Loading...
HomeMy WebLinkAboutItem 26 - Ordinance Amending the Cannabis Public Benefit Fund Finance and Management Services www.santa-ana.org/finance Item # 26 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report July 20, 2021 TOPIC: Ordinance Amending the Cannabis Public Benefit Fund AGENDA TITLE: Consideration of Ordinance Amending the Cannabis Public Benefit Fund Restricted Uses for Additional Youth Services RECOMMENDED ACTION Introduce and conduct first reading of an ordinance amending the Cannabis Public Benefit Fund to provide authority to transfer allocations between youth services and community enforcement activities. DISCUSSION When the City Council adopted an ordinance approving adult cannabis uses in the City and placed a measure on the ballot, asking voters whether to tax the adult cannabis businesses, the City Council asked staff to ensure that the resulting tax revenue would be directed toward providing enhanced youth services and enforcement services. Staff proposed and the City Council adopted Ordinance NS-2959 to set aside cannabis tax revenue for specified services (Exhibit 1). The ordinance created the Cannabis Public Benefit Fund. The existing ordinance provides for the establishment of a Cannabis Public Benefit Fund funded by setting aside two-thirds of Cannabis tax revenue from commercial and retail activities, with one-third for enhanced youth services and one-third for enforcement. Youth services, intended to assist those under 24 years of age, would include, for example, athletic, recreational, health, educational, and human services such as social services or prevention services. Enforcement services would be those services provided by Code Enforcement personnel, the Police Department, and the City Attorney’s office to ensure the proper enforcement of all general code and quality-of-life requirements with an emphasis on enforcing violations of the City’s cannabis regulations, as well as the Finance Department for collection and audit of cannabis tax. The current ordinance provides that any amendment, suspension or elimination of the Cannabis Public Benefit Fund would require the City Council to take the same steps required to access the General Fund Reserve, including making fiscal emergency findings and a two-thirds vote of the entire City Council. Ordinance Amending the Cannabis Public Benefit Fund July 20, 2021 Page 2 1 9 0 1 The City Council reviewed the Fiscal Year 2021-22 budget and determined the cannabis regulations are successfully enforced, and expressed a desire to allocate a greater share of the Cannabis Public Benefit Fund to youth services. The City Attorney has determined the change will require an amendment to the original ordinance. The new ordinance (Exhibit 2) will allow the City Council to allocate between youth services and enforcement, so long as the total two-thirds set-aside remains in place. In other words, the City Council could not reduce the share of Cannabis tax set-aside to the Cannabis Public Benefit Fund without making fiscal emergency findings and a two-thirds vote of the entire City Council. ENVIRONMENTAL IMPACT There is no environmental impact associated with this action. FISCAL IMPACT Based on the current ordinance and the adopted FY 21-22 Budget, the Cannabis Public Benefit Fund will have estimated balances at June 30, 2022 of $412,221 for youth services and $7,576,526 for enforcement activities. Youth Enforcement Bal ance June 30, 2019 Actual -- FY19-20 Se t-Asi de Actual 4,902,658 3,902,658 Inte rest Earni ngs Actual 18,559 18,559 Spe ndi ng Actual (4,341)(1,826,869) Bal ance June 30, 2020 Actual 4,916,875$ 2,094,347$ FY20-21 Se t-Asi de Esti mate 6,033,333 6,033,333 Inte rest Earni ngs Actual YTD 47,011 20,025 Spe ndi ng Budge ted (7,455,659)(3,413,149) Bal ance June 30, 2021 Esti mate 3,541,561$ 4,734,556$ FY21-22 Se t-Asi de Esti mate 6,508,350 6,508,350 Spe ndi ng Budge ted (9,637,690)(3,666,380) Balance June 30, 2022 Estimate 412,221$ 7,576,526$ If the proposed Ordinance is adopted, the City Council will have the flexibility to shift some or all of the $7,576,526 from enforcement activities to youth services. In addition, the City Council will have the flexibility to change future youth and enforcement spending allocations within the Cannabis Public Benefit Fund. EXHIBIT(S) 1. Ordinance No. NS-2959 2. Proposed Ordinance Submitted By: Kathryn Downs, Executive Director Finance and Management Services Approved By: Kristine Ridge, City Manager SRC 11/20/18 ORDINANCE NO. NS -2959 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA, CALIFORNIA, ADDING ARTICLE XX TO CHAPTER 13 OF THE SANTA ANA MUNICIPAL CODE TO ESTABLISH A CANNABIS PUBLIC BENEFIT FUND THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Section XX is hereby added to Chapter 13 of the Santa Ana Municipal Code and shall read as follows: ARTICLE XX.- CANNABIS PUBLIC BENEFIT FUND. Sec. 13-200. - Establishment of the Fund. There is hereby established within the City of Santa Ana the "Cannabis Public Benefit Fund", which shall be two sub -funds, one for Enforcement Services and one for Youth Services, within the City's General Fund (the "Cannabis Fund"). Sec. 13-201.- Purpose. The Cannabis Fund shall be used to fund new or additional Youth Services, as of the date of the fund creation, for City of Santa Ana residents. The Cannabis Fund shall not be used to supplement existing Youth Services. The Cannabis Fund shall also be used to fund community enforcement and code enforcement. Sec. 13-202.- Definitions. For the purposes of this Article, the following words and phrases shall be construed as having the following definitions: Adult Use- shall have the same meaning as that set forth in Santa Ana Municipal Code (" SAMC") section 40-2( 2) as may be periodically amended. At the time of adoption of this Article, meaning cannabis or cannabis products that are intended to be used for non -medicinal purposes by a person twenty-one (21) years of age or older. Commercial Cannabis Activity — shall have the same meaning as that set forth in SAMC section 40-2( 9) as may be periodically amended. At the time of adoption of this Article, meaning the cultivation, possession, manufacture, distribution, processing, storing, laboratory, packaging, labeling, transportation, delivery or sale of cannabis or cannabis products as provided for in this Chapter Ordinance No. NS -2959 Page 1 of 4 EXHIBIT 1 Chapter 40]. Permitted commercial cannabis activities are listed in Land Use Table 40-5 of this Chapter [Chapter 40]. Enforcement Services — any and all services provided by City staff for the prevention, detection, investigation and violations of the City's codes and ordinances intended to prevent public nuisances or activities that are detrimental to the health, safety and welfare of the community. Medicinal/Medical Cannabis- shall have the same meaning as that set forth in SAMC section 40-2(27) as may be periodically amended. At the time of adoption of this Article, meaning cannabis or a product containing cannabis, including, but not limited to, concentrates, and extractions, intended to be sold for use by medicinal cannabis patients in California pursuant to the Compassionate Use Act of 1996, found at Section 11362.5 of the California Health and Safety Code. Medical cannabis retail is regulated by Chapter 18 and Chapter 21 of the Santa Ana Municipal Code. Operating Agreement- shall have the same meaning as that set forth in SAMC section 40-1C as may be periodically amended. At the time of adoption of this Article, meaning a legally binding written agreement between each commercial cannabis business operator and the City, executed by the City Manager, or his or her designee, and in a form or substance satisfactory to the Executive Director of Planning and Building and the City Attorney, and containing those provisions necessary to ensure that the requirements of this article are satisfied. A distinct Commercial Cannabis Operating Agreement shall be required for each location and type of commercial cannabis business activity taking place at an approved Commercial Cannabis Business. Youth Services- any and all services provided to residents of the City under the age of 24 for athletic, recreational, health, educational, or human services, directly by City staff or through partnerships with third parties. This may include City facility improvements, maintenance and equipment needs related to youth services. Sec. 13-203. - Cannabis Revenue Funding. A. Automatic Deposit of Cannabis Tax Revenues into the Cannabis Fund. The Cannabis Fund shall be funded by an automatic deposit of one-third (1/3) of all cannabis tax revenues generated each year for Enforcement Services and one-third (1/3) of all cannabis tax revenues generated each year for Youth Services, commencing with the Fiscal Year Budget for 2018-20 and continuing thereafter in the budget for each Fiscal Year, from all of the following: 1) Operating Agreements for Commercial Cannabis businesses and 2) Any newly adopted Cannabis Business License Tax. For purposes of this subsection, in addition to the descriptions provided directly above in this paragraph, the phrase cannabis tax revenues" means all revenues generated from any new or increased cannabis tax which has been approved by the voters of the City on or after the effective date of this Chapter and any increase of the cannabis tax Ordinance No. NS -2959 Page 2 of 4 authorized by the Santa Ana Municipal Code and approved by the City Council. Tax revenue from Medicinal/Medical Cannabis shall not go into the Cannabis Fund. Funds in these sub -funds shall be carried over from year-to-year. B. Discretionary Deposits into Cannabis Fund Not Prohibited. Nothing in this Chapter shall prohibit the City Council, as part of the budgeting process, from contributing additional revenues to the Cannabis Fund, as determined in the City Council's sound legislative discretion. C. Expenditures from the Cannabis Fund. Funds in the Cannabis Fund shall be restricted to 1) Youth Services: expenditures for new, additional or enhanced, as of the date the Cannabis Fund is created, Youth Services for City of Santa Ana residents and 2) Enforcement Services: expenditures for Enforcement Services. Sec. 13-204.- Presentation to City Council. At least two times per year the City Manager shall make a presentation to the City Council and report on the revenue that has been deposited in the Cannabis Fund and expenditures from the Cannabis Fund. Sec. 13-205. - Procedure for Amending, Suspending or Rescinding Ordinance. This ordinance may only be amended, suspended or rescinded by an affirmative vote of at least two-thirds of the City Council after making findings that a structural deficit exists in the same manner as required to access the Economic Uncertainty Account as set forth in the City's Budget and Financial Policy. Section 2. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. ADOPTED this 4t" day of December, 2018. Ordinance No. NS -2959 Page 3 of 4 APPROVED AS TO FORM: By: -,7d (P3 .GVi c Sonia R. Carvalho City Attorney AYES: Councilmembers: Benavides Pulido Martinez, Solorio, Tinalero, Villegas (6) NOES: Councilmembers: None (0) ABSTAIN: Councilmembers: None (0) NOT PRESENT: Councilmembers: Sarmiento (1) CERTIFICATE OF ATTESTATION AND ORIGINALITY I, MARIA D. HUIZAR, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS -2959 to be the original ordinance adopted by the City Council of the City of Santa Ana on December 4, 2018, and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: o/w/701E a-" /i Maria D. Huizar Clerk of the Council City of Santa Ana Ordinance No. NS -2959 Page 4 of 4 Ordinance No. NS-XXX Page 1 of 2 ORDINANCE NO. NS-XXX AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA , CALIFORNIA, AMENDING ARTICLE XX OF CHAPTER 13 OF THE SANTA ANA MUNICIPAL CODE TO AUTHORIZE DISCRETIONARY ALLOCATIONS BETWEEN YOUTH SERVICES AND ENFORCEMENT SERVICES FROM THE CANNABIS FUND THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES HEREBY ORDAIN AS FOLLOWS: Section 1. Section 13-203 of Article XX of Chapter 13 of the Santa Ana Municipal Code is hereby amended to read as follows: Sec. 13-203. - Cannabis Revenue Funding. A. Automatic Deposit of Cannabis Tax Revenues into the Cannabis Fund. The Cannabis Fund shall be funded by an automatic deposit of two- thirds (2/3) of all cannabis tax revenues generated each year, commencing with the Fiscal Year Budget for 2019-2020 and continuing thereafter in the budget for each Fiscal Year, from all of the following: 1) Operating Agreements for Commercial Cannabis businesses and 2) Any newly adopted Cannabis Business License Tax. For purposes of this subsection, in addition to the descriptions provided directly above in this paragraph, the phrase “cannabis tax revenues” means all revenues generated from any new or increased cannabis tax which has been approved by the voters of the City on or after the effective date of this Chapter and any increase of the cannabis tax authorized by the Santa Ana Municipal Code and approved by the City Council. Tax revenue from Medicinal/Medical Cannabis shall not go into the Cannabis Fund. Funds in the Cannabis Fund shall be carried over from year-to-year. B. Discretionary Deposits into Cannabis Fund not Prohibited. Nothing in this Chapter shall prohibit the City Council, as part of the budgeting process, from contributing additional revenues to the Cannabis Fund, as determined in the City Council’s sound legislative discretion. C. Expenditures from the Cannabis Fund. Funds in the Cannabis Fund shall be restricted to 1) Youth Services: expenditures for new, additional or enhanced, as of the date the Cannabis Fund is created, for Youth Services for City of Santa Ana residents and 2) Enforcement Services: expenditures for Enforcement Services to enforce cannabis regulations and other nuisance laws to improve the quality of life of residents. Specific allocations for Youth Services and Enforcement Services shall be made at the sole discretion of the City Council. EXHIBIT 2 Ordinance No. NS-XXX Page 2 of 2 2 Section 2. If any section, subsection, sentence, clause, phrase or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. ADOPTED this _______ day of ___________, 2021. _________________________ Mayor APPROVED AS TO FORM __//Sonia R. Carvalho//__ SONIA R. CARVALHO City Attorney AYES: Councilmembers: _________________________________ NOES: Councilmembers: _________________________________ ABSTAIN: Councilmembers: _________________________________ NOT PRESENT: Councilmembers: _________________________________ CERTIFICATE OF ATTESTATION AND ORIGINALITY I, DAISY GOMEZ, Clerk of the Council, do hereby attest to and certify that the attached Ordinance No. NS-XXX to be the original ordinance adopted by the City Council of the City of Santa Ana on ______________, 2021, and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: ______________________ ________________________________ Clerk of the Council City of Santa Ana