Utility Users Tax Ordinance

City of Hermosa Beach, CA
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Please be advised that the City of Hermosa Beach, effective November 1, 1998, no longer
imposed its UUT on interstate or international telecommunications because these services were not
placed on the ballot for voter approval by November 6, 1998. The City's UUT, however, continues
to apply to intrastate telecommunications.

ORDINANCE NO. 98-1181

AN ORDINANCE OF THE CITY OF HERMOSA BEACH, CALIFORNIA REGARDING COLLECTION
OF THE UTILITY USERS TAX BY ELECTRICITY PROVIDERS AND AMENDING CHAPTER 3.36
OF THE HERMOSA BEACH MUNICIPAL CODE
THE CITY COUNCIL OF THE CITY OF HERMOSA BEACH, CALIFORNIA DOES ORDAIN AS
FOLLOWS:

SECTION 1.Findings

A. The City of Hermosa Beach imposes a tax upon every person in the City using electricity in the
City.

B. As a result of the restructuring of the electric power industry in California, an electrical energy
supplier may be a different entity than the person, business or entity providing billing services for
such electrical use.

C. The person, business or entity providing billing services is the logical entity to collect electrical
utility user taxes.

D. This ordinance does not impose, increase or extend the electrical utility user tax, and thus is not
subject to voter approval.

SECTIONS 2. Subsection A of Section 3.36.050 of Chapter 3.36 of Title 3 of the Hermosa Beach
Municipal code is amended to read as follows:

A. There is imposed a tax upon every person in the City using electrical energy in the City. The tax
imposed by this section shall be at the rate of six percent of the charges made for such energy
and shall be paid by the person paying for such energy.
"Charges" as used in this section, shall include charges made for: (1) energy; (2) distribution and
transmission; (3) metering; (4) stand-by reserves, firming, ramping, voltage support, regulation,
emergency, or other similar services; (5) minimum charges for such services, including customer
charges, service charges, demand charges, fuel or other cost adjustments, independent system
operator (ISO) charges, stranded investment or competitive transition charges (CTC), public goods
surcharge, franchise fee, franchise surcharge; and (6) all other annual and monthly charges or
surcharges for electricity services or programs, which are authorized by the California Public Utilities
Commission or the Federal Energy Regulatory Commission, whether or not such charges appear
on a bundled or line item basis on the customer billing. "Charges" shall also include the value of
any other services, credits, property, or other consideration provided by the service user in
exchange for the energy or services related to the provisions of such energy.

SECTION 3.Subsection C of Section 3.36.050 of Chapter 3.36 of title 3 of the Hermosa Beach
Municipal Code is amended to read as follows:

C. The tax imposed in this section shall be collected from the service user by the billing agent, or
person, business or entity that provides billing collection services for electrical power generation
and distribution within the City. The amount of tax collected in one month shall be remitted to the
tax administrator on or before the last day of the following month; or at the option of the person,
business or entity required to collect and remit the tax, an estimated amount of tax, measured by
the tax billed in the previous month, shall be remitted to the tax administrator on or before the last
day of each month. Remittance of tax may be predicated on a formula based upon the payment
pattern of the supplier's customers.

SECTION 4.If any section, subsection, sentence, clause, phrase or portion of this Ordinance is for
any reason deemed or 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 portion thereof,
irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or
other portions might subsequently be declared invalid or unconstitutional.

SECTION 5.This ordinance shall become effective and be in full force and effect from and after
thirty (30) days of its final passage and adoption.

SECTION 6.Prior to the expiration of fifteen (15) days after the date of its adoption, the City Clerk
shall cause this ordinance to be published in the Easy Reader, a weekly newspaper of general
circulation published and circulated, in the City of Hermosa Beach in the manner provided by law.

SECTION 7.The City Clerk shall certify to the passage and adoption of this ordinance, shall enter
the same in the book of original ordinances of said city, and shall make minutes of the passage
and adoption thereof in the records of the proceedings of the City Council at which the same is
passed and adopted.

PASSED, APPROVED, AND ADOPTED THIS 28th day of July, 1998, by the following vote:
AYES: Bowler, Oakes, Reviczky
NOES: Mayor Pro Tempore Benz
ABSTAIN: None
ABSENT: Mayor Edgerton
PRESIDENT of the City Council and MAYOR of the City of Hermosa Beach, California
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CITY OF HERMOSA BEACH

Chapter 3.36 UTILITIES TAX

Sections:
3.36.010 Title for citation.
3.36.020 Definitions.
3.36.030 Constitutional exemption.
3.36.040 Telephone tax.
3.36.050 Electricity tax.
3.36.060 Gas tax.
3.36.070 Water tax.
3.36.080 Cable television tax.
3.36.090 Senior citizen exemption.
3.36.100 Duty of collection of tax--Procedures.
3.36.110 Actions to collect.
3.36.120 Interest and penalty.
3.36.130 Enforcement of tax lien.
3.36.140 Additional power and duties of tax administrator.
3.36.150 Assessment--Administrative remedy.
3.36.160 Records.
3.36.170 Refunds.
3.36.180 Jurisdiction of the Public Utilities Commission of the state.
3.36.190 Fund and purpose.

3.36.010 Title for citation.

This chapter shall be known as the utility tax law of the city. (Prior code § 30-43)

3.36.020 Definitions.

Except where the context otherwise requires, the definitions hereafter set forth shall govern the
construction of this chapter:

"City" means the city of Hermosa Beach.

"Month" means a calendar month.

"Person" means any domestic or foreign corporation, firm, association, syndicate, joint stock
company, partnership of any kind, joint venture, club, Massachusetts business or common-law
trust, society, individual or municipal corporation.

"Service supplier" means a person required to collect and remit a tax imposed by this chapter.

"Service user" (as the beneficiary of service at the service location) means a person required to
pay a tax imposed by this chapter.

"Tax administrator" means the finance director of the city.

"Telephone communication services" means services which provide access to a telephone system
and the privilege of telephone communication with substantially all persons having telephone
stations which are part of such telephone system. The term "telephone communication services"
includes digital and cellular telephone service, when the owner or lessee of the telephone has a
billing address in the city, but does not include other forms of land mobile service or maritime
mobile services as defined in Section 2.1 of Title 47 of the code of Federal Regulations.

"Telephone corporation, electrical corporation, gas corporation, water corporation and cable
television corporation" have the same meaning, except as hereinafter provided, as defined in
Sections 234, 218, 222, 241 and 215.5, respectively, of the Public Utilities Code of the state of
California, as said sections existed on January 1, 1975. "Water corporation" shall be construed to
include any organization or municipality, including but not limited to, a mutual water company,
engaged in the selling or supplying of water to a service user. (Ord. 95-1133 § 1, 1995; prior code
§ 30-44)

3.36.030 Constitutional exemption.

Nothing in this chapter shall be construed as imposing a tax upon any person when imposition of
such tax upon that person would be in violation of the Constitution of the United States or that of
the state of California. The tax administrator shall prepare a list of the persons exempt from the
provisions of this chapter by virtue of this section and furnish a copy thereof to each service
supplier. (Prior code § 30-45)

3.36.040 Telephone tax.

A. There is imposed a tax upon every person in the city, other than a telephone corporation, using
intrastate, interstate or international telephone communication services in the city. The tax imposed
by this section shall be at the rate of six percent of all charges made for such service and shall be
paid by the person paying for such services.

B. As used in this section, the term "charge" shall not include charges for services paid for by
inserting coins in coin-operated telephones except that where such coin-operated telephone
service is furnished to a person for a guaranteed amount, the amounts paid under such guarantee
plus any fixed monthly or other periodic charge shall be included in the base for computing the
amount of tax due; nor shall the term "charges" include charges for any type of service or
equipment furnished by a service supplier subject to public utility regulation during any period in
which the same or similar services or equipment are also available for sale or lease from persons
other than a service supplier subject to public utility regulation; nor shall the words "telephone
communication services" include land mobile services or maritime mobile services as defined in
Section 2.1 of Title 47 of the Code of Federal Regulations, as said section existed on January 1,
1970. The term "telephone communication services" refers to that service which provides access to
a telephone system and the privilege of telephone quality communication with substantially all
persons having telephone stations which are part of such telephone system. The telephone users
tax is intended to, and does, apply to all charges billed to a telephone account having a situs in
the city, irrespective of whether a particular communication service originates and/or terminates
within the city.

C. Notwithstanding the provisions of subsection A of this section, the tax imposed under this
section shall not be imposed upon any person for using telephone communication services to the
extent that the amounts paid for such services are exempt from or not subject to the tax imposed
under Division 2, Part 20 of the California Revenue and Taxation Code or the tax imposed under
Title 26; Section 4251 of the United States Code.

D. The tax imposed by this section shall be collected from the service user by the person providing
or receiving payment for the telecommunication services. The amount of the tax collected in one
month shall be remitted to the tax administrator on or before the last day of the following month; or
the amount of tax collected in one month shall be remitted to the tax administrator on or before the
last day of the following month; or remit the tax, an estimated amount of tax collected, measured
by the tax bill in the previous month, shall be remitted to the tax administrator on or before the last
day of each month. (Ord. 95-1137 § 3, 1995; Ord. 95-1133 §§ 2-4, 1995; prior code § 30-46)

3.36.050 Electricity tax.

A. There is imposed a tax upon every person in the city using electrical energy in the city. The tax
imposed by this section shall be at the rate of six percent of the charges made for such energy
and shall be paid by the person paying for such energy. "Charges," as used in this section, shall
include charges made for (1) metered energy, and (2) minimum charges for such services, including
customer charges, service charges, demand charges, standby charges, and annual and monthly
charges, fuel, cost adjustments, etc.

B. As used in this section, the term "using electrical energy" shall not be construed to include the
storage of such energy by a person in a battery owned or possessed by him for use in an
automobile or other machinery or device; provided, however, that the term shall include the
receiving of such energy for the purpose of using it in the charging of batteries. The term shall not
include electricity used in water pumping by water corporations; nor shall the term include the mere
receiving of such energy by an electrical corporation at a point within the city for resale; or the use
of such energy in the production or distribution of water by a public utility or governmental agency.

C. The tax imposed in this section shall be collected from the service user by the person supplying
such energy. The amount of tax collected in one month shall be remitted to the tax administrator
on or before the last day of the following month; or at the option of the person required to collect
and remit the tax, an estimated amount of tax, measured by the tax billed in the previous month,
shall be remitted to the tax administrator on or before the last day of each month. Remittance of
tax may be predicated on a formula based upon the payment pattern of the supplier's customers.
(Ord. 95-1137 § 4, 1995; prior code § 30-47)

3.36.060 Gas tax.

A. There is imposed a tax upon every person in the city using gas energy. The tax imposed by this
section shall be at the rate of six percent of the charges made for such gas energy and shall be
paid by the persons paying for such gas. "Charges," as used in this section, shall include: (1) gas
which is delivered through mains or pipes, (2) minimum charges for such services, including
customer charges, service charges and annual and monthly charges.

B. There shall be excluded from the base on which the tax imposed by this section is computed:
(1) charges made for gas which is to be resold and delivered through mains and pipes; (2) charges
made for gas used in the generation of electrical energy by an electrical corporation; or (3) charges
made for gas used in the production or distribution of water by a public utility or governmental
agency; (4) charges made by a gas corporation for gas used and consumed in the conduct of its
business; and (5) charges made for gas used in the propulsion of a motor vehicle, as that phrase
is defined in the Vehicle Code of the state of California, utilizing natural gas; and (6) charges
related to late payments and returned checks.

C. The tax imposed in this section shall be collected from the service user by the person selling the
gas. The person selling the gas shall, on or before the twentieth of each calendar month,
commencing on the twentieth day of the calendar month after the effective date of this part, make
a return to the tax administrator stating the amount of taxes billed during the preceding calendar
month. At the time such returns are filed, the person selling the gas shall remit tax payments to the
tax administrator in accordance with schedules established or approved by the tax administrator.
(Ord. 95-1137 § 5, 1995; prior code § 30-48)

3.36.070 Water tax.

A. There is imposed a tax upon every person using, in the city, water which is delivered through
mains or pipes. The tax imposed by this section shall be at the rate of six percent of the charges
made for such water and shall be paid by the person paying for such water. "Charges," as used in
this section, shall include charges made for (1) metered water, (2) minimum charges for services,
including customer charges, ready to serve charges, standby charges, and annual and monthly
charges.

B. There shall be excluded from the base on which the tax imposed by this section is computed,
charge for water which is to be resold and delivered through mains or pipes; and charges made by
a municipal water department, public utility or a county or municipal water department, public utility
or a county or municipal water district for water used and consumed by such department, utility or
district.

C. The tax imposed in this section shall be collected from the service user by the person supplying
the water. The amount collected in one month shall be remitted to the tax administrator on or
before the last day of the following month. (Ord. 95-1137 § 6, 1995; prior code § 30-49)

3.36.080 Cable television tax.

A. There is imposed a tax upon every person in the city using cable television service. The tax
imposed by this section shall be the rate of six percent of the charges made for such service and
shall be paid by the person paying for such service.

B. The tax imposed in this section shall be collected from the service user by the person furnishing
the cable television service. The amount collected in one month shall be remitted to the tax
administrator on or before the last day of the following month. (Ord. 95-1137 § 7, 1995; prior code
§ 30-50)

3.36.090 Senior citizen exemption.

A. The tax imposed by this chapter shall not apply to any residence in which the service user is:

1. Sixty-two (62) years of age or older; or

2. "Disabled" within the meaning of Section 416(i)(1)(A) of Title 42 of the United States code; who
uses telephone, electric, gas cable television or water services, in or upon any premises occupied
by such individual, provided the combined gross income of all members of the household in which
such individual resided was less than nine thousand dollars ($9,000.00) for the calendar year prior
to the fiscal year (July 1st through June 30th) for which the exemption provided in this chapter is
applied for.

In order for a disabled person or a person sixty-two (62) years old or older to receive the exemption
granted by this section, they must actually reside at the location receiving the service. Landlords
shall not be allowed to use the exemptions granted by this section under any circumstances. In
addition, the exemptions shall not apply to any nonresidential service locations.

The exemptions granted by this section shall not eliminate the duty of the service supplier from
collecting taxes from such exempt individuals or the duty of such exempt individuals for paying
such taxes to the service supplier unless an exemption is applied for by the service user and
granted in accordance with the provisions of subsection B of this section.

B. Any service user exempt from the taxes imposed by this chapter because of the provisions of
subsection A of this section, may file an application with the finance director of an exemption. Such
application shall be made upon forms supplied by the city and shall recite facts under oath which
qualify the applicant for an exemption. The city shall review all such applications and certify as
exempt those applications determined to qualify therefor and shall notify all service suppliers
affected that such exemption has been approved, stating the name of the applicant, the address
to which such exempt service is being supplied; the account number, if any, and such other
information as may be necessary for the service supplier to remove the exempt user for its tax
billing procedure. Upon receipt of such notice, the service supplier shall not be required to continue
to bill any further tax imposed by this chapter from such exempt service user until further notice by
the city is given. The service supplier shall eliminate such exempt service user from its tax billing
procedure no late than sixty (60) days after receipt of such notice from the city.
All exemptions shall continue and be renewed automatically by the city so long as the prerequisite
facts supporting the initial qualification for exemption shall continue; provided, however, that the
exemption shall automatically terminate with any change in the service address or residence of the
exempt individual; further provided such individual may, nevertheless, apply for a new exemption
with each change of address or residence. Any individual exempt from the tax shall notify the city
within ten days of any change in fact or circumstance which might disqualify said individual from
receiving such exemption. It shall be a misdemeanor for any person to knowingly receive the
benefits of the exemptions provided by this section when the basis for such exemption either does
not exist or ceases to exist.

Any service supplier is authorized to bill the tax imposed by this chapter to any new user or to any
account whose name has been changed (other than by correcting a spelling error or other similar
clerical error) until the supplier receives notification of exemption as provided in subsection B of this
section. Thereupon, the supplier shall cease billing the exempt user for the tax within sixty (60)
days as provided in subsection B of this section. (Prior code § 30-51)

3.36.100 Duty of collection of tax--Procedures.

A. The tax shall be collected insofar as practicable at the same time as and along with the charges
made in accordance with the regular billing practices of the service supplier. Where the amount
paid by a service user to a service supplier is less than the full amount of the energy charge and
tax which has accrued for the billing period, such amount and any subsequent payments by a
service user shall be applied to the utility charge first until such charge has been fully satisfied. Any
remaining balance shall be applied to taxes due. In those cases where a service user has notified
the service supplier where a service user has notified the service supplier of his refusal to pay the
tax imposed on said energy charges Section 3.36.150 will apply.

B. The duty to collect tax from a service user shall commence with the beginning of the first full
regular billing period applicable to the service user where all charges normally included in such
regular billing are subject to the provisions of this chapter. Where a person receives more than one
billing, one or more being for different periods than another, the duty to collect shall arise
separately for each billing. (Prior code § 30-53)

3.36.110 Actions to collect.

Any such tax received from a service user which has wilfully been withheld from the tax
administrator shall be deemed a debt owed to the city by the person required to collect and remit.
Any person holding such money contrary to the provisions of this chapter shall be liable to an
action brought in the name of the city for the recovery of such amount. (Prior code § 30-54)

3.36.120 Interest and penalty.

A. Taxes collected by a service supplier which are not remitted to the tax administrator on or before
the due dates provided in this chapter are delinquent.

B. Interest and penalty provisions may be drawn on a service supplier consistent with provision in
Section 3.32.080(A). Interest and penalties due are an obligation of the service supplier. (Prior
code § 30-55)

3.36.130 Enforcement of tax lien.

A. Utility tax liens may be enforced by:

1. A sale of the real property affected and execution and delivery of the deed to the real property
to the city; or

2. An action to foreclose the liens in any court of competent jurisdiction.

B. Notice of the proposed sale of real property to satisfy the tax lien shall be sent to the parties of
interest not less than sixty (60) days before the proposed sale. For the purposes of this chapter,
"parties of interest" and their order of priority are:

a. First, lienholders of record prior to the recordation of the tax lien under this section, in heir order
of priority; and

b. Then, any person with title of record to all or any portion of the property prior to the recordation
of the tax lien under this section.

2. The tax administrator shall send the notice of the proposed sale by registered mail to the last
known mailing address, if known, of the parties of interest. The tax administrator shall make a
reasonable effort to obtain the name and last known mailing address of the parties of interest.

3. The notice shall include the following:

a. The date, time and place of the proposed sale; and

b. The amount required to redeem the property; and

c. The fact that the property may be redeemed up to the close of business on the last business
day prior to the date of sale; and

d. A statement substantially the same as follows: Any excess funds remaining from the sale of the
property after satisfaction of the tax lien shall be retained by the tax administrator for one year. At
the expiration of one year, any fund not claimed by a party of interest shall be distributed to
various public funds. Claims for excess funds by parties of interest must be filed with the tax
administrator, under the criteria established by California Revenue and Taxation Code section
4675.

4. The city shall charge a fee to the parties of interest for this notice, not to exceed the estimated
reasonable costs of providing such notice.

C. The sale shall be conducted by the city tax administrator.

D. Property sold for delinquent taxes, penalties for delinquency, and costs of collection is subject
to redemption within a redemption period of five years.

E. The validity of a sale under this chapter shall not be affected if the tax administrator's
reasonable effort fails to disclose the name and last known mailing address of parties of interest or
if a party of interest does not receive the mailed notice. (Ord. 94-1105 § 1 (part), 1994: prior code
§ 30-23.2)

3.36.140 Additional power and duties of tax administrator.

A. The tax administrator shall have the power and duty, and is directed to enforce each and all of
the provisions of this chapter.

B. The tax administrator shall have the power to adopt rules and regulations not inconsistent with
provisions of this chapter for the purpose of carrying out and enforcing the payment, collection and
remittance of the taxes herein imposed. A copy of such rules and regulations shall be on file in the
tax administrator's office.

C. The tax administrator may make administrative agreements to vary the strict requirements of this
chapter so that collection of any taxes imposed here may be made in conformance with the billing
procedures of a particular service supplier so long as said agreements result in collection of the tax
in conformance with the general purpose and scope of this chapter. A copy of each such
agreement shall be on file in the tax administrator's office.

D. The tax administrator shall determine the eligibility of any person who asserts a right to
exemption from the taxes imposed by this chapter. The tax administrator shall provide the service
supplier with the name of any person who the tax administrator determines is exempt from the tax
imposed hereby, together with the address and account number to which service is supplied to any
such exempt person. The tax administrator shall notify the service supplier of the termination of any
person's right to exemption hereunder, or the change of any address to which service is supplied
to any exempt person. (Prior code § 30-56)

3.36.150 Assessment--Administrative remedy.

A. The tax administrator may make an assessment for taxes not remitted by a person required to
remit.

B. Whenever the tax administrator determines that a service user has deliberately withheld the
amount of the tax owed by him from the amounts remitted to a person required to collect the tax,
or that a service user has refused to pay the amount of tax to such person, or whenever the tax
administrator deems it in the best interest of the city, he may relieve such person of the obligation
to collect taxes due under this chapter from certain named service users for specified billing
periods.

C. The service supplier shall provide the city with amounts refused and/or unpaid along with the
names and addresses of the service users neglecting to pay the tax imposed under provisions of
this chapter. Whenever the service user has failed to pay the amount of tax for a period of two or
more billing periods, the service supplier shall be relieved of the obligation to collect taxes due.

D. The tax administrator shall notify the service user that he has assumed responsibility to collect
the taxes due for the stated periods and demand payment of such taxes. The notice shall be
served on the service user by handing it to him personally or by deposit of the notice in the United
States mail, postage prepaid thereon, addressed to the service user at the address to which billing
was made by the person required to collect the tax; or, should the service user have changed his
address, to his last known address. If a service user fails to remit the tax to the tax administrator
within fifteen (15) days, from the date of the service of the notice upon him, which shall be the date
of mailing if service is not accompanied in person, a penalty of twenty-five (25) percent of the
amount of the tax set forth in the notice shall be imposed, but in no event less than five dollars
($5.00). The penalty shall become, for all purposes, a part of the tax required to be paid pursuant
to the provisions of this chapter. (Prior code § 30-57)

3.36.160 Records.

It shall be the duty of every service supplier who is required to collect and remit to the city a tax
imposed by the article, to keep and preserve, for a period of not less than three years, all records
as may be necessary to determine the amount of such taxes due to the city from service users
supplied by such service supplier, which records the tax administrator shall have the right to inspect
at all reasonable times. (Prior code § 30-58)

3.36.170 Refunds.

A. Whenever the amount of any tax has been overpaid or paid more than once or has been
erroneously or illegally collected or received by the tax administrator under this chapter, it may be
refunded as provided in this section.

B. Notwithstanding the provisions of subsection A of this section, a service supplier may claim a
refund or take as credit against taxes collected and remitted the amount overpaid, paid more than
once, or erroneously or illegally collected or received, when it is established that the service user
from whom the tax has been collected did not owe the tax; provided however, that neither a refund
nor a credit shall be allowed unless the amount of the tax so collected has either been refunded to
the service user or credited to charges subsequently payable by the service user to the person
required to collect and remit. A service supplier that has collected any amount of tax in excess of
the amount of tax imposed by this chapter and actually due from a service user, may refund such
amount to the service user and claim credit for such overpayment against the amount of tax which
is due upon any other monthly returns, provided such credit is claimed in a return dated no later
than three years from the date of overpayment.

C. No refund shall be paid under the provisions of this section unless the claimant establishes his
right thereto by written records showing entitlement thereto.

D. Notwithstanding other provisions of this section, whenever a service supplier, pursuant to an
order of the California Public Utilities Commission or a court of competent jurisdiction, makes a
refund to service users of charges for past utility services, the taxes paid pursuant to this chapter
on the amount of such refunded charges shall also be refunded to service users, and the service
supplier shall be entitled to claim a credit for such refunded taxes against the amount of tax which
is due upon the next monthly returns. In the event this chapter is repealed, the amount of any
refundable taxes will be borne by the city. (Prior code § 30-59)

3.36.180 Jurisdiction of the Public Utilities Commission of the state.

Nothing contained in this chapter is intended to conflict with the applicable rules, regulations and
tariffs of any service supplier subject to the jurisdiction of the Public Utilities Commission of the
state. In the event of any conflict, the provisions of such rules, regulations and tariffs shall control.
(Prior code § 30-61)

3.36.190 Fund and purpose.

All of the proceeds of the taxes levied under this chapter shall be placed in the general fund of the
city and shall be utilized for general governmental purposes. (Ord. 95-1137 § 8, 1995: prior code §
30-62)