San Bernardino city amendment to divert ‘cultural’ tax fees into general fund

The San Bernardino City Council voted unanimously on Nov. 15 to approve an amendment to a city municipal code that will convert a commercial construction fee into a tax to be utilized for general use.

Changes to the Cultural Development Construction fee, the ordinance located within Municipal Code 650 that imposes an excise tax on development, didn’t sit well with members of the city’s Fine Arts Commission, who are concerned future Councils may refrain from using monies to promote the arts. 

“Most of you current council members have shown your support for the Fine Arts Commission in our activities,” Fine Arts Commission member Dorothy “Dottie” Garcia said. “But there may be future people on future councils who don’t have that attitude.”

The ordinance, first introduced and passed in 1986, was initially a tax for general use and did not require voter approval, according to Deputy City Attorney Steven Graham. In 1989 the City Council attempted to amend the ordinance to place revenue generated through the tax in a separate fund, while also removing the language that directed money for specific use.

After review from the City Attorney’s office, Graham explained that the 1989 amendments made to the Cultural Development Construction Fee do not align with state law regarding public approval of local taxes (Proposition 13 and Proposition 218). Placing taxes in a separate fund is classified as a ‘special tax’ and needs ⅔ majority vote from residents, said Graham. 

The new amendment proposed by staff last Wednesday reverts the language back to the 1986 version. 

“If it’s going to be a general tax, it cannot be placed in a separate fund and cannot be restricted,” said Graham.

The Council’s decision means the approximately $4 million in the separate fund will be placed in the General Fund, according to staff reports.

Garcia alluded specific wording in the amended ordinance that reads, “…or for such other uses as the Mayor and City Council may direct,” is an open invitation to allow officials to divert money for other uses. The redirected use of the art funds would upset developers that think the money is being used for cultural development.

“Those developers would question that statement about ‘such other issues’”, she said. “I suggest striking that clause.” 

City Manager Andrea Scott-Miller confirmed they will approach the Council regarding potential uses for the revenue, including arts and cultural uses.

Councilman John Valdivia said the tax may impact commercial building in the city, placing “ankle weights” on developers.

“I’d like a full analysis and a report back from staff to the Council regarding these fees,” he said.