrom ’s Claremont customers for usage beginning on December 1, 2023. LEGAL REVIEW TheResolutionbeingconsideredbytheCityCouncilhasbeenreviewedandapprovedastoformby the City Attorney. RELATIONSHIP TO CITY PLANNING DOCUMENTS Staffhasevaluatedtheagendaiteminrelationshiptothe City’sstrategicandvisioningdocuments and finds that it applies to the following City Planning Documents: 2022-24 Budget. CEQA REVIEW ThisitemisnotsubjecttoenvironmentalreviewundertheCaliforniaEnvironmentalQualityAct (CEQA). PUBLIC NOTICE PROCESS TheagendaandstaffreportforthisitemhavebeenpostedontheCitywebsiteanddistributedto interested parties. If you desire a copy, please contact the City Clerk’s Office. Submitted by:Prepared by: Adam PirrieKatie Wand City ManagerAssistant to the City Manager Attachment: Resolution CLAREMONTPage 3 of 3Printed on 9/7/2023 powered by Legistar™ ATTACHMENT RESOLUTION NO. 2023- A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CLAREMONT, CALIFORNIA, APPROVING THE RESUMPTION OF UUT) FROM THE SOUTHERN CALIFORNIA GAS COMPANY (SCG) FOR RESIDENTIAL AND COMMERCIAL CUSTOMERS IN CLAREMONT WHEREAS, the City of Claremont has imposed a tax for many years on the use of gas utility services in order to provide a portion of the general fund revenues required to provide a host of essential services to the community; and WHEREAS, on December 29, 2022, the Southern California Gas Company January \[2023\] bills are likely to be shockingly high. An unprecedented cold snap across the nation in part has caused natural gas market prices in the West to more than double between December and January to the tune of 128% since December; and WHEREAS, several Claremont residents contacted the City asking how the City can ratepayers; and WHEREAS, high gas bills add to the financial hardships that Claremont residents and business owners are already facing, such as rising inflation and high cost of living; and WHEREAS, the City of Claremont acknowledges that supply and demand factors impact the cost of natural gas, and appreciate that action is being taken at the state and federal levels to address the sudden spike in gas prices that Californians experienced earlier this year; and WHEREAS, City staff met with SCG staff on April 18, 2023 to discuss the feasibility of SCG temporarily pausing from SCG for a period of three months (for usage during July 1, 2023, and September 30, 2023) in response to the increased costs that Claremont residents and business owners have been burdened with; and WHEREAS, City staff of UUT from SCG would not pose a detrimental financial impact to the City of Claremont or any of its operations; and WHEREAS, on April 25, 2023, the Claremont City Council voted instead to pause collection for a period of five months (for usage during July 1, 2023, and November 30, 2023); and WHEREAS, by way of this Resolution, the City Council is effectively providing SCG with the required 60-day notice to resume the collection of UUT from SCG for usage beginning on December 1, 2023. Resolution No. 2023- Page 2 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CLAREMONT DOES HEREBY RESOLVE: SECTION 1. The City Council finds that the above recitals are true and correct and are incorporated herein. SECTION 2. The City Council approves and authorizes the Mayor to execute this Resolution and authorizes City staff to make the necessary arrangements with SCG to resume December 1, 2023. SECTION 3. The City Council authorizes SCG to resume UUT from SCG for usage beginning on December 1, 2023. SECTION 4. The Mayor shall sign this Resolution and the City Clerk shall attest to the adoption thereof. th PASSED, APPROVED and ADOPTED this 12 day of September, 2023. _____________________________ Mayor, City of Claremont ATTEST: ________________________________ City Clerk, City of Claremont APPROVED AS TO FORM: ________________________________ City Attorney, City of Claremont