HomeMy WebLinkAbout2014-0519 Study Session PACKET
CITY OF
ASHLAND
CITY COUNCIL STUDY SESSION
.AGENDA
Monday, May 19, 2014
Siskiyou Room, 51 Winburn Way
5: 30 p.m. Study Session
1. Look Ahead review
2. Recommendation of the Downtown Beautification Committee to remove the kiosk
from the Plaza
3. Discussion of options for local taxation of marijuana
Following the Study Session the City Council will hold an Executive Session for
Performance Evaluation pursuant to ORS 192.660(2)(i).
In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this
meeting, please contact the City Administrator's office at (541) 488-6002 (TTY phone number 1-800-735-
2900). Notification 72 hours prior to the meeting will enable the City to make reasonable arrangements to
ensure accessibility to the meeting (28 CFR 35.102-35.104 ADA Title I).
COUNCIL MEETINGS ARE BROADCAST LIVE ON CHANNEL 9. STARTING APRIL 15, 2014,
CHARTER CABLE WILL BROADCAST MEETINGS ON CHANNEL 180 OR 181.
VISIT THE CITY OF ASHLAND'S WEB SITE AT W WW.ASHLAND.OR.US
City of Ashland Council Meeting Look Ahead
*****THIS IS A DRAFT AND SUBJECT TO CHANGE*****
Departments Responsible 612 613 6116 6117 6130 711 7114 7115 814 815 8118 8119 9/1 912
6/2 Stud Session flTSisk'i ,au Room' - ere
1 Goal settin discussion continuation Dave Admin UNFIN
6/3 ~Re uular GouncillMe'eti~ 6n
2 Band Board annual report to Council Don Bie hler Admin PRES
3 Airport rates resolution Mike PW CONS
4 Approval of contract with Laborers Tina HR CONS
5 Grant Application for Infill Strategies for Transit Corridors Project CD CONS
Bill
6 Public hearing and ordinance to levy taxes for FY15 (Lee) Finance PH ORD-2
ORD-1
7 Update from Housing and Human Services Commission re: CD NEW
Social Services Grant review & their recommendations (Bill) 1
8 Second readin of ordinance re: Normal Avenue Plan Bill CD ORD-2
9 Update to FireWise Commission Ordinance Dave L./John Legal Fire ORD-2
10 2014 Fire Code Adoption John Fire ORD-1 ORD-2
sn6 ~BtU 'I- ssion iZSiski ou Rooomm' sns
11 Goal setting discussion continuation Dave Admin UNFIN
6017 ~Re uularlCounc!IIMe'etin ® 6/17
12 Report on shelter program for 2013-2014 Dave K. Admin PRES
13 Thank you presentation to Recology for their assistance with the Fire PRES
FireWise Da activities John
14 Unified Land Use Ordinance (ULUO) update (Bill) CD PH ORD-1 oftD-2
1s Discussion of ad hoc Recycle Center Committee Admin NEW
recommendations & Recolo rate incentives Adam
16 Adoption of self-insured benefits plan for FYI 5 (Tina/Dave) HR Admin NEW
17 Supplemental Budget Lee Finance RES
18 Ordinance to le taxes for FY15 Lee Finance ORD-2
19 2014 Fire Code Adoption John Fire ORD-2
20 Update to Chapter 1.08 General Penalties Dave L. Legal ORD-1 ORD-2
21 Ordinance re: mari'uana dispensaries Dave/Dave Admin Le al ORD-1 ORD-2
si30 ~$tud'I$ession inTsi'ski ou Room 9603703
22 AFN business plan Mark Electric/IT SS
23 Workforce development discussion (request of Councilor Slattery) Admin
SS
~n ®Re uular ConcillMe'etin ®li 761
24 Second reading of ordinance updating Council rules and Legal UNPIN
commissions David L. ORD-2
25 Unified Land Use Ordinance ULUO update Bill CD ORD-2
2s U date to Chapter 1.08 General Penalties Dave L. Legal ORD-2
z7Ordinance re: marijuana dispensaries Dave/Dave Admin Legal ORD-z
Page 1 of 2 5/15/2014
City of Ashland Council Meeting Look Ahead
**"*THIS IS A DRAFT AND SUBJECT TO CHANGE**"*
Responsible G12 613 G116 6117 6/30 7/1 7114 7115 814 815 8118 8119 9/1 912
7/14 Stud Session in Siski ou Room 7/14
28 Continuation of goal setting discussion Dave Admin SS
7/15 Regular Council Meeting 7115
29 Annual presentation from the Forest Lands Commission John Fire PRES
30 Discussion of film and video policy Ann Admin NEW
8/4 Stud Session in Siski ou Room 8/4
8/5 Regular Council Meeting 8/5
8/18 Stud Session in Siski ou Room 8/18
8119 Regular Council Meeting 8119
31 Annual resentation from the Conservation Commission Adam Admin PRES
911 Stud Session Cancelled Labor Da Holiday) 9/1
9/2 Regular Council Meeting 9/2
Com lesion esenta Ion Dates - 2014
February 18 - Transportation Commission
March 18 - Tree Commission
April 15 - Historic Commission
May 20 - Fire Wise Commission
June 3 - Band Board
Jul 15 - Forest Lands Commission
August 19 - Conservation Commission
Se tember 18 - Airport Commission
October 21 - Public Arts Commission ,
November 18 - Housing and Human Services Commission
December 18 - Planning Commission
`'n" iri`• .be. "c dined ' 'd ,
Consideration of an ordinance regarding "runs
Page 2 of 2 5/15/2014
CITY OF
ASHLAND
Council Communication
May 19, 2014, Study Session
Recommendation of the Downtown Beautification Committee to remove the Kiosk
from the Plaza
FROM:
Ann Seltzer, Management Analyst, seltzeranae ashland.or.us
SUMMARY
At the May 6, 2014, City Council meeting, the Council requested a recommendation from the
Downtown Beautification Improvement Committee (DBIC) as to removing or refurbishing the existing
Plaza kiosk used to post community flyers.
The DBIC voted to recommend removing the kiosk from the Plaza and noted that if the City Council
wanted it replaced they could direct staff to identify other locations where an information board could
be located.
BACKGROUND AND POLICY IMPLICATIONS:
The kiosk has been in that location for more than 15 years. It was installed to give people a place to
post their flyers which previously were being pasted and taped to city light posts - a practice that still
occurs. Every Monday, Parks employees remove all the flyers from the kiosk.
During the Plaza construction last year, new boards were placed on the kiosk and within four months
the boards were again full of staple holes. Committee members agreed refurbishing the kiosk would
only be beneficial for a few months and asked staff if there were other locations that could serve as a
location for people to post flyers.
There are a number of information boards located in both public locations and private locations where
flyers and posters can be displayed. There is a public display board located on one of the four sided
pillars under the Lithia Way overpass adjacent to the Water Street parking lot. A second information
board could easily be added in the same location. A number of businesses also provide space for
posting community information.
Removal of the Plaza kiosk will require excavation of a large concrete footing approximately 3' x 3'
and then adding new base material for pavers. Removal of the footing can be done in-house. Base
material and placement of new pavers would be contracted with the company who laid the Plaza
pavers.
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CITY OF
ASHLAND
FISCAL IMPLICATIONS:
The cost to fill the void and replace the pavers is estimated at $3,000 to $4,000 depending on the need
to remove surrounding pavers in order to match the existing pattern.
STAFF RECOMMENDATION AND REQUESTED ACTION:
Staff is requesting that Council give direction on whether to move forward with the removal of the
Plaza kiosk. Additionally, staff is requesting direction on whether or not to look for alternative
locations for a new kiosk.
SUGGESTED MOTIONS:
None
ATTACHMENTS:
None
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Council Communication
May 19, 2014, Study Session
Options for local taxation of marijuana
FHUAI;
Dave Kanner, city administrator, dave.kanner@ashland.or.us
SUMMARY
The Council has requested information on options for taxing the sale of marijuana (medical or
otherwise) in the City of Ashland. There is currently nothing in Oregon law that prevents a local
government from taxing the sale of marijuana within its jurisdictional boundaries. Colorado cities
have been taxing medical marijuana since 2010 and recreational marijuana beginning this year,
primarily using sales taxes. Cities in Washington have relied on existing state sales taxes and do not
have the legal authority to impose a local sales tax. Seattle and many Colorado cities also impose a
business license surcharge on retail marijuana outlets. A sales tax or a gross receipts tax would
probably make the most sense for Ashland. A gross receipts tax would be somewhat easier to
administer.
It should also be noted that the marijuana initiative most likely to be considered by the voters in
November contains the following language:
SECTION 42. State has exclusive right to tax marijuana. No county or city of this state
shall impose any fee or tax, including occupation taxes, privilege taxes and inspection fees,
in connection with the purchase, sale, production, processing, transportation, and
delivery of marijuana items.
As such, there is no guarantee that a local tax imposed prior to passage of this initiative would survive
beyond the effective date of the initiative, unless this language is modified by the Legislature.
BACKGROUND AND POLICY IMPLICATIONS
The Council requested information on options for taxing marijuana at each end of the supply chain, as
well as a review of what has been done in Colorado and Washington, where recreational marijuana has
been legalized. This Council Communication is divided into four sections: Types of taxes that could
be applied to marijuana; the Colorado experience with marijuana taxation; the Washington experience
with marijuana taxation; and a local marijuana tax in Ashland.
Taxes that could potentially be applied to mariiuana dispensaries
Sales Tax
A sales tax is levied when a taxable product is sold to an end consumer. The business selling the
product is responsible for collecting the tax, keeping accurate records of its collection and remitting the
proper amount to the taxing entity. States that levy general sales taxes usually exempt groceries,
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CITY OF
ASHLAND
medicines, utilities and other necessities, since lower income people spend a higher proportion of their
income on these things. These exemptions make the sales tax more progressive. The transient
occupancy tax and electric utility tax are sales taxes.
Gross Receipts Tax
A gross receipts tax is applied to the total gross taxable revenues of a business. It is similar to a sales
tax except that it is levied on the seller rather than the purchaser. The seller is responsible for
maintaining accurate records of its gross revenues from taxable goods and services and then remitting
a percentage to the taxing entity. Many businesses that are subject to a gross receipts tax will show the
tax on the bill of sale they present to the customer, but it is nonetheless the business that is responsible
for paying it. Ashland's food & beverage tax is a gross receipts tax.
WSA Tag
Excise taxes are a sales tax based on the volume of business done, often on the quantity of the product
purchased. The best known example is the gas tax, which is paid on a per-gallon basis rather than the
value of the gas purchased. Cigarette taxes are also an excise tax. Oregon assesses several different
excise taxes but Ashland has no local excise taxes. The terms sales tax and excise tax are often used
interchangeably.
Value Added Tax
A value added tax is a tax that applies to each step of a supply chain or production cycle. While the
tax is ultimately built into the cost paid by the end consumer for the finished product, the end
consumer does not see a separate assessment of tax. It can take the form of a sales tax or excise tax.
For example, a machine manufacturer purchases sheet steel and pays a value added tax on the purchase
price. The manufacturer turns the sheet steel into a machine and sells it to a wholesale distributor who
pays a value added tax on that purchase price. The retailer who sells the machine then pays a value
added tax on the mark-up from the wholesaler. Neither Oregon nor Ashland assesses any value added
taxes.
Business License Surcharge
This is an additional fee that is applied to a business license application or renewal from a particular
type of business. Ashland currently charges a business license fee but does not assess any surcharges.
The Colorado experience
Cities in Colorado began taxing medical marijuana in 2010 and began taxing recreational marijuana in
2014. Colorado is a sales tax state and the predominant form of local marijuana taxation there is a
sales tax. City tax rates range from 2% to 10%, and are in addition to a statewide marijuana sales tax
of 10%. The City of Boulder has separate tax rates for medical marijuana (3.56%) and recreational
marijuana (7.06%). Boulder also imposes an excise tax on the growers of recreational marijuana and a
"user tax" on both growers and retailers that is a tax on the assets and expenses of the business. Only
growers within the City of Boulder pay the excise tax and user tax.
It's not surprising that a sales tax would be the most widely used form of taxation in Colorado. The
state has a long history with the sales tax and many (if not most) cities already have local sales taxes in
place on top of the state sales tax. As such, Colorado cities have the administrative mechanisms in
place to collect and audit the sales tax. However, it is by no means the only form of taxation.
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CITY OF
ASHLAND
In addition to sales tax, many Colorado cities do the following:
• Apply their sales tax to marijuana paraphernalia as well as marijuana itself. "Paraphernalia" is
generally defined as "all equipment, products and materials of any kind which are used, intended for
use, or designed for the administration of medical marijuana..."
• Impose a business license surcharge at time of application or renewal for all medical marijuana-
related businesses. ($5,000 appears to be the going rate.)
• At least one Colorado town imposes what it calls an "occupation tax" of $5 on each sales
transaction between a marijuana cultivation facility and a dispensary or between a marijuana-
infused product manufacturer and a dispensary.
The City of Boulder has adopted a somewhat complicated tax structure that differentiates between
medical marijuana (3.56% sales tax) and recreational marijuana (7.06% sales tax), as well as between
cultivation facilities and dispensaries. Their tax structure also includes an excise tax on transfers
between cultivation facilities and dispensaries or testing facilities. The tax is calculated based on
weight or the number of immature plants.
While there a number of local permutations, a retail-level sales tax and business license surcharges
appear to be the most commonly used marijuana taxes in Colorado.
The Washineton Experience
The ballot measure that legalized recreational marijuana in Washington created a specific taxing
scheme. It provides for a 25% excise tax at each transaction point (producer to processor, processor to
retailer and retailer to consumer). One hundred percent of this tax goes to the state and none is shared
with the cities. The Association of Washington Cities has introduced legislation to redirect a portion
of that revenue to cities, but nothing has passed so far. Cities in Washington are prohibited from
enacting local sales taxes. Cities receive a portion of state sales taxes, so to the extent that retail sale of
marijuana generates more state sales tax, cities see at least a small bump in revenue. There are 40
cities in Washington that have a business and occupation tax (functionally similar to a gross receipts
tax) and those taxes apply to marijuana retailers as they would to any other business, but the tax is not
specific to marijuana. The City of Seattle recently adopted an ordinance that makes individuals who
grow or process marijuana subject to business license requirements, however, according to the
Association of Washington Cities, no other Washington cities have taken a similar step.
A local mariiuana tax in Ashland
In discussing a tax in Ashland, a primary consideration must be whether we have the administrative
knowledge and capacity to administer, collect, report on and audit a tax. Under that criterion, a sales
tax or gross receipts tax makes the most sense. Staff would have a preference for a gross receipts tax,
which is easier to administer and audit. Either the TOT ordinance or F&B tax ordinance could provide
a template for a marijuana tax, depending on which direction the City chose to go.
The transient occupancy tax is a sales tax on the transient that is collected on the City's behalf by the
lodging provider. This requires somewhat more complicated record-keeping than a gross receipts tax,
which is applied to the retailer's gross sales of taxable goods and services. The Food & Beverage tax
is a gross receipts tax. Note that many food service providers who are subject to the F&B tax show the
tax as a separate charge on the customer's bill, but it is nonetheless the retailer, not the customer, who
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CITY OF
ASHLAND
is responsible for the tax. A gross receipts tax would be administratively simpler for staff, since it
involves auditing only the total sales of the retailer and not individual transactions between the retailer
and customers. Either tax places an administrative burden on the seller, however a feature of both of
Ashland's taxes is a small retention (5% of total collection) for the collector to cover administrative
costs. Something similar could certainly be built into a marijuana tax.
There was also discussion at the April 1 Council meeting of taxing the production of marijuana,
presumably via a direct tax on growers or via an excise tax paid at the time the marijuana is exchanged
between the grower and the dispensary.
A direct tax on the grower is probably not feasible under Oregon's current system. Medical marijuana
grow sites must register with the state and information about grow sites is considered confidential.
Even if there are registered grow sites in Ashland, we would have no way of knowing it. An indirect
tax such as a value added tax would be possible, however it would require an entirely new
administrative structure. What's more, if the City were to impose a sales or gross receipts tax, it would
be arguably inappropriate to also tax individual elements of the supply chain, since that would
effectively create double taxation (i.e., a tax on the cost of a tax that has already been paid) at the point
of sale. OMMP card holders who grow for themselves are not exchanging any money and there is
therefore nothing to tax (aside from the fact that we wouldn't know who they are).
The question also remains as to what the tax rate would be in Ashland should the City tax sales of
marijuana. There is no right or wrong answer to this question. Taxes on recreational marijuana tend to
be fairly high (as much as 25%), but staff did not find an example of a medical marijuana tax in
Colorado that was higher than 10%. It appears that 5% is about average. There is, of course, no way
of knowing how much would be raised by a marijuana tax in Ashland. Regardless of what figure is
initially imposed, it could always be adjusted up or down by future Council action.
STAFF RECOMMENDATION AND REQUESTED ACTION
Staff seeks direction on whether to prepare a marijuana taxation ordinance for the Council to consider
as well as direction on what form such a tax should take.
SUGGESTED MOTION
N/A. Item is scheduled for discussion and direction to staff only.
ATTACHMENTS
None
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