Check
Thank you for your patience is our closed session ran a little bit long
The current time is 706 and I'm calling the meeting of the San Leandro City Council to order
This is a special meeting meaning it's outside of our standard sequence. It's not the first or the third Monday
It is the second Monday and we've called a special meeting so we can take at least a small set of actions
council councilmember bolt
Present vice mayor Viviros Walton
Present and mayor Gonzalez present. Okay, please join me in the Pledge of Allegiance stand if you're able to I
Pledge allegiance to the flag of the United States of America and to the Republic for which it stands
one nation under God indivisible with liberty and justice for all
the city of San Leonardo connects early meetings and fulfill its mandate and so discriminatory statements or conduct that would potentially violate the federal civil rights act of
1964 or conduct or and or the California Fair Employment and Housing acts
California penal code sections for three or four fifteen are per se disruptive to a meeting
Our meeting in particular and will not be tolerated
Please see the City Council handbook and City Council meeting rules of decorum for more information
Madam clerk your announcement, please
If you would like to make a public comment during the meeting
You can do so in person or via zoom if you are present at the meeting
Please complete a speaker card and submit it to the city clerk before the item is presented
Then wait for public comment on that item to be called if you wish to participate in public comment via zoom
You can use the raise your hand tool when the item is called
During the public comment session speakers will be invited to speak and will have a set time to share their comments a
Countdown timer will appear for their convenience and when the time is up the microphone will be muted all hands
Raised outside of public comment will be lowered to avoid confusion
Once public comment is opened hands may be raised to speak
At this point in time. We'll go to closed session action taken
I don't believe that we had any action taken advice was given but I will turn to a city attorney just to confirm
Thank You mayor to confirm no reportable actions were taken in closed session direction was provided to staff
Thank you for our for our consent calendar
Do we have any council members that would like to pull an item?
Councilmember Victor Aguilar, would you like to pull an item and if so, which one thank you mayor? No, I do not
I would like to move the consent calendar.
Okay, so we'll take the motion
right after we hear from the public
and I will come to you first on that.
Council Member Simon,
would you like to pull something from the consent calendar?
No, I'd like to recuse myself from item 4B.
Item 4B.
So here's my question for you.
Would you like for us to take two votes
or would you just like to step out for the consent calendar
so we can take our vote and then just be done?
I'm happy to do it either way cuz we can take two votes if you'd like I can step out for that for be for the full
For just for for be
Okay, is that what you're saying? Yeah, I'd like to participate in the other since I'm calling no problem
Thank you for the identification of the recusal at this point in time any other questions request to pull items
Seeing none. Let's move to public comment on this item
Mayor, we have not received any comment cards. We have one hand raised online. Please proceed
online. We've opened and closed public comment in person. Our online speaker is Douglas Spalding.
Good evening, council members. Thanks. We are all indoors shielded from the wind and the cold.
I'd like to just bring to everyone's attention item 4E, which looks to be another consulting
services agreement to the tune of three hundred seventy six some thousand
dollars and as I read through the item I'm a little confused because it seems
like we have a consultant to to advise in terms of crosswalks crossings and if
I'm and I'm you know I'm not the most technically adept at these things I
could well have it wrong. But it looks like the role of the consultant is to do things
that are already done by fine organizations like Caltrans, like PG&E, it's like basically
maybe the go-between between the city and these organizations. And it confuses me why
we'd be spending so many hundreds of thousands of dollars on something that seems like it
could just kind of be happening because it's people's jobs already. I don't know. So maybe
somebody there knows more than I do and could get back to me and help me understand. Thank you.
Thank you. Mayor, there are no more hands raised online.
Okay, so we will close public comment. In our written agenda up here that we're working off
of to manage our meeting. Numbering is a little bit misaligned so I think you'd
like to recuse yourself on the Heron Bay item is that correct? Okay so council
member and that's item 4C as in Charlie and so for council member Victor Aguilar
I think you wanted to make the motion. I'm assuming that you'd like to make a
motion for for a B D through H is that what you are moving at this time so
there is a slight misalignment okay so it's C so it would be I think your
motion is for for a B and then for D David through H yes that's your motion
okay do I have a second on that motion council member James Aguilar I'll second
Okay, so we've got a motion and a second by first by councilmember Victor Aguilar with a second from James Aguilar for
For a for B and then D through H any further discussion seeing none. Please vote
All votes are in and the motion carries unanimously
Okay, if you would please step out briefly while we move through the second item
So do I have a motion for item for?
see
Vice mayor so moved by the second council member bolt
Second on the motion by the vice mayor with a second council member bolt. Is there any further discussion? Seeing none, please vote
All votes are in and the motion carries unanimously with six. Yes votes and council member
Fred Simon being recused. Thank you six one. Thank you
Say turn if you can assure the council member Simon returns
And then it's my time we'll move to item five a five a our presentation
Regarding receiving our feedbacks regarding potential November 26 measure as listed in our agenda
We've got deputy city manager Eric Engelbart here to present
Good evening mayor and council and members of the public joining us tonight in person and on the zoom happy to be here tonight
to provide this presentation on
The our efforts to explore the business license tax modernization
So I've got some highlights of our agenda that we'll be running through here as part of our staff presentation tonight
We'll start off with a summary of prior actions and how we got here
Summary of the robust outreach efforts that we've conducted to date on this topic
Well, then here are some updates on just both the fiscal and a regional context
That informed these discussions
We'll also have an overview of both our current business license model as well as an overview of the model
that's under current evaluation,
and then we'll wrap things up with some concerns
and observations regarding that model,
as well as some potential changes or mitigation measures
that could be explored and wrap things up
with direction that we're seeking.
So many of these dates before you should look familiar,
all of these highlighted dates before you
are represented various preceding times,
and we've had these discussions with the City Council
in various forums. Starting at the left you can see back in February of 2025 during our
annual Saturday annual planning session at that meeting the council directed staff to
begin work to explore a potential November 2026 revenue measure. Then in the June of
2025 as part of the budget discussion staff did propose to incorporate a $500,000 allocation
to support further exploration analysis and outreach efforts associated with the November
measure.
At that time, council did not authorize the funding to proceed forward, though it did
ask the staff to come back once a year and fund balance estimates were known.
As soon as that information was available, it was presented to council on December 1st
of 2025 along with a request to proceed forward with exploration of such a measure at that time
council did not authorize staff to proceed though the item was was reconsidered at the
december 15th to 2025 meeting at which time council did direct staff to proceed forward
then in february on february 17th of this year council directed staff to work with a consultant
to conduct a poll and to specifically test three different possible measures,
one of which was a business license tax monetization as well as a parcel tax and
a vacancy tax. The polling was then conducted and once the polling
information was available, we presented it at the April 6th, 2026 meeting and at
which time council received the results, authorized consulting services
to help support the effort and then we'll and Council also directed us to
proceed forward with the conducting outreach and analysis related to the
business license tax modernization. Since that time we have open here to some
highlights of the various outreach that we've done to various stakeholder groups
and the public and business owners. So you can see there beginning basically
the day after we received the direction from Council we began identifying and
lining up relevant financial consultants
and developing draft outreach materials.
We also engaged in dialogue with the Chamber of Commerce
via email initially and then we wanna thank the chamber
for inviting city staff to attend
a special executive board meeting
to provide a presentation of that April presentation slide
that can address any questions.
The chamber then followed up with some additional
follow up questions via email and responsive information
provided back to them. Then on May 19th you can see there we launched a city
survey portal and that is still live and available today. One can click on
these links here in the materials or visit them and still continue to
provide feedback. We also established a dedicated project phone line for calls
or texts for questions or input. A physical paper mailer was actually was
mailed out as well to nearly 20,000 resident or over 20,000 residents
Notifying them of these discussions.
There was also related social media posts, online videos,
and other ads notifying the public as well
on all of our social media channels.
Late in May, last month, we also launched
a dedicated project website.
You can see the address there that has just a lot
of information on the model and the proposal
that's under evaluation right now,
including an estimator so that business owners
who might be interested to understand the ramifications
of the model could calculate and drive some estimates.
And then of course, in addition to that,
we had various other outreach that took place.
You can see there including issuance of a press release,
notification via email to over 7,200 businesses
in our database, emails to our business associations,
and then in all the materials,
we also included a variety of ways
in which feedback could be provided
in addition to attending tonight's meeting.
I think we also wanted to provide just some fiscal context.
Much of this information on the slide
should look familiar to the council
as we've highlighted these topics
in various other public forums and public meetings.
As we know, the city continues to face
a number of long-term funding challenges,
including related to capital projects,
infrastructure needs, and public safety.
Yet, like all municipalities, we do face,
we have finite revenue sources, right?
We basically have our general fund and we have reserves.
So it is challenging in terms of on the revenue side.
Additionally, like virtually all other municipalities
here in California, we also face a number of legacy,
unfunded liabilities, including those related to pension
and OPEB obligations.
And I guess long story short, and suffice to say that
Cost savings alone, while they may balance the city budget,
they won't fully address all of the fiscal challenges
that we face.
And then also I think just general mantra
as staff has evaluated this is the notion
that really kind of one has to look at both sides
of the budget, right, both on the expenditure side
as well as on the expenditure side.
I think it's also worth noting some regional context
that helped inform this discussion.
you can just see here on the screen before us,
the kind of overall environment here in Alameda County.
And you can see the vast majority of cities
already have what are known as gross receipts,
business license tax models already in effect.
And in addition to these, it's also worth noting
we're aware of at least three or four other cities
that are actively involved in a very similar process
that we're in right now of evaluating the possibility
of modifying or shifting over to a gross receipts model.
And indeed just last week,
understandings at the state of Hayward City Council adopted an ordinance to
formally place a business license tax modernization with a grocery sheet
structure on the upcoming November ballot also worth noting all all the
efforts and all the work that your council has done to help reduce our
ongoing expenditures and address our fiscal challenges through budgetary
reductions most of this should look familiar to us and as a reminder as part
of the mid-cycle budget process that just wrapped up.
You know, we've identified a path forward to closing
an $11.6 million structural deficit.
And you can see the highlights there of some of the approaches
that are being taken to do that, including $6.4 million
in operating expenditure reductions
and inter-fund transfer reductions
that have already been adopted.
And then looking ahead to the upcoming biennium
that'll start about a little over a year from now,
you can see there's also quite a number of other cuts
have already been identified and that will be baked into our baseline budget planning process.
Also worth noting here, you can kind of see an overview of our current business license model,
acknowledging that there's a lot of information on that screenshot on the right-hand side,
but rest assured, one can just click on that link that's visible on the page there to see this in
greater detail. At a high level though, our current structure, which is quite dated,
My understanding is that it was last updated
in maybe the mid-90s, although some of the definitions
and classifications even go back to as early
as the 1960s in some cases.
And you can see just to highlight a few,
you can even see we even have a classification
for fortune telling with its own distinct rate as well.
It just kind of highlights the error
in which some of this was originally developed.
And at a high level, basically that tax is typically
calculated with a base fee along with an additional unit fee that's typically
based on either the number of employees or the square footage of the business.
Some highlights here you can see this is again our current business license
model as it's currently in effect and already being implemented in this
current fiscal year we're expecting to derive about a little under six point
seven million dollars from that current model and you see this is really just
kind of a breakdown of the sources of that revenue under that current model
And you can see in a different kind of categories of business types how many of any of those licensed businesses exist here in
San Orlando that have business licenses and the amount of funds that were derived by breaking broken down by category
Now we're gonna kind of pivot a little bit here in terms of this this this concept of a business license tax modernization
And it includes a number of assumptions that I'll go over here
As an initial model we took a look at Union City just down the road from us
as a potential model to analyze and to analyze
what that model would look like here in San Leandro.
The reason why Union City was selected
is for a number of reasons, one of which is,
generally speaking, they are known as a community
that prioritizes economic development,
also worth noting that they just re-modernized
their own structure in 2024 following a robust public process.
And based on feedback we've heard from staff
that organization that generally speaking the the the community has has
adapted to it and they have not seen some kind of large-scale departure of
businesses or something along those lines following the adoption of that
measure similar as I mentioned earlier to one of the things is our current
structure has approximately 30 categories and so a modernization
typically we see in other cities including in cities to to narrow that
consolidate those categories. Also the first $25,000 of gross revenue is
exempted under the union city model and just a reminder here and this last item
this last bullet points and of sub bullets therein really reminds us again
why we're here today and why we're having this discussion again there's
just you know quite a lot of community needs that we hear about in these
meetings and in other forums that the public has identified concerns for all
these issue areas for which sufficient funds to really address all the needs
we don't currently have and so ultimately if a measure were to move
forward you know you can see some of the highlights of the various funds or
service areas and programs that could be funded by the council. So here we have I
know we have a lot of numbers on the screen but just at a high level what this
is showing us is if we were to take the Union City model that was just updated
and modernized in 2024 as part of that election cycle and transpose that here
and San Leandro to our business community.
You can see kind of what that would look like.
So those categories at the left should look familiar
from two slides ago when we outlined the current revenues
we're already deriving.
And then the bottom here, right-hand corner,
you can see the grand total of revenue that could be derived
again if that union city model were transposed here.
Worth noting though, again,
this is the grand total of revenue,
so a little under nine million.
And recall for comparison from two slides ago,
Our current model is generating about a little under 6.7 million.
So it's the delta between those two is what we're talking about.
So this 8.997 would replace the 6.6.
So what that means is essentially a net increase of less than $3 million annually.
So just to drill down further, like what would this actually mean for a number of businesses
in our community.
As I mentioned earlier, this is a complicated text structure and they are inherently so.
But you can see a number of variety of different examples here of different business types.
And you can see, I would draw your attention to these rows 3 and 4 that are highlighted
in beige color.
And you can see the difference of what they would experience.
So taking one example here, say highlighting row, a cell 1C, you can see basically if you
have a restaurant here in San Leonardo that currently generates about $1 million of grosser
seats with 12 employees, they're currently paying about $800 a year for their business
license tax in our current model.
if we were to transition to a Union City model their tax would actually decrease.
But now conversely you can take a look someone like a car dealership that's
generating 65 million dollars with 70 employees and they would see quite a
market increase from four thousand dollars a year to twenty seven
thousand dollars a year. So you can see there's a number of scenarios here where
there could be quite significant percentile increases if we were to
simply transpose the Union City model and then to clear staff is not is not
recommending that at this time. So just kind of highlighting again to drill down
further on some of those but we classify as concerns and observations that we've
noted based on this model some there is just some inherent differences between
Union City and San Leandro we certainly have a number of well I would say a
larger business community here a larger number of businesses we also have a
number of very large businesses including over 30 businesses with over
150 employees, greater than 20 businesses with over 50 million dollars in annual
revenue. We're also knowing there are some examples or ranges for for large
businesses who with the current rates range from a low end of about 8,000 a
year all the way up to a high end of some business that are already paying
$200,000 a year under the current structure and you can see below that how
those ranges could change under the Union City model from between 10,000
one to 248,000 on the high end and then for any business type you can see the
low end is currently $171 per year and then the high again is about
200,000 and then you can see the new rates as well but notably and it's
certainly a concern we want to flag is that in some instances such as the ones
I just went over in the preceding slide you can see some businesses would see
quite significant increases. Nevertheless there are a number of smaller business
who business types who are anticipated to see a lesser impact of increase and
in some cases they're even businesses who would see an annual decrease. And so
that's why we're highlighting for your awareness what we're classifying and
potential mitigations. And so the idea is further direction we received we
analyzed in depth at the Union City model, did a lot of analysis, did quite a
bit of robust outreach, listen to business owners feedback, really drill
down on certain examples and we identified you know some some concerns
with that that that Union City model if we were to just boilerplate transfer it
over without making any changes to it so we want to identify there's these
options that do exist to potentially mitigate those impacts if you all
directed us to do so including what I would say and we were kind of put these
in order of prioritization from the staff's perspective. Certainly I think
think refining those rates for the highly impacted business communities
would be a logical next step in terms of trying to mitigate those impacts, and I
would say this is commonplace. No two cities are precisely alike, and so just
about every city that has a gross receipts model has done some
customization to reflect the conditions in their in their local community. Other
options could in phasing it in over time, and that could be baked into the
ordinance into the language for the tax so that you kind of try to allow time
for businesses to adapt to that new model over time rather than just like a
full conversion in year one. Another options could include exploring you know
maximum level gross receipts that are subject to taxation though that is not
very typical in other cities. There's also you know we could look at modifying
those exemption thresholds as I mentioned earlier Union City currently
exempts the first $25,000 of annual revenue.
There could be other ways of increasing that exemption
to capture more businesses with exemptions.
And then other options also just as a reminder,
as you recall from prior meetings,
our economic development team has been working
in partnership with the council through the process
of their adopted economic development strategy,
which highlights a number of sort of clients
like priority business areas
that we're trying to incentivize here in San Leandro,
including manufacturing, R&D, other large-scale tax,
sales tax generators, high-paying large employers,
and of course housing providers,
and many of whom have been impacted
as a result of recent policy changes.
Some other just generalized consideration,
policy considerations we wanna highlight
is that part of the context as to why we're exploring this
in addition to the fact that most other cities
in the Alameda County are already using such a model
actively exploring converting to one it's also worth noting that there are
some business types that just by their nature don't necessarily fully offset
the cost or that the service level impacts that their their operations may
may have on the city so for example you know there's certain examples of
professional services you know using just some examples like dental offices
or law firms or others like that where they're not most of their revenue is
derived from services being provided not actual products that are being sold so
there's no sales tax that's coming along with that. Additionally using example
say warehouses or other some of the more industrial type businesses where they
have a lot of truck trips involved they can have a very significant impact on
pavement condition or in some cases parking or just urban runoff as well and
then nevertheless with all that said we also want to ensure that any changes
balance those impacts with the potential impacts of the businesses and
These all items all come out of our ED strategy as well.
Of course, we always want to focus on retaining
the businesses that we have, supporting their long-term
growth and hiring and expansion.
So now we're on the last slide here
and just highlights the direction that we're seeking
from you all tonight, but in particular,
providing direction on those potential mitigations
or modification measures that I just highlighted
a few moments ago to help better incentivize
business retention growth, hiring and expansion.
And if so directed, the staff is prepared
to bring forward a draft ordinance in July
for placement on the November 26 measure.
And just for broader context on that too,
to the extent there is still a desire
to proceed forward with the measure for November,
our deadline essentially is July
in order to meet those deadlines
in order to get it on the ballot.
And that wraps up staff's presentation.
I'm happy to answer any questions.
Thank you for your presentation.
So what we'll do is we'll take questions
then we'll go to public comment,
then we'll come back for further discussion.
Librations, so questions, first please.
And may I also be able to interject, I apologize.
I would on note too, we have Eric Myers,
who is our tax consultant from HDL,
who's on the line virtually with via Zoom.
And he's available to answer more kind of
technical questions about the model
and the analysis that took place.
And we also have Bonnie Moss from Clifford Moss,
who's been our strategic advisor on this initiative,
as well as our team from the economic development division,
as well as our finance department here to help.
Thank you for the service of resources that are available to us. So at this point in time, we'll go to questions from council members
So we'll start with council member bolt
Yes, thank you for the presentation
I know we spoke a lot about Union City and I get it this to communities that are
Quite often looked at
You know similarly
But are we taking into consideration if there's a business in San Leandro?
that also does the same type of business in a different community not Union City
What they're paying in that city to kind of
You know because I don't want to be in a position where we're going so far here and then in a different city
They're not really doing that and then we lose to that city a certain business
That is certainly some of the types of analysis that you all could direct us to do
I will share that these these then by the very nature of these models of this particular business
Tax or this particular tax structure is inherently complicated, right?
And there's all these various permutations every city does it in a different way
It's a much more complex model than say some of the other
general purpose taxes that we've looked at in past election cycles like the real property transfer tax or a sales tax where it's much more
straightforward and clean apples to apples comparisons and so but to the extent the council is interested in further analysis of other cities
We can certainly do so beyond the information that's already presented here. I think I think
mine's geared more to just if we have businesses that operate in multiple cities understanding
what they're paying in those cities as well so I'm not saying like go figure out what all the
other cities are making people pay but to the point that we're looking at specific businesses
that are here in San Leandro and they say for them it's apples to apples they're doing the same
thing in this city and that city that we're taking time to understand what that number
is that that's all I'm requesting but it's a full council that that's all I have.
Thank you so we'll come to Councilmember Victor Aguilar.
Thank you mayor and thank you Eric for the presentation I just like what I'm having a
hard time wrapping my head around is the potential 700% increase with regards to manufacturing
Um, yes, it's great that we can potentially garner the revenue, but I just wanted to,
you know, having a trouble trying to figure out like, what is equitable?
Um, and, you know, with regards to warehouses, I mean, you know, warehouses, does that include
storage facilities, like public storage?
Is that considered a warehouse?
Because I think that that decrease
is something that shouldn't not be existent.
But the increase with regards to manufacturing,
I think there's, you know,
and we received a lot of emails
from a lot of businesses with regards to this.
And I can see why folks are talking about this
trying to figure out what makes sense and like my council colleague mentioned
what are other businesses in other cities being charged because you know
the last thing I want to do is lose a major company to a neighboring city who
is not charging these astronomical rates with a 700% increase so how are we going
to make this equitable. Thank you councilmember for your question I think
this all speaks to you know these these concerns and observation acknowledging
given the time constraints available we provided this analysis we worked with
our tax consultant to derive it these estimates were derived we've highlighted
for you this the very similar concerns you've just you just highlighted as well
and your comments just now and so that's why we're we're suggesting mitigation
measures I think this all speaks to this kind of first bullet point here about
refining those rates and modifying the structure so that we're not just cloning
the union city model but we're taking into account those local impacts. Gotcha
thank you for that that's my question. Then if I could clarify he did ask a
question about public storage. Do you know which category that would fit into
off the top of your head? I don't offhand but I will look to my... Okay so what we'll
to do is we'll let them do the research and we'll continue with council members with their
questions. Councilmember Bowman. Thank you Mayor. I'll try to ask just the
questions and then come back for comments. I really appreciate the initial outreach that's
been done but I know that we've if we go to that slide of the outreach sort of you know
when the council gave direction to go out there and figure out if we want to do this
like this does not seem like enough time to come up with a fully baked policy
for this November. Would we best practice normally spend more time than what we've
had to come up with what this structure would look like? I would say certainly
and other cities that have done done this there's typically an ideal world
there's more time. Okay because I did notice you earlier you said you know
there were time constraints,
and it does feel really truncated.
The other question I had is on the slide six,
in terms of original context.
Nine of the 14 cities in Alameda County use gross receipts.
Hayward and Livermore do some sort of mix,
but most businesses do.
So it seems that only Dublin and Albany do not.
And so it does seem like we are on the right track,
if I'm understanding correctly,
to be able to look at our current structure
to see what modifications there are.
Would you say that that is,
that for us to sort of fall in line with the other cities
in Alameda County, the majority of which are using
gross receipts, we're one of the only ones
that do not except for with cannabis
and parking lot businesses?
That is, I mean, I would say it is correct
that we are, for lack of a better term,
somewhat of an outlier now in terms of the model
that we have and most, the majority of cities
in Alameda County have transitioned away
from that type of model and towards this grocery
suits model.
Also I would share, I have some information here
while it's coming in in real time that public storage
in the model is listed under property rental.
so I can answer Councilor Aguilar's question from earlier.
Okay, and then in terms of possible mitigations,
help me, Eric, if you could understand
the timeframe for this.
Do we need to build out what these sort of mitigations
would actually look like?
Would we be able to do that before putting it on
the ballot this November, or would this be something
that would require us to give staff more time
to be able to fully understand
what these possible mitigation efforts would look like.
Sure, I would say either is possible.
I mean, certainly we are prepared if so directed.
If the goal was to focus on the November ballot,
that means we need to come back to you all in July
and we're prepared to do that
and come back with some proposed refinements.
With that said, certainly there are,
that is a tight period of time.
And so in optimal circumstances having additional time,
it could do more robust analysis
and working with our tax consultant
and doing more research and kind of drilling down
on these various permutations.
As you can imagine with a truck of attacks like this,
there's just quite a different ways,
variety in ways in which it could be modified.
Great, and then the last question is for the last slide
or slide 15 around policy considerations.
Tax changes should balance potential impacts
to businesses retention and growth hiring expansion.
Is that what is driving what would need to happen
for slide 14, possible mitigations?
I would certainly say that is a lens through which
we would certainly be evaluating any such refinements.
Thank you.
Can I, through the mayor too, just to respond
to confirming the public storage
would fall under warehousing, to your question.
Oh, it is warehousing?
I thought I heard property rentals.
We verified it looks like it would be under warehousing.
under warehousing okay thank you thank you thank you council member Bowen
coming to council member James Aguilar yeah I have one question I think that
kind of fits into council member Bowen's point about timing do you have a drop
dead deadline for us to communicate with the registrar of voters that were
placing something on the November ballot what is that deadline sure of course
Defer to the clerk on that one, but old my understanding is it's I believe the very beginning of August
And given that we have a typically here have a August recess
What that means is a practical matter is by end of July basically
And according to our current skin adopted council calendar, that would be basically the last meeting in July
In the absence of a special meeting. Thank you. That's helpful. Thank you
And then you had been in there councilmember Simon. You're out
You're back in. Okay, there you go
Councillor Simon thank you for the presentation just so I understand the
slide here our current fee model is based upon number of employees in square
footage generally speaking the majority here and this gross receipts that we're
considering are we looking at or considering profit margins for
businesses if they're pulling in a lot of money but their expenses are really
high? Yes, I would say this. In general, best practice and is incorporated into the Union
City model. The intention is to have customized rates for these different categories that
takes into account, like certain examples, like restaurants would typically have very
low margins, right, would be an example of a business that is typically and there's others,
but versus high margin businesses, and so the intent is to have some customization there
to reflect that
Okay, so regarding the restaurants you mentioned your current rate goes from $800 to $320
Could you illustrate how that happens?
Well, I think in this instance we were the comparison here and then again, this is a specific like
Hypothetical example and knowing that every restaurant is different but under this example
It's assume we have a restaurant that makes 1 million dollars even of annual revenue
And then you apply the new formula,
Union City Formula for that category of business.
And then the output of that formula
is basically this new rate of $320.
Conversely, their current rate is based,
and we go back to that earlier slide with the,
and you can see, I don't know if you can see
restaurants on here, but you can see
how the current formula works,
which is really more focused on,
that not, well it's just not focused on gross receipts.
So are you pulling in expenses from the restaurants
or how are you telling what their profit margin is?
So state law for these types of taxes
really limits us to gross receipts.
We're not able to have some kind of net.
It's not a structure or a model that we're able to utilize.
And so the idea is ideally that the structure itself,
or the formula that's applicable for a category,
takes into account the generalized conditions
of these types of categories of businesses.
but we cannot take legally take into account
or start like deducting costs
or things like that off their business.
Yeah, I'd just be curious as this progresses
to understand a little bit more how that works,
how to see that formula, how that equation works.
That's quite a drastic cut for the restaurants,
which may be helpful to them
if they have a high profit margin,
but just trying to understand how that works
at profit margin factor.
And is there a summary of comments
from the business community?
Do we have, um.
We do, yeah, we do, I would say this,
we certainly have through the, well we have,
I would say this, a couple things in terms of feedback
received to date.
Certainly there was the polling data,
scientific polling information that we presented in April.
In addition to that, we do have summaries of the responses
that we've gotten through the polling and feedback sessions
and outreach work we've done over the last,
since the last check-in with council.
We did not include that in the presentation tonight
because part of our intent for tonight's meeting is really to create that forum
to hear from the business owners you know who are coming tonight as so to
have that give them the feedback session and additionally I would note that the
channel that we have right now for example that we listen page I mean it is
not exclusively limited to only business owners who can provide the feedback it
really the public can provide feedback to it as well but we have certainly have
information on on feedback received a date on an aggregated basis that we can
share with council my last question so if this goes on a ballot it's voted on
by the residents yeah correct the San Landro registered voters and the businesses
aren't voting so what say do the businesses have in this besides I mean
is just giving us comments or because it's interesting how there's certain
tax measures that are out there that we have analyzed throughout this whole
process and the businesses don't have a vote. They have to the extent they live
in town or the owners live in town they have a vote in that respect but you are
correct that's the nature of taxation local taxes is that the the
authorization for local taxes is derived from the consent of the voters in that
city and that's accrue across the board. Okay because there's certain taxes that
Or like that like the vacancy tax I believe has that issue this one does too
I mean there are examples of like for like prop 218 fees like we went through that stormwater fee process
a year or two ago and that's different because that's like a
Different that's a fee and that's that's actually voted on by the property owners directly but a couple of questions or a few questions from me
Have we tracked any sort of tax holidays?
That other cities are undertaking currently for other new or existing businesses
We have heard anecdotally of some that are doing that
We have not we don't have a slide though summarizing that and then I know that the focus is definite the sales
Gross receipts for sales
Tied to San Leandro. I don't don't have the exact language at play
But tell me a little bit more about what that means as a practical matter
Obviously for a restaurant it's pretty easy because restaurant sites in San
Leandro. I'm looking more to companies that sell products around the country.
Sure, so I mean by and large I would say this, this is state law and
constitutional provisions, we can only tax activity that takes place within our
jurisdiction, within the balance of the jurisdiction of the city of San Leandro.
So using examples, I have a big contracting company that may be
headquartered here but they do construction projects all over the Bay
Area. We can only tax the gross receipts on activity or projects that actually
happen take place in San Leandro. So let's run with that a little bit. I've
got a consultant that's based here. Let's change it to an accountant. I've got an
accountant that's based here. But they provide services to businesses
throughout the East Bay. The accountants sit here in San Leandro. Their offices
are here, their computers are here, but their services are for clients in Union
City, Hayward, Oakland, maybe even San Francisco. Is all of that activity tied
to San Leandro? Mayor, I'm gonna ask if we have Eric Myers from HDL. Is our tax
consultant available online here? He may be able to drill down on some of these more
technical questions. Thank you. Sure. Good evening. Good
evening. In that hypothetical that you stated, Mr. Mayor,
we're going to as a general rule for the taxation of conducting
the business, we're not going to take into account where the
customers are located. So if they're only participating
location is in San Leandro, they may go to the customer site,
to do some of their consulting.
They may do it virtually, they may send things via email,
but the business activity is gonna get generally
sourced to San Leandro.
And to the extent that that business says,
well, I actually have an office somewhere else.
Great, let's talk about that
under what are called constitutional apportionment rules.
But generally speaking in your hypothetical,
all of that revenue is gonna be sourced to San Leandro.
The location of the customer is not determinative.
Would it be different for construction businesses?
Well, for construction businesses,
because the service is actually happening
at another site that may be outside the city,
generally the answer is yes.
Where the job site is,
is often gonna have the majority
of the revenue attributed there.
Okay. And then what about some of our large manufacturers
that sell their product around the world?
So again, I mean, setting aside any of the complexities
of sort of Water's Edge for the moment,
let's, what we're gonna look at is
how much taxable activity is happening
in the city of San Leandro.
we don't really look to where the customer is located.
So what we're looking to is how much taxable activity
as measured by gross receipts is happening in San Leandro.
There's constitutional apportionment provisions for that.
If a city, if a business says, hey, look,
I know that we're doing a lot of the work here,
but we're not doing all of it here, great.
We can work with a business
to come up with that determination.
But generally speaking, if they've got a single location
and they're shipping worldwide,
this is the source location for their grocery seats.
If they have transfers to another location,
so they manufacture in San Leandro,
but they say, you know what?
We're gonna open a poor house in Tracy
and then we're gonna sell out of the city of Tracy.
They make it here and then they ship it to Tracy
and they sell it out of Tracy.
Would that change the tax that's paid?
It would, but it wouldn't eradicate
their tax obligation in San Leandro.
So you'd now have a second location
that's participating in the sale,
but a gross receipts business license tax
is not a tax on sales at retail.
So that's why it can reach services,
it can reach other items in the stream of commerce
that a retail sales tax does not reach.
But to be clear, I think your answer to my question was
in my hypothetical, it would eradicate
the gross receipts tax?
It would not, sorry, it would fine us both.
Why is that since no risk,
no, there's no receipt for activity in San Leandro.
The manufacturer is part of the stream of commerce,
Mr. Mayor, and that is taxable activity occurring
in your city.
And so you'd have to come up with an apportionment
between, let's call it just for the sake
of the hypothetical 50-50.
There's two locations participating.
One builds the stuff, trans ships it,
and then the other sells it out of their location.
That's still participating.
That is taxable activity.
Conducting a business is typically the taxable activity,
not just receiving the sales.
So if the entity, the broader legal entity
receives gross receipts, because of that,
you will portion some of that
to what's happening in San Leandro.
So if you look at the tax code
for international transfer pricing at section 482,
is that akin to that type of transfer pricing analysis?
I think it's simpler, though I'm not an expert
in international transfer pricing.
This concept of apportioning economic activity is going to be at the core for our bigger businesses
in the city?
That is correct.
And it is similar to what you will see in the income tax realm.
Maybe not necessarily the international treaties, but the general apportionment rules will look
to pay roll and property as proxies for business activity in a given location.
Okay. Let's talk. Let's take public comment on this item, Mayor we have received six comment
cards from within the room and there are presently three, four hands raised online. Okay, we'll
start in person. Make sure if you'd like to speak on this item now's a chance to put in
card because when we close public comment will be done with public comment
in person then we'll go online and we'll listen to those speakers so if you'd
like to speak make sure you have your card turned in so let's open up public
comment in person please our first in-person speakers the first three are
James A. Bigier, thank you. James A. Bigier followed by David Stark and
Jennifer Rizzo. Mr. Bigier. Good evening Mayor and members of the City Council.
I'm James Bigier, Cross Street. We have Bigier Avenue. Purely for online reasons. If you
wouldn't mind standing, they can hear you online, thank you. My
great-great-grandfather started this Torrey Festival parade that you enjoyed
yesterday 117 years ago in 1909 we came from Germany in 1885 that's what my
dealer plate says on my dealer plate 1885 we were able to choose that number
for the DMV so anyway we're a long stand established dealership in San
Leandro we want you to recognize that we've been here a long time other
dealerships here too we don't want to kill auto industry as you can see Volvo
and Hyundai is gone now within the last week or two they're gone okay and so I'm
going to get folk laser focus not drift on too much so we strongly urge the
council to adjust the current draft of the business license tax extremely
moderate modernization measure gross receipts are deeply unfair for high
volume low margin industries a vehicle sales involves high asset costs but
extremely thin net profit margin, especially on new cars. You have often
just one or two percent, okay, profit. Okay, modeling this measure with the Union
City, I notice you guys don't talk about San Jose, you don't talk about Fremont,
all the big cities that have a lot of cars, we're talking about Union City.
Modeling the measure for the Union City without protections will intentionally
disinvestigate local dealerships. Charging a retail rate, $1.25 per
thousand of gross revenues sounds tiny but for a dealership moving fifty
million in inventory that is sixty two thousand five hundred dollars annual
tax bill that eats up over ten percent of our actual in net income high margin
software consultants or landlords will only pay a fraction of percent of that
profits the structure penalizes us simply for selling high ticket ticket
items okay neighboring auto-heavy cities protect their sectors your time has
elapsed the next three speakers so what we're gonna ask you to do is to take
what you have prepared and can you email that to us please thank you for that
additional context and again feel free to email us because we do we do review
that information you can also you can also speak with us our contact
information is available online and we're ready and willing to listen. The
next three speakers are David Stark, Jennifer Rizzo and Robert Jones. Good
evening Mayor and members of City Council I'm David Stark representing the Bay
East Association of Realtors which includes many housing providers and
real estate professionals who live and work in San Leandro. We have two
concerns about the proposed business license tax structure that may affect
particularly smaller housing providers and the local real estate industry. First,
we ask the council to carefully consider the cumulative impact on smaller rental housing
providers, especially those who own or manage five or fewer units who are trying to maintain
aging housing while also managing rising insurance, maintenance, financing, and new regulatory costs.
Now, action that you took during your last meeting means housing providers must now absorb the full
cost of both the rental registry and rent stabilization programs. Of course
staffs indicate there will be savings from the proposed gross receipt model
but they may be modest and may be outweighed by the newly adopted rent
program expenses. We ask you to evaluate the cumulative effect of these policies
not just the proposed business license structure. Second the unknown impact on
real estate agents and brokers. Now real estate is different from many businesses
because compensation is governed both by state law
and structured through independent contractor
relationships.
Commissions are actually paid to brokerages
and then distributed to agents.
And it's unclear how gross receipts would be calculated,
whether agents would be taxed on total commissions or net
earnings, how brokerages would be treated,
and whether overlapping taxation will occur.
We ask that you provide greater clarity regarding the impact
both on housing providers and on real estate professionals
before you send this to the voters.
And I understand that you already have some concerns
about the timing and whether it has been enough time
to fully vet this.
We ask you to think very carefully,
take your time before you send anything to the voters.
And I appreciate the opportunity to share our perspective.
Thank you.
Thank you.
The next three speakers are Jennifer Rizzo,
Robert Jones and Jeff Carey.
Good evening. I'm Jennifer Rizzo. I'm with the California Apartment Association, representing San Leandro rental housing providers.
And rental housing is one of San Leandro's largest business categories.
There are more than 2,700 rental homes and apartments in the city, and those homes are essential to San Leandro's housing supply.
CAA understands the city's need to fund essential services,
but the proposed business license tax measure
would move the city to a gross receipts formula,
and that is a serious problem for rental housing.
A gross receipts tax does not tax the profit.
It taxes the revenue before a provider pays the insurance,
the repairs, the utilities, the labor, property taxes,
and those expenses have risen sharply,
and they're not optional.
property can look healthy on paper based on gross revenue while still struggling to cover the actual cost of
Operating and maintaining housing and this proposal is especially concerning because it comes at the heels of the new rent control and rent registry program
Which is projected to tax local rental housing providers more than two billion dollars annually
Layering a new gross receipts tax on top of that would add yet another cost to the same housing providers
the city depends on, to preserve existing homes. And that matters because when the cost
of operating rental housing increases, owners have fewer dollars available for maintenance
and repairs and upgrades and long-term reinvestment. At a time when cities across California are
trying to preserve existing housing, encourage investment, San Leandro should not adopt
a tax structure that makes rental housing more expensive to operate and harder to maintain.
So we urge the council not to move forward with the measure as currently proposed.
At a minimum, the city should include safeguards for highly impacted businesses such as reduced
rates for housing providers or caps on gross receipts subject to the tax.
Thank you.
Your time has elapsed.
Our next three speakers are Robert Jones, Jeff Carey, and San Leandro Chamber of Commerce.
I'm Robert Jones.
I grew up here in town.
I'm a real estate broker.
town. I'm a real estate broker. Just wondered, do any of you people own a business? I mean,
you passed that rent control, the state already had it. And then I've had clients that kept
their rents low because they had low interest rates on their loans, five-year fixed. Well,
those just got jacked up 50 percent. And the insurance rates have gone through the roof.
you penalize the good landlords. It's just sad to see just why do we have to be so anti-business?
Thank you. The next three speakers are Jeff Kerry, San Leandro Chamber of Commerce, and Jeff Crop.
I'm Jeff Kerry, a long-time business owner and San Leandro resident for a long time.
I'd just like to know how this tax is going to go ahead and affect the small businesses in San
Leandro. We're a small business. A lot of our business has been terribly affected by the parking
in the downtown area. We think it's unfair. We have never had an official accounting
as if the city was going to go ahead and remove additional parking on Callan Avenue,
but you've killed our business and now you're asking for more taxes. I just like to know
how much that's going to go ahead and cost us in the long run but the thing is we're terribly
hurt by the San Leandro business practices in the downtown regarding their parking. Thank you.
Thank you. The next two speakers are San Leandro Chamber of Commerce and Jeff Krop.
Good evening, Mayor and members of the City Council. I'm Emily Grago, CEO of the San
Lando Chamber of Commerce. I want to share with you a little bit of data and some of the comments
we've received from a membership survey that we sent out. I also emailed all of you and put all
of those comments in there so that you can read them. We also know that this is, you all are looking
to modernize the tax structure as other cities have done and we are being told that it's going
gonna help close deferred maintenance budget gaps.
But our survey and the comments from our members
really reveal a deep and practical disconnect
between theory and local reality.
98% of our respondents reported that their fees will go up,
impacting employers of every size
and if all sectors responded.
This is not an abstract policy,
it's a direct increase in the cost of doing business,
and it will trickle down to San Leandro consumers.
The council needs to ask itself if this measure
will inadvertently trigger long-term economic flight.
One of our members who has operated
and established business here since 1989,
who is a food distributor and retailer,
stated clearly that this proposal
has caused them to entirely halt their plans
to purchase another commercial property in San Leandro.
When multi-decade investors begin rethinking
their future footprint here, it's a warning sign.
We had a lot of long-term businesses.
Furthermore, there is immense frustration regarding how this is being marketed at the community.
It's saying doesn't San Leandro deserve new roads, doesn't San Leandro deserve new facilities,
but legally the money goes to the general fund and there's no guarantee that it's going to be locked into infrastructure or deferred maintenance.
So we are urging the council, we ask the council to please pause action on this.
Don't rush this to the ballot, have further conversation, more dialogue with the businesses.
Find out more how this is really going to affect them, especially from what we've heard in the present. Thank you. Your time has elapsed
Our last in-person speaker is jeff crop
Hello council members
I wasn't planning on speaking but I was looking at the um, slide 11 what it would look like union city gross receipts model in san lienro
and I'm kind of there with Councilmember Bolt in that why is it just one city you're comparing
to? Why aren't you looking at more cities? And looking at this number, I'm seeing that
the amounts are different for different categories and I wondered what this proposal would look
like if you had only two actual rates. One at 0.002 and the other one at 0.004 with a
minimum of $150 for all categories. That feels to me like it would seem like you're being
even-handed with all businesses regardless of category, rather than preferential for
particular categories, you know, exemptions of who knows what special interest wants your
attention, but my suggestion is to handle it more even-handedly than that and compare
to other groups.
When I did receive my poll it seemed like your polling company is looking for the bias
that was most likely to get your measure to pass.
There was no actionable information provided to the citizens in that.
It's just like tax the business and you won't have to pay anything and you'll have better
situation.
I really think you should reconsider that approach that your pollster has provided you.
Thank you Mayor there are no more speaker cards.
So we will close public comment in person and go online to continue with online public
comment.
Our first online commenter is Claire Ibrahim. Claire, you may unmute yourself.
Thank you. Can you hear me okay?
Yep.
My name is Claire Ibrahim. I'm the founder of East Bay Child Development Center. We are
a pediatric therapy center here in San Leandro and we serve over 400 families per year. Under
the proposed gross receipts model, our estimated tax liability would be around $7,500. Our gross
revenues around 3 million but pediatric therapy operates on very thin margins.
That revenue flows almost entirely to staff salaries, overhead, and direct care
costs, not profit. We are in our sixth year in business here in San Leandro and
we have not yet reached consistent profitability. Grouping health and social
services into the same category as law firms, accounting firms, and other high
margin professional services does not reflect the economic reality of how we
we operate. Taxing gross receipts without regard for expenses treats our practice the same as a
highly profitable enterprise of equal revenue which is not an accurate measure of financial
capacity. While we support a modernized tax structure we simply ask that it reflect the real
economic conditions of the businesses and the community it affects. Thank you. Thank you. The
The next online speaker is Alvaro Ramos.
Can you hear me?
Yes.
OK.
Well, the one thing that I did take away from looking at this
was it looks to me like progressive taxation.
I mean, what I'm getting from this
is like you have flat tax rates already,
or at least what was the base fee.
And I just want to point out that flat taxes are just
financially destructive.
And then they contribute to deficits to the United States.
Flat taxes are unfair because they provide an unequal voice
to each taxpayer.
It's basically like putting inequality and building it
into the tax code.
And the federal government granted tax cuts,
which should be considered a part of mitigation.
And even so far as those tax cuts
also very destructive to the US economy. I mean, the hard truth is that the federal government
delivered a budget shortfalls for American households, which include cuts to health care,
to food and energy. And that's not even everything, but that's just a sum it up.
And I think we can expect more destruction in the next fiscal year. I mean, the city of San
San Leandro has cut public services that we all need last year and then this next fiscal
year again, austerity will kill thousands of American people each year.
So if a business had a good year, the community should have relief after all this stress.
Governments need the resources to keep people alive.
We need to stop worrying about companies leaving and have a discussion about workers and consumers
disappearing.
I'm concerned about the funding priorities too, and I would appreciate a clear focus
like housing services to save us money and provide stability, public transportation too,
so that we can limit the car dependency.
We're not prepared for the oil shock that we're about to face.
And BART is also in a deficit too.
Library operating days and hours are getting cut for the second time when we have illiteracy.
Thank you sir.
Your time is up.
Our next online speaker is Stacey Cooper Dent.
Good evening, Mayor Gonzalez and council members.
My name is Stacey Cooper Dent,
and for almost 25 years I've worked at Tarani.
I am proud to be a part of this 100-year-old
independent manufacturing company
headquartered on Marina Boulevard.
The decision in front of you tonight
has real consequences for companies like ours.
Tarani moved to San Leandro in 2020,
and we made a long-term commitment
to build our forever home right here in San Leandro.
We made that decision at a time
when many manufacturers were choosing to leave the Bay Area
due to high cost and complexity to do business.
We chose to stay here because we believe San Leandro
is a place where a company like ours could grow and thrive.
Since then, we've grown to almost 500 people,
doubled, with almost half living
within 10 miles of our factory.
And at Tarani, we're creating high quality jobs
with strong wages and growth opportunities.
These are jobs that contribute to the long-term health
of our families and this community.
With the limited information that we have available tonight,
we believe the proposed business license fee structure
would increase our fee to 10x today, not 7x, 10x the cost.
And at that level, it's much more than a marginal change.
It meaningfully shapes how we think about growing,
hiring, and investing.
And our ask is simple.
Let's work together.
Let's figure out how to create a more balanced approach.
We understand this is a difficult decision
and we're here to partner to do it with you.
Thank you.
Thank you.
The next speaker is Kristin Anderson.
Good evening council.
My name is Kristin Anderson
and I'm here to talk to the council
as both a business owner in San Leandro
and a board member for the Chamber of Commerce.
This initiative is being proposed
to generate significant revenue for our city,
but at whose cost?
San Leandro has always promoted itself
as a business-friendly city,
a place where many industries call home
from warehousing, manufacturing, retail, biotech,
hospitality, construction, healthcare, professional services,
nonprofits, and many more.
To own and operate a business in California
is very expensive, yet here we are doing it.
We provide jobs in San Leandro.
We pay property taxes.
We generate sales tax revenue.
We provide goods and services to the residents of the city.
We have invested in this community.
So when the city pulled the residents regarding the measure and asking if businesses should
pay their fair share to the city, the pull in itself was unfair to us.
Gross receipts is not an indication of affordability or profitability in a business.
Yes, some businesses will end up paying less, but clearly some businesses are going to pay significantly more, which may cause the elimination of jobs, or businesses leaving San Leandro completely.
Some businesses could see an increase of 760%. I ask you, is that fair?
Tonight I request the City Council delay their decision and talk to your business community before agreeing to this measure.
This measure needs more time, more data, more outreach to the business community.
We have invested in this city and now we ask the city invest their time in us.
Thank you.
Thank you.
The next online speaker is Douglas Spaulding.
Thank you.
I support this proposal as reasonable, smart, and fair.
no secret. The city needs to increase our revenue and that's become more
necessary with the apparent postponement of the citizen's parcel tax.
This, uh, also listen to the county does, do, uh, the percent to look at is the,
is the tax rate it's fair to pay hundreds of dollars in taxes on hundreds of
thousands of dollars in revenue, just as it is to pay thousands of dollars in
taxes and millions of dollars in revenue. San Leandro is a good place to do business.
I would say in some cases a little too sweet. And to my friends who turned out from the
business community, I don't believe this is going to bankrupt any business. I don't believe
this is going to result in any economic flight, jobs, nor companies. The sky is not falling.
This is not analogous to businesses moving from California to Texas. I don't know of
lot of Fortune 500 companies in San Leandro for whom it would be worthwhile. This is merely the
cost of doing business in San Leandro and the criteria for ensuring the quality of life in San
Leandro. Toriani is a exemplary business. So, you know, have your employees move to San Leandro to
take advantage of their rent stabilization ordinance. Our excellent schools, our progressive
of policing are reconciling with the red lining
and our racist past.
So I know the concern that many members
of the community hold is that if this passes,
we need some guardrails.
So it doesn't just go into the next internal investigation.
I know you all want to wish express your commitment
to reopening Lakeshore Road.
I asked, will you commit to rebuilding
the three firehouses in San Leandro?
A business does not do a lot of good,
generate a lot of revenue if it burns down.
Thank you very much.
Thank you.
The next online speaker is Twan Noh.
Yes, I'd like to just raise concern
on behalf of the businesses that need to be more input.
The gross revenue seats are not an accurate measure
of how well a business is doing. A lot of businesses are struggling, especially with COVID.
For example, many housing providers have not been made hold and are out tens of thousands of dollars
and gross revenue receipt doesn't take into account whether business is profitable or not.
and you're hammering immigrants who labor day in and day out to provide essential housing service.
Your alternatives to that is really non-existent because non-profit housing providers were evicting
people after the pandemic ended. And that was tracked in Berkeley because they have high overhead
costs including office staff and not being accountable because they're using tax dollars
and money not coming out of their pocket. Well, immigrant and local residents were doing
weekend and doing labor for very little cost and not getting paid. So how are you going to provide
effective, efficient, lower cost housing that is more affordable for low-income renters?
You talk like you care about housing, but how many of you actually roll up your sleeves and do the
central service of housing and actually put a roof over people's head? You pass policy without
outreach to stakeholders that are harming people. You need to look at policy that works and spend
money wisely. Dublin, as you know, has an excess in money and they don't have this kind of revenue
gross tax receipt base so your time has elapsed mayor there are no more hands raised online
so we're closing public comment online and coming back to the chambers for any further
questions or discussions beginning with council member bowen thank you mayor um a few things that
i want to share i think i mean from the very first um priority workshop i attended we talked about
the looming deficit and all the things that the city needs to be able to pay for. And the question
was how do we get more money? And so Council has always directed staff to figure out a way to do
so. And actually, you know, last year I actually submitted a referral to explore potential revenue
measures. And, you know, last year the world looked a little different than it does now.
And very recently we had, recently when we took the vote to expend money to be able to go out there
and figure out if we actually do even want
to do this process, I had actually voted no.
And the reason why I had voted no
was not because I didn't want the city
to be able to find more money,
but the reality is that it is a very hard time
for everyone, businesses included and people included.
Just, you know, yesterday, today,
I announced that around, you know,
the reduction of WIC benefits for people.
We're literally taking away basic needs from people,
and that includes people that own businesses
and people that work at these businesses.
And so I appreciate the work that staff has done
to explore this because that was the direction
that this council gave to do so.
I don't think that we had enough time to be able to do,
to create a proposal for this election
that would be what I think would be balanced
and what I think what I'm hearing
from the businesses here as well.
The reality is that we do need to do something.
And if we look at the cities around us,
Including Fremont that's on there including Dublin where my car dealership is all of these things like there
We we do need to find a way to modernize
We do need to find a way to do to be able to work together with the business community
I recently took a trip to Oklahoma City and the revitalization down there was amazing and the business community came outside
We decided to work with the city
We knew that we also had to invest in the city as well because when we invest in the city and the city invest in
Us we both can succeed
And so my recommendation, my position is that we actually
defer on this proposal and look at a new proposal,
look at what we actually mean when we say that we want to
make it balanced, that we want retention, we want growth,
we want hiring, we want expansion.
It really worries me that some of the percentage hikes
are 200% to 700%.
These are real impacts on the city and the community,
and we need to figure out what that actually means.
Right now, I appreciate that that is the lens
of which we are looking at the mitigations,
but I don't really know what that means.
I would really need to see something
that was more concrete in that,
and I definitely love all the things that we want to fund,
but I think at this point, we have to be realistic
about where we're at and what we're asking of our residents,
what we're asking of our businesses,
We're asking of people that work at these businesses.
Thank you.
While I wait for the next council member,
you're saying defer from November.
Would you also like to see further work done?
Yes. Thank you.
So that's yes, I know that the mic didn't punch in,
but it was a yes, and for deferral and more work.
Going to Council Member Bolt, please.
Yes, start and finish with the same sentence.
We need help.
It should come from both sides.
It's both sides of the equation,
the residents and the businesses.
With that said, some of the comments
that I do agree with coming from the business
and I saw notes being taken and I appreciate that by staff,
but the overlaps overlapping taxes, that should be a no go.
If we figure that out and we see that's happening,
that's something we need to correct a cap on certain industries where we're
seeing an astronomical increase. I know that is the intention of staff. I felt
it through the presentation. So I want us to continue to work on that to
understand that and and know that we're not gonna lose businesses to other
cities that are doing business here in another city like I mentioned earlier
because our taxes just go so far that it's not smart to do business here
anymore. I don't like employee-based. I think that could and would have a
negative effect on our growth and most importantly jobs. You know someone's in
that bridge area of do I hire someone else and what does it mean to the bottom
instead of yes let's hire more we have more work to do so I like that we
haven't really approached that thank you and I don't want to see us go that way
the last thing I'll ask is and I don't know who to ask this up someone put it
out there not look at anybody in particular but hopefully I get a
response could we earmark the increase in funds towards infrastructure so if we
know we're bringing in now and then there's an overall increase could it
maybe we can't do that but if we could I'd like to see that happen and then
well I'll stop there and see who if anybody could answer that okay so that
last piece is a legal question because this is a general tax and I will come to
city attorney for that correct as proposed right now I'm just confirming
with Mr. Engelbart. This would be a general tax 50% plus one approval and
would be used for any and all municipal services. So the question is could we
earmark the increase to go strictly to infrastructure? No. Okay, that solves that.
Lastly, I'll just say this, second to last, I don't want to see a decrease. I
I know businesses don't want to hear that especially if they saw this and they're like sweet
I don't think anybody should get a decrease in these times
And then I'm gonna end with what I started with we need help and it should come from both sides of the equation the residents
And the businesses so I support us going forward and getting more information
So we have a better understanding of what it's gonna look like for the November ballot and I'll stop there
So just to clarify I hear let's continue studying
From your perspective. You're still ready to possibly put it on the November ballot
With more information you want to have that discussion again at some point
before the end of July
Correct. Thank you
So next I will come to councilmember Simon
Thank you. I agree with
Most of what my colleagues have said so far and I do want to highlight again
And everyone probably already knows this but I'm just going to say it. We need the money in every shape way and form
From our streets to our firehouse that we heard that's not that earthquake issues
building falls on the truck can't serve the
businesses or the residents and then that comes back to
Councilmember bolts common and I agree fully this should come from both the businesses and the residents and
And I understand it's allowed by law, by this process,
but it just really does not seem fair.
The residents can dictate what the businesses get taxed.
I know it's the process, but it just does not seem fair.
They have no say and they can get stuck
with whatever the residents say.
I don't think the residents would like that
if the businesses could do that to the residents.
So I think we should be fair here as a council.
I do believe we should look at the profit margins,
more so than just the gross receipts.
It just seems like way out of whack for some businesses
that show lots of money coming in,
but when you pencil it out with the expenses,
it may not be that case.
So I think more work needs to be done.
I would like it to be in the November ballot.
Do we have time is the question.
Do we have time to do the analysis
to get more input from the businesses
and to really let the residents know
that we all have to pitch in.
I know folks don't like to hear it,
but it is a reality.
We all live and share in this city,
and we have to step up every one of us.
But I do support this measure, not in the shape and form.
We need to modify it and make sure
that it's fair to the businesses,
but I don't know if we're ready for November.
I would love to,
but I'd like to hear what my other colleagues say.
Thank you.
So we will proceed with Councilmember James Aguilar.
Thank you, Mayor.
I'm going to agree with the sentiment something needs to happen.
That's 100% sure and I think Councilmember Bolt has it right on the nose that it needs
to be both sides.
Both sides need to contribute, especially right now.
But I really do want to spend more time studying.
I want to spend time understanding, and I also want to spend more time sitting down
with businesses and keep getting emails and start to work through my mind, what equity
looks like in this scenario. And so, I am also, along with Councilmember Simon, I'm
not sure we're ready for November. I really just want to push the narrative of we need
to talk more. We need to work more. So I'm willing to put the work in to get something
that looks a lot more polished and move forward from there.
Okay. Coming to councilmember Victor Aguilar. Thank you. I agree with my council colleagues
with councilmember bow and Simon and Aglar. I think we all have to work together to pitch
in to establish some sort of revenue measure to come in. And, you know, I have been supportive
of this, but I think we need to work together and I had asked the question to staff with
regards to equity and to make sure that we look at some sort of models that that make
sense that are not completely astronomical, but that are, you know, equitable and somewhat
competitive but I think we need to go back and do some more research but you
know I will be supporting this to move forward on the November 3rd ballot those
are my comments thank you mayor. Vice mayor please. A couple of thoughts that I
wanted to share just in terms of moving my hope is that we get to November with
something and I think having just voted on a an annual budget for this upcoming
fiscal year we are heading into planning for our biennial budget. Essentially
it's happening now and we are looking at a runway we're looking at a short runway
at our fiscal cliff and the short runway to get to something that's equitable
in November, a couple and so that's kind of what I'm in my head those are those
concurrent lanes and figuring out what that how how they how that both of those
things can be balanced just a couple of two main kind of drill downs for our
discussion in November and July is what does high paying mean in terms of a
high-paying employer I'm definitely want to ensure that we think about what is
high like is it like an executive level position versus an employer that does
manufacturing but pays a livable wage and even you know more than that so like
what is high paying of employers and like what does that mean within the
context of the San Leandro economy I did submit an item for the last planning
session on research and development and so I know that there's a lot more
information on our economic development strategy or on our research and development plan to
attract and retain R&D. That continues to be a growing field.
ahead, I am thinking about what our neighboring, not just cities in Alameda County, but throughout
the bay, where would, for example, where would a data center fit in here? That is something
that is hot. It's an emerging issue for many communities. And it's unclear to me how forward
facing this strategy is. It looks to me that it is based on who is here now. And so I'm
trying to think ahead on those emerging types of industry that may be coming our way. And
And how does this, how do we plan for that?
I'm not necessarily supportive of that one example,
but that's something that I'm thinking about.
Like where would that fit within the categories?
So I know our economic development team has thought about,
you know, what are some of those emerging industries?
I also wanted to balance the climate impact
some of the industries that we have and how is that offset? And so like how many of them would
fit into these categories, right? Like high pay employers, large revenue, or sorry receipts.
But I'm also thinking about some of the other impacts that as a community and as a regional
community that we're all kind of bearing through. And so that's kind of where I'm thinking about
balancing some of the other impacts that are not necessarily bottom line to the business, but that
are also beneficial to the community at large. So I'm thinking of climate impact. I'm thinking of
resource impact such as water and electricity.
So if they're a high water, high electric
user or business user,
fine tuning this to mitigate for that,
but also kind of mitigating the,
they are large sales tax generators.
So that's kind of where my head is at.
I would like to see something in July.
I hope that we can be ready by the end of July
to send something in the November ballot
because we do need revenue on the city books
because we are in a fiscal cliff
and that is not an interpretation of the budget.
It is where we are and it's a reality
of what we're facing in the upcoming biennial budget.
And so appreciate the business community
and the community at large who took the time
to answer the survey and who took the time to email us
and to call us and to ask of our time.
Appreciate the thoughtfulness that went
into everyone's comments and the time it took
to put together a communication to us,
whether it was email or phone call, thank you.
As you can tell, we're all listening
and we're trying to kind of balance and negotiate that
so that we can come with an equitable proposal
that balances the needs of the city
and how we also contribute to the social contract.
So thank you.
Okay, so my thoughts on this first, let me thank staff.
I know you guys have been a lot of work
in a short period of time
trying to give us something to contemplate.
The bottom line for me
is that there hasn't been enough time.
There just isn't, there has not been enough time.
This is not, some people might say it's not fully baked.
Some people said that in the community.
is not fully baked. I think it's more than that. We're still stirring the ingredients.
We're still trying to figure out definitions. We're still trying to figure out impact. I
think the concept that was raised by one of the council members, I don't remember who
exactly, was, hey, for this business that operates in multiple cities, how does it play
out for that business across multiple cities and what they pay here in San Leonardo, what
they will pay someplace else? So these kinds of things are really particularly important
to me because I don't think there's been enough time. I also have to say that I do think that
the survey, I did not like the structure of the survey because I thought the survey was
a bit self-serving, that do you think that businesses should pay their fair share? That
implies flat out that they're not paying their fair share. I don't know. I just did not like
it. I've had a number of businesses say that to me. I've had residents who, you know, like
the idea of themselves not paying the tax, say to me, that they thought that the survey
was not fair in itself. And that's problematic because that's our brand. Our brand needs
to be one of fairness and equity in treating people right. I've also gotten a lot of pushback
from both residents and from businesses on what exactly is happening here. What are the
is going to be for different businesses. The businesses that I have heard from feel like
they are not quite clear what the impact would be for them. So I think that that clarity
is particularly important. But for me, the bottom, bottom line, and I probably should
have started with this because that is what I preach, always start with the most important
point. For me, the single most important point is that for a general tax, we cannot control
how that money will be used. And I am just, I am opposed to any more general taxes in
the city of San Leandro unless someone can convince me otherwise and it's very
simple because general taxes have been increased and increased and increased
through time and we've always told the residents it's for the roads but when we
look empirically at how we spend the money the answer is that's not where the
money goes so I think we need a mechanism whether it's partial taxes or
some other specific tax that makes us spend the money
on that purpose.
And while we might be able to raise our right hand
and promise that we're gonna use it a certain way,
the council rotates every two years
and you get new council members and different needs,
and that's what we see over and over and over and over.
So I cannot, I will not support a general tax in November.
I will only support specific taxes because we need to have that fiscal discipline as
a city to be forced to spend the money on the fire stations that are in danger of collapse
on the roads where 30% of our neighborhood roads are failed.
So I will not be supporting this tax in November, even if we vote to put it on.
I will not be supporting this tax in November,
and I will campaign against this tax.
So, City Manager, please don't do that.
Please don't do that.
We just don't, for whatever the opinion is,
we keep it flat in here.
So, City Manager, I know you've kind of been telling
the remarks, it is my impression that what Council
would like to do is to come back in July
and get more information.
Is that what you have tracked as well?
Thank you, Mr. Mayor. Yes, that is what I have here is that staff has a list of questions
for their information pieces that the council would like. Due to the fact there is a small
amount of time, we will do our best to bring you what we can and whatever is left, we will
let you know what answers, what questions we could not answer at that time and then
council could direct us what they'd like to do, whether that's November ballot or not.
And I would also encourage just council members to, because we've had question and answer
time here just more questions right would you like those to come through you
how would you like additional questions you know we walk out of this room and
say oh my goodness I wish I had asked how would you like to funnel those
questions council members can send the questions directly to me okay thank you
very much council member Victor Aguilar just a brief question it said will be
forwarded a draft ordinance in July for placement do we have an exact date in
July? I do not have an exact date right now tomorrow the team meets our executive
team now that we have quite a bit of feedback our original plan was to come
back on the 15th but due to the fact we have some work to do in that agenda would
be issued on Wednesday we'll need more time to prepare what we can for July but
as soon as I know I will make sure to let council members know. Thank you and
for the record I will be out on the 15th. I will not attend the
meeting on the 15th I will be out of the country. Yes. What we most likely will do
is bring it back in one of those first two meetings the reason why is as deputy
city manager Engelbert has shared we only have July for the decision and if
we come back at the the only time we come back is the very last meeting in
July that leaves no room for council to ask more questions or get more clarity
So it most likely will be one of those first two meetings just in case there's something else you need follow-up on
customer assignment is a follow-up question on where the money would go and
I
Agree, I want the money to go to fix roads and firehouses specifically. I got that. I agree with that
But just so I understand the different revenue measures
Does the revenue measure that specifies that it has to be two-thirds?
Two-thirds voting by the residents if it specifies a specific project
Coming to city attorney. Yes a
Tax for a specifically defined use would be a special tax
Requires two-thirds vote to pass
Okay, excuse me, and do you want sorry mayor? Did you want me to mention?
Yes
There is a provision under state law
That's court created that alleged that provides that a tax
for a special purpose
specific purpose
Put on by an initiative by residents or citizens would only require 50% plus one citizens initiative
my another follow-up question is from a parcel tax perspective and this is kind of maybe out there, but like prop 13 and
Some businesses that have been here for a long long time
Barely pay any property taxes or as a new business that comes in like Toronto or someone paying high property tax
Is there any way that we as a city can try to address that?
inequity between
businesses in that scenario
because it's not an
Agendized item. I'm going to say let's take that conversation offline
Okay, as opposed to having that discussion in an open session where it's not agendized. Thank you
Okay at this point in time. I see no further hands. I believe you have the the direction that you need
So we will come to our last item on the agenda, which is adjournment. The time is 851 and we are adjourned