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Home My WebLink About10/01/1991, 3 - BUSINESS TAX ORDINANCE 1111 1111111101111fifflaffiftmIli 1 II "7 r MEETING DAT I� �� c� o san pais OBISp0 - - COUNCIL AGENDA REPORT ITIN NUM FROM: William C. Statler, Director of Finance(,( Prepared by: Linda Asprion, Revenue Manager SUBJECT: BUSINESS TAX ORDINANCE CAO RECOMMENDATION ■ Adopt a revised business tax ordinance which will improve the equity, administration, and revenue generation abilities of the City's business tax program, to be effective November 25, 1991. ■ Adopt . a resolution establishing- fees for the issuance of duplicate, branch establishment, and change of location business tax certificates, to be effective November 25, 1991. REPORT-IN-BRIEF Implementing a revised business tax ordinance has been the subject of in-depth discussion over the past four years and is consistent with recommendations from various Council adopted financial documents and community groups. The goals for revising the business tax ordinance are to: ■ Ensure equity for the basis and rate of the tax reflecting ability to pay and ensuring that all business activities are required to pay a business tax; ■ Provide consistent general fund revenues that reflect economic changes, either up or down; ■ Establish a revenue source that will not be difficult or costly to administer and enforce,that is easy for both the City staff and business community to understand. Under the revised ordinance, the method and rate for determining business taxes will be the same for all businesses and will be calculated using the existing tax basis for retail businesses: fifty cents ($ .50) per thousand dollars of gross receipts. DISCUSSION Background The City's business tax ordinance was last evaluated on a comprehensive basis in 1958. Updating the business tax ordinance was identified by the Citizens' Advisory Committee (CAC) as an integral part of an-'action plan" recommendation to.Council for-implementing policy and revenue measures necessary to ensure the City's long-term financial health. The Council subsequently established the revision of the business tax ordinance as a high priority goal for 1991-93, and on February 5, 1991 approved a workscope and the formation of a Business Tax Advisory Committee (BTAC) to assist in preparing the recommendations for the revision. —I ii��hl��►►►�IIIIIIIIII��°�91111U city of San �-_AS OBISp0 COUNCIL AGENDA REPORT With the assistance of the Chamber of Commerce, the BTAC was formed composed of owners and officers from a broad range of business categories. The members of the BTAC and their business associations are listed below. Archie Woodward, Sunset Honda Jay Hieatt Automobile Dealers County Bar Association Tom Donat, Riley's Margaret Gardner, Paper Reeds Large Downtown Retailer Small Downtown Retailer Joe Heringes, Long's Drugs Tom Murrell/Mary Von Achen Non-downtown Retailer SLO Property Owner's Assn. Bob Klem, JBL Scientific Doug Longfellow, Hudson's Restaurant Manufacturer Central Coast Restaurant Assn. Steve Souza Dave Garth, Executive Director SLO Contractor's Assn. Chamber of Commerce Snmmary of Key Changes The following is a summary of key changes being proposed to the current business tax ordinance: ■ Contrary to its stated intent, the current ordinance includes some regulatory provisions. To address this concern, the term "license" has been removed from the proposed ordinance, and it has been recodified to the '"Tax and Revenue" section of the Municipal Code to reinforce its revenue raising purpose. Any regulatory provisions have been retained in Title 5 of the Municipal Code ("Licenses, Permits, and Resolutions") to further ensure the distinction between "taxes" and "licenses". ■ Administration, enforcement, and communication of the provisions of the ordinance to the business community is difficult due to the numerous categories of businesses and varying tax rates and measures. The current ordinance contains over 75 categories of businesses and related methods of taxation;the proposed ordinance has only one method of determining business taxes. ■ By listing each business type subject to taxation, the current ordinance allows certain types of businesses to go untaxed. Non-residential property rental is the most notable exception (business taxes were extended by the Council to all residential property rentals in November of 1990). The proposed ordinance simply extends the requirement-to pay business taxes to•all persons conducting business in the City, and no listing of business types is provided. Exemptions are provided for the following: A. Minors under the age of 18 years old. 3 a2 �i��1��►i►IVIIIIIIIIII ��il city of san L_JS 0131Spo Wo am COUNCIL AGENDA REPORT B. Bonafied non-profit organizations. C. Businesses where the payment of local business taxes conflicts with the applicable statues or constitution of the United States or the State of California. ■ The current ordinance provides for annual renewals based on the City's fiscal year (July to June). For many businesses, this poses difficulty in determining gross receipts as this period is not consistent with their fiscal year (generally a calendar year). The new ordinance establishes the period for determining gross receipts as the last completed fiscal year, with renewal due on April 15th (rather than July 1st) to coincide with existing federal and state tax payment_dates... . . ■ New businesses will pay a flat fee of $25, no matter when the business is established during the year, which will be the full tax until the next renewal period (April 15th). At the renewal period, the new business will determine the business tax due based upon their gross receipts from their opening day. ■ A proactive enforcement policy will be implemented through an educational/audit program. Methodology Used by Business Tax Advisory Committee i The BTAC was formed with the intent of having a business peer group review the current business tax ordinance, become familiar with the general options and elements involved in restructuring an ordinance, and develop an overall philosophy which would be the basis for the revised ordinance. The BTAC met on three occasions and utilized the Council approved workscope as the basis for their review. At their final meeting on May 10, 1991, the BTAC finalized their recommendations for restructuring the business tax ordinance. A copy of the workscope approved by the Council is provided in Attachment A. The major elements and concepts discussed by the BTAC along with their recommendations are as follows: Purpose of the Bmunem Tax Ordnance The purpose of the City's business tax ordinance is to raise revenues for general municipal purposes - it is not intended for regulation. An overview of the dollar amount and percentage of revenue generated from business taxes compared to all tax revenues and all general fund revenues was presented along with the same statistics for other local and comparable cities. Additionally, growth trends for all of the City's tax revenues was presented for the past ten years, which demonstrated that business tax was the only tax revenue showing a negative (0.2%) real growth for that period of time. Attachment B is a duplicate of the material provided for the BTAG's information. 33 1m, I�III city of San _ AS OBISPO lmii% COUNCIL AGENDA REPORT Business Tax Review Goals The review of the business tax ordinance is to accomplish the following three goals: Equity. The revised ordinance should ensure, to the greatest extent possible, that similar businesses are treated equally, that all types of business activities are subject to paying business taxes, and that tax rates reflect a general "ability to pay". While equity is the primary purpose for the revision, the BTAC recognized that a perfect "equity" situation cannot be achieved, and as such, the complexity of the proposed ordinance needs to be consistent with the level of taxation and amount of revenue raised. Revenue Generation. In meeting the primary purpose of the City's business tax ordinance - to raise revenues for. general municipal.purposes_- the BTAC discussed the following revenue generating criteria: ■ Reflects changing economic conditions (up or down). ■ A source of revenue that the City can rely upon in funding general municipal purposes. ■ Remain competitive with the practices of other comparable communities. Administrative Simplicity. A major concern of the BTAC was that the revised ordinance should not be difficult or costly for the City to administer and enforce nor should it be difficult for the business community to understand and comply with its provisions. Key Elements of the Review The four key elements of the business tax ordinance revision that directly impact the goals of equity, revenue generation capabilities, and administrative simplicity are: Business Classification System. The BTAC discussed that any business classification system needs to appropriately group businesses based on nature and profitability and ensure that all businesses activities are clearly subject to the business tax. Once the BTAC decided to use gross receipts as the measure for the tax with a uniform tax rate for all businesses, this element was no longer an issue as this approach treats all business classifications equally. Tax Measures The term "tax measure" refers to the base upon which tax rates are levied in determining the amount of tax due. The BTAC selected gross receipts as the recommended measure as it clearly reflects economic growth and changing economic conditions while incorporating a basic equity or "ability to pay" for all businesses. Other methods considered by the BTAC but not recommended included flat rates, payroll, square footage, and number of employees. Tax Structure. The tax structure developed should meet equity and administrative simplicity goals. By recommending gross receipts, the BTAC approach reflects a tax structure that (1) reflects profitability or general ability to pay; (2) is not regressive; (3) treats similar businesses similarly; (4) and is not more complex than warranted by the level of taxation and revenues raised. lllm1n1vl�j11I1pl01111 Jl City Of san L.AiS OB1Sp0 i COUNCIL AGENDA REPORT Tar Rates. The following criteria was given as direction to the BTAC in the Council approved workscope in determining tax rates: ■ Overall business tax revenues cannot be less than would be received under the current ordinance. ■ Revenues from retail businesses should stay about the same as received under the current ordinance. ■ Minimum business taxes should not be less than the cost of issuing, renewing, and administering business taxes. ■ . .. .. Tax rates should be straight-forward and.easy. to understand. By recommending fifty cents ($ .50) per thousand dollars of gross receipts, the BTAC is implementing the current retail business tax rate (one of the criteria) for all business classifications. Under the current ordinance, service businesses are taxed at a rate higher than the recommended rate while other business groups are generally taxed at lower and regressive rates. As such, historically the service and retail businesses have been taxed at a higher rate and have paid a higher proportion of business tax, which of course, is not equitable. This is demonstrated graphically in Attachment C. By incorporating the recommended tax rate into the revised ordinance, the administration for both staff and the business community is simplified. There will no longer be a distinction among business classifications, nor different rates or means of calculating business tag. Impacts of the Revised Ordinance In considering the impacts of the proposed revisions to the business tax ordinance, the BTAC evaluated the following areas: i Have equity, revenue generation, and administration been unproved? In re-evaluating and discussing their recommendations, the BTAC felt that great strides were made in accomplishing these three goals: ■ All businesses are to be taxed on an equitable basis at the same rate which will reflect a changing economy and relative "ability to pay". ■ While revenue generation will be fairly stable for the City, the proposed structure will also allow the City to experience economic trends along with the business community - up or down. ■ Administrative issues have been greatly simplified for both staff and the business community. 3-S City of San . AS OBISPO j COUNCIL AGENDA REPORT what are rhe fora dd unpacts on. Broad classes of businesses? For retail businesses, which comprise over 41% of the businesses within the City, the amount of business tax paid will remain the same. For the service businesses comprising approximately 9% of City businesses, the amount of business tax will be reduced, with all other businesses classifications (comprising 50% of the City's businesses) experiencing a potential decrease or increase in the amount of business tax they pay. These changes will bring all other businesses into an equitable tax environment of paying their fair share relative to service and retail establishments. Individual businesses? Each business .will be taxed-based upon its gross-receipts. Therefore, the general "ability to pay' concept is in place, with smaller businesses paying less (there is a $25.00 minimum business tax which will cover the cost of issuing the certificate) and larger businesses paying at the same proportional rate. As an added incentive for new businesses, the BTAC has recommended that the minimum tax of $25.00 be all that is required to receive their first business tax certificate. However, when the new business renews, the rate would be the same as all other businesses. Overall City revenues? As the BTAC began structuring specific rate and tax basis recommendations for inclusion in the revised ordinance, one of their concerns was the amount (both dollars and percentage) of increase the City would be receiving. Determining the specific revenue increase related solely to the new tax structure is very difficult for the following reasons: ■ There is no independent measure of gross receipts by business classification for San Luis Obispo County. As such, it is difficult to estimate revenue from those classes being changed from flat rates to gross receipts. ■ The BTAC is recommending a proactive enforcement policy and adding businesses which have not previously been taxed, which will increase the number of businesses on which the tax will be assessed. Most of this impact will be noted by the property rental businesses (both residential and non- residential). ■ Approximately 50% of the current business groups are taxed on a declining tax schedule, whereas the recommended tax schedule is not regressive but remains proportionate throughout the gross receipts range. After making allowances for the above anomalies, the anticipated increase in business tax revenue, based on the same tax rate applied to all classifications, is anticipated to be approximately 20% or $100,000 annually as summarized in Attachment D. As noted in the BTAC recommendations, they have.-requested-that they- reconvene-in two years to re- evaluate the revenue effect of this tax revision. 3-� ��►�iii►i►illllllll1° �►UJil city of San h__.IS OBISPO COUNCIL AGENDA REPORT How do the proposed revisions compare to neigfibory and comparable communities? As part of the review performed by the BTAC, a variety of business tax statistics for local and comparable cities was provided for comparison purposes. Specifically, the BTAC requested a comparison of each city's business tax charges for four levels of gross receipts as compared to the current and proposed business tax charges for San Luis Obispo. This comparison was performed by business classification (i.e. retail, wholesale, manufacturing, professional, etc.), using comparable cities which base their tax on a percentage of gross receipts for that specific business classification. The results of this comparison are shown in Attachment E and indicate that the proposed rate of $ .50 per thousand dollars of gross receipts is very comparable with tax rates in other cities. Is the revised ordinance easier for businesses toandastand and comply with its provisions? Is it easier for the staff to admarister and enforce? With the current ordinance establishing different rates for various sections of business groupings and addressing many business types individually, both staff and the BTAC concurred that the proposed revisions would significantly simplify the administration of the business tax program for the City as well as the business community. Implementation of the Revised Business Tax Ordinance Although the revised business tax ordinance will become effective November 25, 1991, the first affected renewal date will be April 15, 1992. As such, businesses which renewed on July 1, 1991 or new businesses established prior to the passage of the revised ordinance, have paid their business tax through June 30, 1992. Therefore,when these businesses renew on April 15, 1992, they will be taxed at the rate of $.40 per thousand dollars of gross receipts (rather than the $ .50 tax rate) to provide them with a credit for the seventy-five days (April 15, 1992 - June 30, 1992) for which they had previously paid. Beginning in the Fall of 1991, an enforcement/education program will be implemented through an audit program as approved in the 1991-93 Financial Plan (page D-108). Although a resolution establishing fees for the issuance of duplicate, branch establishment, and change of location business tax certificates is recommended, no fees are proposed at this time in order to encourage business owners to inform us of these changes. Currently, the activity level for these services is minimal (20 to 40 per month). Adopting a resolution establishing a fee (albeit zero) will allow the flexibility to charge a fee if the requirement to issue these additional certificates becomes an administrative burden in the future. Regulatory Provisions Contrary to its stated intent, the current ordinance includes some regulatory provisions which need to be retained and placed in appropriate sections within Title 5 of the Municipal Code. A summary of these regulatory provisions. included -in..the proposed ordinance follows. Chapter 5.08 Mechanical Amusement Devices Sections 5.08.030, 5.08.040, and 5.08.050 currently establish the amount charged for a business tax for mechanical amusement devices. Mechanical Amusement Devices will now 3-7 '110111,11111II111111lf° llUJll city of san , _js OBlspo COUNCIL AGENDA REPORT be included in the proposed ordinance and the business tax will be established using gross receipts. As such, these sections are being deleted. The addition of a new Section 5.08.030 allows for the disqualification of a permit based upon the criminal conviction of the applicant as currently required in Section 5.04.050. Section 5.08.040 establishes a fee for the processing of the application permit. Chapter 5.12 Contractors This Chapter is being deleted. Currently the chapter establishes the business tax for contractors,which will be included in the proposed ordinance. The regulatory section being deleted (Section 5.12.040) requires the contractor to produce a valid Contractor's License, which is currently a requirement in the Building and Safety Division, where it will continue to be enforced. Chapter 5.16 Solicitors and Peddlers In Sections 5.16.030 and 5.16.080 there will be the addition of the permit application being referred to the Chief of Police for investigation and reporting. This is an addition of a regulatory provision previously located in Section 5.04.200 of the current business tax ordinance. Section 5.16.050 establishes a fee for the processing of the application process. Section 5.16.070 is being revised to eliminate a constitutional difficulty as recommended by the City Attorney. Chapter 5.20 Taxicabs The addition of Section 5.20.055 allows for the disqualification of the applicant for a permit based upon criminal conviction as currently required by Section 5.04.050. The addition of a new Section 5.20.140 establishes a non-refundable application fee to defray the administrative costs of processing the application. Chapter 5.24 Passenger Stages This chapter establishes procedures which fully cover regulatory provisions from Chapter 5.04 and no modification is required. Chapter 5.32 Bingo This chapter establishes procedures which fully cover regulatory provisions from Chapter 5.04 and no modification is required. Chapter 5.36 Service Stations This chapter establishes procedures which fully cover regulatory provisions from Chapter 5.04 and no modification is required. Chapter 5.40 Adult Entertainment Establishments This chapter establishes procedures which fully cover criminal conviction investigations and regulatory provisions from Chapter 5.04 so that no modification is required. Chapter 5.44 Mobile Home-Park Rent-Stabilization . This chapter establishes procedures which fully cover regulatory provisions from Chapter 5.04 and no modification is required. 3$ ��►►►��Illllilli ��lll city Of San L.JS OBISpO M1 A COUNCIL AGENDA REPORT Chapter 5.48 Sales on Streets and Sidewalks This chapter establishes procedures which fully cover regulatory provisions from Chapter 5.04 and no modification is required. Chapter 5.52 Electronic Game Amusement Centers This chapter establishes procedures which fully cover criminal conviction investigations and no modification is required for compliance with Section 5.04.050. Chapter 5.60 Posting Section 5.04.390 requires every posting business to obtain a permit prior to conducting business. With the deletion of Section 5.04390, a new provision, Section 5.60.010, is enacted to retain this requirement. Chapter 5.64 Public Dances Section 5.04.420 requires a permit be issued by the Chief of Police prior to conducting a public dance. With the deletion of Section 5.04.420, a new provision, Section 5.64.010, is enacted establishing the same requirement. Chapter 5.68 Cardrooms Section 5.04.470 prohibits cardrooms from operating within the City. Section 5.68.010 replaces this regulatory provision upon its deletion. Along with retention of required regulatory provisions in Title 5, we are also establishing a fee to cover the administrative cost of processing application permits. Application permits require researching for any criminal conviction of the applicant. The actual cost of processing these permits requires further study by the Police and Finance Departments, and as such, the actual amount of the fee will be set by resolution at a later date. BUSINESS COMMUNITY PARTICIPATION As noted above, the BTAC was formed in order to ensure participation by the business community in the business tax revision. Additionally, several presentations have been made to the Business Improvement Association Board of Directors as well as the Chamber of Commerce's Legislative Committee and Board of Directors regarding the recommended revisions. At the time this agenda item was prepared, no formal correspondence had been received from the BIA or Chamber of Commerce. FISCAL IMPACT Two of the criteria given to the BTAC in setting the tax rate was that the overall business tax revenues could not be less than would be received under the current ordinance and that retail business revenue should stay about the same. As the BTAC began structuring the broad components for inclusion in the revised ordinance, one of their concerns was the amount of businesstax increase the._City would be receiving.. Although difficult to determine, for the reasons previously listed, the proposed revision in the business tax ordinance is anticipated to increase revenue by approximately 20% as a result of increased rates. Using this percentage and applying it to the 1990-91 business tax revenue would indicate approximately a $100,000 annual increase. Since the Business Improvement Area's (BIA) revenue is based upon the amount of business tax paid by businesses within that 3- g 'i111111 ►►►11Illlilllll►' IIUIII city of san , ,s oBIspo COUNCIL AGENDA REPORT Area, it is projected that the BIA's revenue will also increase by 20%. Due to the change in timing of the renewal.process (from July 1st to.April 15th), there will be a one time increase in revenue of approximately $80,000 during 1991-92. These projections are consistent with the 1991-93 Financial Plan. Does the City Need Additional Revenue? As discussed in the Citizens' Advisory Committee report submitted to Council on February 5, 1991, the City's current financial condition is very strong by state and national standards. The City has enjoyed a strong local economy since World War II, which has contributed significantly to our fiscal success. However, there are many communities that have financial resources equal or greater than our own, but nonetheless have experienced serious financial difficulties. Although_our strong locaL economy..has enabled us to deliver an excellent. program of municipal services, the City's current financial health is primarily attributable to the City's past and current financial management policies and practices that reflect our commitment to fiscal responsibility. Although the City is in good financial condition today, continuing our commitment to an excellent program of municipal services and achieving our public facility goals will require additional revenues. The CAC's report identified $5.7 million in annual costs required to support new programs or projects that have already been adopted by Council. These revenue needs only increase if other projects currently under consideration, but not yet adopted, are also considered. Increasing business tax revenues is one component of an overall strategy in maintaining our financial health - now and in the future. ALTERNATIVES There are two basic alternatives available to the Council: ■ Approve No Changes to the Business Tax Ordinance Based upon the recommendations of the Citizens' Advisory Committee, those of the BTAC, the Council's high priority in achieving this goal, and the City's long-term financial health needs, this alternative is not recommended. ■ Approve Revisions that are Different Than Those Recommended The Council could approve revisions to the business tax ordinance that are different than those recommended by the Business Tax Advisory Committee. However, taking into consideration the length of time since the fees were last increased, the conscientious review and recommendations of the Business Tax Advisory Committee, and the current requirement for the funds, this alternative is not recommended. SUMMARY Revision of the business tax ordinance was identified by the Citizens' Advisory Committee and the Council as a revenue measure necessary to ensure the City's long-term financial health. The Business Tax Advisory Committee has conscientiously reviewed numerous revision options and has structured their recommendations for compliance with the goals of equity, revenue generation, and administrative simplicity. J-10 i�I�V1��►►i�iIIIIIIIIP°j�IIIJII city of San LAS OBISpo RENMEMEW COUNCIL AGENDA REPORT ATTACHMENTS A. Workscope Approved by Council for the Business Tax Revision B. Business Tax Revenue Statistics 1. Business Taxes Compared with Total Tax Revenues 2. Business Taxes Compared with Total General Fund Revenues 3. Business Tax Comparisons with Other California Cities a. As Percent of General Fund Revenues b. General Characteristics 4. Tax Revenues Growth Factor - 1979 through 1988 C. Business Tax Characteristics 1. Number-Qf.Businesses-by.Type . 2. Business Tax Revenues by Type 3. Summary of Business Tax Revenues by Number and Type D. Summary of Projected Business Tax Revenues by Type E. Projected Business Tax Revenues by Type Depending on Gross Receipts - Current & Proposed Compared with Other Cities 1. Retail 2. Contractors 3. Wholesale 4. Manufacturing 5. Professional 6. Services i 7. Non-Residential Property Rental 8. Residential Property Rental EXHIBITS 1. Ordinance implementing business taxes 2. Resolution establishing fees for the issuance of duplicate, branch establishment, and change of location business tax certificates. I 3-/ Attachment.._ MEETING DATE: 1111makiggg city of San tins OBISPO = - ,s- 7 i iCOUNCIL AGENDA REPORT ITEM NUMBER:AAMInze Q FROM: William C. Statler, Director of Finance SUBJECT: BUSINESS LICENSE TAX REVIEW WORKSCOPE CAO RECOMMENDATION Approve the workscope for the review and evaluation of the City's existing Business License Tax Ordinance. DISCUSSION The City's business tax ordinance was last evaluated on a comprehensive basis in 1958. Updating the business tax ordinance is a high priority in the Council's Goals for 1991- 93, and was recommended by the Citizens' Advisory Committee in their report to the Council on February 5, 1991. The recommended workscope for this review is attached and includes the following key areas: ■ Purpose of the Business Tax Ordinance ■ Business Tax Review Goals ■ Key Elements of the Review ■ Special Considerations ■ Impacts of the Revised Ordinance ■ Action Plan and Schedule As noted in the Action Plan, it is recommended that the Council approve the formation of a seven member Business Advisory Committee to assist the CAO in preparing recommendations for Council consideration. This committee should be composed of owners and officers of businesses located in the downtown as well as other commercial areas in the City. Further, they should represent a broad range of business categories: retailers, professionals, contractors, services, manufacturing, and property owners and managers. The Chamber of Commerce has agreed to assist the CAO in forming this committee. ATTACHMENT Business Tax Revision Workscope BSTAK/NORKSCPE.YPF BUSINESS TAX REVISION WORKSCOPE A. PURPOSE OF THE BUSINESS TAX ORDINANCE 1. The purpose of the City's business tax ordinance is to raise revenues for general municipal purposes. 2. It is not intended for regulation. 3. Regulation of selected business categories, such as mechanical amusement devices, electronic game centers, taxicabs, massage establishments, bingo operators, or adult entertainment establishments (which are currently regulated under the Municipal Code), is an appropriate exercise of the City's inherent police powers. However, any such regulation should be accomplished through separate regulatory ordinances, not through the City's business tax ordinance. 4. Accordingly, use of the term "license" in defining and discussing the City's business tax ordinance should be discontinued as no "license" or any other approval to conduct business is granted when a Business Tax Receipt is issued. B. BUSINESS TAX REVIEW GOALS The review of the City's current Business Tax Ordinance should accomplish the following three goals: equity, revenue generation, and administrative simplicity. 1. Equity The revised Business Tax Ordinance should ensure, to the greatest extent possible, that similar businesses are treated equally and that tax rates reflect a general ability to pay. In considering "ability to pay" it should be noted that net profit, which may be the best measure of ability to pay, is not allowed by the State as a basis for local business taxes. Achieving this goal will require evaluation of the following issues in the current Business Tax Ordinance as well as any proposed revisions: a. What are the current .business classes, tax rates, tax measures, and tax structures? b. Are rate structures regressive? c. Are similar businesses grouped together and treated the same? d. Is the same tax rate and tax rate structure applied to similar types of businesses? �3 e. Do tax rates reflect a general ability to pay? f. Are differential rates in place which reflect the general profitability of different types of business activities? g. Are all types of business activity clearly subject to paying business taxes? h. In addressing these equity objectives, which is the primary purpose for this revision, we need to recognize that we cannot achieve perfect "equity" in all situations. Ths complexity of any proposed ordinance in achieving "equity" needs to be consistent with level of taxation and amount of revenue raised. 2. Revenue Generation As discussed above, equity issues are the primary reason for this business tax revision. However, in meeting the primary purpose of the City's Business Tax Ordinance - to raise revenues for general municipal purposes - any revisions to the business tax ordinance should meet the following revenue generating criteria: a. Reflect changing economic conditions (up or down). b. Be a source of revenue that the City can rely upon in funding general municipal purposes. c. Remain competitive with the practices of other comparable communities. Achieving this goal will require the evaluation of the following issues in the current Business Tax Ordinance as well as any proposed changes: d. What is the relative importance of business taxes in comparison to total general purpose revenues? e. How have business taxes grown over time? f. Is the rate structure likely to reflect economic growth and changes in the economy generally? g. How does the rate structure compare with those in neighboring and comparable cities? h. What percentage of current business tax revenues come from various types of businesses? 3. Administrative Complexity The revised Business Tax Ordinance should not be difficult or costly for the City to administer and enforce nor should it be difficult for the business community to understand and comply with its provisions. Achieving this goal will fequire the evaluation of the following issues in the current Business Tax- Ordinance as well as any proposed changes: a. Is the ordinance well-organized? b. Is it lengthy and difficult to understand? c. Does it contain everything necessary to understand and administer it? d. Is it consistent and well-documented? e. Are payment amounts easy to calculate? f. Are business activities clearly identified? g. Are policy considerations clearly presented such as apportionment guidelines, penalties, and any exemptions? C. KEY ELEMENTS OF THE REVIEW There are four key elements of the Business Tax Ordinance revision that directly impact its equity, revenue generation capabilities, and administrative complexity: business classification system, tax measures, tax rate structure, and tax rates. ` 1. Business Classification System How businesses are classified or grouped together in the ordinance is the single most important factor in meeting our three goals of equity, revenue generation, and administrative simplicity: a. Improves equity by ensuring that tax rates and measures assigned to a class of business (such as retailers, professionals, or contractors) reflect the profitability and nature of particular type of business. b. Improves equity by ensuring that similar types of businesses are treated similarly. c. Depending on tax measures and rates, determines the ordinance's revenue generating capabilities. d. Enhances administration by the City and compliance by the business community by clearly defining the different types of business subject to the tax. To achieve these objectives, the business classification system needs to: e. Appropriately group businesses based on their nature and profitability. 3�5 L Balance the number of classes between too many and too few in achieving equity vs administrative simplicity goals. g. Ensure that all business activities are clearly subject to business taxes. h. Use the Standard Industrial Classification system (SIC Codes) of U. S. Department of Commerce as the basis for the grouping of business types in order to simplify and standardize their development. 2. Tax Measures The term "tax measure" refers to the base upon which tax rates are levied in determining the amount of tax due. The following are common tax measures used by California cities: a. Flat fees, such as 5100.00 per year, per business. b. Number of employees, such as $15.00 per employee c. Gross receipts, such as $50.00 per $100,000 of annual gross receipts. d. Gross payro14 such as $25.00 per $50,000 of annual gross salaries and wages paid. e. Units, such as $25.00 per motel room. f. Square footage, such as $5.00 per gross square feet of business area. The "tax measure" selected will clearly affect the ordinance's revenue generating capabilities in reflecting economic growth and changing economic conditions. For example, little revenue growth will be reflected in flat fee structures (revenues per business will remain constant even though sales and profits per business may rise annually) whereas gross receipts will increase (or decrease) with changes in economic conditions. The advantages and disadvantages of each "tax measure" needs to be evaluated in meeting our three goals of equity, revenue generation, and administrative simplicity. 3. Tax Structure After determining business groupings and tax measures, tax structures need to be developed which will meet equity and administrative simplicity goals. Tax structures should: a. Reflect profitability or general ability to pay. 3'/6 b. Not be regressive: similar businesses with lower gross receipts and profitability should not pay higher rates than similar businesses with greater gross receipts or profitability. c. Treat similar business similarly. d. Not be more 'complex than warranted by the level of taxation and revenues raised. One of the methods available to achieve these objectives is the use of tax ratios or differentials by business type to reflect general ability to pay. For example, although cities are precluded by the State from using net profit in determining local business taxes, standard ratios of net profit to gross receipts by business type is an acceptable method of achieving equity in business taxes. This type of information is available from a wide variety of sources, including authoritative income statistics such as the following provided by U.S. Department of the Treasury, Internal Revenue Service as of 1987 for sole proprietors: Ratio of Net Profits Business Class to Gross Receipts Wholesaling 9% Retailing 8% Manufacturing 19% Contractors 20% Services 20% Private Utilities 20% Recreation/Entertainment 29% Property Rental 28% Professions 50% These profit margins can be readily converted to tax ratios which reflect the relative profitability of various business types: Relative Profitability Business Class to Gross Receipts Wholesaling 1.0 Retailing 1.0 Manufacturing 2.0 Contractors 2.0 Services 2.0 Private Utilities 2.0 Recreation/Entertainment 3.0 Property Rentals 3.0 Professions 5.0 3--17 4. Tax Rates Three of the four business elements to be reviewed - business groups, tax measures, and tax structures. - can (and should) be developed without knowing bow much specific businesses will pay or how much revenue will be raised overall This is the sole purpose of tax rates. Once the database regarding existing businesses is developed and business groups, tax measures, and tax structures are agreed upon, tax rates are set which will determine the amount that individual businesses will pay and how much revenue the City will receive. The following criteria should be used in determining tax rates: a. Overall business tax revenues cannot be less than would be received under the current ordinance. b. Revenues from retail businesses should stay about the same as received under the current ordinance. c. Minimum business taxes should not be less than the cost of issuing, renewing, and administering business taxes. The current minimum of $25.00 for most business tax receipts meets this objective. d. Tax rates should be straight-forward and easy to understand. D. SPECIAL CONSIDERATIONS There are several factors that require special considerations in reviewing the business tax ordinance: 1. Apportionment Under State law, businesses must be taxed on a basis that reflects their level of activity in the City. a. For businesses located within the City limits that derive their sales solely from this location, this is not a concern. b. However, for businesses with. their .principal places of business located outside of the City but that conduct business operations in the City, this may be more difficult to determine. c. Similar difficulties (although in an opposite direction) are encountered with businesses that are headquartered in San Luis Obispo but principally sell their products to other businesses or individuals located outside of the City. d. These are not insurmountable problems; they are faced by every City'in California. However, some method needs to be developed to tax these JA/� businesses in proportion to their business activity that occurs in the City. 2. New Businesses Gross receipts is the primary "tax measure" used in the existing business tax ordinance, and even greater reliance may be placed on this tax base in any revision. For new business, this poses a problem in issuing their first Business Tax Receipt as there are no actual gross receipts yet. There are several alternatives for resolving this issue which need to be evaluated during the business tax revision. 3. Gross Receipts Period Under the current business tax ordinance, Business Tax Receipts are renewal annually on a City focal year basis (July to June). This is an inconvenient time period for many businesses as they maintain their records on a calendar year basis. E. IMPACTS OF THE REVISED ORDINANCE The following impacts of any revisions to the existing Business Tax Ordinance need to be evaluated: 1. Have equity, revenue generation, and administration been improved? 2. What are the financial impacts on: a. Broad classes of businesses? b. Individual businesses? c. Overall City revenues? 3. How do the revised tax measures, structures, and rates compare to neighboring and comparable communities? 4. Is the revised ordinance easier for businesses to understand and comply with its provisions? Is it easier for the staff to administer and enforce? F. ACTION PLAN AND SCHEDULE 1. Business Advisory Committee The Council should approve the formation of a seven member Business Advisory Committee to assist the CAO in preparing recommendation for the Council's consideration. This committee should be composed of owners and officers of businesses located in the downtown as well as other commercial areas in the City. Further, they should represent a broad range of business categories: retailers, professionals, contractors, services, manufacturing, and property owners and managers. 3-�9 The Chamber of Commerce has agreed to assist the CAO in forming this committee. 2. Schedule a. Orientation for committee members 2/91 b. Develop and present background materials to committee 3/91 c. Two to three committee meetings to discuss 4/91 and finalize business classifications, tax measures, tax structures, and tax rates d. Present recommendations to Council 5/91 BSTAX/2YORKSCP.YPF Attachmentff.-1 General Fund Tax Revenues 1989 - 90 All Other . Tax Revenues $12, 122,500 : ::::::..:..... :: ................................................... .................................................... ..................................................... ...................................................... ....................................................... ...........................................1............ ....................................................... ........................................................ ......................................................... Business Tax 4% Revenue $502 400 , Total General Fund Tax Revenues - $12,624,900 3a/ Attachment Total General Fund Revenues 1989 - 90 All Other . Tax Revenues $17,847, 100 . . ................................................... .................................................... ..................................................... ...................................................... ....................................................... ...................................................... ....................................................... .. . ..................... ......................... ....... ......................................................... Business Tax Revenue $502,400 0 2.7 !fl Total General Fund Revenues - $18,349,500 3� Atwchmen+ E� (a). CALIFORNIA CHARTER CITIES: COMPARISON OF BUSINESS TAX REVENUES AS A PERCENTAGE OF GENERAL FUND REVENUES (1) BUSINESS TAX REVENUE AS CITY % OF GENERAL FUND MONTEREY 5037% NAPA 5 . 60% POMONA 3 . 890 SAN LUIS OBISPO 2 . 65% SANTA BARBARA 3 . 28% SANTA CRUZ 2 . 73% (1) SOURCE : 1987-88 STATE CONTROLLERS REPORT INDICATES THAT BUSINESS TAX REVENUES REPRESENT 5 . 8% OF GENERAL FUND REVENUES STATEWIDE. Attachmenta-A X w � O t` N O N O O N O O CD t- N !' CD 1` t\ M r O N M Ln O CD r N M CD F- W O M O O CO 6 4 4 T Ln 4 r CD Lf) <"" ' 4 z t` S M O Ln CD O O N 1�- O M It qqt >; <; ; O 69 69 r r 69 r qt N r 69 r r 69 Ma 'ss#: *- W), 69 E9 69 69 69 69 (A. 69 69 ......... p 69 L CA CD CD CD 1` M It O (.0 CO I%t CD Cn Lf) is (.D Q"a N O S �t r O C) 1` O c*) O N C) d' N CA 'a' Ln O r CD T .Ty M T a; Ln N M O „: T C' 69 6% /rte r 6�} r V T r b9- r r b9 1� 69 69 6 . y� T� 69 69, 69 69 69 ':?S ::: X .W M t\ O 't r 0 'CF O CO O O r 0 C0 O Q L O r o CD N M. t\ 4 N rli N r tTi z. r LL. W 0...W O:.. cc Q O Ln O Ln M O O d' N O co � m O '`"' O O f` O (3) CC) O O CD CD O co Ln CA O i`>; O O CD O C'D w O O N Cfl O In T CA N Fa: t7 J U) y N Cfl N O CO CD r- `� CO N In Cn CV Cn M ':?><€>; Q' (n O Oqd- M Ln M co CD r t� O O r M : W T N M Ln r 0 M M N 69 M CD N O fi f: Ln O': z 69 69 69 69 69 r.' �.' 69 69 r 69 69 > �� 69. 69. 69. " f CIO LL W O O O N O O O O O O O r CC) CC) s>< s O .:. O U.) O 1\ O O O Ln U) O O CA Lo CD €« O (n Ln t` CD M 1` O m N F- O Ln Ln Ln I� CO - - W.>UJ ...z'>co Z O CA O t` O O O Nr 'cr O M O M O CD O CC) M O O Ct N O 1�- O Ln O O O CA N O O O N O <<s'.<.< ' O Q O N r% Ln Ln M N CA Cn 1` CA Ln r- % N J" N '7 M N f\ M CO r CO 'Ct Ln `t '.O z< O CL CIS �_ CU co tip as x O O p vVj U0 CDco p rte+ .�. +�+ „<„ J � p CL O c4 cd N cz c� c0 Ctl <"'`""' cC a U U 0 UJ ti Z IL a cn co cn < cA Attachment" . . CONSTANT GROWTH FACTOR - 1979 THROUGH 1988 TAX REVENUES GENERAL TEN YEAR REAL HISTORICAL ACCOUNTABLE GROWTH REVENUE CATEGORY GROWTH GROWTH (1) FACTOR GENERAL PROPERTY TAXES 13.5% 7.4% 6.1% SALES & USE TAXES 10.1% 7.4% 2.7% TRANSIENT & LODGING TAXES 11.8% 7.4% 4.4% FRANCHISE TAXES 8.4% 7.4% 1.0% BUSINESS LICENSE TAXES 7.2% 7.4% (0.2)% UTILITY USERS TAX 9.4% 7.4% 2.0% ;1) ACCOUNTABLE GROWTH IS THE SUM OF GROWTH IN INFLATION (5.8%) AND ?OPULATION (1.6%). ��5 Attachme G— Number of Businesses Per Type 1990-91 Retail 2,006 :...... 1 Wholesale & Manufacturing o 412 9 /� ............................... 10% Contractor Service 471 454 Entertainment 1% Prop Rental 26 303 Professional 1, 142 3a� Attachment.C=.2.,.. Business Tax Revenue By Business Type 1990 - 91 :. ::RetaiI ;:: b8 ................. $331,800 . ............. ....................................................... ....................................................... ....................................................... ........................................................ ......................................................... ......................................................... ......................................................... .......................................................... ........................................................... .......................................................... ........................................................... ............................................................ ........................................................... ............................................................ ........................................................... ............................................................ ................................................... ......... ............................................................ .... ::.:.:.........................boj; Contractor 25, 100 Prop Rental 4% $229000 (4.5%) Professional $79,600 Wholesale & Service (2%) Manufacturing & Entertainment (.5%) $18,700 $ 109700 �a7 Attachment en.3 PERCENTAGE OF BUSINESS TAX REVENUE COMPARED TO PERCENTAGE OF BUSINESSES PERCENTAGE OF PERCENTAGE OF BUSINESS TYPE REVENUES BUSINESSES RETAIL 68. 0% 41% CONTRACTOR 5 . 0% 100 PROPERTY RENTAL 4. 5% 6 PROFESSIONAL 16 . 0% 24% ENTERTAINMENT 0 . 50 1% SERVICES 2 . 0% 9% WHOLESALE & MFG. 4. 0% 9% Attachment,& W 0 0 0 0 0 tLO 0 0 t� W0 LQ to co Q) 4T N LA co CD Z Lo OO_ Cfl co LO 1*- (7) m w N 664 69 r 64 6s 1�- W:: Q 69' 64 64' 64 m u.:;x p G 'm: 0 Cl): LO a w : <<z< m; `X' 0 0 0 0 0 0 0 60 9 o aLU U') n CD (3) 0 T o 0 CACC] O_ CD O CA NC\j Ca W, .y Z N 696% 64 69 69 69 � +� W W 6% 6% c > ¢ Cn W C) CII � c LLJX D c0 O o CD co Cn CA Q d Cy CD 0 . 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Cn Q m m J Cn U LL WD U- a: W O J L ` v owC 0 co a OV a x Z 0 m 3� LU N N N N Attachment,9=L d0 O -j to «9 O tri Q CL W O tvi Q J 69 t9 e0 N c9 n w u► c � om o � h m cQi N o o .- N to N r`0 Hi 19 M tl! fA to N O 19 N CO t0 W t9 N a w m `o y co co co Ln Ew o n CL p p N_ O S A N CL 0 0 0 0 m i9 iAM `n o a w m w , Z m 69 N CD O W C 19 E w .r m lL T N 19 c7 O A N �1 C O GD � to O N9 N tD n E 'A tc M m U N T 6 ~ Q o o O O o0CDLq � 33v c� 0 69 69 Attachments-. oo O o .Oin n C y y O vi z c F" h h h V0 vi iy w z � y U � = a a a � n m •o y � c � y y y O v% O O Ln V_ h O y y 4-P G c. y Z Ln a a y y Q I� c y y 0 2 O o e e a o vi w si `r= Z y w O R y - U " i en e e w -: 41P 40�U H W •� ° e � ° o j � ZpS 205 - •� O O 8 N p V y i�A 6�9 y 331 AttachmentiLd. OO O o LO 0 N O 69 N n 0 O 69 r I':J E9 69 C6 O O O O M) In N O 69 r Q �O 0 J � L/) N N N O O � cND C7 t� U C 69 69 V7 O O � � CO O N O CU 64 6% m 69 m m CJ N O O O O 0 69 69 C' Q 69 O N ti a 00 N O M 69 N n N CL 69 r Z LOO,d 0 M 0 J 69 rn c� c � a 2 c to n M N W y 69 63 r O j N 69ti 69 69 H a c U O O O O r a: O OFE E ho o E 'E VJ O O O O O NO r UO CV) r o 64 64 f9 69 Attach mentjgLy ... t. 00 O o 0 Ln69 N N O . Q :j 69 69 O O O O LO to N O 69 r Q lD 69 69 r J 69 Un N N O Cz U r (NO CO r- 6%69 w O 0 O . [0 M f0 r M ffl 69 � r M 69 m CD W E 64 N 0 aQi H r C9 69 69 a Ln o 0 0 N O N O p r M t^J CD 0 69 69 69 a 69 0 un 0 0 N cD to O fC 69 r < (D d 69 69 r ti 69 z � c c a0i y 6'� 69 c 69, 69 � o 69 M N 0 H 69 C7 r O 69 Cz O 69 69 N C o O O U O o C 0 .E 0 0 0 'n �n Attachment.:-57 OO O O 0 0 h O 69 N I�- U') 0 r,: owb Cl O O O O O O O T T T r 0 J N N N u7 U p 69 r 69 69 69 0 LO O O O O O 6% M T O E h 64 6 d N cD h O G e9 co 69 Z co cc co m p � r r CO N C 69 0 � O O O O O iQ C 6cm 9 69 U') U7 E •? Q7 E 69 d 69 LL O O O N R 0 � D I Cl) M M I � r r E 69 669 69 0 E Q d ti. U w w a 2 ¢ o c E E io o I u) 33�- W (7 69 6699 69 69 w N N LO AttachmentALnl_ _. 69 q q M 69 N Nd) n N J 6% fus U7 0 U7 0. N O V O q O) O •C r M m c0 O T O Q 64 6699 N 64 6'.* N c9 69 0] q q q N O 60 .^— O O H b9 ' q a 69 69 LO c Q Q O r c`7 C) N m 69 69 64 c.'i a 64 0 0 0 0 Ifl r U) N O cC C7N Z 64 [Tp 69 TT T T T d CO Q Q Q N O Q 69 ,C7 q C c`) m M C7 O r L7 U) O 69 69 c9 U) d 0 T/1 L p7 LL U) LO q q /^ y C r U) v J > 69 69 c•) ch 69 W C,/^ C T T W q O OT M c`7 r d N69 O CO 69 U N d C O O O O O QOO H O O V7 LO .335 m (D 64 C4 4A &4 0 0 0 0 o N AttachmenuL . � r n J 69 69 f/1 O O O O 69 69 69 69 0 J N O N N n Lo U r t0 M r� O 69 69 0 W 69 69 W c0 N N 0 0 O � Or � N 44 69 M t M 69 N O O O O O F 69 M r O y f0 a 0 0 69 69 69 o. eA 69 64 69 W z a. 49 69 0 0 Q t"' C m Co q co 0 LO Z E 63 69 N C C Q� O ` 69 r lL 69 M M N N Lo 69 M r O cE 69 N cr Q 69 69 C co co co co E LO LO h n N o r N N N rIWJ O 64 U 69 0 0 0 y 69 69 b9 U3 cE Q y C C O O O O O O E0 CD ^ �^ LO O_ O N N _,J �L C7 69 609 CA 69 AttachmentZ O OO O N n N rz 69 69 J to O N O bq, v* O r O J Vj N M N O c7' r cND M f� U �C 69 69 Q O p 69 rffl r o 0 0 0 � r U7 ,UA) o D Pl r C'i U5 iM W,^I w 0 O a0 0 �" vJ v7 A v/ C r Z Cn uo �n cn �., N co C9 co O N69 r M M C`) r CO In C 69 to M G O Q LL.. 1� w C7 Co 0 M C r CO t() to 0 69 69 69 O 69 LL co co N O co N M 1- N 69 v> C O C69 C-. 69 Q � r� a 2 0 0 0 o ¢fn o o 'E L, E 69 6 9-37 C7 u9 69 69 64 ORDINANCE (1991 SERIES) AN ORDINANCE OF THE CITY OF SAN LUIS OBISPO REPEALING CHAPTERS 5.04, 5.08.030, 5.08.040, 5.08.050, 5.12, 5.16.030, 5.16.050, 5.16.070 AND 5.20.140 OF THE SAN LUIS OBISPO MUNICIPAL CODE AND ADDING CHAPTERS 3.01, 5.03.030, 5.08.040, 5.16.030, 5.16.050, 5.16.070, 5.16.080, 5.20.055, 5.20.140, 5.60, 5.64, AND 5.68 TO THE SAN LUIS OBISPO MUNICIPAL CODE RELATING TO BUSINESS TAX CERTIFICATION WHEREAS, the City's business tax ordinance has not been evaluated on a comprehensive basis since 1958; and WHEREAS, the City Council established the revision of the City's business tax ordinance as a high priority goal for 1991-93; and WHEREAS, the City Council approved the workscope for the review of the City's business tax ordinance on February 5, 1991; and WHEREAS, a Business Tax Advisory Committee was formed with the assistance of the Chamber of Commerce that was composed of ten members representing a broad range of business categories to assist the City Administrative Officer in preparing recommendations to the City Council for changes in the business tax ordinance in order to improve its equity, revenue generation abilities, and administrative simplicity; and WHEREAS, deletion of 5.04 will result in deletion of regulatory provisions which the City desires to maintain and which need to be added to the appropriate provisions of Title 5; and WHEREAS, the City Council has held a hearing to consider the proposed changes to the Business Tax Ordinance; NOW THEREFORE BE IT ORDAINED by the City Council of the City of San Luis Obispo as follows: SECTION 1. Chapter 5.04, Business Licenses Generally, is hereby deleted. Title 5 is hereby retitled to be "Licenses, Permits, and Regulations'. 9-3g Ordinance (1991 Series) Page 2 SECTION 2. A new Chapter 3.01 is hereby added to read as follows: CHAPTER 3.01 BUSINESS TAX CERTIFICATION AR77CLE L GENERAL PROVISIONS SECTION 3.01.101. PURPOSE The provisions of this chapter are enacted solely to raise revenue for general municipal purposes and are not intended for regulation. SECTION 3.01.102. BUSINESS TAX CERTIFICATES REQUIRED Business taxes are hereby imposed upon all businesses, professions, trades, vocations, enterprises, establishments, occupations, or callings conducting business in the City to which a business tax may lawfully apply, in the amount of fifty cents ($ .50) per thousand dollars of gross receipts. It shall be unlawful for any person to transact and carry on any business, trade, vocation, enterprise, establishment, occupation, or calling in the City not otherwise exempt without first having procured a business tax certificate from the City or complying with all of the applicable provisions of this chapter. The business tax certificate shall be evidence only of the fact that such business tax has been paid. Neither the payment of the business tax nor the possession of the business tax certificate shall authorize, permit, or allow the doing of any act which the person paying or holding such business tax certificate would not otherwise be entitled to do; nor shall it be construed as permission to conduct or carry on a business at any place within the City where the conducting or carrying on of such business is prohibited or fails to comply with the City's zoning, planning, or building regulations, nor shall it be construed as permission to conduct or carry on a business in such a manner as to create or maintain a nuisance. SECTION 3.01.103. EXEMPTIONS The following persons and organizations are exempt from the provisions of this Chapter. A. MINORS UNDER THE AGE OF 18. Businesses owned and conducted by minors under the age of eighteen (18) years shall be exempt from the business tax provisions of this chapter where all of the following conditions exist and legal 3--39 Ordinance (1991 Series) Page 3 documentation is provided to support that: 1. All persons engaged in the operation of the business are under the age of eighteen (18) years. 2. All persons engaged in the operation of the business have a bona fide ownership interest in the business. B. CHARITABLE, RELIGIOUS, AND NONPROFIT ORGANIZATIONS. 1. Organization activities. The provisions of this chapter shall not be deemed or construed to require the payment of a business tax to conduct, manage, or carry on any business, occupation, or activity of any institution or organization recognized by a tax board of the State with a "Statement of Domestic Non Profit Organization" or the Internal Revenue Service of the United States which is conducted wholly for the benefit of charitable, religious, or nonprofit purposes and from which profit is not derived, either directly or indirectly, by any person. 2. Nonexempt activities. The exemption provisions of this section shall not be construed to extend to any person, business, corporation, or organization receiving a fee, wage, stipend, salary, remuneration, compensation, or pay for the performance of any business, occupation, or activity related to exempt organization activities. Any such person, business, corporation, or organization shall be subject to the business tax provisions of this chapter and shall obtain the business tax certificate prior to any business, occupation, or activity being undertaken. C. CONFLICTS WITH FEDERAL AND STATE LAWS OR CONTRACTUAL AGREEMENTS. The provisions of this chapter shall not be construed to require a person to obtain a business tax certificate prior to doing business within the City if such requirement conflicts with the applicable statues, laws, or constitution of the United States or the State of California or other contractual obligations or franchise agreements. The Finance Director may develop administrative guidelines concerning exemptions, apportionment, and any other matters which the she or he determines as necessary for the lawful and effective implementation of this Chapter. SECTION 3.01.104. DEFINITIONS For the purposes of this chapter, unless otherwise apparent from the context, certain words and phrases used in this chapter are defined as follows: 3-�Q Ordinance (1991 Series) Page 4 A. "Business".shall mean and include professions, trades, vocations, rentals, leases, enterprises, establishments, and occupations and all and every kind of calling, any of which is conducted for the purpose of earning in whole, or in part, a profit or livelihood, whether or not a profit or a livelihood actually is earned thereby, whether paid in money, goods, labor, or otherwise, and whether or not the business has a fixed place of business in the City. B. "Finance Director" shall mean the individual designated by the City Administrative Officer to collect business taxes pursuant to the provisions of this chapter. C. "Gross Receipts" shall mean and include the total amounts actually received or receivable from sales, services, rentals, or leases in the total amounts actually received or receivable for the performance of any act or service, of whatever nature it may be, for which a charge is made or a credit allowed, whether or not such act or service is done as a part of, or in connection with, the sale or rental of materials, property (real or personal), goods, wares, or merchandise. Included in "gross receipts" shall be receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, rented or leased, the cost of the materials used, labor and service costs, interest paid or payable, or losses or other expenses whatsoever. Excluded from "gross receipts" shall be the following: 1. Cash discounts allowed and taken on sales; 2. Credit allowed on property accepted as a part of the purchase price in which property may later be sold; 3. Any tax required by law to be included in, or added to, the purchase price and collected from the consumer or purchaser; 4. Such part of the sales price of property returned by purchasers upon the rescission of the sales contract as is refunded, either in cash or by credit; 5. Amounts collected for others where the business is acting as an agent or trustee to the extent that such amounts are paid to those for whom the amounts were collected; 6. Receipts of refundable deposits, except that refundable deposits forfeited and taken into the income of the business shall not be excluded; Ordinance (1991 Series) Page 5 7. As to a real estate transaction, the sales price of the real estate sold for the account of others, except that portion which represents commission or other income; 8. Income from businesses which perform the function of agent or broker, except that portion of income which represents commission or other income to the agent or broker; 9. As to a retail gasoline dealer, a portion of the receipts of the dealer from the sales of motor vehicle fuels equal to the amount of motor vehicle fuel license tax imposed. 10. As to a retail gasoline dealer, any special motor fuel taxes if paid by the dealer or collected by the dealer from the consumer or purchaser. D. 'Person" shall mean and include all domestic and foreign corporations, associations, syndicates, joint-stock corporations, partnerships of every kind, clubs, Massachusetts trust, business, and other common law trusts, societies, and individuals transacting and carrying on any business in the City, other than an employee. E. "Sworn Statement" shall mean an affidavit sworn to before a person authorized to take oaths or a declaration or certification made under the penalty of perjury. F. "Gross receipts subject to the business tax" shall be that portion of gross receipts relating to business conducted within the City. For businesses with their headquarters located within the City of San Luis Obispo, their total gross receipts shall be deemed to be related to business conducted within the City unless an apportionment of gross receipts is requested by the business pursuant to Section 3.01.509 of this chapter. ARTICLE II. TAX AMOUNTS SECTION 3.01.201. TAX BASIS The amount of the business tax to be paid by the applicant is to be measured by gross receipts from the preceding completed calendar or fiscal year. For a new business, which has no gross receipt history, the applicant is required to pay the minimum tax. SECTION 3.01.202. TAX RATE The tax rate for all businesses shall be fifty cents ($ .50) per thousand dollars of gross receipts. This rate shall be applied in thousand dollar increments, and gross income shall Ordinance (1991 Series) Page 6 be rounded to the next highest thousand dollar interval for the computation of the business tax. SECTION 3.01103. MINIMUM TAX The minimum tax which shall be paid by any business will be $25.00, which represent the minimum cost to the City of issuing or renewing the certificate. ARTICLE III. APPLICATION AND RENEWAL SECTION 3.01.301. BUSINESS TAX CERTIFICATE APPLICATIONS Every person required to have a business tax certificate pursuant to the provisions of this chapter shall make a written application to the Finance Director and submit the following information: A. The nature or kind of business for which the business tax certificate is requested; B. The place where the business is to be conducted and, if the business is not to be conducted at a permanent location, the residence address, identified as such, of the owners of the business; C. If the application is made for the issuance of a business tax certificate to a person to do business under a fictitious name, the names, social security numbers, and residence addresses of the owners of the business; D. If the application is made for the issuance of a business tax certificate to a corporation or partnership, the names, franchise tax number, and residence addresses of the officers or partners thereof, and E. Any further information which the Federal or State taxing authority or the Finance Director may require to enable the issuance of the business tax certificate. SECTION 3.01.302. BUSINESS TAX CERTIFICATE RENEWALS In all cases, the applicant for the renewal of the business tax certificate required by the provisions of this chapter shall submit to the Finance Director a written statement, upon a form provided by the Finance Director, written under penalty of perjury or sworn to before a person authorized to administer oaths, setting forth the actual gross receipts earned the preceding calendar or fiscal year as reported to any Federal or State taxing authority to which gross receipts are reported to enable the Finance Director to ascertain —TJ Ordinance (1991 Series) Page 7 the amount of the business tax to be paid. Unless otherwise specifically provided, all annual business taxes required by the provisions of this chapter shall be due and payable on April 15 of each year and shall be delinquent on May 1st of each year. No renewal of a business tax certificate shall be issued until payment in full of all delinquent business taxes, including accrued interest and applicable penalties thereon is received by the City. It shall be the responsibility of the applicant to ensure renewal of the business tax certificate. ARTICLE IV. BUSINESS TAX CERTIFICATE ISSUANCE SECTION 3.01.401. CONTENT All business tax certificates required by the provisions of this chapter, unless otherwise provided in this chapter, shall be prepared and issued by the Finance Director upon the payment to the City of the proper amount of business tax. Each business tax certificate shall state upon the face thereof the following: A. The name of the person to whom the business tax certificate is issued B. The type of business taxed C. The location or address of the business taxed D. The date of the expiration of the business tax certificate E. That the business tax certificate when issued shall be the receipt for the business tax paid to the City F. That the possession of the business tax certificate shall not authorize, permit, or allow the person to do any act which such person would not otherwise be lawfully entitled to do. SECTION 3.01.402. POSTING AND KEEPING All business tax certificates issued pursuant to the provisions of this chapter shall be posted and kept in the following manner: A. Any persons transacting and carrying on business at a permanent location in the City shall keep such business tax certificate posted in a conspicuous place upon the premises where such business is carried on. B. Any persons transacting and carrying on business, but not operating at a 3— tl Ordinance (1991 Series) Page 8 permanent location in the City, shall keep such business tax certificate upon them at all times while transacting and carrying on such business. SECTION 3.01.403. DUPLICATES A duplicate business tax certificate may be issued by the Finance Director to replace any business tax certificate previously issued pursuant to the provisions of this chapter, which business tax certificate has been lost or destroyed, upon the filing of a statement of such fact and the payment of a duplicate fee set by resolution of the City Council. SECTION 3.01.404. BRANCH ESTABLISHMENTS A separate business tax certificate shall be issued for each branch establishment or location of business; provided, however, warehouses and distributing plants used in connection with, and incidental to, a business taxed pursuant to the provisions of this chapter shall not be deemed to be separate places of businesses or branch establishments; and provided, further, any person conducting two (2) or more types of businesses at the same location and under the same management, or at different locations, but which businesses use a single set or integrated set of books and records, may elect to pay only one business tax calculated on all the gross receipts of the businesses, except that a fee set by resolution of the City Council shall be paid upon issuance for each additional branch or location. SECTION 3.01.405. CHANGE OF LOCATION No business tax certificate issued pursuant to the provisions of this chapter shall be transferable; provided, however, where a business tax certificate is issued for a person to transact and carry on a business at a particular place, such person, upon an application therefor and the payment of a fee set by resolution of the City Council, may have the business tax certificate reissued for transacting and carrying on of such business under such business tax certificate at some other location to which it is to be moved. ARTICLE V. ADMINISTRATION SECTION 3.01.501. CERTIFICATION OF RECORDS A. CONCLUSIVENESS OF STATEMENTS. No statement required by the provisions of this chapter shall be conclusive as to the matters set forth therein, nor shall the filing of such statements preclude the City from collecting by appropriate action such Ordinance (1991 Series) Page 9 sums as are actually due and payable pursuant to the provisions of this chapter. Such statements and each of the several items therein contained shall be subject to certification by the Finance Director, the deputies of the Finance Director, or authorized employees or representatives of the City, who are hereby authorized to examine such books and records of any certificate holder or applicant for a business tax certificate as may be necessary in their judgment to verify or ascertain the amount of the business tax due. B. RECORD RETENTION. All persons subject to the provisions of this chapter shall keep complete records of all business transactions and shall retain such records for examination by the Finance Director, the deputies of the Finance Director, or authorized employees or representatives of the City, and maintain them for a period of at least three years from the annual due date of the federal tax return or the City business tax return, whichever time period is greater. Records which shall be maintained for audit purposes shall include State and Federal income tax returns, schedules and records included in such returns, and any and all work papers used to prepare such returns. C. EXAMINATION OF RECORDS. All business tax certificate holders, applicants for business tax certificates, and persons engaged in business in the City are hereby required to permit an examination of such books and records for the purposes set forth in this section during regular business hours and at reasonable times. D. INTEREST AND PENALTIES. If, subsequent to the examination, it is determined that the business has been delinquent or has non-reported or under-reported gross receipts, thereby underpaying business taxes, the certificate holder shall pay to the City within ten (10) days of notification of the determination of the amount of tax due, interest in the amount of 8% from the date the tax was due, and a penalty in the amount of the business tax due. Interest shall continue to accrue on the additional tax amount until such amount is paid in full. A mistake made in stating the amount of the business tax shall not, in any case, prevent or prejudice the Finance Director from collecting what is actually due from any person or entity carrying on a trade, calling, profession, or occupation subject to a business tax under this chapter. 20 Ordinance (1991 Series) Page 10 E. DETERMINATION OF TAX AMOUNTS DUE. If any person subject to the tax imposed by this chapter fails to submit information required, or if the Finance Director is not satisfied with records and statements filed, the Finance Director shall determine the amount of the business tax due from such person by means of such information as may be obtainable and shall mail a notice of the amount so assessed by serving it personally or by depositing it in the United States Post Office at San Luis Obispo, California, postage prepaid, addressed to the person at their last-known address. SECTION 3.01-502. INFORMATION CONFIDENTIAL It shall be unlawful for the Finance Director or designee, or any person having an administrative duty pursuant to the provisions of this chapter, to make known in any manner whatever the business affairs, operations, or financial information obtained by an investigation of the records of any person required to obtain a business tax certificate, or pay a business tax, or any other person visited or examined in the discharge of the official duty of the Finance Director, or of the amount or source of income, profits, losses, or expenditures, or any particular thereof, set forth in any statement or application, or amended statement or application, or copy of either, or in any book containing any abstract or particulars therein to be seen or examined by any person; provided, however, the provisions of this section shall not be construed to prevent: A. Disclosure to, or the examination of records and equipment by, another City official, employee, or agent for the collection of taxes for the sole purpose of administering or enforcing the provisions of this chapter or collecting the business taxes imposed by the provisions of this chapter; B. The disclosure of information to, or the examination of records by, Federal or State officials, or the tax officials of another city or county, if the reciprocal arrangement exists, or to a grand jury or court of law upon a subpoena; C. The disclosure of information and the results of examination or records or particular taxpayers, or relating to particular taxpayers, to a court of law for proceedings brought to determine the existence of the amount of any business tax liability of such particular taxpayers of the City; D. The disclosure, after the filing of a written request to the effect, to the taxpayer, or to the taxpayers' successors, receivers, trustees, executors, administrators, assignees, or 3-#7 Ordinance (1991 Series) Page 11 guarantors if directly interested, of information as to items included in the measure of any paid business tax, any unpaid business tax, or any amount of business tax required to be collected, including interest and penalties; further provided, however, that the City Attorney shall approve each such disclosure, and the Finance Director or designee may refuse to make any disclosure referred to in this subsection when, in their opinion, the public interest would suffer thereby; E. The disclosure of the names and business address of persons to whom business tax certificates have been issued and the general type and nature of their business; F. The disclosure, by way of public meeting or otherwise, of such information as may be necessary to the City Council in order to permit the City Council to be fully advised as to the facts if a taxpayer files a claim for the refund of business taxes, or submits an offer of compromise with regard to a claim asserted against them by the City for business taxes, or when acting upon any other similar matter; and G. The disclosure of general statistics regarding business taxes collected or business done in the City. SECTION 3.01.503. FINANCE DIRECTOR ADJUSTMENT POWERS The Finance Director shall have the power, for good cause shown, and documented by the Finance Director as a permanent record: A. To extend the time for filing any required sworn statement; B. To waive any penalties which would otherwise have accrued; C. To adjust the amount of the business tax due. D. To make refunds or prorations of taxes paid. SECTION 3.01.504. DEBT TO CITY The amount of any business tax and penalty imposed by the provisions of this chapter shall be deemed a debt to the City. A suit may. be brought against any person to enforce the collection of the debt described in this Chapter in any court of competent jurisdiction. The conviction of any person for transacting any business without a certificate shall not excuse or exempt such person from payment of any license due or unpaid at the time of such conviction and nothing herein shall prevent a criminal prosecution for any violation of the provisions of this Chapter. 3�8� Ordinance (1991 Series) Page 12 SECTION 3.01.505. DELINQUENCIES AND PENALTIES For failure to pay the business tax required by the provisions of this chapter prior to the delinquency date, the Finance Director shall add a penalty of Ten and no/100ths ($10.00) Dollars or ten (10%) percent of the business tax, whichever is the greater, on the first day of each month after the delinquency thereof; provided, however, the total amount of such penalty to be added in no event shall exceed one hundred (100%) percent of the amount of the business tax due. SECTION 3.01.506. ENFORCEMENT A. DUTIES OF THE FINANCE DIRECTOR AND CHIEF OF POLICE. It shall be the duty of the Finance Director to enforce each and all of the provisions of this chapter, and the Chief of Police shall render such assistance in such enforcement as may from time to time be required by the Finance Director. B. INSPECTIONS. The Finance Director, in the exercise of the duties imposed by the provisions of this section, and acting through deputies or duly authorized assistants, shall have the right to enter and examine all places of business free of charge during normal business hours to ascertain whether the provisions of this chapter are being complied with. C. PENALTY FOR VIOLATION. Any person who violates any provision of Section 3.01.102 by transacting and carrying on any business, trade, vocation, enterprise, establishment, occupation, or calling in the City without first having procured a business tax certificate from the City or without complying with all of the applicable provisions of this chapter is guilty of an infraction and is subject to punishment as provided for in Chapter 1.12 of this municipal code. SECTION 3.01.507. EVIDENCE OF DOING BUSINESS When any person, by the use of a sign, circular, card, telephone book, newspaper, other publication, or advertising media, shall advertise, hold out, or represent that they are in business in the City, or when any person holds an active license or permit issued by a government agency indicating that they are conducting a business in the City, and such person fails to deny, by a sworn statement given to the Finance Director or designee, that they are not conducting a business in the City after being requested to do so by the Finance Director or designee, then these facts shall be considered prima facie evidence that such person is conducting a business in the City. 3-� Ordinance (1991 Series) Page 13 SECTION 3.01.508. REMEDIES CUMULATIVE All remedies prescribed by the provisions of this chapter shall be cumulative, and the use of one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the provisions of this chapter. SECTION 3.01.509. APPORTIONMENT When the business tax imposed by this Chapter cannot be enforced without there being an apportionment according to the amount of business done in the City of San Luis Obispo, apportionment rules shall be established by the Finance Director. The Finance Director shall conduct an investigation and shall fix as the business tax for the applicant an amount that is reasonable and nondiscriminatory or, if a business tax has already been paid, shall order a refund of the amount over and above the business tax so affixed. In fixing the business tax to be charged, the Finance Director shall have the power to base the business tax upon a percentage of gross receipts, operating expenses, floor space, payroll, number of employees, business taxes paid to other cities, or any other measure which will assure that the business tax assessed shall be uniform with the amount of business done in the City of San Luis Obispo, or of businesses of a like nature, so long as the amount assessed does not exceed the business tax set forth in this Chapter. ARTICLE VL IMPLEMENTATION SECTION 3.01.601. IMPLEMENTATION OF REVISED PROVISIONS For business tax renewals for which business taxes were paid or due prior to the effective date of this Chapter, the tax rate upon renewal on April 15, 1992 shall be forty cents ($ .40) per thousand dollars of gross receipts in order to account for overlapping tax periods, subject to the minimum tax of $25.00. SECTION 3. Chapter 5.08, Section 5.08.030, License Fee - Occupational, is hereby deleted. 5.08.030 . SO Ordinance (1991 Series) Page 14 SECTION 4. A new Chapter 5.08, Section 5.08.030 is hereby added to read as follows: S: ) fl30 run�nai Conduct ineligibility for'Ci y .�censes end Pemuts A Except as gib"eru!tse provided herein, con ctian (tzicludang a plea of guzftV-& colo contendere)' of a,felony,'or a nuS ieme2nor inv©lying a crime= moral turpitude or. .. ... . .. conduct related tri the riaiure of the pernut requested„shall be..pr}mna facie: itsqual ficauon o f;an applicant; B The City Itcensarig 'Ufbority,`However, may dtsregard:such conviction: it'is found .::: anal tletehne lyy sut h:licensing autbonty that m�ttga.0 circumstances exist n Y..........=..... suchdeternunation, th&T: ty licedsing author>ty shall`considef...6 e following factors: 1 'I`he type of business 3�cense or per t,for which the person s ;VplMg 2 ,The nature acid Serio isrim D. the offense; 3 Tha carcumstances surrounqm dtrtg fhe'confln 1'he length of.time elapsed,sinee tlae comnctton, 5 The e ag of the person at the;time of the conviction= 6 'The presence ;or absence of retia i. talion or efforts at reliabilitatton: 7 Contributing s& ai or;environmental Gond inns, C 'The City lacensu g'authon#y'shall`give notice of tiisqualtfication to an app cant disqualified undei this section Such'nouce shall be ui mtii g and delivered personally or mailed to:the appitcant at,the address;shown on the applicauoi D An applicant wl�o is dasqualr#ied for::a City perrmt under.mm tuts section rnay'appeal such determtnatioa of'disqualifi'cation : Such appeal shall lie in wrtttg and filed'wtih'the City t"lerk untl�inten days of the date of the nfluce of dtsqualtfscattort The Council s1�all :.:.:.::::.:. ....... ...: ........ hear and determ1ne the appeal within ninety days after-itis filed `he eters nation o€the: .. Ctuncil.;.pn..the::aPPeal::shall be.; fina..i .. . ....................... SECTION 5. Chapter 5.08, Section 5.08.040, License fee - Location, is hereby deleted. 5.08.040 License Ise fee a bocation. 3-51 Ordinance (1991 Series) Page 15 device rented out or placed by such o1jeIatei in the city. SECTION 6. A new Chapter 5.08, Section 5.08.040 is hereby added to read as follows: 5 040 >F&e License'>.And:.Permit ................................... .. ...................__......_ __........ . ..................................................................................................... Application far 2 itcense or permtt shall be accrizttpanied : a tonrefundabie,fee as es#ablrslied by the CounctL ' 'The fee;shall be ztt ain amcttr►t sufl"icient fully to; defray adstrattve'cost ancurred to the processing of ar; atipltcat�on, anti shall nat ........... of other fees or taii�, inci ding business taxes, required;by AhJ code: SECTION 7. Chapter 5.08, Section 5.08.050, License Fee - Location owner, is hereby deleted. 5.08.050 License ease fee bocation o"ner: iequired of = opeifttoi. Each location ownei shall pay a ficense fee f0i each njechar�cal =zusenjent device owned, used and opciated by him in the stlin of ten d0flMs. SECTION 8. Chapter 5.12, Contractors, is hereby deleted. SECTION 9. Chapter 5.16, Section 5.16.030, Permit Determination, is hereby deleted. 5.16.030 , that no penitiL shaii be gianted at the meeting on which the petition theiefol is Flesente&I SECTION 10. A new Chapter 5.16, Section 5.16.030 is hereby added to read as follows: 1S:fltl 'Permit `_ Determnation' Pcirmit_applicat�oo shall'he referred'to;the Chief of Police ldr invesugauan aild report to: the::lireiising aurlrir�tY oiirsuant'to Se%ct;on.516.1180: SECTION 11. Chapter 5.16, Section 5.16.050, Permit holders not exempt from license fee, is hereby deleted. 5.16.050 Pennit Holdeza not Exempt fion, Licestse Feer. 3-5c;. Ordinance (1991 Series) Page 16 fees fo, conducting stich ba SECTION 12. Chapter 5.16, Section 5.16.050 is hereby added to read as follows: deefof.icense'sdpemit .:...:::.::.....:.::....:.:...::....:...:..::..::::......:::.::.:.:::.:::<:::. ::.::.:::::<.:'.:>:..::<.>:.,.::.:>,.:...::.:: ..::.:::;:.;".::.::.;:<.:.:<.>:.>:::.::.:;:.:::: Appitcattnn for a incense +or;pertntt 5 be aceompantQd by a nt� rendabie fs as es a#i ish by,die Comical he fee:'shall Ise M an amourtt m cient fuliy td` defray ,. •. ii'<:: :.:R:?ny.(:i:::i:)biC: :`:::.:�:::. ')::Y::::::.i...::J!::.::'w::.:vv:::::iY•ii ad ntrustrattve cost Incurred to the proces5trig of 6A appiicatro= and<s . hot bpan: 1tEu o€ oter #ees ortaxes, tncludtng bustness taxes, r tared b this code' SECTION 13. Chapter 5.16, Section 5.16.070, Entering private residential property without invitation deemed a nuisance, is hereby deleted. 5.16.070 Entering UVOIL Pfilate Residential Pioperty nithout invitation deeined a Nuisance. without invitation or autholization of the occupant, u, the occaymits, of stich residentiai FCISU112d PIOPCIty OL fo, any type of services oz disposing Of UL peddling OL hawidng the pLliiishabie m provided in this code. iiing in the city mheietivon any yeison is itsiding o, living, including pilv2tte SECTION 14. A new Chapter 5.16, Section 5.16.070 is hereby added to read as follows: 5 16.070' Enterurg upon Private Y2esident al Property without Invitation A.;.No a cttoz peddler,.hawke t aiinetartCM&Chani ranter vendor, or any other Pe son shali enter in or upon p rvate tesidential.. erty or premises tn, the cagy wttho%tif itvttat;on or aat orrraz3on of#iie accapant, +ar the oceuparits of sur1� res dential,premises. . fo the pttp©se of.soliciting orders far any and;alltypes of regi or personal property or.,or :. arty type of services or d sposuig of or ;pedd3in ter hawi Ing the same, except upon perdu€ auffi'e` iici l 3-53 Ordinance (1991 Series) Page 17 "Private residenrial'pfemmses"means any piem.s 5 to the clty wherdupon,a person restdng orng,, nclaiduig but;not ilrruteci to any privats residence, Hotel; mote' :.:.i.i':::::::.i:.:y::.v.:.::^iii;Citi:!.ii:i.:...:.ii::.i:.i':.::.::i:..'::::..i:...i:i:+..ii:.::.::::.::.y:.:::::::.::.i:::..:y::::::n :::.::::.::::::. .�::::.:: ioardtnghouse= zportzghouse, apartment ar nttlttple restdesttjal dwellutg SECTION 15. A new Chapter 5.16, Section 5.16.080 is hereby added to read as follows: Sa 6IiB0 Criminal conduct„ IneH --b-1- for CSty I.�ceases.snd Permits; Tse provastons of lection 5 OS Q30 shalt m.bepphcable t+p i11. ts Chapter. SECTION 16. A new Chapter 5.20, Section 5.20.055 is hereby added to read as follows: 5111 5$ Cnminal`Con uct nei►gL iiity for:L�ty Licenses;and Pe wits: '1' pzovistons ofecttonU8 OHO shall be appltcabte to,%this Chapter: SECTION 17. Chapter 5.20, Section 5.20.140, Certificate holders' registration and license fees, is hereby deleted. 520.140 Eerfificate holders' tegistiation and license fees. M� liceme fees to the city. be issued in the same mminei povided by this code foi othe, licenses of the city.- SECTION 18. Chapter 5.20, Section 5.20.140, is hereby added to read as follows: 5:2014(? Incense Appitcafwn and Renewal: Arty application for a license to,operate;a taxi s ►all be:accompanied py:a nonrefundable fee as.; 3talilished by theounciL' 'The applicauowfee charged hereunder, shall be in sufficient a :ya;d.>;...,;. ..i:< :::::::::::::.::.::::::::.:.: .::. ::::.:::::.:::::.:: :....,............................................. amotuits to fully defrministrative posts incurred tri the prcesstngof an application and are not taade tri:itstr of airy other fees or'tazes required under this code A�icetise to apgrate. a;taxa shall a renewed.:annually SECTION 19. A new Chapter 5.60, Section 5.60.010 is hereby added to read as follows: Chapters( stag 5 ttfl 30 Advertising by Post:n 1Permtt Required A .£very person earryitrg on the'business ©f advertising by paSttng, sHai' ,iaclang affixing Dr.P bills;or signs to or upon posts, fences,!: uildtngs, or +other structures, 3 5�, Ordinance (1991 Series) Page 18 except'b boards;p advemsuig slgii boards,sT all pay-a permit fee " Tlie fee shall a ill an : :.;:.: :;:s;:; »:;.:;:;,;:.;>:.:...;....:..::.;.:�:.�:.;;r::.,.;:;:va;;:;:•;::s;;;;•;;,::,,o:�::<::..:.,..,: •:>::s;':..: ':.:<.;::.:xc,;:x amt�unt sifficient to.defray administrative cost incurred, shall not be? u lieu :oi o#her fees or taxes, p3cludag,busu..ess.taxes, requreii b this code: B Before a permt# is issued under #his section, the appTcant must first:nbtaui a................... l`frq tke ..................... SECTION 20. Anew Chapter 5.64, Section 5.64.010 is hereby added to read as follows: Cptez; fid; P;u'tc€ .ances 5.64 0:10 Peizril .e ired Eueiy persvtt who:shad conduct a pubic dance at wlacll an admission fee.ts charged, sMl pay ................... permii ..........set y ounce, payable an ;advance his fee sialT be in an amt3unt sufficientst incurred,,and shall not,:. uz lieu of other fees or..axes,inclg usiness taxes,'rega;red. y;tis.cpt'e Before a;gernut�s granted under iii Section tTie_aplicarit must obtains aerinrt frnrli theChief of:Police an+f rnustduring such ranee provide twcT ororsr uniformed, rneusl3ers of a Ci#y liceizsed .private patio.: service ...........s e fined in ibis code, the nui ibdr of.sstch,persons i4 . etermiaecT at:tie fuT discretion'of<tfie Chief of<police .. ................................ .................................................. ......................................................................................... SECTION 21. A new Chapter 5.68, Section 5.68.010 is hereby added to read as follows: Chapter'S 6$ Cardrooms 5.690-0; ;+Carmroo as ) otii6 ted A'— ; Na persow:zhali conduct, mintai manage, operate, carry on......... o ra se to be; corrdsacied, main#dined, ttnaged, operated. or;;carriedon, any cardroom or other business where tables or other steins of furnsture. are useddtrectTy ar tntiirsctly for piaysng;cards of card garries and<for the;use of which a fee, cnmmisssart or;compensation. is directly or ini3irectTy charger ta, or accepted or received from, players; or partscspartsJn ,any such igogil o f;:cards.or,card garner; B . A "card room" means any space, room or encIostire furnis:e of 'equspped ifth a iab3.e or:tables, or oder items of'furmture,:used or;intended to be use as a car. e fo 'tl►e playing .0 ,cards, and the use of whsch i5 available to : public or any<portiflii of the pubs a provMed ...h...a...V.. "card rborn" shall not nclucle a rt3o in whsch the sole card game 3 Ordinance (1991 Series) Page 19 played ".'b'd e SECTION 22. Chapter 1.12, Section 1.12.060B is hereby amended to delete "Chapter 5.04 - Business Licenses;" and to add in its place: "Chapter 3.01 - Business Tax;" SECTION 23. A synopsis of this ordinance, approved by the City Attorney, together with the ayes and noes, shall be published once in full, at least three (3) days prior to the final passage in the Telegram-Tribune, a newspaper published and circulated in said city, and the same shall go into effect at the expiration of thirty (30) days after its said final passage. A copy of the full text of this ordinance shall be on file in the office of the City Clerk on and after the date following introduction and passage to print and shall be available to any interested member of the public. INTRODUCED AND PASSED TO PRINT by the Council of the City of San Luis Obispo at its meeting held on the day of , 1991, on motion of _, seconded by , and on the following roll call vote: AYES: NOTES: ABSENT: ATTEST: MAYOR CITY CLERK APPROVED: 1<11-y A nistrative Officer r aa� i tto ey 41 Director of Finance X56 Ordinance (1991 Series) Page 20 FINALLY PASSED this day of , 1991 on motion of , seconded by and on the following roll call vote: AYES: NOES: ABSENT: Mayor Ron Dunin ATTEST: City Clerk Pam Voges s7 ahlb RESOLUTION NO. (1991 SERIES) SETTING FORTH THE AMOUNT OF FEES FOR ISSUANCE OF DUPLICATE, BRANCH ESTABLISHMENT, AND CHANGE OF LOCATION BUSINESS TAX CERTIFICATES WHEREAS, Chapter 3.01 of the City of San Luis Obispo Municipal Code establishes business taxes and provides for the setting of fees for issuing duplicate, branch establishment, and change of location business tax certificates; and WHEREAS, Ordinance No. was made available for public inspection and review ten days prior to a public hearing held on this matter on August 20, 1991; and public notice was provided fourteen (14) days prior to the public hearing; and NOW, THEREFORE, the City Council of the City of Sa Luis Obispo finds and resolves that a fee in the amount of $ 0.00 (zero) be established fbr duplicate, branch establishment, and change of location business tax certificates. Upon motion of seconded by and on the following roll call vote: AYES: NOES: ABSENT: the foregoing resolution was adopted this day of 1991. ATTEST: Mayor Ron Dunin Pam Voges, City Clerk APPRO City Ad -nistrative Officer Director of Finance Wit t ney 3-59 ORDINANCE (1991 SERIES) AN ORDINANCE OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO AMENDING CHAPTERS IN THE SAN LUIS OBISPO MUNICIPAL CODE RELATING TO BUSINESS TAX CERTIFICATION On October 1, 1991, the San Luis Obispo City Council voted to to introduce Ordinance No. (1991 Series), which will add Chapter 3.01 to Title 3 of the San Luis Obispo Municipal Code relating to business tax certification, and will amend various other chapters of the San Luis Obispo Municipal Code to reflect regulatory provisions which the City desires to maintain and which need to be added to the appropriate provisions of Title 5. Primary provisions of the ordinance are as follows: 1. The sole purpose of the City's business tax ordinance is to raise revenue for general municipal purposes and is not intended for regulation. Neither the payment of the business tax nor the possession of the business tax certificate shall authorize, permit, or allow the doing of any act which the person paying or holding such business tax certificate would not otherwise be entitled to do. 2. All persons or organizations conducting business in the City of San Luis Obispo shall pay business taxes based on the rate of fifty cents (S .50) per thousand dollars of gross receipts. Minors and non-profit organizations are exempt from this requirement. 3. The renewal date for business tax certificates will be changed from an annual renewal on July 1st to an annual renewal on April 15th. The Council must vote again to approve the ordinance before it can take effect. That action is tentatively scheduled for October 22, 1991 at a regular City Council meeting to begin at 7:00 p.m. in the Council Chambers of City Hall, 990 Palm Street. Copies of the complete ordinance are available in the City Clerk's Office in City Hall, 990 Palm Street. For more information, contact the Finance Department at 781- 7126. Pam Voges, City Clerk 3-59 MEETING AGENDA DATE -1-9 ITEM COPIES TO: ❑-Dm&e9 Action ❑ FYI DOWNTOWN SAN LUIS OBISPO d2axII ❑r�'DDDR BUSINESS IMPROVEMENT ASSOCIATION CAO ❑ FRE CHIEF TRMNEY ❑ MDR q�CLM/ORIC. ❑ POLICECFL ❑ MGMT.TE M ❑ FEC.DIM 0r READ FILE El Lrm Dn TO: -Ron Dunin, Mayor Peg Pinard, City Council Penny Rappa, City Council Jerry Reiss, City Council Bill Roalman, City Council John Dunn, City Administrative Officer FROM: BIA Board of Directors RECEIVED DATE: September 23, 1991 WIC.01,U,NCIL 1991 RE: Business License Tax SApo,CA The BIA Board of Directors would like to acknowledge the extraordinary effort demonstrated by the Business License Tax Advisory Committee, and William Statler and Linda Asprion of the City Staff in formulating the new proposed Business Tax Ordinance. We would like to ask for one specific change and offer comments on areas of concern. The proposed renewal date of April 15th be changed to the existing date of July 1st. Businesses face federal, state, and property taxes during the month of April. In addition, businesses with in-store charge accounts suffer a reduced cash flow due to lack of customer payment in April. The added burden of paying an additional 'tax in April could prove a financial burden. City staff has contended that the April date is appropriate since it is a common tax month. In addition, City staff felt that the business tax amount owed would be relatively insignificant. These reasons do not justify a change in the date; the BIA Board asks that the date remain July 1st. Other areas of concern include: taxation of non-residential property owners, taxation of out-of-town property owners, and apportionment. The BIA revenue will be directly affected by these areas. The lack of clearly defined rules for these areas is of concern to the BIA. P.O. Box 1402, Son Luis Obispo, CA 93406 (805) 541 -0286 The BIA Board would like to request that City staff report . to the BIA monthly on the status of the above mentioned issues due to the direct financial impact on BIA revenue. The Business Tax Advisory Committee is scheduled to reconvene in two years, however; we would request more frequent meetings due to the potential for significant revenue loss. The BIA will be actively monitoring the effectiveness of the new ordinance and revenue generation. The BIA Board appreciates your consideration of our concerns and ask that you take the appropriate action that will benefit all parties.