UTILITY USERS TAX ADMINISTRATIVE RULES/INSTRUCTIONS

Effective July 20, 2000

1. City Responsibilities. To assist utility service providers that perform the valuable public service of collecting the City’s Utility Users Tax (UUT), City will assume the following responsibilities:

A. City will assure the accuracy of its boundary information (including the reflection of the latest annexation and municipal reorganizations) needed for utility billing and tax collection purposes by making available accurate street address boundary information to utility service providers upon request. The utility service provider shall not be responsible or liable for the collection or payment of any past UUT taxes that were not collected due to the inaccuracy of information provided by the City

2. City shall provide utility service providers with accurate and timely ordinance information, including ordinance amendments through its website (http://www.ci.emeryville.ca.us) or the website of its consultant (currently the Municipal Resource Web site at http://www.mrc-usa.com). City will provide written notice of ordinance changes to persons designated by the utility service provider. In the absence of special circumstances, the utility service provider shall begin implementation of the UUT tax change within sixty (60) days from the date on which the utility service provider receives the written notification from the City. If the 60th day is not the first day of a month, then the utility service provider shall implement the changes no later than the first billing cycle of the month following the month in which the 60th day occurs. To Abegin implementation@ means to calculate and place the UUT tax in the customer billing.

2. The City shall comply with Public Utilities Code Section 799 regarding legal challenges regarding the validity of the UUT ordinance, any part thereof, or any collection thereunder.

3. The City shall reimburse utility service providers for the reasonable costs associated with an extraordinary audit request as determined by the City.

4. The City shall take reasonable steps to assure that all utility service providers, including new market entrants, are correctly applying and collecting the UUT tax.

5. Following the effective date of these Administrative Rules/Instructions, the Tax Administrator shall notify the utility service providers within the City that they may request that the City render a determination of the application of the UUT tax to their various existing services. If such request is made within ninety (90) days of the notice, then any determination by the City shall apply prospectively. The Tax Administrator shall give the utility service provider at least a 60 (sixty) day written notice following the determination of tax application before implementation of such changes shall be required. If the 60th day is not the first day of a month, then the utility service provider shall implement the changes on the first day of the month following the month in which the 60th day occurs. To Abegin implementation@ means to calculate and place the UUT tax in the customer billing. The City shall not be required to render a determination with prospective effect under this subsection when a utility service provider fails to apply the UUT tax at all, or fails to apply the tax to a service that the utility service provider, in good faith, believes to be taxable. A utility service provider’s failure to apply the UUT tax to a service shall not be deemed in good faith, for purposes of this subsection, if the service is predominantly viewed by the utility service provider’s industry as being subject to the UUT tax or, in the case of telecommunication services, has been directly determined by the IRS within the past six months or more, to be subject to the federal excise tax.

6. When new utility technologies are employed or new utility services are being offered, a utility service provider may request that the City render a determination of applicability within ninety (90) days of providing such services or technologies. Upon rendering a determination of applicability, the Tax Administrator shall seek prospective application of the UUT tax ordinance to such technologies or services. The Tax Administrator shall give the utility service provider at least a 60 (sixty) day written notice before implementation of such changes shall be required. If the 60th day is not the first day of a month, then the utility service provider shall implement the changes on the first day of the month following the month in which the 60th day occurs. To Abegin implementation@ means to calculate and place the UUT tax in the customer billing.

1. Regarding Paragraphs G. And H. above, the City may participate in an advisory committee, comprised of representatives of public agencies with UUT ordinances, to develop and recommend to such public agencies (after meeting and conferring with utility representatives) the following: uniform applications of the UUT tax to various utility services and technologies; uniform implementation protocols; and appropriate amendments to UUT ordinances to reflect industry, regulatory, and technological changes.

10. The City shall take reasonable steps to notify all service providers providing similar services who have requested such notification of any determination made under paragraph G. or H.

II Outside Consultants. The Tax Administrator has the right and obligation to assure fair and reasonable compliance with the UUT ordinance. Due to the complexity of utility services, technologies and tax administration, the Tax Administrator may require special outside expertise to assist in performing compliance review of the UUT ordinance. Utility service providers have a legitimate interest in assuring that such outside firms maintain the confidentiality of utility customer information and conduct their compliance reviews in a professional and efficient manner. The Tax Administrator’s use of special outside expertise shall therefore be subject to the following rules:

1. The outside firm will provide, at the beginning of each and every audit engagement, a letter or resolution from the City to the service supplier that identifies the outside firm as an authorized agent of the City.

2. The outside firm will execute a non-disclosure agreement (approved by the City Attorney) in which the outside firm agrees to maintain the confidentiality of customer information and not to use individual customer information for any purpose other than the UUT compliance review of this City.

3. The outside firm will not initiate contact with a utility customer in the course of performing its compliance activities, except with the prior written consent of the utility service provider.

4. The outside firm shall fully disclose to the City any potential conflict of interest (e.g., prior or proposed representation of private utility customers within the City).

5. The outside firm shall not make any data requests of a utility service provider except with the permission of the City.

6. The outside firm is authorized to perform a compliance review (including sampling audits and computerized reviews) which, in its professional opinion, is reasonably necessary to perform its contractual obligation to the City. If a utility service provider refuses to cooperate in connection with such compliance review, the outside firm shall immediately advise the Tax Administrator so that the Tax Administrator may take appropriate remedial steps.

7. The outside firm will use its best efforts to accurately identify all errors, whether such corrections are in favor of the customer, the City, another public agency, or the utility service provider.

8. The Tax Administrator shall make available to the utility service provider a copy of the draft compliance report prepared by the outside firm regarding such utility service provider. The utility service provider shall be afforded an opportunity (at least thirty (30) days) to respond to any aspect of the draft report before such report becomes final. The final report will identify and address all substantive written comments on the draft report submitted by the utility service provider.