HomeMy WebLinkAboutStaff Report 119-06TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE:
SUBJECT:
JANUARY 23, 2006 CMR: 119:06-REVISED
REQUEST FROM THE FINANCE COMMITTEE FOR COUNCIL
DIRECTION REGARDING INSTITUTION OF A BUSINESS
REGISTRY FEE OR A BUSINESS LICENSE TAX ANDON AN
INCREASE TO THE TRANSIENT OCCUPANCY TAX
RECOMMENDATION
Staff recommends that Council provide direction on whether to move forward with establishing a
Business Registry Fee or a Business License Tax; and, additionally, on whether to pursue an
increase in the Transient Occupancy Tax (TOT).
BACKGROUND
On September 20, 2005, a report to the Finance Cormnittee requesting direction on whether to
move forward in implementing a Business Registry Fee (BRF) or a Business License Tax (BLT)
was presented. This report contained the following topics and information:
A brief history of BLT discussions in the City of Palo Alto
The reasons for reviving deliberations on instituting a BRF or BLT
Purpose, pros and cons, and options for a BRF.
Purpose, pros and cons, and options for a BLT.
Chamber of Commerce Government Action Committee (GAC) feedback on a BRF/BLT.
Comparative data from surrounding cities with a BRF/BLT.
Impact of a BRF or BLT on new and existing businesses given recent implementation of
impact and other fees.
A copy of CMR:378:05, which has considerable information on a BRF and BLT, is attached
(Attachment A) for Council reference. The primary reason for presenting the report was to
complete one of Council’ s Top 5 Priorities to explore new funding sources for new General Fund
infrastructure projects and programs.
During the September 20 Finance Committee meeting, Committee members raised a number of
questions and concerns about a BRF or BLT. These included:
CMR:119:06 Page 1 of 4
A BRF or BLT will have a significant impact on small businesses with narrow operating
margins
The timing of increasing fees or taxes, given tentative economic conditions and the
City’s efforts to retain and attract businesses, is not favorable
Fee or tax increases should be viewed in terms of other tax and fee burdens businesses
bear, especially in light of recent impact fees imposed by the City
The costs for collecting a BRF or BLT are high and inefficient based on recommended
revenue yields
How do businesses benefit from a BLF or BLT? What is the nexus between those who
pay the tax and those who will benefit?
Has staff considered alternative revenue sources such as a higher Transient Occupancy
Tax (TOT)
Does the City need a BLT to replenish the City’s infrastructure reserve that will be
depleted over time? The City could increase savings and, therefore, reselweS, by
reducing expenditures in other areas
During public discussion, two residents spoke in favor of a BLT. One argued that a BLT was
necessary to strengthen City’s revenues and to pay for the increased cost of services over time.
The speaker argued that businesses have paid low property taxes as a consequence of Proposition
13 and that a BLT is equitable and necessary. The second speaker emphasized that businesses
are not paying their fair share for costs incurred by the traffic they generate and the services their
employees consume. He pointed to the sharp increase in the City’s day-time population and how
service businesses that do not generate sales and transient occupancy taxes are not contributing
to City resources. A third person spoke against the BLF or BLT citing arguments similar to
those made by the Chamber of Commerce that are presented below.
Staff mentioned at the meeting that should Council indicate willingness to entertain a BLF or
BLT, it would return with a variety of fee or taxation models for Council consideration. As
mentioned in CMR:378:05, there are a variety of ways to allocate fees and taxes to businesses.
An estimate of $5,000 to $10,000 for a consultant to deve!op these models was proposed.
After questions and comments, the Finance Committee voted 2-2 on whether to move forward
with implementing a BLF or BLT and funding a consultant study. A tie vote required that the
recommendation by staff be brought to the full Council for consideration and resolution.
DISCUSSION
Subsequent to the September Finance Committee meeting, staff met with the GAC. As with
prior meetings, the purpose was to keep the GAC informed and to communicate its thoughts on a
BLF or BLT to the City Council and senior City staff. Resistance to moving forward with a new
fee or tax was clearly stated. There was opposition to a BLF based on the belief that information
it would yield is already available and, more importantly, that it would inevitably lead to a tax.
A BLT was challenged for a variety of reasons including: it would be burdensome on
businesses; send the wTong message during a time of trying to attract and retain businesses; it
would be costly to administer; and it would impose a tax on businesses such as home,
professional and other services that have not been taxed to date. Additionally, the Chamber
opposed spending $5,000 to $10,000 on a consultant to develop fee or tax models.
CMR:119:06 Page 2 of 4
As mentioned, during the September 20 Finance Committee meeting, Council Member Morton
indicated that a BLT was inefficient in raising revenue. To implement a BRF or BLT, first year
start-up costs are estimated at $232,000 and second year program costs at $152,000. \Vhile a
BLT could theoretically generate a wide range of revenue levels, staff preliminarily
recommended a revenue target of $1.0 to $2.5 million. Council Member Morton said this return
on the City’s investment was low compared to, for example, raising the City’s Transient
Occupancy Tax which would incur no additional administrative costs. At current revenue levels,
a 1 percent increase in the TOT would raise an estimated $600,000. Should Counci! want to
consider this option, Attachment B provides a comparison between Palo Alto’s 10 percent TOT
rate and those in other California jurisdictions. The rate in surrounding communities such as
Men!o Park, Los Altos, East Palo Alto, and Mountain View is 10 percent. In addition, both the
average and median rate for 67 jurisdictions surveyed is 10 percent.
In concI~,usion, staff requests that Council provide direction on whether to move forward with
establishing a Business Registry Fee or a Business License Tax, or with an increase to the TOT.
If Council’s direction is to move forward, then staff requests confirmation of spending $5,000 to
$10,000 on a consultant modeling study.
POLICY IMPLICATIONS
This report is following Council direction to evaluate a new tax source to support new projects
and programs. Examining a BRF or BLT is a component of one of Council’s Top 5 Priorities
"City Finances."
TIMELINE
Should Council give direction to pursue a BRF or BLT, staff would return with an in-depth study
of either option in May 2006. Once this study is completed and a fee or taxation model is
approved, implementation dates will be determined.
ENVIRONMENTAL ASSESSMENT
Implementing a fee or tax does not constitute a project for the purposes of the California
Environmental Quality Act.
PREPARED BY:
DEPARTMENT HEAD APPROVAL
Jos@ ,
Depu~ Director, Administrati-~ e Services
CMR:119:06 Page 3 of 4
CITY MANAGER APPROVAL
E~H~-~RRISON
Assistant City Manager
ATTACHMENTS.
Attachment 1:CMR:378:05 "Request for Council Direction Regarding Institution of a
Business Registry Fee or a Business License Tax
Attachment 2: Transient Occupancy Rates for California Cities
CMR: 119:06 Page 4 of 4
ATTACHMENT 1
of Palo Alto
City Manager’s Report
TO:HONOtLA~BLE CITY COUNCIL
ATTENTION:
FROM:
FINANCE COMMITTEE
CITY MANAGER DEPARTMENT:AD MINI S TtL4TIVE
SERVICES
DATE:
SUBJECT:
SEPTEMBER 20, 2005 CMR: 378:05
REQUEST FOR COUNCIL DIRECTION ~GARDING
INSTITUTION OF A BUSINESS ~GISTRY FEE OR A BUSINESS
LICENSE TAX
RECOMMENDATION
Staff recommends that Council provide direction on whether to move forward with establishing a
Business Registry Fee or a Business License Tax.
BACKGROUND
The City of Palo Alto is one of a few cities in California that does not have a Business License
Tax (BLT). In the late 1980s, the City considered a Utility Users Tax (UUT) or a BLT. The
electorate eventually passed a UUT to support the General Fund and the City’s commitments to
the Pato Alto Unified School District under a Covenant not to Develop unused school sites.
Daring the late 1990s, when a funding plan for rehabilitating the City’s infrastructure was
reconmaended, increased or new taxes were proposed. Although staff’s principal
recommendation was to increase the Transient Occupancy Tax (TOT), discussions with the
Chamber of Commerce’s Government Action Committee (GAC) touched upon extending the
UUT and implementing a BLT. The GAC made clear its opposition to a significant increase in
the TOT, changing the UUT, or establishing a BLT. The GAC did appear open, at that time, to
discussing a nominal registry tee (a fee would capture administrative costs of program versus a
tax which would raise General Fund revenues) for businesses within the City. Purposes for such
a fee ranged from gathering data to promoting economic development within the City and
developing a comprehensive database for public service and private sector needs.
Under one of its Top Five priorities, "City Finances," Council tasked staff in early 2000-01 with
exploring new funding sources for new infrastructure projects. In particular, Council was
interested in exploring the le~@ng of a BLT to fund General Fund needs such as new
infrastructure. Several models with varying levels of a BLT were developed and readied for
discussion with the business community and Council, but with the sharp economic downturn in
2000-01, the idea of a BLT was placed in abeyance. With a mild upturn_ in the economy, the
CMR:378:05 Page 1 of 8
increasing need for new facilities, and to address a Council top priority, staff is responding to
Council’s request for information on a Business Registry Fee (BRF) or a BLT.
Since Council directed staff to find new revenue sources specifically for new infrastructure, a
number of additional and significant events have occurred that present a case for a new General
Fund resource such as a BLT. These events, discussed in recent Long Range Financial Plans,
include:
The loss of key revenue generators such as Hyatt Rickey’s, Carlsen Porsche and
Nissan auto dealerships, and Agilent Technology. The loss to the City’s revenue
base of Agilent, Carlsen Porsche, Nissan, and Hyatt Rickey’s is well over $1.0
million annually. Three of these revenue generators appear to be lost permanently.
Decline of City sales and transient occupancy taxes by $10.1 million since 2000-01
with no signs of returning to such levels.
Inability to develop commercial sites such as the Alma and Edgewood plazas into
better revenue generators.
Inroads into sales and Utility Users T~x by technologies such as the Internet and
emerging Voice Over Internet Protocols.
Heightened shopping mall, supermarket, hotel, and big box store competition to City
businesses.
The transformation of the Stanford Research Park into a research and design complex
that does not generate significant sales taxes as did prior technology company
tenants.
Rising City benefit expenses such as worker’s compensation, health care, and
pension obligations.
Disappearance of landfill rent to the General Fund beginning in 2013 that ultimately
will reduce resources by $4.5 million annually.
DISCUSSION
This report will discuss the following:
Purpose, pros and cons, and option(s) for a BRF.
Purpose, pros and cons, and options for a BLT.
GAC feedback on a BRF/BLT.
Comparative data from surrounding cities with a BRF/BLT.
Impact of a BRF or BLT on new and existing businesses given recent implementation of
impact and other fees.
Business Registry Fee
It appears that no other California cities have such a fee. If cities lexo7 a business tax, they do so
primarily to raise revenue and then to gather the data that is necessary to collect the tax and help
City departments to fulfill their regulatory functions whether it be economic development, land
use planning or managing sewer discharge. For Palo Alto, the purposes and benefits of having a
registry fee could include:
CMR:378:05 Page 2 of 8
Pros
Gather data needed to support economic development planning between businesses and
the Cib~ and for the City to regulate such development.
Assess whether the appropriate level and type of public safety, emergency, utilib’ and
other services are being delivered.
Provide da~a to develop recommendations on land use trends and to better coordinate
transportation programs such as colru-nute coordination and transportation demand
management.
Provide Water Quality Control Plant with updated information to identif?, all facilities
that must comply with the Sewer Use Ordinance.
Valuable business profile information (see below) would be available to Ci~.~ and
businesses via a centralized database on the CiD~’s Web site.
Allow the City to integrate sales tax information with other measures of business activiD~
(e.g., transient occupancy tax generators) in the ci~,.
Save time m~d expense of multiple Cit?, departments requesting information from
businesses and landox~T~ers as they try to keep up with tenant and or, met turnover.
Better statistics on businesses leaving and entering the ciD*.
The City would have information on contractors and other businesses that are in Palo
Alto on a temporary basis and using its services.
Unlike other cities in California, the City lacks comprehensive, up-to-date, and centralized
information on businesses within its boundaries. The Ci~ and business communi~, would
benefit from centralized data such as the number of employees businesses have, the square
footage of cormnercia! buildings, the tenant and ow-ner of a building, and the types of businesses
that operate within city limits, t~xisting databases such as Reference USA are helpful, but they
do not provide current information, are not comprehensive, and are not necessarily tailored to the
City’s information needs. Moreover, data to these publications is provided on a voluntary basis.
Cons
There is do~side to implementing a fee. Although the fee is expected to be nominal, it will
have an impact on businesses, especially on those with narrow profit margins. This impact ~ill
depend on the methodology used to allocate collection costs. The BRF will be viewed as "one
more tax" that, when added to other costs, further erodes profit margins. Small businesses,
professional offices, professionals visiting Palo Alto, and home businesses would probably view
the fee as burdensome. As discussed below~, the Chamber’s Govermnent Action Committee is
concerned about mounting fees particularly given recent implementation of a number of impact
fees and the Business Improvement District.
A second potentiaI argument against a BRF is that it may appear intrusive. Currently, the
comprehensive list of businesses envisioned by staff would include residential businesses.
Unaccustomed to the regulatory oversight and requirements that more traditional businesses face,
residential enterprises may object to being identified and to paying a fee not previously paid.
The practice of home businesses and visiting contractors paying a tax is common, however, in
cities having a BLT. As required by law, neither a BRF nor a BLT would be charged to exempt
businesses (e.g., banks), non-profits, or other businesses Council exempts.
CMR:378:05 Page 3 of 8
BRF Option
The BRF is anticipated to be at a nominal cost to businesses. Since the primary purpose is to
obtain infom~afion for regulatory and other purposes, the fee would be calculated solely to
recoup the administrative costs of the program. Based on a flat fee per business, the estimated
fee would roughly.equate to $35 - $50 per business. Should Council emphasize a BRF, staff
would investigate potential fee options other than a flat fee that are legal.
Business License Tax
The chief purpose of a BLT is to raise revenue to support General Fund activities. Methods for
taxing businesses and the amount raised vary considerably from jurisdiction to jurisdiction, but
the colrmaon tl~read is to generate resources for public use, be it capital or operating programs.
Pros
New revenue sources are needed to build new facilities in the CiD~. With adoption of the
Infrastructure Management Plan in 1997; Council also approved a policy of requiring new
resources to build new General Fund infrastruct..ure. Council has applied this principle to
proposed major new facilities such as th~ M~tchell Park Library and other communJD, center and
library renovations by placing a General Obligation Bond (GO) measure on the ballot. \Vith its
considerable facilities and recent revenue constraints: the Ci~ is hard-pressed to rehabilitate and
maintain existing infrastructure and has been unable to meet expanding or new ne~ds. The
recent four-year economic slump forced the City to reduce its operating e×penditures by over ]0
percent since 200~, so resources for new programs and facilities are limited.
.amother reason for a BLT is to backfill for actual and potential revenue losses. Unless sales and
transient occupancy taxes rebound dran~aticaliy, the CiD~ is facing increasing chalienges in terms
of rising expenses and potential revenue losses.
Since all but two jurisdictions in California have a BLT, businesses are familiar with and expect
a BLT when they move to Palo Alto. ~ecdotally, businesses relocating to the City always
inquire about a BLT m~d are taken aback when they hear the City does not have one.
Cons
While there are solid reasons, both short and long-term, for a new tax, there are arguments
against it. A major initiative on the part of Council and Ci~ staff has been to maintain and
encourage new businesses in Palo Alto. A new tax will be perceived as contrary to this effort
and potentially send a mixed message.
This might be especially true for businesses building new or expanded facilities (i.e., adding new
net square footage) that will now be affected by new development impact fees such as the
community facilities, parks, and transportation fees..Although it is important to recognize that
existing businesses do not have to pay impact fees, a BLT would increase their costs as well.
\Vhile the extent of this cost is dependent on the level of fees adopted by Council, businesses
could expect their taxes to rise by several hundred of dollars. In addition to the quantitative
impact, businesses wil! experience the intrusion cited in the BRF discussion. Businesses
relatively untouched by City taxes such as service and home businesses would be impacted.
CMR:378:05 Page 4 of 8
Recent analyses of the Peninsula economy show a modest upturn. Corporate profits have turned
in solid results, but job growth has been especially slow and is not expected to rise sharply over
the next few years. Companies have been reluctant to rehire employees in face of economic
uncertainties. The slow revival of City sales and occupancy taxes supports this view. Levying a
BLT at this juncture in the local economy can be viewed as negatively timed.
BLT Options
Council has numerous options both in how a BLT is levied and in determining revenue levels.
Methodologies for applying the tax include gross receipts, number of employees, square footage,
or a mix and match of the aforementioned. Exemptions, caps and other techniques are typically
incorporated in the taxing system as well. The amount to be collected depends on revenue needs
and what is acceptable to the overall conmmnity. If Council decides to move ahead with a BLT,
staff would return with a recommended tax methodology and a variety of revenue ranges. Staff’ s
tentatively preferred methodology is to tax according to the number of employees in each
business. This method is straightforward and relatively easy to administer.
Estimated Administrative Costs of a BRF,q3LT Program
Staff estimates the initial or first year costs of starting and implementing a BRF or BLT progrmn
at $232,000. Second year costs are estimated at $152,000. These costs include a permanentl.0
FTE, temporary staffing, software and hardware, overhead, and other supply and material costs.
It is important to note that these estimates do not include a rigorous BLT enforcement effort.
Some cities hire an additional full-time staff person to monitor, enforce and audit their BLT
programs. This is especially true in programs whose tax is based on the gross receipts of
businesses and where business tax revenues are a major budget resource. If a strict enforcement
program is implemented, an additional 1.0 FTE or approximately $80,000 in costs would be
required.
Chamber of Commerce’s Government Action Committee Comments
On September 1, 2005, staff met with the Chamber’s Government Action Committee (GAC) to
discuss the BRF/BLT. The GAC was vocal with questions and comments.
GAC Ouestions and Staff Responses
1) Question: What are the legal requirements for implementing a fee or tax?
Response: A registD, or regulatory fee is not covered by Proposition 218 and does not
require a vote. Staff believes a registry fee would serve a number of regulatory purposes
including but not limited to economic development planning and assessing the adequacy
of City service levels to businesses. A business license tax is covered by Proposition 218
and would require approval by a simple majority of City voters. As a general tax, a
measure would be brought to voters during a general municipal election.
2)Question: Why does the City seek another fee when it is already costly, especially given
the ~Palo Alto Process," to establish or maintain a business in Palo Alto. What value or
return will businesses see for paying the fee or tax?
CMR:378:05 Page 5 of 8
Response: The GAC is correct that a BRF!BLT will add to a business’ operational costs.
Staff believes, however, that a BRF will be nominal (approximately $35 - $50 annually)
and would not impose a considerable burden. As cited in earlier pages, there are
numerous benefits of having a database that can synergistically enhance cooperation
among businesses and between business and the City. A BLT would add more
significant costs depending upon desired revenue levels and the allocation methodology
used.
It is generally acknowledged that the City’s process for approval of business projects is
lengthy and costly. Several efforts to streamline the process and to support businesses
(e.g., red team) have occurred. Mayoral and staff committees have been established to
understand and troubleshoot issues businesses face. This activity recognizes the leakage
of businesses from the City and the need to retain those businesses. Nevertheless,
economic forces beyond the City’s control (e.g., dot corn bust and consequent weak
economy) have been more instrumental in challenging businesses than have City taxes
and fees. Staff believes the departure of Hyatt Rickey’s and Agilent has less to do With
fees and more to do with conditions within their respective industries.
3)Question: Will.the City eventually turn the BRF into a BLT and will the City propose
increasing the Transient Occupancy or Utility Users Tax if a BRF is implemented?
Response: There is no plan to turn a regist~, fee (if implemented) into a tax now or in the
future. Council does, however, retain the prerogative to submit tax increases or new
taxes to voters under Proposition 218 and other applicable State laws. As stated at the
GAC meeting, there is no proposal to increase the Transient Occupancy Tax, especially
given heightened competition from surrounding cities, nor is there any intent to extend
the Utility Users Tax.
4)Question: \\q~y do we need a BRF for information when other business databases, phone
directories and information sources exist?
Response: Staff agrees that a variety of databases from which to gather information on
businesses exist. But these databases are often out of date, incomplete in terms of
important information, and cumbersome to integrate. Once a City database is created, it
will be updated annually and will be made available for businesses, residents, and staff on
the City’s Web site.
Sula, ev of Surroundin~ Cities with a BLT
The GAC was also interested in how taxes and fees paid by businesses in Palo Alto compare to
surrounding cities and especially to cities of similar population size. Virmally all cities in
California have a BLT. Considerable variations can be found, however, in the level of revenue
raised, the methodology used to levy the tax, and in enforcement efforts. Attachment A shows
that annual revenue levels range from a low of $0.13 million in Santa Paula to a high of $23
million in Santa Monica. As a percentage of total revenue, cities vary from a low of 0.6 percent
to a high of 11.0 percent. Cities that are heavily reliant on the BLT for revenue tend to utilize the
gross receipts methodology for levying the tax.
CMR:378:05 Page 6 of 8
If Council wants to pursue a BLT, staff recommends a revenue target range of $1.0 million to
$2.5 million annually. These revenue levels could, for example, pay debt ser,4ce on a $10 - $30
million new facility (depending on interest rates and issuance costs) or backfill for lost revenues
due to key revenue generators leaving Palo Alto (e.g., automobile dealerships generate around
$2.0 million annually). The proposed revenue goals would place the Cib7 at the lower to mid
level of revenue ranges in the attached survey. This level of BLT falls far below the steep
revenue levels of Berkeley, Santa Monica or Modesto which are in the range of $10 million and
higher.
Comparison of Palo Alto Fees/Taxes to Those in Other Cities
Comparative studies are difficult in that a true ;~apples to apples" comparison is elusi~:e and
subject to numerous qualifications. A major question of the Council and GAC is the impact of
fees and taxes on businesses in Palo Alto compared to sun’ounding cities. The concern is that
City-imposed "start-up" costs that are direct (fees and taxes) and indirect (time and financial
costs of City approval process) are so burdensome that businesses will choose not to do business
in Palo Alto or move away.
The only available source for comparing government-imposed costs of constructing new or
expanded square footage for office, R & D, or retail purposes is the development impact fee
comparison graphs in CMR:323:05 (Attachments B and C). These attachments compare the one-
time fees charged to a developer in Palo Alto compared to those in surrounding communities.
The conclusion dra~ from these charts is that Palo Alto’s impact fees are high compared to
other cities for non-residential development. By adding a registry fee, the City could be seen as
raising the cost for those who want to develop new or expanded space. In Attachment C, the
~:Fee Comparison for Retail," the addition of a fee would move Palo Alto’s potential fees higher
and toward $27 per square foot, much higher than those in Menlo Park, Redwood City or
Surmywale.
Combining the development impact fees with the BRF for comparative purposes is somewhat
misleading, however, in that the former are one-time and the latter annual. Moreover,
Attactnnents B and C do not include a business fee or higher business license tax that most of the
comparative cities levy. Given the numerous permutations in fees, taxes, and assessments
among cities as well as the intangible benefits of locating in particular communities, it is difficult
to arrive at informative comparisons.
Request for Council Direction
Staff requests that Council discuss a potential BRF or BLT and give staff direction on which, if
any, path to pursue. If Council chooses a BLT, its input on the revenue level desired from such a
tax would be helpful. Additional feedback on fee or tax methodologies would be helpful but not
necessary at this time. Once Council makes a decision, staffwould retm-n to the GAC to inform
it of Council’s direction and to obtain their feedback.
POLICY IMPLICATIONS
This report is following Council direction to evaluate a new tax source to support new projects
and programs. Examining a BRF or BLT is a component of one of Council’s Top 5 Priorities
"City Finances."
CMR:378:05 Page 7 of 8
TIMELINE
Should Council give direction to pursue a BRF or BLT, staff would return with an in-depth stud?;
of either option in January 2006. Preliminarily, a BRF could be implemented by the beginning
of July 1, 2006. A BLT, however, would require a vote in the General Municipal Election of
November 2006 with implementation to follow at a later date.
ENVIRONMENTAL ASSESSMENT
Implementing a tee or tax does not constitute
Environmental Quality Act.
a project for the put-poses of the California
PREPARED BY:
JO.(~EPH\)$ACCIO
DepUty Director, Administrative Services
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
CARL YEATS
Director,Services
Assistant City Manager
ATTACHMENTS
Attactv’nent A: Business License Tax - City Survey
Attachment B: Fee Comparison - Office/R&D
.attachment C: Fee Comparison -- Retai!
CMR._,78.0~Page 8 of 8
ATTACHMENT A
Business License Tax - City Survey
}erkeley
Gross receipts, with variations. 20 different
categories. Contractors pay $i00 flat rate or
reconcile at year-end based on actual receipts.
Service vehicles - $45/vehicle up to $300.
IApartment buildingslhotels on a per-unit bases.
10,000tc $ 11,000,000
12,00C
Camarillo 62.739
Folded into
Customer Svc.
Counter and
Revenue Coliectior’
Div
2.5 (but also Uo
TOT and other
iicenses)
By number of employees, depending on type and
location of business. Within city, fixed rate 0-4
lemployees is $130; over 100 employees is $1,925. I
10.983 For contractors and gardeners only (there are no in-I 1 or less
ttown businesses). For contractors, .5% of job cost /
plus $100 annual application fee. $125 flat rate for
home-based businesses.
6,500
6,500
1,400
4,000
420
4,100
13.000
6,000
17,000
1,600
8,000
7.000
4,000
7,000
22,000
609
8,500
8.868
Fontana 1 160,o15 IRate schedules based on gross revenue and t 2
Half Moon Bay 12,688 1.5
Hillsborough
28,976Los Gatos
Maywood ]29,596 1
Menlo Park 30.648 less than 1
207,634
Gross receipts for retail, wholesale, mfg., e-
commerce. Flat fee for advertising, apadment
rental, mobile home parks, auctioneers,
contractors. For ex: Retail gross receipts of $0-
$50K, $75~ going as high as $975. Jobbing, mfmg,
wholesale, goes as high as $30.000.
Gross receipts
By employee or by gross receipts, depending on
type of business.
Admin. Fee plus gross receipts-based tax, plus
depending on industry.
Modesto
Flat fee for most businesses ($30) plus business
improvement district fee (S50-$200) for downtown
businesses: manufacturing businesses pay by
employee; apartment complexes pay by unitIper employee (since ’93)
Gross receipts, exc. Contractors - contract amount.
Professionals are at $60lperson!yr: delivery trucks
@ $40/yr ’
Gross receipts, 50c/$1000, plus admin fee
depending on intout of city/in-home, etc.
Base amount plus $24 times number of employees
Gross receipts, except contractors, where it’s flat
rate b,v license class
Admin. Costs plus gross receipts.
91,495 Gross receipts, plus base amount, processing fee,I 4
Iplanning division code comDliance fee ]
29.281 Gross receipts, plus one-time processing fee.I less than 1
Range s $25 to $450.I
133,086 Per employee. 2-year renewal, going to the ballot to 1 P/q- ("not
increase the tax. Currently, $10-$300. ($300 for enough")
146+ employees) Processing fee = $54 for new
apps. , $23 for renewals.
40 categories. Retail - b~/gross rece pts.t
$ i,157,000
3,674,000
229,473
500,000
1,050,000
. 172,000
1,300,000
10,o00,000
1.2%
2.4%,
2.7%
1.8%
2.5%
1.80%
5.5%
9.7%
Mountain View 72,033 1 180.000 0.248%
Newport Beach 83.120 3.200 000 4.9%
Oakdale 17,439 less than 1 135.000 0.6%
Oceanside 175,085 2 2,300,000 2.5%
i ,800,000
1.800,000
1,835,000
23,000,000
133,500
390,000
800,000
75,986
99,242
44,519
Redwood City
Rialto
San Luis Obispo
Santa Monica
Santa Paula
Sunnyvale
87.250Whittier
1
"Source: City/County Population Estimates from the website of the California Dept. of Finance, Demographic Reseamh Unit. -_
2.9%
2.40%
4.~)%
11.0%
1.5%
0.47%i
1.8%
% []
Transient
ATTACHMENT 2
Occupancy Tax Rates - Calif Cities
Source: Computations by CalifomiaCityFinance.com from State Controller data, updated for years following 2002-03.
1998-99 1999-00 2000-01 2001-02 2002-03
Count 66 67 66 67 67
Mean 9.8%9.8%9.9%10.0%!0.0%
Standard Deviation 1.4%1.4%1 ~4%1.4%1.4%
Median 10.0%10.0%10.0%10.0%10.0%
Minimum 6.5%6.5°.4 6.5%6.5°/,6.5%
Maximum 14.0%14.0%14~0%14.0%14.0%
City County 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Alameda Alameda 10.0%10.0%10.0%10.0~10.0%I0.0%10.0%10.0%
Belmont San Mateo 10,0%10.0%10,0%10.0%10,0%10.0%10,0%10.0%
Berkeley Alameda 12.0%12,0%12.0%12.0%12.0%12.0%12.0%12,0%
Beverly Hills Los Angeles 14,0%14.0%14.0%14.0%14,0%14.0%14.0%14.0%
Burlingame San Mateo 10,0%!0,0%10.0%10.0%10.0°.4 10.0%10.0%10.0%
Campbell Santa Clara 10.0%10.0%10.0%10.0%10,0°,4 10.0%10.0%10.0%
Capitola Santa Cruz 9.5%9,5°.4 9,5%9.5%!10.0%10.0%10.0°.4 10,0%
Carmel Monterey 10.0°.4 10.0%10.0%10.0°.4 10,0%10.0%10.0%
Concord Contra Costa 10.0%10.0°.4 10.0%10.0%10.0%10,0%10.0%10.0%
Coronado San Diego 8.0%8.0°.4 8.0%8.0%8.0°,4 8.0%8.0%i 8.0%
Corte Madera Matin 10,0%10,0°.4 10.0%10.0%10,0%10.0%10.0%10,0%
Cupertino Santa Clara 10.0%10.0%10.0%10.0%10.0°.4 10.0%10.0%10.0%
Daly City San Mateo 10.0%10.0°.4 10.0%10.0°/,10.0%10.0%10.0%10.0%
Danville Contra Costa 6.5%6.5°.4 6.5%6.5%6.5%6.5%6.5°/,6.5%
Davis Yolo 10.0%10.0°.4 10.0%10.0%10.0°.4 10.0%10.0%10.0%
Dublin Alameda 8.0%8.0°.4 8.0%8.0%8.0%8.0%8.0%8.0%
East Palo Alto San Mateo 10.0%10.0°.4 10.0%10.0%10.0%10.0%10.0%10.0%
El Cerrito Contra Costa 10.0%10.0°.4 10.0%10.0°/,10.0%10.0%10.0oA 10.0%
Emeryville Alameda 10.0%10.0°.4 10.0%12.0%12.0%12.0%12.0%!12.0%
Fairfax Marin 9.0%9.0°.4 10.0%10.0%10.0%10.0%10.0%10.0%
Fairfield Solano 10.0%10.0%10.0%10.0%10.0°.4 10.0%10.0%10.0%
Fontana San Bemardino 8.0%8.0%8.0%8.0%8.0°.4 8.0%8.0%8.0%
iFort Bragg Mendocino 10.0%10.0%10.0%10.0%10.0°.4 10.0%10.0%10.0%
Foster City San Mateo 8.0%8.0%8.0%8.0%!8.0%8.0%8.0%1 8.0%
Fountain Valley Orange 9.0%9.0%9.0%9.0%!9.0%9.0%9.0%9.0%
Fremont Alameda 8.0%8.0°.4 8.0%8.0%8.0%8.0%8.0%8.0%
Fresno Fresno 12.0%12.0°.4 12.0%12.0°/,12.0%12.0%12.0%12.0%
Gilroy Santa Clara 9.0°/9.0°.4 9.0%9.0%9.0%9.0%9.0%9.0%
Half Moon Bay San Mateo 10.0%10.0%10.0%10.0%10,0%10.0%10.0~10.0%
Hayward Alameda 8.5%8.5".4 8,5%8.5°/‘8.5°.4 8,5%8.5%8.5%
Healdsburg Sonoma 10.0%10.0°.4 10.0%10.0%1 10.0%10.0%12,0%12,0%
Hermosa Beach Los Angeles 10,0%10.0%10,0%10,0°/‘10.0°,4 10.0%10.0%10.0%
Livermore Alameda 8.0%8.0°.4 8.0%8,0%8,0%8.0%8.0%8.0%
Loma Linda San Bernardino 10,0%10,0%10.0%10.0%10.0°.4 10.0%10,0%10,0%
Los Altos Santa Clara 8,0%8.0°.4 10.0°A 10.0°.4 10.0%10,0%10.0%
Los Angeles Los Angeles 14.0%14.0°.4 14.0%14.0°/,14.0°.4 14.0%I4.0%14.0%
Page 1 of 2
Transient Occupancy Tax Rates - Calif Cities
City
Los Gatos
Manhattan Beach
Menlo Park
Mill Valley
Millbrae
Milpitas
Monterey
Morgan Hill
Mountain View
Newark
Oakland
Palm Springs
Palo Alto
Pleasanton
Redwood City
Richmond
Sacramento
San Carlos
San Diego
San Francisco
San Jose
San Luis Obispo
San Mateo
San Rafael
Santa Barbara
Santa Clara
Santa Cruz
Santa Monica
South Lake Tahoe
Sunnyvale
Vacaville
County 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06
Santa Clara 10.0°,4 10.0%10.0%10.0%10.0%10.0%10.0%10.0%
Los Angeles 10.0°,4 10.0%10.0%10.0%10.0%10.0%10.0%10.0%
San Mateo 10.0%10.0%10.0%10.0%10.0%10.0%10.0°,4 10.0%
Marin 10.0%10.0%10.0%10.0%10.0%10.0%10.0°,4 10.0%
San Mateo 10.0%10.0%10.0%10.0%10.0%10.0%10.0%10.0%
iSanta Clara 8.0%8.0%10.0%10.0%10.0%10.0%10.0°,4 10.0%
Monterey 10.0%10.0°,4 10.0%10.0°,4 10.0%10.0%10.0%1 10.0%
Santa Clara 10.0%10.0°/=10.0%10.0°/10.0%10.0%10.0%10.0%
Santa Clara 10.0%10.0°,4 10.0%10.0°,4 10.0%10.0%10.0%10.0%
Alameda 7.5%7.5%7.5%10.0°,4 10.0%10.0%10.0%10.0%
Alameda 11.0%11.0%11.0%11.0%11.0%11.0%11.0%11.0%
Riverside 10.0%10.0%!10.0%10.0°,4 10.0%10.0%10.0%10.0%
Santa Clara 10.0%10.0°,4 10.0%10.0%10.0%10.0%10.0%10.0°,4
Alameda 8.0%8.0%!8.0%8.0°,4 8.0%8.0%8.0%8.0°,4
San Mateo 8.0%8.0%8.0%8.0°,4 8.0%8.0%8.0%8.0°,4
Contra Costa 10.0%10.0%10.0%10.0~10.0%10.0%10.0%10,0%
Sacramento 12.0%12.0%12.0%12.0%1 12.0%12,0%12.0%12.0%
San Mateo 10.0%10.0%10.0%10.0%10.0%10.0%10.0%10.0%
San Diego 10.5%10.5%10.5%10.5%!10.5%10.5%10.5%10.5°,4
San Francisco 14.0%14.0%14.0%14.0%14,0%14.0%14.0%14.0%
Santa Clara 10.0%10.0%10.0%10.0%10.0°,4 10.0%10.0%10.0%
San Luis Obispo 10.0%10.0%10.0%10.0%10.0%10.0%10.0%’ 10.0°,4
San Mateo 10.0%10.0%10.0%10.0%10.0%10.0%10.0%10.0°,4
Matin 10.0%10.0%10.0%10.0%10.0°/=10.0°,4 10.0%10.0°,4
Santa Barbara 10.0%10.0%12.0%12.0%12.0%12.0°/=12.0%12.0%
Santa Clara 10.0%9.5%9.5%9.5%9.5°/=9.5%9.5%9.5°,4
Santa Cruz 10.0%10.0%10.0°/~10o0%10.0%10.0°,4 10.0%10.0°,4
Los Angeles 12.0%12.0%12.0%12.0%12.0°/=12.0%14.0%14.0°/,
El Dorado 10.0%10.0%10.0°,4 10.0%10.0°,4 12.0%12.0%12.0%
Santa Clara 8.5%8.5%8.5%8.5%8.5%8.5~/=8.5%9.5~
Solano 8.0%8,0%8.0°/=8.0%8.0%
Page 2 of 2