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Emergency Communication System Access Fee -July 21, 2008 BACKGROUND Originally adopted by City Council in 2004, the City's 911 Fee ordinance charges a fee to support the operation of the City's 911 communication system. The fees for fiscal year 2008-09 are $2.06 per single access line, $14.41 per trunk line and $50.44 per super trunk line, per month. Revenues generated by the 911 Fee on an annual basis total approximately $2.5 million. The 911 Fee was amended once since its introduction in 2004 and increased 2.9% on July 1, 2006. This revenue source is, however, at risk due to technological changes over the years in the telecommunication industry and ongoing legal challenges to the 911 Fee. More specifically, certain types of modern and expanding telephony may not be taxed due to outdated definitions contained in the current ordinance. Additionally, there is pending litigation against other California cities, with similar 911 Fees, asserting that the 911 Fee is a "tax" as defined by Proposition 218 and not a user fee. If this litigation is successful then existing "fees" would be invalidated, including San Leandro's 911 Fee. Legal Issues Many California cities, including San Leandro, are of the opinion that the 911 fee is a user fee and can be authorized by the City Council. In April of this year, the Court of Appeal upheld a trial court decision that the City of Union City's 911 Fee was in fact a "special tax" and as such was void because it was enacted without a vote of the electorate pursuant to Proposition 218. This case is now being appealed to the California Supreme Court. If the case is heard by the Supreme Court and the lower court's decision is overturned, then San Leandro's 911 Fee will not be impacted. However, should the case not be heard, or the lower courts are upheld, then the City will lose this revenue source. 911 Services are Critical to Public Safety and Welfare The City's 911 communication system directs critical police, fire and medical resources to calls for emergency services. The City's 911 program provides equipment, software, facilities and personnel staffing to operate an important and needed public service. In order to ensure and provide for the continued improvement of this service the City enacted an Emergency Communications System Access Fee Ordinance in 2004. The funds raised by the fee are restricted to the 911 program and cannot be used for other government services. As noted above, this funding source is now at risk of being lost. Should this occur, it will be necessary to reduce or eliminate other services in order to continue funding for the 911 program. A Potential Solution Given the legal challenges to the 911 Fee and the need to modernize the current ordinance, as noted earlier, staff believes it appropriate to place the question before the voters. More specifically, staff is recommending that an Emergency Communication System Access Tax Ordinance be placed before the voters at the upcoming November 4, general election. Since the tax is restricted as to its use, the tax would be a special tax and would require a 2/3 favorable vote for adoption.