“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.” May 12, 2026
Business License Tax
Modernization Plan
Update – Phase 2
2CITY OF
MANHATTAN 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.” • Background on City’s Business License Tax
• Goals of Business License Tax Modernization Plan
• List of Priorities - Phase 1 (completed) and Phase 2
(underway)
• Tax Study Results & Alternative Tax Structures
Presented by HDL Companies
• Feedback from Business License Tax Forum
• Next Steps/Tentative Timeline
• Recommendation
Agenda
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
3CITY OF
MANHATTAN 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
• BLT is typically a 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 businesses comply with local regulations and contribute to public services, of which they benefit
• BLT supports the General Fund to pay for public services, maintenance, infrastructure and other costs that uphold City’s desirability and attraction to visitors and business Background
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
4CITY OF
MANHATTAN 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 revenues
º In some cities, it makes up 30% of
General Fund revenues
• Manhattan Beach BLT provides about 5%
of General Fund revenues
Background
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
LICENSE
5CITY OF
MANHATTAN 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:
º 1975 – Added Chapter 6.08 Garage or Lawn Sales
º 1978 – Added Chapter 6.12 Games of Skill and Science
º 1985 – Added Chapter 6.16 Fortune-Telling
º 1998 – Added Chapter 6.20 Temporary Film Permits
º 2006 – Amended 6.10.010 & 6.10.020 Clearer Definitions, License Required
º 2019 – 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
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
6CITY OF
MANHATTAN 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. Gross Receipts
º In-Town = $313.88 flat tax for the first $91,661 of gross receipts + $2.80/$1,000 in excess thereof not to exceed $12,156 (Cap) º Home-Occupation & Out -of-town = $156.64 flat tax for the first $55,765 of gross receipts + $2.80/$1,000 in excess thereof not to exceed $12,156
2. Flat Tax
º Contractor = $508.80 per year
º Sub-contractor = $254.16 per year
º Mail Order (PO Box) = $164.48 per year
3. Per Unit/Room
º Hotels/Motels = $29.08 per unit
º Apartments (3 or more units) = $29.08 per unit
4. Per Vehicle
º Mobile Vendor/Catering = $420.72 per vehicle
º Gardener = $197.48 per vehicle
Current Tax Structure
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
7CITY OF
MANHATTAN 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.”
5. Per Employee
º Administrative & Sales Office = $313.88 flat tax + $43.55 per employee in excess of 2 not to exceed $12,156 (cap)
6. Square Footage
º Beer Bars & Cocktail Lounges = $0.516 per square foot
7. Commercial Property (two calculations, whichever is higher)
1. Square Footage: $313.88 flat tax + $0.457 per square foot in excess of 5,000 square feet not to exceed $251,168 (cap)
2. Gross Receipts: $313.88 flat tax for the first $91,661 of gross receipts + $2.80/$1,000 in excess thereof not to exceed $12,156
8. Research & Development (two calculations, whichever is higher)
1. Square Footage: $313.88 flat tax + $0.735 per square foot in excess of 5,000 square feet not to exceed $251,168
2. Employees $313.88 flat tax + $43.55 per employee not to exceed $12,156
9. Supplemental Licenses
º Handbill = $234.28 per person per year or $57.26 per day per person º Solicitation = $844.16 for the 1st 5 people & $136.63/person in excess thereof Current Tax Structure Continued…
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
8CITY OF
MANHATTAN 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.” Polling Question from
Business License Tax Forum
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
81%
34 2%
1 0%
0 2%
1 2%
1 0%
0 2%
1 0%
0 0%
0 10%
4 0
5 10
15 20
25 30
35 40
Question 1: What tax structure do you currently fall under? 9CITY OF
MANHATTAN 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.” Current Cap on Business License Taxes
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Comparison of Business License Tax Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts
Business License Tax
Payment
% of
Gross Receipts
1 $100,000 $337 0.34%
2 $500,000 $1,457 0.29%
3 $1,000,000 $2,857 0.29%
4 $3,000,000 $8,457 0.28%
5 $4,500,000 $12,156 0.27%
6 $5,000,000 $12,156 0.24%
7 $10,000,000 $12,156 0.12%
8 $20,000,000 $12,156 0.06%
9 $50,000,000 $12,156 0.02%
10 $100,000,000 $12,156 0.01%
The current business license tax cap is $12,156 for the 2026-2027 licensing year.
Based on this tax structure, a business generating $4.5 million pays the same as a business generating $10 million or more
10CITY OF
MANHATTAN 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.” Polling Question from
Business License Tax Forum
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
28%
12 37%
16 14%
6 9%
4 2%
1 5%
2 2%
1 0%
0 2%
1 0%
0 0
2 4
6 8
10 12
14 16
18 Question 2: Which Gross Receipts threshold does your business currently fall under?
11CITY OF
MANHATTAN 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.” Goals of Business License Tax Modernization Plan
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
1) Simplify the Code
2) Clarify the Code
3) Modernize the Code
4) Fair and Equitable Tax Structure
5) Maintain Fiscal Sustainability
12CITY OF
MANHATTAN 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 (Completed) - Administrative clean up of the Code:
º Adopted Ordinance No. 26-0005 on March 17, 2026
º Amended sections of Chapter 6.01 Licensing Regulations º Modified several sections of code to address outdated language and current best practices
• Phase 2 (In Progress) – Involves significant updates to the Code if tax structure is modernized and requires voter approval:
º Perform Tax Study and Identify Alternative Tax Structures º Obtain Community Input through Forum
º Conduct Community Polling
º Explore Ballot Measure for November 2026 General
Election
Two Phases of
Business License Tax Modernization Plan
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
13CITY OF
MANHATTAN 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
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
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
14CITY OF
MANHATTAN 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
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
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
or reducing
base tax
and clarify
exemptions/
deductions
for revenues
in other
jurisdictions
18 ____
Clarify
definition of
employees
to include
both on-site
and remote
employees
or eliminate
employee
based taxes
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
Apportionment: The process
of allocating Gross Receipts
generated in each City
15CITY OF
MANHATTAN 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. Methodology
º Registry Analysis
2. Jurisdictions Comparisons
º Basic Overview
º Detailed Analysis
3. Alternative Tax Models
º Individual Models
º Model Comparisons
Preliminary Tax Study Results
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
16CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Business License Tax
Registry Analysis
17CITY OF
MANHATTAN 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.” 5-Year Revenue Trend
Based on the License Period Expiration Date
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
$3,800,586 $3,706,440
$4,519,010
$4,840,274
$5,055,189
$5,388,685
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
$5,000,000
$6,000,000
2020-21 2021-22 2022-23 2023-24 2024-25 2025-26
18CITY OF
MANHATTAN 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.” Business License Counts
Based on the License Expiration Date
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
1,943 2,004
2,029
2,141 2,179 2,245
2,386
1,709 1,796
2,201
2,401 2,417
2,562
2,859
0 500
1,000
1,500
2,000
2,500
3,000
3,500
2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 Inside Businesses Outside Businesses
19CITY OF
MANHATTAN 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.” Existing Rates, Total Counts & Tax Basis
Based on License Expiration Date
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Rate Types
Count of
Businesses
2020-21
Count of
Businesses
2025-26 Primary Tax Basis
Contractor - General 825 1,426 Flat Fee
Contractor - Subcontractor 658 1,056 Flat Fee
Retail Sales And Service 489 735 Hybrid
Home Occupation 424 433 Flat Fee + Gross Receipts
Out Of Town 275 343 Flat Fee + Gross Receipts
Professional Services 377 340 Flat Fee + Gross Receipts Residential Rentals - 3 Or More Dwelling
Units 248 218 Per Unit
Commercial Property 134 213 Flat Fee + Gross Receipts
Restaurant 131 141 Flat Fee + Gross Receipts
Exempt Business 54 81 Varied
All Others (17) 185 259 Varied Rates Based On
Classification
Total 3,800 5,245
20CITY OF
MANHATTAN 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.” Retail Sales and
Service
26%
Commercial
Property
17%
Professional
Services
16%
Restaurant
12%
Contractor -
General
11%
Research and
Development
4%
Home Occupation
4%
Contractor -
Subcontractor
4%
All Other (20)
6%
Total Share of Tax Revenue Generated by Business Type
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
21CITY OF
MANHATTAN 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.” Top 100 Businesses Compared to Citywide
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Top 100
35.75%
All Other
Businesses
64.25%
Top 100 - Percent of
Total Tax Revenue Due to Cap
Top 100
85.01% All Other Businesses
14.99%
Top 100 - Percent of
Total Reported Gross Receipts
Top
100
12.69%
All Other
Businesses
87.31%
Top 100 - Percent of
Total Reported Employees
22CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Jurisdiction Comparison:
Basic Overview
23CITY OF
MANHATTAN 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.” Jurisdiction Comparisons
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Jurisdiction
Selections
• Beverly Hills
• Culver City
• El Segundo
• Hermosa Beach
• Redondo Beach
• Santa Monica
• Torrance
24CITY OF
MANHATTAN 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.” Demographic and Economic Statistics by Location
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Location Population Business
Count
Business Tax
Revenue
Revenue Per
Capita
Revenue Per
Business
Tax
Structure
Last
Modified
Tax Basis
Cap
Presence?
(Y/N)
Beverly Hills 30,974 10,195 $58,074,991 $2,069.17 $6,297.20 2005 Gross
Receipts or
Per Employee
NO CAP
El Segundo 16,445 2,629 $12,748,377 $851.73 $5,359.82 2022 Per Employee and Sq Ft NO CAP
Culver City 39,041 8,200 $18,736,305 $751.20 $3,653.66 2022 Gross Receipts NO CAP
Santa Monica 89,922 23,700 $32,014,490 $418.83 $1,603.38 2024 Gross Receipts NO CAP
Manhattan Beach 33,369 5,245 $5,850,000 $175.30 $1,115.34 1976 Gross Receipts YES
Torrance 139,224 10,662 $10,067,180 $83.11 $1,087.98 1992 Flat Fee
Per
Employee
NO CAP
Hermosa Beach 18,641 1,401 $1,280,040 $68.67 $913.66 2002 Mix of Flat /
Employee /
Unit / GR Tax
NO CAP
Redondo Beach 67,749 3,332 $1,301,224 $19.83 $405.16 2013 Per Employee NO CAP 25CITY OF
MANHATTAN 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.” Jurisdiction Comparison
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Comparison based on Per Capita &
Per Business
Revenue Per Capita Revenue Per Business
0.00%
5.00%
10.00%
15.00%
20.00%
Percent of BLT Contributing to
General Fund Revenue
% of General Fund Revenue Budget from BLT
26CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Questions on
Jurisdiction
Comparison?
27CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Business License Tax
Models
28CITY OF
MANHATTAN 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.” Model 1 – Gross Receipts Cap Removed
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Model Structure:
• Maintains current structure
• No cap on gross receipts
• Keeps same categories
Outcomes:
• Easy to implement
• Increases revenues for City services
• Some improvement in fairness or equity (due to cap removal) • Doesn’t simplify the tax structure
• Ignores new business models
29CITY OF
MANHATTAN 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.” Model 1 – Gross Receipts Cap Removed
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Revenue Impacts
Number of
Businesses 2025 Charges Estimated Revenue
No Cap
5,245 $5,389,000 $8,296,000
Increased Revenues $2,907,000
30CITY OF
MANHATTAN 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.” Model 1 Analysis
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Analysis of Model 1 Business License Tax Structure
Comparison of Business License Tax Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts
Current BLT Payment
(Tax based on Gross
Receipts)
Current % of
Gross Receipts
Model 1 BLT
Payment
Model 1 % of
Gross Receipts
1 $100,000 $337 0.34% $337 0.34%
2 $500,000 $1,457 0.29% $1,457 0.29%
3 $1,000,000 $2,857 0.29% $2,857 0.29%
4 $3,000,000 $8,457 0.28% $8,457 0.28%
5 $4,500,000 $12,156 0.27% $12,657 0.28%
6 $5,000,000 $12,156 0.24% $14,057 0.28%
7 $10,000,000 $12,156 0.12% $28,057 0.28%
8 $20,000,000 $12,156 0.06% $56,057 0.28%
9 $50,000,000 $12,156 0.02% $140,057 0.28%
10 $100,000,000 $12,156 0.01% $280,057 0.28%
31CITY OF
MANHATTAN 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.” Model 2 Single Gross Receipts Rate
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Model Structure:
• Uniform gross receipts rate for all businesses
• Small flat-rate tax
• Removes the cap
• Transitions to two categories: Non-Exempt & Exempt
Outcomes:
• Easy for businesses to understand
• Same rate for all non-exempt businesses is more equitable • Increases revenues for City services
• Low flat rate supports micro-enterprises
32CITY OF
MANHATTAN 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.” Model 2 Single Gross Receipts Rate
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Tax Basis Taxable Gross Receipts
Flat Rate (decreases) $100 Flat Rate
(Up to $100,000 Gross Receipts)
Gross Receipts Tax (keeps the same rate,
yet removes the cap)
+ $2.80 per thousand dollars in excess of
$100,000 of Gross Receipts
Rate Structure
Number of
Businesses
Total Taxable
Gross Receipts
(in millions)
2025 Charges Tax Amount
$2.80/thousand
5,245 $2,947 $5,389,000 $7,703,000
Increased Revenue $2,314,000
Revenue Impacts
33CITY OF
MANHATTAN 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.” Model 2 Analysis
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Analysis of Model 2 Business License Tax Structure
Comparison of Business License Tax Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts Current BLT Payment
Current % of
Gross Receipts
Model 2 BLT
Payment
Model 2 % of
Gross Receipts
1 $100,000 $337 0.34% $100 0.10%
2 $500,000 $1,457 0.29% $1,220 0.24%
3 $1,000,000 $2,857 0.29% $2,620 0.26%
4 $3,000,000 $8,457 0.28% $8,220 0.27%
5 $4,500,000 $12,156 0.27% $12,420 0.28%
6 $5,000,000 $12,156 0.24% $13,820 0.28%
7 $10,000,000 $12,156 0.12% $27,820 0.28%
8 $20,000,000 $12,156 0.06% $55,820 0.28%
9 $50,000,000 $12,156 0.02% $139,820 0.28%
10 $100,000,000 $12,156 0.01% $279,820 0.28%
34CITY OF
MANHATTAN 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.” Model 3 Single Gross Receipts Rate
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Model Structure:
• Uniform gross receipts rate for all businesses
• Small flat-rate tax
• Increases cap to $100,000
• Transitions to two categories: Non-Exempt & Exempt
Outcomes:
• Easy for businesses to understand
• Same rate for all non-exempt businesses is more equitable • Increases revenues for City services
• Low flat rate supports micro-enterprises
35CITY OF
MANHATTAN 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.” Model 3 Single Gross Receipts Rate
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Tax Basis Taxable Gross Receipts
Flat Rate (decreases) $100 Flat Rate
(Up to $100,000 Gross Receipts)
Gross Receipts Tax (keeps the same rate,
and sets cap at $100,000)
+ $2.80 per thousand dollars in excess of
$100,000 of Gross Receipts
Rate Structure
Number of
Businesses
Total Taxable
Gross Receipts
(in millions)
2025 Charges
Tax Amount
$2.80/thousand
with $100,000 Cap
5,245 $2,947 $5,389,000 $6,561,000
Increased Revenue $1,172,000
Revenue Impacts
36CITY OF
MANHATTAN 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.” Model 3 Analysis
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Analysis of Model 3 Business License Tax Structure
Comparison of Business License Tax Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts Current BLT Payment
Current % of
Gross Receipts
Model 3 BLT
Payment
Model 3 % of
Gross Receipts
1 $100,000 $337 0.34% $100 0.10%
2 $500,000 $1,457 0.29% $1,220 0.24%
3 $1,000,000 $2,857 0.29% $2,620 0.26%
4 $3,000,000 $8,457 0.28% $8,220 0.27%
5 $4,500,000 $12,156 0.27% $12,420 0.28%
6 $5,000,000 $12,156 0.24% $13,820 0.28%
7 $10,000,000 $12,156 0.12% $27,820 0.28%
8 $20,000,000 $12,156 0.06% $55,820 0.28%
9 $50,000,000 $12,156 0.02% $100,000 0.20%
10 $100,000,000 $12,156 0.01% $100,000 0.10%
37CITY OF
MANHATTAN 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.” Model 4 Variable Gross Receipts
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Model Structure:
• Variable gross receipts rate based on business type
• Small flat-rate tax
• Increases cap to $100,000
• Model simplifies businesses into five base categories and an exempt category
Outcomes:
• Only five (5) categories is easier to navigate
• Slightly increases revenues for City services
• Low flat rate supports micro-enterprises
• More concentration of revenue from particular industries • Not as fair and equitable
38CITY OF
MANHATTAN 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.” Model 4 Variable Gross Receipts
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Flat Rate 5 Simplified Categories Rate Per Thousand
$100 Flat Rate
Up to $100,000 Gross Receipts
Contractor $2.80
General/Retail $2.00
Professional $2.80
Property Rental $2.80
Services $2.80
Rate Structure
39CITY OF
MANHATTAN 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.” Model 4 Variable Gross Receipts
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Business Type Number of
Businesses
Estimated Taxable
Gross Receipts 2025 Charges
Model 4 - Variable
Gross Receipts
Estimated Revenue
Contractor 2,486 $474,705,512 $829,000 $1,008,000
General/Retail 784 $1,322,788,156 $1,721,000 $2,203,000 Professional 499 $559,253,940 $1,041,000 $1,337,000
Property Rental 469 $154,479,325 $917,000 $418,000
Services 927 $434,767,820 $881,000 $975,000
Exempt 80 $0 $0 $0
Totals 5,245 $2,947 $5,389,000 $5,941,000
Increased Revenue $552,000
40CITY OF
MANHATTAN 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.” Model 4 Analysis
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Analysis of Model 4 Business License Tax Structure
Comparison of Business License Tax (BLT) Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts
Current BLT
Payment
Current % of
Gross Receipts
Model 4 BLT Payment
(Contractor/Professional/
Property Rental/Services)
Model 4 % of
Gross Receipts
1 $100,000 $337 0.34% $100 0.10%
2 $500,000 $1,457 0.29% $1,220 0.24%
3 $1,000,000 $2,857 0.29% $2,620 0.26%
4 $3,000,000 $8,457 0.28% $8,220 0.27%
5 $4,500,000 $12,156 0.27% $12,420 0.28%
6 $5,000,000 $12,156 0.24% $13,820 0.28%
7 $10,000,000 $12,156 0.12% $27,820 0.28%
8 $20,000,000 $12,156 0.06% $55,820 0.28%
9 $50,000,000 $12,156 0.02% $100,000 0.20%
10 $100,000,000 $12,156 0.01% $100,000 0.10%
41CITY OF
MANHATTAN 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.” Model 4 Analysis Continued…
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Analysis of Model 4 Business License Tax Structure
Comparison of Business License Tax (BLT) Payments Based on Gross Receipts of $100K, $500K, $1M, $3M, $4.5M, $5M, $10M, $20M, $50M, $100M Gross Receipts
Current BLT
Payment
Current % of
Gross Receipts
Model 4 BLT Payment
(General/Retail)
Model 4 % of
Gross Receipts
1 $100,000 $337 0.34% $100 0.10%
2 $500,000 $1,457 0.29% $900 0.18%
3 $1,000,000 $2,857 0.29% $1,900 0.19%
4 $3,000,000 $8,457 0.28% $5,900 0.20%
5 $4,500,000 $12,156 0.27% $8,900 0.20%
6 $5,000,000 $12,156 0.24% $9,900 0.20%
7 $10,000,000 $12,156 0.12% $19,900 0.20%
8 $20,000,000 $12,156 0.06% $39,900 0.20%
9 $50,000,000 $12,156 0.02% $99,900 0.20%
10 $100,000,000 $12,156 0.01% $100,000 0.10%
42CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Business License Tax
Model Comparisons
43CITY OF
MANHATTAN 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.” Example 1: Subcontractor
Comparison of 4 Models and Other Cities
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Manhattan Beach Tax
Current Tax $246
Model 1 $246
Model 2 $100
Model 3 $100
Model 4 $100
Comparison Cities Tax
Beverly Hills $75
Culver City $0
El Segundo $150
Hermosa Beach $239
Redondo Beach $192
Santa Monica $75
Torrance $218
Factors
• Category: Subcontractor (Contractor)
• Gross Receipts: $40,000
• Employees: 2
• Other Units: 500 Sq Ft
44CITY OF
MANHATTAN 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.” Example 2: Restaurant
Comparison of 4 Models and Other Cities
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Manhattan Beach Tax
Current Tax $1,696
Model 1 $1,696
Model 2 $1,500
Model 3 $1,500
Model 4 $1,100
Comparison Cities Tax
Beverly Hills $750
Culver City $600
El Segundo $694
Hermosa Beach $813
Redondo Beach $243
Santa Monica $750
Torrance $458
Factors
• Category: Restaurant (General Retail)
• Gross Receipts: $600,000
• Employees: 8
• Other Units: 2,500 Sq Ft
45CITY OF
MANHATTAN 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.” Example 3: Medical Office
Comparison of 4 Models and Other Cities
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Manhattan Beach Tax
Current Tax $3,315
Model 1 $3,315
Model 2 $3,180
Model 3 $3,180
Model 4 $3,180
Comparison Cities Tax
Beverly Hills $4,882
Culver City $3,500
El Segundo $150
Hermosa Beach $598
Redondo Beach $252
Santa Monica $5,775
Torrance $338
Factors
• Category: Medical Office (Professional)
• Gross Receipts: $1,200,000
• Employees: 5 (3 Prof)
• Other Units: 3,000Sq Ft
46CITY OF
MANHATTAN 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.” Example 4: Commercial Property
Comparison of 4 Models and Other Cities
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Manhattan Beach Tax
Current Tax $1,916
Model 1 $1,916
Model 2 $1,780
Model 3 $1,780
Model 4 $1,780
Comparison Cities Tax
Beverly Hills $16,450
Culver City $650
El Segundo $930
Hermosa Beach $322
Redondo Beach $158
Santa Monica $875
Torrance $250
Factors
• Category: Commercial Property (Property Rental)
• Gross Receipts: $700,000
• Employees: 5
• Other Units: 5,000 Sq Ft (7 Units)
Note: Models 2 - 4 eliminate the sales
tax credit for Commercial Property
47CITY OF
MANHATTAN 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.” Example 5: Commercial Property
Comparison of 4 Models and Other Cities
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Manhattan Beach Tax
Current Tax $94,575
Model 1 $94,575
Model 2 $69,820
Model 3 $69,820
Model 4 $69,820
Comparison Cities Tax
Beverly Hills $587,500
Culver City $32,240
El Segundo $63,090
Hermosa Beach $6,900
Redondo Beach $1,662
Santa Monica $31,250
Torrance $11,250
Factors
• Category: Commercial Property (Property Rental)
• Gross Receipts: $25,000,000
• Employees: 25
• Other Units: 225,000 Sq Ft (150 Units)
Note: Models 2 - 4 eliminate the sales
tax credit for Commercial Property
48CITY OF
MANHATTAN 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.” MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Questions on Model
Comparison?
49CITY OF
MANHATTAN 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.” Summary of Models 1 - 4
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
2025 Tax
Revenue Model 1 Model 2 Model 3 Model 4
Removes Cap ✓ ✓
Reduce Flat Tax ✓ ✓ ✓
Set Cap to $100K ✓ ✓
Set Variable GR ✓
Projected
Revenue $5,389,000 $8,296,000 $7,703,000 $6,561,000 $5,941,000 Projected Business Tax
Revenue Increase $2,907,000 $2,314,000 $1,172,000 $552,000 Annual Revenue of each Model and Revenue Impact
50CITY OF
MANHATTAN 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.” Last Polling Question from
Business License Tax Forum
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
6%
3 38%
18 10%
5 46%
22 0
5 10
15 20
25 Model 1 - No Cap Model 2 - No Cap +
Reduce Flat Tax
Model 3 - Reduce Flat
Tax + set Cap to $100k
Model 4 - Reduce Flat
Tax + set Cap to $100k +
set variable GR tax rate
Question 3: Which Tax Model do you Prefer?
51CITY OF
MANHATTAN 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.” Next Steps & Tentative Timeline
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2
Regular updates on the Business License Modernization Plan are posted on the City Website at: www.manhattanbeach.gov/BusinessLicense May 12,
2026
Present Tax
Analysis
Findings and
Business
Community
Feedback at
City Council
Meeting
May-June
2026
Conduct
Community
Polling and
present results
at City Council
Meeting
July-August
2026
Call for
election and
submit ballot
measure to
County
November 3,
2026
General
Election
52CITY OF
MANHATTAN 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 City Council discuss and provide
direction regarding the Business License Tax
Modernization Plan in addition to:
º Confirming which Tax Model to proceed with
º Confirming next stage with Community Polling
Recommendation
MAY 12, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN – PHASE 2