2022-07-19 CC Agenda Packet - PRESENTATION - Business License Tax MeasureBusiness License Tax Measure
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Unfunded Infrastructure
Annual ongoing need of N$2M in street and sidewalk
improvements & repairs
Facility needs assessment
^'$45M in unfunded infrastructure projects and repairs
Parks needs assessment
^'$30M in unfunded infrastructure projects
Unfunded Technology needs: N$4M
Total unfunded fiscal need for the City over the next 20 years
^'$119M
^'$6M per year
Not factored into the above discussion:
Unfunded Labor negotiations
Future labor negotiations will need to be funded
Fiscal impact: unknown
■ $120,000,000
$100,000,000
$80,000,000
$60,000,000
$40, 000, 000
$20,000,000
$0
10-Year General Fund Financial Forecast
General Fund Ten -Year Projection
FY2022 FY2023 FY2024 FY2025 FY2026 FY2027 FY2028 FY2029 FY2030 FY2031
Revenues Appropriations Fund Balance
$30,000,000
$25,000,000
$20,000,000
$15,000,000
$10,000,000
$5,000,000
$0
Revision to the Business License Tax
Requires an affirmative vote by four members of the Council
to place the measure on the ballot
Requires voter approval: 50% + 1
Potentially generate $3M per year ongoing
Revision to sales tax credit
Update current language in code that is outdated
Update the methodology used to calculate the business
license tax
If approved by voters, it is estimated the measure could
generate an additional $3,000,000 in ongoing annual
revenue beginning with FY 2023-2024.
Revision to sales tax credit
Average annual Sales Tax Credit applied is $1.4M; total eligible credit is $2.8M
Revision of Sales Tax Credit
Current sales tax credit: 40% of total sales tax generated by the business
is applied towards offsetting the business' BLT, up to 100%, with no
sunset
—Option A: Modify sales tax credit to sunset after four years of a
business operating in the City
—Option 6: Eliminate sales tax credit
Current BLT Structure:
Current model: ONE rate for the combination of employee count (10) and square
footage (5,000)
Current base tax = $11.30
Square feet over 5,000: assessed $.27 per square foot
Employee head count over 10: assessed $137.80 per employee
Proposed BLT structure:
Separate in 2 rates:
Square feet:
— 0 to 2,000 = $150.00 flat rate
— Over 2,000 and up to 5,000 = $.26 per square foot
— Over 5,000 and up to 50,000 = $.27 per sq. ft. (same as current model)
— Over 50,000 and up to 100,000 = $.28 per sq. ft.
— Over 100,000 and up to 250,000 = $.29 per sq. ft.
— Over 250,000 = $.30 per sq. ft.
— Alternative structure?
Employees:
— No charge for 0-5 employees
— $ 138 per employee over 5 (current rate is $137.80 per employee over 10)
Miscellaneous business that do not utilize square footage and/or employee count: $150.00 flat
rate.
Proposed BLT structure for Apartment Units:
1-3 units: proposed base of $150 (current base is $32.80)
Units above 3: proposed rate of $150/unit (currently $11.30/unit)
Units above 50:
Option 1: propose changing from per unit charge to total square feet
charge + assessing an employee charge if over 5 employees
Option 2: remain assessing a per unit charge of $150/unit
Current BLT structure for Hotels, Motels, Auto Courts & Lodging Houses
1-14 units: current rate of $111.30
15-49 units: current rate of $216.30
50+units: current rate of $432.60
Current BLT structure for Hotels, Motels, Auto Courts & Lodging Houses
Under SO units shall pay a BLT of $150/room per year
Over 50 units:
Propose changing from per unit charge to total square feet charge + assessing an
employee charge if over S employees
Nonprofits
current rate of $0
Proposed rate of $150
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Inflationary Index
Current: average of the last ten years CPI
Proposed: average of the last five years CPI
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Category/size Current
Commercial (General Retail, Food & Drugs, Restaurants)
Average (up to 5 employees/up to 2,000 sq.ft.) Small $111.30
Average
(5+
employees/over
2,000 & up to 5,000 sq.ft.)
Small
$440
Average
(5+
employees/over
5,000 & up to 50,000 sq.ft.)
Medium
$3,1166
Average
(5+
employees/over
50,000 & up to 100,000 sq.ft.)
Medium
$23,404
Average
(5+
employees/over
100,000 & up to 250,000 sq.ft.)
Large
$48,597
Average (5+ employees/over 250,000 sq.ft.) Large $258,801
Proposed*
$150.00
$1,063
$4,348
$26,992
$53,404
$279,995
El Segundo
UUT = 6.5%
Sales Tax = 1 /o
UUT = 2%
UUT = 4.75%
UUT = 5%o
/o Sales Tax= 1
UUT = 0%
Category/size
Current
Torrance
Carson
Redondo Beach
Long Beach
Manhattan Beach
General Retail
Base
I $ 1111
$ 321
$ 3281
$ 1891
$ 4121
$ 265
Small
I 4401
8971
4921
2791
4471
1,270
Medium
I 3,1661
2,9071
1,4761
8191
7241
6,030
Large
I 48,5971
$ 5,8551
$ 2,9191
$ 1,6111
1,1281
10,271
Largest
1 258,801
-
-
-
$ 66,8611
$ 10,271
Small Up to 5,000 sq ft <=$500k in gross receipts
Medium 5,000-100,000 sq ft >$500k & up to $2.5M
Large >100,000-250,000 sq ft >$2.5M in gross receipts Largest >250,000 sq ft >$100M in gross receipts
Base
$450
$412
$400
$350
$328
$300
$265
$250
$200
$189
$150
$111
$100
$50
$32
Current
Torrance Carson Redondo Beach Long Manhattan
(No STC)
Beach Beach
Small Business/Sole Proprietor
$1,400
$1,270
$1, 200
$1,000
$897
$800
$600
$476 $492
$447
$400
$279
$200 1 1 1 .
Current Torrance Carson Redondo Beach Long Manhattan
(No STC) Beach Beach
16
Medium Businesses — up to 50,000 sq. ft.
7,000.00
6,000.00
5,000.00
4,000.00
3,166.00
3,000.00 w 2,907.00
2,000.00
1,476.00
6,030.00
1,000.00 819.00 724.00
Current Torrance Carson Redondo Beach Long Manhattan
(No STC) Beach Beach
I
1,91111111111111
50,000.00 48,597.00
40,000.00
30,000.00
20,000.00
10,000.00
Large Business/Corporation
10,271.00
5,855.00
2,919.20
■ 1,6= 0 1,19
Current Torrance Carson Redondo Beach Long Manhattan
(No STC) Beach Beach
17
..,-k Next Ste P_�
Adopt a resolution, by at least two-thirds majority, placing amendments to the
City's Business License Tax Ordinance on the ballot for the November 8, 2022.
Designate one or more Council Members, to draft ballot arguments in favor of
the ballot measure.
Direct the City Attorney to draft an impartial analysis of the ballot measure.
Adopt a resolution approving amendments to Resolution Nos. 5337 and 5338
calling for the November 8, 2022 General Municipal Election (for transmittal to
the Los Angeles County Registrar-Recorder/City Clerk's Office) for purposes of
changing the number of ballot measures on the ballot for the November 8,
2022 General Municipal Election from three (3) to four (4) measures.
Thank you!
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