HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 1/7/2003 * PLEASE NOTE: Since the Glendale City Council does not take formal action at
the Workshops, Workshop minutes are not approved by the City Council.
MINUTES
CITY OF GLENDALE
CITY COUNCIL WORKSHOP
January 7, 2003
1:30 p.m.
PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Thomas R. Eggleston, and
Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet,
H. Phillip Lieberman, and Manuel D. Martinez
ALSO PRESENT: Ed Beasley, City Manager; Terry Zerkle, Assistant City Manager;
Rick Flaaen, City Attorney; and Pamela Hanna, City Clerk
1 . REVIEW OF TELECOMMUNICATION RATES
CITY STAFF PRESENTING THIS ITEM: Mr. Chris Zapata, Deputy City Manager; Mr.
Art Lynch, Chief Financial Officer; and Mr. Michael Bailey, Regulatory and
Communications Manager.
In accordance with the City's on-going business plan, the City's Regulatory and
Communications Office performed a comprehensive review of the area, focusing on
cost saving and revenue opportunities. This review included looking at how technology
will affect the City's revenue base.
Staff determined that the increase in technological advancements in communications
might cause a shift in the revenue base. In performing this analysis, Staff discovered
that the rates paid by telecommunications providers and cable providers are
inconsistent.
Presently, the City of Glendale charges cable providers a license fee of 5% of their
gross revenues. This is in addition to other benefits the companies provide to the City
of Glendale government. (e.g., access equipment grants and free cable service). On
the other hand, telecommunications companies are charged only the 1.8% general
sales tax.
The City may consider equalizing the rates paid by cable and telecom providers to
establish a level business environment. To do so, the City would need to amend the
telecom sales tax. By amending the telecom sales tax rate to 5% the City would
establish a fair, reasonable and consistent rate for both cable and other
telecommunications providers
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Other similarly situated cities in the State of Arizona have adopted telecommunications
sales tax measures.
This item was previously discussed at a workshop on July 2, 2002. Council requested
that staff bring this item back for further discussion.
Amendment of the tax rate will establish a level business environment and ensure
cable telecommunications providers pay an equalized rate.
The recommendation was to review the information and provide staff with direction
regarding the amendment of the tax rate of Glendale City Code Section 21.1-470,
Telecommunications Services.
Mr. Michael Bailey explained staff reviewed the city's current policies, investigating
where cost saving and revenue opportunities can be instigated. He said, while 80
percent of today's telecommunication service is provided via landlines, it is expected
that wireless service will account for 50 percent of service by 2005 and be the
predominant service by 2015. He explained telecommunication companies are
currently subject to a 1 .8 percent telecommunications rate, whereas cable companies
offering tele-communications services are assessed a five percent license fee.
Councilmember Goulet asked if they anticipate high speed cable lines being utilized in
the future. Mr. Bailey said they predict the future will focus on wireless technology.
In response to Vice Mayor Eggleston's question, Mr. Bailey clarified the city's intent is
to create a level playing field between all telecommunications companies.
Mayor Scruggs suggested they view telecommunications as a product on which
everyone is assessed the same tax rate. Mr. Zapata agreed.
Councilmember Lieberman said the city is searching for parity in its rates. Mr. Bailey
agreed.
Councilmember Clark clarified that for the city to do nothing would give
telecommunication companies an unfair competitive advantage over cable companies.
Councilmember Frate said staffs research shows the proposed equalization would put
Glendale in line with other cities in the valley. He stated he supports staff's
recommendation, believing it to be fair and equitable.
Mayor Scruggs asked if the .5 percent and .1 percent would still be broken out for
transportation and public safety, respectively, if the city were to approve the proposed
five percent rate. Mr. Zapata explained the 1.8 percent already includes the .5 percent
and .1 percent for transportation and safety. He clarified staff is recommending a 3.2
percent increase.
Councilmember Martinez expressed his opinion Glendale should move to a five percent
fee for all telecommunications companies. He asked what the increase would mean in
terms of revenue to the city. Mr. Zapata said each percent equates to approximately $1
million annually. Councilmember Martinez asked if the subject has been discussed
with Qwest. Mr. Zapata said Qwest was agreeable, assuming the rate was assessed to
all telecommunications providers and was based on the transaction privilege tax rather
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than cost recovery. Councilmember Martinez asked if the rate increase would be done
at once or phased in over a period of time. Mr. Lynch stated their intention is to move
forward with immediate implementation rather than a phased implementation,
explaining doing so will level the field sooner.
Councilmember Goulet reiterated that it is actually a 3.2 percent increase, not a 5
percent increase. He noted Glendale is not the only city looking at the issue.
Mayor Scruggs asked if Alltel, Sprint and other providers would also be effected. Mr.
Bailey responded yes.
Councilmember Frate stated he supports the increase and believes it should be
implemented all at once. Councilmember Clark agreed.
Councilmember Lieberman said, while satellite communications are not currently a
factor, they will be once they bring down their cost of service.
Mayor Scruggs voiced Council's consensus to proceed with 3.2 percent increase, to be
implemented all at once. She asked how the city will notify telecommunication
companies of the increase. Mr. Bailey said they have been in contact with and will
continue to communicate with the telecommunications providers with regard to the
increase. Mayor Scruggs asked how long it will take to implement the increase once it
has received final approval. Mr. Zapata said, while the increase could be implemented
immediately, Council has the discretion of providing a grace period. Mayor Scruggs
encouraged staff to work closely with members of the telecommunications industry.
2. ITEMS OF SPECIAL INTEREST TO COUNCIL
MAYOR SCRUGGS INTRODUCED THE ITEM.
This item is being placed on the agenda to provide members of the City Council an
opportunity to identify an item of special interest that they would like considered for
possible future workshop discussion. All identified items will be referred to the City
Manager for an initial assessment of the time and resources needed to bring a full
report forward for Council consideration and direction.
The City Manager will report back to the Council by the first workshop of the
subsequent month with an assessment of the item being asked for consideration. The
item will be specifically posted on the agenda so that discussion may take place by the
full Council and direction may be provided to the City Manager regarding whether
future study and/or a full report is warranted.
At the request of City Council, this item is being placed on the first workshop agenda of
each quarter.
The recommendation was to identify items of special interest for referral to the City
Manager.
Mayor Scruggs polled each Councilmember regarding items of special interest which
they wished to submit.
Councilmember Clark brought no items forward.
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Councilmember Frate asked staff to review the city's ordinance regulating the use of
go-peds, looking at ordinances found in other cities and how those ordinances are
enforced. He explained he is concerned about the number of calls regarding go-peds
received by the Police Department and the department's limited resources to respond.
Councilmember Frate also requested the City Manager to investigate what resources
and staff time would be needed for a comprehensive study of an amended smoking
ordinance.
Vice Mayor Eggleston brought no items forward.
Councilmember Lieberman submitted the issue of annexation with regard to managing
the city's future growth. He also asked that the city investigate what it can do to ensure
Luke Air Force Base survives Rumsfield's BRAC Commission in 2005.
Councilmember Martinez brought no items forward. He asked Mr. Flaaen if the
subcommittee should continue to work with Peoria on a smoking ordinance or wait until
it comes before the Council and a decision has been made. Mr. Flaaen said, until
Council takes a contrary action, the subcommittee should continue its efforts.
Councilmember Goulet brought no items forward.
Mayor Scruggs brought no items forward.
ADJOURNMENT
The meeting was adjourned at 2:05 p.m.
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