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HomeMy WebLinkAboutOrdinance No. 2787-2014Sponsored by: Mayor Porter and Council Member Molloy CITY OF KENAI ORDINANCE NO. 2787 -2014 AN ORDINANCE OF THE COUNCIL OF THE CITY OF KENAI, ALASKA, REPEALING KMC 7.15.110 - OFFSET AGAINST DELINQUENT TAXES, AND RE- ENACTING THE CODE SECTION AS KMC 7.15. 110 - TAX COMPLIANCE, TO REQUIRE INDIVIDUALS AND BUSINESSES CONTRACTING WITH THE CITY TO BE IN COMPLIANCE WITH CITY TAX ORDINANCES. WHEREAS, it is in the City's best interest to contract with and conduct business with individuals and businesses that are in compliance with the City's tax ordinances; and, WHEREAS, while the City's code allows the City to offset amounts owed by its contractors for delinquent City taxes, it does not prohibit the award of contracts to contractors that are delinquent on City taxes; and, WHEREAS, requiring certification of tax compliance for competitively bid transactions prior to award of a contract is administratively feasible; and, WHEREAS, allowing the City to terminate contracts or offset amounts owed for delinquent taxes will help ensure that individuals and businesses who do business with the City remain in tax compliance even for purchases not competitively bid; and WHEREAS, exempting tax compliance verification from transactions with or through other government agencies is reasonable, as these types of transactions do not result in taxable transactions and are exempt from sales taxes under code; and, WHEREAS, it is in the best interest of the City of Kenai to require individuals and business contracting with the City to be in compliance with City tax ordinances. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, that Section 1. Form: That this is a code ordinance. Section 2. Repeal and Re- Enactment of Section 7.15. 110 of the Kenai Municipal Code: That Kenai Municipal Code, Section 7.15. 110 - Offset of Delinquent Taxes, is hereby Repealed and Re- Enacted as follows: [7.15. 110 OFFSET AGAINST DELINQUENT TAXES. THE CITY MAY OFFSET AMOUNTS OWED BY ITS CONTRACTOR(S) FOR DELINQUENT CITY TAXES AGAINST ANY AMOUNT OWING TO THE CONTRACTOR(S) UNDER A CONTRACT BETWEEN THE CITY AND THE CONTRACTOR(S)] New Text Underlined; [DELETED TEXT BRACKETED) Ordinance No. 2787 -2014 Page 2 of 2 7.15.110 Tax Compliance. Lai No contract that requires competitive bidding pursuant to a City ordinance may be awarded to an individual or business that is in violation of City tax ordinances unless the violation is cured within 10 business days of notice. (b) If an individual or business becomes delinquent on any City tax obligation during the term of a contract, the City may terminate the contract if not cured within 10 business days of notice, and the City may offset amounts owed by the City to the individual or business under a contract for the amount of outstanding tax obligations including applicable Denalties and interest. (c) Tax compliance verification is not required for purchases when the City conducts business with or through other federal, state or local governmental agencies. Section 3. Severability: That if any part or provision of this ordinance or application thereof to any person or circumstances is adjudged invalid by any court of competent jurisdiction, such judgment shall be confined in its operation to the part, provision, or application directly involved in all controversy in which this judgment shall have been rendered, and shall not affect or impair the validity of the remainder of this title or application thereof to other persons or circumstances. The City Council hereby declares that it would have enacted the remainder of this ordinance even without such part, provision, or application. Section 4. Effective Date: That pursuant to KMC 1.15.070(f), this ordinance shall take effect 30 days after adoption. PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 20th day of August, 2014. I (�a-. � � PAT PORTER, MAYOR L i� �U of • • e • - Introduced: August 6, 2014 Adopted: August 20, 2014 Effective: September 19, 2014 New Text Underlined; ]DELETED TEXT BRACKETED] "I/c'114l e with a Past, C# with a Future" 210 Fidalgo Avenue, Kenai, Alaska 99611 -7794 Telephone: 907 - 283 -7535 / FAX: 907 - 283 -3014 MEMORANDUM TO: Council Members Bookey, Boyle, Gabriel, Marquis & Navarre FROM: Mayor Porter and Council Member Molloy DATE: 08 -14 -14 SUBJECT: Ordinance No. 2787 -2014 It is in the best interest of the City of Kenai to require individuals and businesses contracting with the City to be in compliance with City tax ordinances. Existing Code does not expressly establish this policy, although it has been the City's practice. Kenai Municipal Code 7.15.110 - Offset against delinquent taxes, currently only allows the City to `offset amounts owed by its contractor(s) for delinquent City taxes against any amount owing to the contractor(s) under a contract between the City and the contractor(s)." Ordinance No. 2787 -2014 repeals KMC 7.15.110- Offset against delinquent taxes and re- enacts it as KMC 7.15.110 -Tax Compliance. In this ordinance, there are 3 subsections: 1. Subsection (a) establishes that "No contract that requires competitive bidding pursuant to a City ordinance may be awarded to an individual or business that is in violation of City tax ordinances unless the violation is cured within 10 business days of notice." This means that pursuant to HAIC 7.15.040- Competitive bidding, and 7.15.050- Purchases, when competitive bidding not required, unless certain specific exemptions apply, all purchases for supplies, materials, equipment, and contractual services in excess of $25,000 will require the City to verify tax compliance prior to award of a contract. Imposing the requirement on all purchases made by the City is not administratively practical primarily because the City makes thousands of individual purchases a year and does not have available staff time to verify tax compliance for every single transaction. 2. Subsection (b) applies to all contracts, not only contracts that require competitive bidding. Subsection (b) retains the option of "offset against delinquent taxes" including collection of applicable penalties and interest. Subsection (b) adds the option of the City's right to terminate a contract if an individual or business becomes delinquent on any City tax obligation during the term of a contract, and the delinquency is not cured within 10 business days of notice. The City also could use both options under subsection (b): terminate the contract and offset amounts owed to the contractor up to the amount of the delinquent tax obligation plus applicable penalties and interest. City Councilors 08 -14 -14 Page 2 of 2 3. Subsection (c) provides that "Tax compliance verification is not required for purchases when the City conducts business with or through other federal, state or local governmental agencies." These transactions with or through other governmental agencies are non taxable transactions under Code, therefore tax compliance verification should not be required because nothing is gained by the additional administrative burden and expense that would be imposed if tax verification compliance was required. Your support of this ordinance is respectfully requested.