“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Business License Tax Modernization PlanMarch 3, 2026
2CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.”
1. Background and History of Business Licensing2. Fiscal Impacts of Business License Tax Modernization Plan3. Goals of Business License Tax Modernization Plan4. List of Priorities Grouped in Phase 1 and Phase 25. Tentative Timeline and Outreach Plan6. Recommendation Agenda
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 3CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” What is a Business License Tax (BLT)?•BLT is assessed on persons or entities for the privilege of conducting business within the City •Potential to be major source of revenue for most cities •Licensing process allows cities to regulate the types of businesses that can operate and conduct activities •Purpose of BLT is to ensure that businesses comply with local regulations and contribute to public services, to which they benefit•BLT revenues support the General Fund to pay for public services, maintenance, infrastructure and other costs Background
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE
4CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” •BLT is typically based on gross receipts and/or a flat rate •Tax is sometimes based on the number of employees, number of vehicles, square footage of the business or some combination of factors•Over 95 % of cities/counties in California impose a BLT •On average, BLT reflects 3% of a city’s revenuesºIn some cities, it makes up 30% of General Fund revenues•Manhattan Beach BLT provides about 5% of General Fund revenues (about $6 million) Background
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 5CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” •1971 – Business Licensing regulations, codified under MBMC Chapter 6.01, first enacted•Subsequent updates applied to the Code:º1975 – Added Chapter 6.08 Garage or Lawn Salesº1978 – Added Chapter 6.12 Games of Skill and Scienceº1985 – Added Chapter 6.16 Fortune-Tellingº1998 – Added Chapter 6.20 Temporary Film Permitsº2006 – Amended 6.10.010 & 6.10.020 Clearer Definitions, License Requiredº2019 – Added Chapter 6.24 Sidewalk Vending•After 50 years, a comprehensive update to the BLT Code is warranted due to significant shifts in State law, case law and modern ways business is conducted History of Business License in MB
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 6CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” •Budget for a comprehensive Business License Tax Update was approved during FY 2026 Mid-Year Budget ($202,400): º$52,400 in Specialized Legal Servicesº$60,000 for Financial Analysis/Tax Studyº$90,000 for Polling/Ballot Measure Consultant Services•Impacts to City’s BLT revenue would be identified in Financial Analysis before a ballot measure is put forward to votersºTax Study will provide options for alternative tax structures, categories, and fiscal impacts to City and to businesses ºAnalysis will include a comparison of other City BLT ratesCities include: 1) Redondo Beach, 2) Hermosa Beach, 3) El Segundo, 4) Torrance, 5) Beverly Hills, 6) Culver City, and 7) Santa Monica Fiscal Impacts
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 7CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Main Goals of Business License Update
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 1) Simplify the Code
2) Clarify the Code
3) Modernize the Code
4) Fair and Equitable Tax Structure
5) Maintain Fiscal Sustainability
8CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Priorities – Phase 1
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 1____
Clarify require-ments for Mobile and Sidewalk Vendors
2____
Clarify revocation process, appeal process, or business license denial 3____
Clarify required documents for different business types 4____
Clarify language regarding confidential documents in MBMC 6.01.230 5____
Clarify the Delinquent Process in MBMC 6.01.250
Simplify - Clarify - Modernize - Fair - Sustainability
Actions that Require City Council Approval via Ordinance 9CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Priorities – Phase 1
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 6____
Clarify/ update “due date” from March 1stto to April 30th(MBMC 6.01.070) 7____
Clarify/ revise City Manager’s authority to exempt a business from paying business license tax (MBMC 6.01.280 G) 8____
Clarify/ revise Police Chief and Police Officers’ authority to make arrests for violating business license code (MBMC 6.01.260) 9____
Change any references of "Fee" to "Tax" throughout code 10____
Update record-keeping procedures of gross receipts / IRS information for life of business plus 5 years (Resolution No. 5002) Simplify - Clarify - Modernize - Fair - Sustainability
Actions that require City Council Approval via Ordinance 10CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Phase 1 – Ordinance No. 26-0005
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE •Amends sections of Chapter 6.01 Business Licensing Regulations:6.01.030 Authority to impose licensefees and taxes.6.01.040 License tax a debt.6.01.060 License year.6.01.070 License tax due dates.6.01.090 Tax Refunds.6.01.100 Transfer of license fee. (Deleted)6.01.110 Duplicate license fee. (Deleted)6.01.160 Revocation and suspension.6.01.190 Application - First License.6.01.210 Statement and records.6.01.220 Failure to file statement or corrected statement.
6.01.230 Information confidential.6.01.240 Appeals.6.01.250 Rules and regulations -Licensing Authority.6.01.260 Enforcement.6.01.270 Penalty.6.01.280 Exemptions.6.01.290 Requirements of general builder or engineering contractor or owner/builder.6.01.320 Consumer Price Index (CPI) adjustments. 11CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Questions on Phase 1
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE •Ordinance No. 26-0005 amends sections of Chapter 6.01 Business Licensing Regulations•Edits include long overdue administrative clean-up of the code and best practices•Questions?
12CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Priorities – Phase 2
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 11____
Update categories based on business type instead of location (eliminate Home Occupation, PO Box, etc.) 12____
Consolidate Tax Types based on Gross Receipts
13 ____
Clarify and expand Professional Services (Real Estate) and create new business types (Waymo, WeWork, other new industries) 14____
Clarify tax category for STR vs Hotels (Gross receipts vs per room tax) 15____
Consider a standard deduction for business license tax
Simplify - Clarify - Modernize - Fair - Sustainability Actions Require Voter Approval
13CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Priorities – Phase 2
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE 16 ____
Consider changes to Sales Tax Credit (currently applies to Commercial Property category only per MBMC 6.01.310) 17 ____
Address apportion-ment by eliminating base tax and clarify exemptions/deductions for revenues generated in other jurisdictions 18 ____
Clarify definition of employees to include both on-site and remote employees 19 ____
Update the current rate structure to be comparable with neighboring cities 20 ____
Raise or remove the cap to address equity across business types Simplify - Clarify - Modernize - Fair - Sustainability Actions Require Voter Approval
14CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Addressing the Cap in Phase 2
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE Analysis of Current Business License TaxComparison of Business License Tax Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M% of Gross ReceiptsBusiness License Tax PaymentGross Receipts0.34%$337 $100,000 1 0.29%$1,457 $500,000 2 0.29%$2,857 $1,000,000 3 0.28%$8,457 $3,000,000 4 0.27%$12,156 $4,500,000 5 0.24%$12,156 $5,000,000 6 0.12%$12,156 $10,000,000 7 0.06%$12,156 $20,000,000 8The current business license tax cap is $12,156 for the 2026-2027 licensing year. Based on this tax structure, a business generating $5 million pays the same as a business generating $10 million or more 15CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Questions on Phase 2
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE •Phase 2 can be accomplished through an Ordinance and ballot language that requires voter approval in the November 2026 election•This addresses code amendments that trigger any tax changes •In April/May 2026, staff will present to City Council alternative options and discuss results of the Financial Analysis/Tax Study and Community Polling•In June 2026, staff will present to City Council the final Ordinance and ballot language to be considered for the November 2026 election•Questions?
16CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” Tentative Timeline & Public Outreach
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATEPastPresentFuture October 23, 2025
Met with Chamber & BIDsNovember 6, 2025
Met with Finance Sub-committeeFebruary 19, 2026
Published Notice in The Beach ReporterMarch 3, 2026
Phase 1: Initial City Council Meeting March – April 2026 Conduct Tax Study, Polling and Research
A new webpage will be available & informational brochure will be mailed April/May 2026
Phase 2: Present Results of Tax Analysis & Polling at City Council MeetingQ2 2026 Business community meeting(s) and resident information session(s)June 2, 2026 Phase 2: Present Ordinance/Ballot Language & Other Documents for Ballot MeasureJune 2026 Submit Ballot Measure 120 days before November ElectionNovember 2026 General Election
17CITY OFMANHATTAN BEACH“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topic. In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails.” •Staff recommends that the City Council: (1) conduct a Public Hearing(2) adopt Ordinance No. 26-0005 amending sections of the Manhattan Beach Municipal Code Chapter 6.01 Licensing Regulations(3) Discuss and provide direction regarding the Business License Tax Modernization Plan, including the Priorities and Tentative Timeline Recommendation
MARCH 3, 2026PUBLIC HEARING ON BUSINESS LICENSE MUNICIPAL CODE UPDATE