Item 6-E

                                             Council Meeting: 9/23/97                     Santa Monica, CA

          TO:       Mayor and City Council

               FROM:     City Staff

          SUBJECT:  Approval of Resolution Amending Utility User's Tax
          Administrative Rules

INTRODUCTION
This is to recommend that the City Council approve the attached
resolution amending the City's Utility User's Tax Administrative
Rules.  Many of the recommended revisions are only minor wording
changes that will clarify the intent and aid in the application
of the Administrative Rules.  The two substantive changes more
clearly identify the responsibilities of each party (City and
utility Service Supplier) when determining the appropriate
application of the City's Utility User Tax ordinance in regards
to new and emerging technologies.

BACKGROUND 
The City's Utility Users Tax (UUT) Ordinance (Chapter 6.72 of the
Santa Monica Municipal Code) taxes the use of various utility
services within the City.  The UUT is an important part of the
City's tax revenues which finance municipal services such as
police, fire, library, and public works.  As utility Service
Suppliers are required to collect the tax from their customers
and  remit the proceeds to the City, it is vitally important that
the utility Service Suppliers understand the proper application
of the City's UUT ordinance, particularly in light of new and
emerging technologies which may or may not be subject to the UUT.

In September 1996, the City Council adopted a set of
administrative rules (Resolution No. 9086 CCS)intended to
facilitate the efficient  and effective collection of UUT
revenues.  The rules are also intended to assure that the City's
UUT is correctly applied by all current and future utility
Service Suppliers to all appropriate types of services which are
currently provided or will in the future be provided by these
Service Suppliers.  Further discussions  among the City's UUT
auditor, other public agencies, and the utility Service Suppliers
have resulted in the revisions set forth in the attached
resolution.

DISCUSSION OF CHANGES
Attachment A to the recommended resolution provides the text of
the Administrative Rules with the proposed revisions noted.  Many
revisions are wording changes that provide further clarification
as to the responsibilities of both the City and the Service
Suppliers concerning implementation of the City's UUT.

The two substantive changes deal with the liability of the
Service Suppliers for payment of past UUT taxes that may not have
been collected.  These are discussed below:

          Section I.A. of the original rules stated that the Service
     Supplier was not responsible for payment of past UUT taxes
     that were not collected due to the inaccuracy of boundary
     information supplied by the City or due to the City's
     failure to make appropriate corrections to the utility
     Service Supplier's billing data.  The proposed amendment
     limits this non-liability "to the extent that the City
     reviews such data at the request of the utility Service
     Supplier".

          Section I.G. states that upon request of a Service Supplier,
     should the City review the applicability of the UUT to
     certain services that were not previously taxed and
     determine that these services should have been taxed, the
     UUT would apply prospectively provided the Service Supplier
     previously acted in good faith.  However, if it is
     determined that the Service Supplier did not act in good
     faith in failing to apply the UUT, the City could apply the
     UUT retroactively.

BUDGET/FINANCIAL IMPACT
There is no budget or financial impact associated with approval
of the attached revisions to the City's UUT Administrative Rules.

RECOMMENDATION
City staff recommends that the City Council approve the attached
resolution which adopts the amended UUT Administrative Rules.

Attachment:    Proposed Resolution

                     RESOLUTION NUMBER _____
                      (City Council Series)

   A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA
    AMENDING THE CITY'S UTILITY USER TAX ADMINISTRATIVE RULES


     WHEREAS, the City of Santa Monica's Utility Tax (UUT)
Ordinance (Chapter 6.72 of the Municipal Code) places a utility
users tax on the use of certain utility services within the City;

     WHEREAS, the utility Service Supplier (as that term is
defined in Section 6.72.010(e) of the Municipal Code) is required
to impose and collect the UUT tax from its customers, and remit
the tax to the City;

     WHEREAS, the cooperation of the utility Service Supplier is
of great importance to the appropriate implementation of the
City's UUT ordinance;

     WHEREAS, the City Council adopted Resolution No.9086 (CCS)
on September 10, 1996 which established and approved the City's
UUT Administrative Rules; 

     WHEREAS, the City now proposes to amend the UUT
Administrative Rules to further facilitate implementation of the
City's UUT ordinance;

     NOW, THEREFORE, the City Council of the CITY OF SANTA MONICA
does hereby resolve:

     SECTION 1. The UUT Administrative Rules are hereby amended
as detailed in Attachment "A" to this resolution, and shall be
followed and implemented by the Tax Administrator of the City's
Utility Tax Ordinance.

     SECTION 2. A copy of the amended UUT Administrative Rules
shall be distributed, within thirty days hereof, to all utility
Service Suppliers that conduct business within the City.

     SECTION 3. The City Clerk shall certify to the adoption of
this Resolution, and thenceforth and thereafter the same shall be
in full force and effect.

APPROVED AS TO FORM:

                                
MARSHA JONES MOUTRIE
City Attorney