Agda Pkt 2025.12.22 Joint SA PFA

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Page 2 of 3 City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.org BACKGROUND The Finance Department has been proactively reviewing compliance rates with the City’s various taxes, fees, and charges and has identified instances where there is a pattern of delinquent payments. The Finance Department has been working with the City Attorney’s Office to identify strategies to ensure better compliance. The City’s TOT is an important revenue source to the City, representing roughly 2.4% of General Fund revenues. As is the case with other taxes assessed by the City, the City contracts with HdL Companies to administer the TOT, including collection of payments and periodically auditing accounts to ensure compliance. While most establishments comply with the audits and pay the required TOT, Redwood City has seen some lack of compliance with the HdL audits and delinquent payments. In providing the Tax Administrator (Finance Director) administrative subpoena authority, the City would have more tools to enforce compliance with the tax. Specifically, administrative subpoena authority allows the Tax Administrator (Finance Director) to order entities to disclose relevant records to the administration of the TOT. With administrative subpoena authority, the City can seek court action to compel compliance if an establishment refuses to provide such records and subject the establishment to penalties for failing to comply with a subsequent court order. Similar authority is in place for the City’s Utility Users Tax (UUT) and Communication Users’ Tax (CUT). The changes recommended would align the TOT provisions with those of the City’s UUT and CUT. No changes are proposed to the existing tax structure. ANALYSIS Ensuring compliance with the City’s TOT is expected to increase revenues to the General Fund. In addition, it will create a sense of fairness and equity to all establishments subject to the TOT. It is not fair to the entities that are complying with the TOT that other entities are not in compliance. EQUITY IMPACT STATEMENT The anticipated impact of this policy, program, or action has been assessed in the following ways: Reviewed from similar or relevant past program or policy in Redwood City FISCAL IMPACT The proposed amendment to Chapter 32, Article IV, Section 32.87 (Records to be Kept for a Period of Three Years) of the Redwood City Municipal Code is expected to result in increased revenues to the General Fund as the City will have more leverage to compel audit compliance on delinquent accounts. The exact impact cannot be quantified at this time. 10.A. - Page 2 of 5 787