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July 21, 2026
Consideration of Polling Results
on a Potential Business License
Ballot Measure and Direction to
Schedule the Consideration of
Calling the Election for the
August 4, 2026, City Council
Meeting
2 CITY OF
MANHATTAN BEACH
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•
Background
•
Timeline and Outreach To Date
•
Recap of Tax Model 3
•
Impacts to Deviating Businesses
•
Concept of Double Taxation
•
Alternative Tax Model Options
•
Next Steps/Final Direction
Agenda
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
3 CITY OF
MANHATTAN BEACH
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Why update the City’s Business License Tax (BLT) Code?
•
Current tax structure is complex and inequitable
•
Concept of a uniform gross receipts model = every business is taxed the same rate
º
Ensures there is no preferential rate for certain business types º
Modern and more resilient tax basis for cities
•
Outdated code from 1971 does not account for new business types •
BLT supports the General Fund to pay for public services, maintenance, infrastructure, and other costs that uphold the City’s desirability and attraction to visitors and businesses
•
Polling results support the proposed measure to equalize the tax rate across all businesses
Background
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
4 CITY OF
MANHATTAN BEACH
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Goals of Business License Tax Modernization Plan
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
1) Simplify the Code
2) Clarify the Code
3) Modernize the Code
4) Fair and Equitable Tax Structure
5) Maintain Fiscal Sustainability
5 CITY OF
MANHATTAN BEACH
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Timeline & Public Outreach
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Past
Present
Future
October 23,
2025
Met with
Chamber &
BIDs
November 6,
2025
Met with
Finance
Sub
-
committee
March 3,
2026
Phase 1
Ordinance:
City Council
Meeting
March 17,
2026
Second
Reading of
Ordinance
April 23,
2026
Business
License Tax
Forum
–
Community
Meeting
May 12,
2026
Present
Results of Tax
Analysis &
Select
Preferred Tax
Model
July 21, 2026
Present
Polling Results
& Final
Decision
Points for BLT
Measure
July
–
August
2026
Submit Notice
in The Beach
Reporter &
Continued
Outreach &
Mailers
August 4,
2026
Phase 2: Call
Election,
Present
Ordinance &
Documents for
Ballot Measure
November 3,
2026
General
Election
6 CITY OF
MANHATTAN BEACH
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JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Recap of Tax Model 3
7 CITY OF
MANHATTAN BEACH
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Polling Question from
Business License Tax Forum
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
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, $100k CAP
Model 4 - Reduce Flat
Tax, $100k CAP, set
variable GR tax rate
Question 3: Which Tax Model do you Prefer?
48 Respondents Total
8 CITY OF
MANHATTAN BEACH
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Recap of Models 1
-
4 JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
2025 Tax
Revenue
Model 1
Model 2
Model 3
(Modified)
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
$6,205,000
$5,941,000
Projected Business Tax
Revenue Increase
$2,907,000
$2,314,000
$816,000
$552,000
9 CITY OF
MANHATTAN BEACH
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Model 3 Single Gross Receipts Rate
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
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 and new businesses
10 CITY OF
MANHATTAN BEACH
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Model 3 Single Gross Receipts Rate
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Tax Basis
Taxable Gross Receipts
Flat Rate
(decreases)
$100
Flat Rate
(Up to $100,000 in Gross Receipts)
Gross Receipts Tax
(decreases incremental
tax rate, and sets cap at $100,000)
+ $2.60
per thousand dollars in excess of
$100,000 of Gross Receipts
Rate Structure
How it Works
Example of $500,000 Business
Amount
Amount in Gross Receipts Reported
$500,000
Less $100,000 deduction from flat rate
-
$100,000
Amount Subject to Gross Receipts Tax
$400,000
Divide by $1,000
400
Gross Receipts Tax Rate
x $2.60
Total Gross Receipts Taxes
$1,040
Total Flat Tax
+ $100
Subtotal Tax Amount Due
$1,140
11 CITY OF
MANHATTAN BEACH
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Model 3 Analysis
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
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
$313
0.34%
$100
0.10%
2 $500,000
$1,457
0.29%
$1,140
0.23%
3 $1,000,000
$2,857
0.29%
$2,440
0.24%
4 $3,000,000
$8,457
0.28%
$7,640
0.25%
5 $4,500,000
$12,156
0.27%
$11,540
0.26%
6 $5,000,000
$12,156
0.24%
$12,840
0.26%
7 $10,000,000
$12,156
0.12%
$25,840
0.26%
8 $20,000,000
$12,156
0.06%
$51,840
0.26%
9 $50,000,000
$12,156
0.02%
$100,000
0.20%
10 $100,000,000
$12,156
0.01%
$100,000
0.10%
✓
Reduces Flat Tax to $100
✓
Reduces Gross Receipts Tax Rate from $2.80 to $2.60
✓
Increases CAP to $100,000
12 CITY OF
MANHATTAN BEACH
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JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Deviating Businesses
13 CITY OF
MANHATTAN BEACH
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•
Hotels:
º
Current Structure:
$29.08
per room
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
•
Administrative Office:
º
Current Structure:
$313.88 flat tax + $43.55
per employee
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
•
PO Box
º
Current Structure:
$164.48 per year
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
Deviating Businesses
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
14 CITY OF
MANHATTAN BEACH
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•
Rental of Residential Property
Condominiums
º
Current Structure:
$0 per year
, yet annual license required
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
Dwelling Units
(3 or more units per lot)
º
Current Structure:
$29.08
per unit annually
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
Deviating Businesses
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
15 CITY OF
MANHATTAN BEACH
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•
Contractor
º
Current Structure:
$508.80
per year
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
•
Sub
-
contractor
º
Current Structure:
$254.16
per year
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
•
Per Vehicle
º
Gardener
-
Currently:
$197.48
per vehicle
º
Mobile Vendor/Catering
-
Currently:
$420.72
per vehicle
º
Proposed Structure (Model 3):
$100 Flat Tax, plus Gross
Receipt Basis Tax ($2.60 per $1,000 of GR)
Deviating Businesses
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
16 CITY OF
MANHATTAN BEACH
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•
Commercial Property
º
Current Structure:
Two calculations, whichever is higher:
1. Structure Square Footage Basis:
$313.88
flat tax +
$0.457
per square foot in excess of 5,000 square feet
not to exceed
$251,168
(CAP) OR
2. Gross Receipts Basis:
$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)
▪
Both options allow for Sales Tax Credit Deduction
º
Proposed Structure (Model 3):
1. Gross Receipts Basis:
$100
Flat Tax for the first
$100,000, plus
$2.60
/$1,000 in excess thereof not to
exceed
$100,000
(CAP)
Deviating Businesses
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
17 CITY OF
MANHATTAN BEACH
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JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Feedback from Business
Community
18 CITY OF
MANHATTAN BEACH
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•
Commercial Property
º
Business License Tax on Commercial Property is not new
º
Current tax structure
requires annual business license
º
Proposed tax structure
maintains same requirement
Feedback from Business Community
Concept of Double Taxation
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
•
These are two separate business entities, not a
duplicate tax on the same license
•
Both entities pay a business license based on their
respective Gross Receipts
Why this is not
“double taxation
”
19 CITY OF
MANHATTAN BEACH
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•
Apportionment
º
Businesses only need to report Gross Receipts
(GR) generated in Manhattan Beach
•
Real Estate
º
Draft Ordinance would allow brokers to deduct
third
-
party funds held in a trust or escrow account
from the basis of their Gross Receipts calculations
º
Each entity pays its fair share in BLT for
commissions earned, similar to
Contractors/Subcontractors
Feedback from Business Community
Concept of Double Taxation
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
20 CITY OF
MANHATTAN BEACH
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•
Pass Through Revenue
º
Draft Ordinance will not recognize Pass
-
Through
Revenue as part of Gross Receipts
•
Franchise Agreements with Public Utilities
º
Draft Ordinance will keep the exemption in place
for Public Utilities to only pay the flat tax (and not
pay Gross Receipts basis)
if
there is a Franchise
Agreement in place where Franchise Taxes are
paid
Feedback from Business Community
Concept of Double Taxation
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
21 CITY OF
MANHATTAN BEACH
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With concerns in mind,
alternative tax models
were developed for
further consideration
Feedback from Business Community
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
“Increasing the CAP from
$12,156 to $100,000
means businesses
generating $5 million+
will see increases”
“Applying a uniform tax
upon all business types
means certain categories
will see more noticeable
increases”
22 CITY OF
MANHATTAN BEACH
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In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails .”
Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate $337 0.280% $100 0.260% $100 0.250% $150 0.240% $150 0.225% CURRENT MODEL 3 OPTION A OPTION B OPTION C
Qty. of
Businesses
Under Amt % Gross Receipts
Current
BLT
Payment
Current %
of Gross
Receipts
BLT
Payment
% of
Gross
Receipts
BLT
Payment
% of
Gross
Receipts
BLT
Payment
% of
Gross
Receipts
BLT
Payment
% of
Gross
Receipts
2,305 43.9% $100,000 $313 0.34% $100 0.10% $100 0.10% $150 0.15% $150 0.150% 2,312 44.1% $500,000 $1,457 0.29% $1,140 0.23% $1,100 0.22% $1,110 0.22% $1,050 0.210% 248 4.7% $1,000,000 $2,857 0.29% $2,440 0.24% $2,350 0.24% $2,310 0.23% $2,175 0.218% 250 4.8% $3,000,000 $8,457 0.28% $7,640 0.25% $7,350 0.25% $7,110 0.24% $6,675 0.223% 41 0.8% $4,500,000 $12,156 0.27% $11,540 0.26% $11,100 0.25% $10,710 0.24% $10,050 0.223% 8 0.2% $5,000,000 $12,156 0.24% $12,840 0.26% $12,350 0.25% $11,910 0.24% $11,175 0.224% 36 0.7% $7,500,000 $12,156 0.16% $19,340 0.26% $18,600 0.25% $17,910 0.24% $16,800 0.224% 7 0.1% $10,000,000 $12,156 0.12% $25,840 0.26% $24,850 0.25% $23,910 0.24% $22,425 0.224% 12 0.2% $15,000,000 $12,156 0.08% $38,840 0.26% $37,350 0.25% $35,910 0.24% $33,675 0.225% 7 0.1% $20,000,000 $12,156 0.06% $51,840 0.26% $49,850 0.25% $47,910 0.24% $44,925 0.225% 4 0.1% $25,000,000 $12,156 0.05% $64,840 0.26% $62,350 0.25% $59,910 0.24% $56,175 0.225% 3 0.1% $30,000,000 $12,156 0.04% $77,840 0.26% $74,850 0.25% $71,910 0.24% $67,425 0.225% 2 0.0% $40,000,000 $12,156 0.03% $100,000 0.25% $99,850 0.25% $95,910 0.24% $89,925 0.225% 2 0.0% $50,000,000 $12,156 0.02% $100,000 0.20% $100,000 0.20% $100,000 0.20% $100,000 0.200% 4 0.1% $75,000,000 $12,156 0.02% $100,000 0.13% $100,000 0.13% $100,000 0.13% $100,000 0.133% 4 0.1% $100,000,000 $12,156 0.01% $100,000 0.10% $100,000 0.10% $100,000 0.10% $100,000 0.100% 5,245 100%
$100,000 CAP SCENARIOS
Maximum Tax (CAP) $12,156 $100,000 $100,000 $100,000 $100,000 Estimated Increased City Revenue $816,630 $636,252 $713,625 $443,059 % of Businesses with Increase 23% 23% 32% 30%
No Change (Exempt) 2% 2% 2% 2%
% of Businesses with Decrease 75% 75% 66% 68%
$75,000 CAP SCENARIOS
Maximum Tax (CAP) $12,156 $75,000 $75,000 $75,000 $75,000 Estimated Increased City Revenue $540,747 $367,127 $449,445 $184,443 Less Revenue if CAP reduced $275,883 $269,125 $264,180 $258,616 # of Businesses Impacted by $75K CAP 15 12 12 12
Business License Tax Modernization Plan
Alternative Tax Model Options
23 CITY OF
MANHATTAN BEACH
“Note: This PowerPoint presentation is intended solely as a visual aid to an oral staff presentation of an agenda report topi c.
In the event of any differences between the presentation and the agenda report, the information in the agenda report prevails .”
Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate Flat Tax GR Rate $313 0.280% $100 0.260% $100 0.250% $150 0.240% $150 0.225% CURRENT MODEL 3 OPTION A OPTION B OPTION C
Examples based on
$500,000 - $25,000,000
in Gross Receipts
Current BLT
Payment
% of
Gross
Receipts
BLT
Payment $ Change
% of
Gross
Receipts
BLT
Payment $ Change
% of
Gross
Receipts
BLT
Payment $ Change
% of
Gross
Receipts
BLT
Payment $ Change
% of
Gross
Receipts
$500,000 $1,457 0.29% $1,140 ($317) 0.23% $1,100 ($357) 0.22% $1,110 ($347) 0.22% $1,050 ($407) 0.21% $1,000,000 $2,857 0.29% $2,440 ($417) 0.24% $2,350 ($507) 0.24% $2,310 ($547) 0.23% $2,175 ($682) 0.22% $3,000,000 $8,457 0.28% $7,640 ($817) 0.25% $7,350 ($1,107) 0.25% $7,110 ($1,347) 0.24% $6,675 ($1,782) 0.22% $5,000,000 $12,156 0.24% $12,840 $684 0.26% $12,350 $194 0.25% $11,910 ($246) 0.24% $11,175 ($981) 0.22% $10,000,000 $12,156 0.12% $25,840 $13,684 0.26% $24,850 $12,694 0.25% $23,910 $11,754 0.24% $22,425 $10,269 0.22% $25,000,000 $12,157 0.05% $64,840 $52,683 0.26% $62,350 $50,193 0.25% $59,910 $47,753 0.24% $56,175 $44,018 0.22% Commercial Property Impacts
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE
Gross Receipts Range
# of
Businesses %
$1 - $100,000 84 39.6%
95.8%
Decreases in
all Models
within this
range
$100,000 - $500,000 95 44.8%
$500,000 - $1,000,000 14 6.6%
$1,000,000 - $3,000,000 10 4.7%
$3,000,000 - $4,500,000 3 1.4%
$4,500,000 - $5,000,000 2 0.9%
$5,000,000 + 4 0.5%
Total Commercial Property 212 100%
All proposed
Models remove
the Square
Footage Basis of
the Tax and
replaces current
$251,168 Cap
Data is based on 2025
-
2026 licensing year reflecting Gross Receipts from 2024 Calendar Year 24 CITY OF
MANHATTAN BEACH
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•
Staff recommends City Council discuss and provide direction regarding:
º
Final Decision Points on Tax Model
º
Whether to proceed with placing ballot measure
•
If approved, next steps will be to return on August 4, 2026, to present the following:
º
Ordinance and ballot language
º
Resolution to Call the Election
º
Resolutions for Ballot Measure Submission and Filing of Rebuttal Arguments
º
Selection of a Ballot Letter Designation for the City’s Ballot Measure (Tentative letters for measure are BL or MBL)
•
Additional outreach to businesses and residents will be provided Recommendation
JULY 21, 2026
BUSINESS LICENSE TAX MODERNIZATION PLAN UPDATE