AGENDA
Special Meeting
Martin Luther King Jr. Community Center,
140 E. 12th Street, National City, CA
Ron Morrison, Mayor Douglas J. Schulze, City Manager
Luz Molina, Vice-Mayor - District 1 Heidi Skinner, City Attorney Jose Rodriguez, Councilmember -District 2 Shelley Chapel, MMC, City Clerk Ditas Yamane, Councilmember – District 3
Marcus Bush, Councilmember– District 4
_______________________________________________________________________ The City Council also sits as the City of National City Community Development Commission, Housing Authority, Joint Powers Financing Authority, and Successor Agency to the Community Development Commission as the National City Redevelopment Agency
Thank you for participating in local government and the City of National City Council Meetings.
Meetings: Regular City Council Meetings are held on the first and third Tuesday of the month at 6:00 p.m. Special Closed Session Meetings and Workshops may be same day, the start time is based on needs. Check Special Agendas for times.
Location: Regular City Council Meetings are held in the Council Chamber located at City Hall, 1243 National City Boulevard, National City, CA 91950, the meetings are open to the public.
Agendas and Material: Agendas and Agenda Packet for items listed are available on the City website, and distributed to the City Council no less than 72 hours before the City Council Meeting.
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EFFECTIVE JANUARY 1, 2025
All Contributions to Candidates and Current Elected Officials are required to self-report a Declaration of Campaign Contribution to a Councilmember of more than $500 within the past year (effective Jan 1, 2025). This report may be included on the Public Comment Speaker Slip to be completed prior to the City Council Meeting.
Spanish Interpretation Services: Spanish Interpretation Services are available; please contact the City Clerk before the start of the meeting for assistance. [email protected] American Disabilities Act Title II: In compliance with the American Disabilities Act of 1990, persons with a disability may request an agenda in appropriate alternative formats as required by Title II. Any person with a disability who requires a modification or accommodation to participate in a meeting should direct such request to the City Clerk’s Office (619) 336-4228 at least 24 hours in advance of the meeting.
AGENDA
Special Meeting
Martin Luther King Jr. Community Center,
140 E. 12th Street, National City, CA
Ron Morrison, Mayor Douglas J. Schulze, City Manager
Luz Molina, Vice-Mayor - District 1 Heidi Skinner, City Attorney Jose Rodriguez, Councilmember -District 2 Shelley Chapel, MMC, City Clerk Ditas Yamane, Councilmember – District 3
Marcus Bush, Councilmember– District 4
_______________________________________________________________________ The City Council also sits as the City of National City Community Development Commission, Housing Authority, Joint Powers Financing Authority, and Successor Agency to the Community Development Commission as the National City Redevelopment Agency
Gracias por participar en las reuniones del gobierno local y del Consejo de la Ciudad de National City.
Reuniones: Las reuniones regulares del Consejo Municipal se llevan a cabo el primer y tercer martes del mes a las 6:00 p.m. La reunión especial de sesión privada y los talleres pueden ser el mismo día, la hora de inicio se basa en las necesidades. Consulte las agendas especiales para conocer los horarios.
Ubicación: Las reuniones regulares del Concejo Municipal se llevan a cabo en la Cámara del Consejo ubicada en el Ayuntamiento, 1243 National City Boulevard, National City, CA 91950, las reuniones están abiertas al público.
Agendas y Material: Las Agendas y el Paquete de Agenda para los temas enumerados están disponibles en el sitio web de la Ciudad y se distribuyen al Concejo Municipal no menos de 72 horas antes de la Reunión del Concejo Municipal. Regístrese para recibir notificaciones electrónicas cuando se publiquen artículos.
Participación pública: Se fomenta de varias maneras como se describe a continuación. Los miembros del público pueden asistir a la Reunión del Concejo Municipal en persona, ver la Reunión del Concejo Municipal a través de la transmisión web en vivo o participar de forma remota a través de Zoom. Las grabaciones de las reuniones están archivadas y disponibles para su visualización en el sitio web de la Ciudad.
Para acceder a la opción Zoom, por favor introduce tu identificador en la Cola de Zoom.
Comentario Público: Las personas que deseen dirigirse al Concejo Municipal sobre asuntos que no están en la agenda pueden hacerlo bajo Comentarios públicos. Quienes deseen hacer uso de la palabra sobre los temas del programa podrán hacerlo cuando se esté examinando el tema.
Por favor, envíe una “Solicitud para entrar en la cola” al Secretario municipal antes de la reunión o inmediatamente después del anuncio del artículo. Todos los comentarios estarán limitados hasta tres (3) minutos. El Presidente tendrá la autoridad para reducir el tiempo asignado para acomodar a un gran número de oradores. (Política del Ayuntamiento 104) Si desea enviar comentarios por escrito, envíe un correo electrónico a la Oficina del Secretario de la Ciudad al menos 1 hora antes de la Reunión del Consejo Municipal para dar tiempo a la distribución al Consejo Municipal.
Todos comentarios deben estar sometidos a más tardar cuatro (4) horas antes del comienzo de la sesión.
A PARTIR DEL 1 DE ENERO DE 2023
Todas las contribuciones a los candidatos y funcionarios electos actuales deben autoinformar una Declaración de contribución de campaña a un concejal de más de $ 500 en el último año (a partir del 1 de enero de 2023). Este informe puede incluirse en el Recibo del orador de comentarios públicos que se completará antes de la reunión del Concejo Municipal Servicios de interpretación en español: Los servicios de interpretación en español están disponibles, comuníquese con el Secretario de la Ciudad antes del inicio de la reunión para obtener ayuda.
Título II de la Ley de Discapacidades Americanas: En cumplimiento con la Ley de Discapacidades Americanas de 1990, las personas con discapacidad pueden solicitar una agenda en formatos alternativos apropiados según lo requerido por el Título II. Cualquier persona con una discapacidad que requiera un modificación o adaptación para participar en una reunión debe dirigir dicha solicitud a la Oficina del Secretario de la Ciudad (619) 336-4228 al menos 24 horas antes de la reunión.
Estado de California )
)ss
Condado de San Diego )
DECLARACIÓN JURADA DE PUBLICACIÓN
Yo, Shelley Chapel, MMC, secretaria municipal de la ciudad de National City, declaro bajo pena de perjurio que este aviso de reunión extraordinaria – taller convocado por el Ayuntamiento de la ciudad de National City fue publicado y proporcionado el jueves 16 de julio de 2026 a las 18:00 horas. Dicha reunión se celebrará el martes 21 de julio de 2026 a las 15:00 horas en el Centro Comunitario Martin Luther King Jr., 140 E 12th Street, en la ciudad de National City, California. Dicho aviso se colocó en los tablones de anuncios frente al Ayuntamiento y la Biblioteca.
Shelley Chapel
Capilla Shelley, MMC, secretaria municipal
State of California )
)ss.
County of San Diego )
AFFIDAVIT OF POSTING
I, Shelley Chapel, MMC, City Clerk of the City of National City, hereby declare under penalty of perjury that this notice of a Special Meeting – Workshop was called by the City Council of the City of National City was posted and provided on Thursday, July 16, 2026, at 6:00 p.m. Said meeting to be held Tuesday, July 21, 2026, at 3:00 p.m. in the Martin Luther King Jr. Community Center, 140 E 12th Street, in the City of National City, California. Said notice was posted on the Bulletin Boards in front of City Hall and the Library.
Shelley Chapel
Shelley Chapel, MMC, City Clerk
AGENDA
Taller del Ayuntamiento
Martes, 21 de julio de 2026, 15:00 horas.
Centro Comunitario Martin Luther King Jr. ,
140 E. 12th Street
National City, CA 91950
1. LLAMADA AL ORDEN
2. PASE DE LISTA
3. JURAMENTO A LA BANDERA
4. CÓMO PÚBLICO
Los comentarios públicos se limitarán únicamente a la discusión sobre la Reforma del Impuesto de Licencias Mercantiles.
5. INFORME DEL PERSONAL
1. Taller sobre la Reforma del Impuesto sobre Licencias Comerciales (Impuesto por Ingresos Brutos), Divulgación Empresarial y Comunitaria, Resultados de Encuestas de Opinión Pública, Relacionado con la posible medida de reforma fiscal de licencias comerciales.
Recomendación:
Recibir la presentación sobre el estudio de reforma fiscal de licencias comerciales, los hallazgos de divulgación empresarial y comunitaria, y los resultados de encuestas de opinión pública, y proporcionar orientación sobre una propuesta de reforma fiscal de licencias comerciales, incluyendo la estructura de tasas propuesta y si el personal debe preparar las resoluciones y materiales de votación necesarios para su consideración en el ayuntamiento el 4 de agosto, Reunión Especial 2026
6. Suspensión
AGENDA
City Council Workshop
Tuesday, July 21, 2026, 3:00 p.m.
Martin Luther King Jr. Community Center
140 E. 12th Street
National City, CA 91950
Pages
1. CALL TO ORDER
2. ROLL CALL
3. PLEDGE OF ALLEGIANCE
4. PUBLIC COMMENT
Public Comment will be restricted to the Business License Tax Reform discussion only.
5. STAFF REPORT
5.1 Workshop on the Business License Tax Reform (Gross Receipts Tax) Study Findings, Business and Community Outreach, Public Opinion Survey Results, Relating to Potential Business License Tax Reform Ballot Measure. 2 Recommendation:
Receive the Presentation Regarding the Business License Tax Reform Study, Business and Community Outreach Findings, and Public Opinion Survey Results, and Provide Direction Regarding a Proposed Business License Tax Reform Ballot Measure, Including the Proposed Rate Structure and Whether Staff Should Prepare the Necessary Resolutions and Ballot Materials for City Council Consideration at the August 4, 2026 Special Meeting
6. ADJOURNMENT
AGENDA REPORT
Department: City Manager's Office
Prepared by: Pedro Garcia, Economic Development Manager Meeting Date: Tuesday, July 21, 2026
Approved by: Douglas J. Schulze, City Manager
SUBJECT:
Workshop on the Business License Tax Reform (Gross Receipts Tax) Study Findings, Business and Community Outreach, Public Opinion Survey Results, Relating to Potential Business License Tax Reform Ballot Measure.
RECOMMENDATION:
Receive the Presentation Regarding the Business License Tax Reform Study, Business and Community Outreach Findings, and Public Opinion Survey Results, and Provide Direction Regarding a Proposed Business License Tax Reform Ballot Measure, Including the Proposed Rate Structure and Whether Staff Should Prepare the Necessary Resolutions and Ballot Materials for City Council Consideration at the August 4, 2026 Special Meeting BOARD/COMMISSION/COMMITTEE PRIOR ACTION:
Not Applicable.
EXPLANATION:
On December 2, 2025, the City Council authorized a Professional Services Agreement with HdL Companies to conduct a comprehensive Revenue Modernization Study focused on evaluating the City's existing Business License Tax structure and identifying potential modernization opportunities.
Since that time, staff and HdL Companies have evaluated various Business License Tax modernization models intended to better align the City's Business License Tax structure with today's business environment while addressing the City's long-term fiscal sustainability.
On April 14, 2026, the City Council directed staff to continue evaluating Business License Tax modernization concepts, conduct stakeholder outreach, complete public opinion polling, and return with additional information for Council consideration.
Since the April meeting, staff have continued outreach efforts with business organizations, community stakeholders, and residents to better understand their concerns, answer questions, and receive feedback regarding the proposed Business License Tax Reform Measure.
Business outreach included presentations, meetings, and discussions with the National City Mile of Cars Association, South County Economic Development Council (SCEDC), National City Chamber of Commerce, Working Waterfront, and additional members of the business community.
The City organized a series of business roundtable discussions hosted by members of the City Council and Mayor. During these meetings, City Manager Doug Schulze presented an overview of the City's current fiscal condition, the structural budget deficit, and the need to identify
sustainable long-term revenue solutions. The presentations also highlighted revenue initiatives already underway, proposed expenditure reduction strategies, and the proposed Business License Tax Reform as one component of the City's broader fiscal strategy.
Collectively, these outreach efforts were intended to provide the City Council with meaningful input from businesses, community stakeholders, and residents regarding the City's fiscal challenges, the proposed modernization of the Business License Tax, and the potential impacts of the proposed measure prior to making any final policy decisions.
Outreach discussions focused on topics including:
Business competitiveness;
Potential impacts on small and large businesses;
Long-term fiscal sustainability;
Public safety and infrastructure service levels;
Business climate considerations;
Accountability and transparency measures associated with potential future revenues; Business implementation considerations; and
Service priorities identified by the business community.
Throughout the outreach process, business representatives expressed concerns regarding current economic conditions, operating costs, narrow business margins, industry-specific impacts, and the timing of implementation. Participants also emphasized the importance of accountability, transparency, and ensuring that any future revenues result in visible improvements to City services, particularly within commercial and business corridor areas. Staff has considered this feedback throughout the evaluation process and incorporated it, where appropriate, into the proposed implementation strategy and public communication efforts.
Consistent with City Council direction provided in April 2026, the purpose of the outreach efforts, public opinion survey, and business roundtables was to provide the City Council with additional information and community feedback prior to making any final decision regarding a potential ballot measure.
In addition to stakeholder outreach, the City commissioned an independent public opinion survey to better understand voter perspectives regarding Business License Tax modernization, City service priorities, accountability measures, and the City's long-term fiscal sustainability challenges.
The survey evaluated public sentiment related to:
Public safety services;
Street and infrastructure maintenance;
Business fairness and modernization;
Small business protections;
Accountability and oversight provisions; and
Long-term fiscal sustainability.
Overall, the survey found that 69 percent of likely voters surveyed indicated support for the proposed Business License Tax Reform measure, while the remaining respondents were either opposed or undecided. The survey also provided valuable feedback regarding voter priorities, accountability expectations, and community perceptions of the City's fiscal condition.
The complete Public Opinion Survey Report is included as Exhibit E to this agenda report for the City Council's review and consideration.
The purpose of this workshop is to provide the City Council with an opportunity to review the Business License Tax Reform Study, stakeholder outreach efforts, business roundtable discussions, and public opinion survey results. Staff are seeking policy direction regarding the proposed Business License Tax Reform measure, including the proposed rate structure and whether staff should prepare the necessary resolutions, ordinance, and ballot materials for consideration at the August 4, 2026, Special Meeting.
Based upon City Council direction received during this workshop, staff will prepare the appropriate resolutions, ordinance, ballot question, and related election documents for consideration at the August 4, 2026, Special Meeting. If approved by the City Council at that meeting, the measure would be submitted to National City voters at the November 3, 2026, General Municipal Election.
Should the measure ultimately be approved by the voters, staff anticipates conducting a comprehensive business education and outreach program prior to implementation. The implementation period would include development of educational materials, frequently asked questions, workshops with business organizations, one-on-one assistance for businesses, updates to the City's business licensing systems and processes, and other implementation activities designed to facilitate a smooth transition.
FINANCIAL STATEMENT:
There is no immediate fiscal impact associated with receiving this presentation. If the City Council directs placement of a Business License Tax measure on a future ballot, the City may incur costs associated with election services, legal noticing, and ballot measure preparation.
RELATED CITY COUNCIL 2020-2025 STRATEGIC PLAN GOAL:
Balanced Budget and Economic Development
ENVIRONMENTAL REVIEW:
This is not a project under CEQA, and is therefore, not subject to environmental review.
CCR15378; PRC 21065.
PUBLIC NOTIFICATION:
The Agenda Report was posted at least 72 hours before the Regular Meeting date and time, and 24 hours before a Special Meeting in accordance with the Ralph M. Brown Act ORDINANCE:
Not Applicable
EXHIBITS:
Exhibit A – Business License Tax Reform Presentation
Exhibit B – City Manager Business Roundtable Presentation Exhibit C – Business and Community Outreach Summary
Exhibit D – Public Opinion Survey Presentation
Exhibit E – Business License Tax Reform Key Facts and FAQ Exhibit F – Proposed Ballot Measure Language
CITY OF NATIONAL CITY
BUSINESS LICENSE TAX
Tax Study Draft
Presented By
Tax Study
Content
1. Registry Analysis – starting slide 5
2. Jurisdictions Comparisons – starting slide 10
a. Basic Overview
b. Detailed Analysis
3. Tax Models – starting slide 15
a. Models
b. Models Comparisons
4. Appendix– starting slide 25
1
Tax Study Purpose
12
1. Assess Performance of the Current Tax Structure
Evaluate how the City’s existing business tax framework is performing in terms of revenue stability, fairness across business types, and long-term sustainability.
2. Benchmark Against Peer Jurisdictions
Compare the City’s approach to similar jurisdictions to understand how it competes regionally and where it may be over- or under-aligned.
3. Identify Opportunities for Improvement
Explore alternative tax structures and rate methodologies to determine whether adjustments could enhance revenue reliability, improve equity, or better reflect the local business environment.
4. Provide a Clear Path Forward for Decision-Making
Present data-driven scenarios and trade-offs to help City Council confidently evaluate whether to maintain the current structure or pursue targeted changes. Ensure any potential direction is grounded in fiscal impact, community considerations, and implementation feasibility.
Purpose of the Tax Study 3
Business License Tax
Registry Review
4
Business License Registry Review
License Rates, Counts, and Tax Basis
Rate Types Count of Business Primary Tax Basis
Residential Rentals 1 to 4 Units 1,551 Flat Fee
Gross Receipts Class 2 1,225 Tiered Gross Receipts
Contractor - Specialty or Subcontractor (Outside) 585 Flat Fee Gross Receipts Class 5 338 Tiered Gross Receipts
Contractor - General (Outside) 323 Flat Fee
Gross Receipts Class 1 322 Tiered Gross Receipts
Gross Receipts Class 6 281 Tiered Gross Receipts
Residential Rentals 5 to 30 Units 174 Flat Fee
Out of Town Vendor 162 Tiered Gross Receipts
Gross Receipts Class 3 156 Tiered Gross Receipts
All Other (12) 363 Flat Fee/Tiered Gross Receipts
Total 5,480
5
Business License Registry Review
Total Share of Tax Revenue Generated by Business Type
Residential Rental & Apartment
Houses
26%
Retail Sales - General
12%
Restaurants
5%
Medical Offices
5%
Service - General
4%
Contractor - Sub (Based Out Of City)
4%
Contractor - General (Based Out Of
City)
3%
Wholesale Business
3%
Service - Repairs
3%
All Other (93)
35%
6
Business License Registry Review
Top 100 Businesses Compared to all Businesses in the City The top 100 businesses account for 57% of the reported gross receipts and 29% of the total tax assessed.
Top 100
29.17%
All Other
Businesses
70.83%
Top 100 - Percent of
Total Taxes Revenue
Top 100
57.54%
All Other
Businesses
42.46%
Top 100 - Percent of
Total Reported Gross Receipts
7
In general, “Gross Receipts” means the
total amount of revenue received or
accrued by a business from all activities
conducted within the City, whether
received in cash, credit, or other form
of value, without deduction for costs or
expenses, and limited to the portion
attributable to business activity within
the City.
Types of Revenue
• Sales of goods and services
• Fees
• Rents
• Other compensation
What is Gross Receipts? 8
Jurisdiction Comparison
Basic Overview
9
Jurisdiction Comparison
Demographic and Economic Statistics by Location
Location Population Business Count Business Tax Revenue Revenue Per Capita Revenue Per Business Ordinance Last Modified Tax Basis Cap Presence?(Y/N) Del Mar 3,867 1,846 $276,466 $71.49 $149.76 N/A Gross Receipts N Carlsbad 113,495 7,136 $6,356,809 $56.01 $890.81 1995 Gross Receipts N Oceanside 170,020 9,500 $4,721,430 $27.77 $496.99 2002 Gross Receipts N Vista 98,344 4,555 $2,374,284 $24.14 $521.25 1975 Gross Receipts N San Clemente 62,313 7,700 $1,283,866 $20.60 $166.74 2012 Gross Receipts N Escondido 148,122 6,336 $2,154,732 $14.55 $340.08 1995 Gross Receipts N National City 55,236 5,255 $683,353 $12.37 $130.04 2017 Gross Receipts / Flat Fee Y
El Cajon 102,991 5,866 $849,581 $8.25 $144.83 2013 Per Employee N La Mesa 60,537 3,673 $486,474 $8.04 $132.45 1985 Flat Fee / Per Employee N
Chula Vista 274,333 8,700 $2,017,470 $7.35 $231.89 1995 Flat Fee / Per Employee Y
Based on publicly available 2023 data
10
Jurisdiction Comparison
Detailed Analysis
11
Jurisdictions for
Detailed Analysis
• National City
• Chula Vista
• Oceanside
• Vista
• San Diego
Jurisdiction Selections 12
Detailed Comparison Analysis
Business Scenarios – Estimated Revenue
Business Scenario Business Type Gross
Receipts Employees Other Units National City Chula Vista(Per Employee) Oceanside
(Gross
Receipts)
Vista
(Gross
Receipts)
San Diego
(Per
Employee)
Single Family Housing
Construction Contractor $45,000 3 $20 $131 $50 $41 $34
Commercial Property Property Rental $75,000 3 10 Units $26 $20 $50 $64 $34 Laundry Service Service $1,200,000 8 $371 $196 $600 $601 $34 Dental Office Professional $3,000,000 10 5 Prof. $938 $1,050 $1,500 $1,071 $34 Apartment Complex Property Rental $5,000,000 15 200 Units $5,150 $248 $2,500 $500 $200 Department Store Retail $20,000,000 35 $2,126 $547 $10,000 $4,471 $300 Automotive Dealer Retail $40,000,000 20 $1,720 $352 $20,000 $8,471 $225 Total $10,351 $2,545 $15,219 $15,219 $861
13
The Models
14
Features
• Variable gross receipts rate for businesses based on business type. • Small flat-rate tax.
• Model removes the special or specific categories in the current code in favor of five base categories and an exempt category.
Variable Gross Receipts Rates
Model Evaluation
Pros:
• Only five categories = easier to navigate.
• Boosts revenue potential.
• More equitable: accounts for varying
contributions to revenue base.
• Low base rate supports microenterprises.
Cons:
• Definitions have the potential to be too
broad.
• Multi-type businesses may need multiple
licenses.
• Potential for perceived favoritism or
penalty in rate design.
15
Variable Gross Receipts Rate
Model Structure
Categories* Flat Rate Option 1Tax Rates * Option 2 Tax Rates Contractor
$25 Flat Rate
Up to $25,000 Gross Receipts
0.2% Of Gross Receipts 0.2% Of Gross Receipts
General/Retail 0.1% Of Gross Receipts 0.05% Of Gross Receipts Professional 0.3% Of Gross Receipts 0.3% Of Gross Receipts Property Rental 0.3% Of Gross Receipts 0.3% Of Gross Receipts Services 0.2% Of Gross Receipts 0.2% Of Gross Receipts
Exempt $0.00 0% Of Gross Receipts 0% Of Gross Receipts
16 * Option 2 has a cap of $150,000 on tax liability per business across all categories
Variable Gross Receipts Rate
Model’s Revenue Impact
Business Type
Number of
Businesses
Est. Taxable Gross
Receipts FY2025 Charges
Option 1
Est. Revenue
Option 2
Est. Revenue
Contractor 999 $121,000,000 $67,000 $218,000 $218,000
General/Retail 1,216 $2,664,000,000 $263,000 $2,671,000 $1,351,000 Professional 334 $561,000,000 $96,000 $1,664,000 $1,252,000 Property Rental 2,058 $862,000,000 $219,000 $2,486,000 $2,486,000 Service 837 $634,000,000 $115,000 $1,255,000 $1,255,000 Exempt 36 $0 $0 $0 $0
Total 5,480 $4,842,000,000 $760,000 $8,294,000 $6,562,000 Increased Business Tax
Revenue $7,534,000 $5,802,000
17
Gross Receipts Comparison
Impact of Gross Receipt on a Single Product
18 New Car
Averaging. $60,000
Option 1
Gross Receipt Tax
0.10%
Business Pays
$60
If passed on to consumers…
Option 2
Gross Receipt Tax
0.05%
Business Pays
$30
If passed on to consumers…
+0.10%
+ 0.05%
Adjusted for new tax
$60,060
Adjusted for new tax
$60,030
Model Comparisons
19
Tax Model Comparisons
Business Scenarios – Estimated Revenue
Business Scenario Business
Type
Gross
Receipts Employees Other Units
National
City
(Current)
Variable GR
Option 1
Variable
GR
Option 2
Chula Vista
(Per
Employee)
Oceanside
(Gross
Receipts)
Vista
(Gross
Receipts)
San Diego
(Per
Employee)
Single Family Housing
Construction Contractor $45,000 3 $20 $65 $65 $131 $50 $41 $34 Commercial Property Property
Rental $75,000 3 10 Units $26 $175 $175 $20 $50 $64 $34 Laundry Service Service $1,200,000 8 $371 $2,375 $2,375 $196 $600 $601 $34 Dental Office Professional $3,000,000 10 5 Prof. $938 $8,950 $8,950 $1,050 $1,500 $1,071 $34 Apartment Complex Property
Rental $5,000,000 15 200 Units $5,150 $14,950 $14,950 $248 $2,500 $500 $200 Department Store Retail $20,000,000 35 $2,126 $20,000 $10,013 $547 $10,000 $4,471 $300 Automotive Dealer Retail $40,000,000 20 $1,720 $40,000 $20,013 $352 $20,000 $8,471 $225 20
Cost of Doing Business: National City vs. Chula Vista
What is the cost advantage of doing business in National City compared to Chula Vista? Chula Vista Average
(Cost Per Square Foot)
National City Average
(Cost Per Square Foot) Difference
Office Space $37.00 – $42.15 $27.00 – $29.04 National City is 25% cheaper Retail Space $32.00 – $33.00 $32.00 – $33.00 Identical averages Flex Space $28.00 $22.00 National City is 21% cheaper
Industrial/Warehouse $17.78 – $18.00 $20.00 – $21.88 National City is 15% pricier 21
Cost of Doing Business: National City vs. Chula Vista
Business Example
Metric Chula Vista National City Difference
Median Annual SF Cost $29.70 $26.42 11.1%
Annual Occupancy Cost (125K SF) $3,713,036 $3,302,143 $410,893 Business Tax (Department Store Example) $547 $20,000 -$19,453 Net Cost to a Department Store $3,713,583 $3,322,143 $391, 440 Department Store Number of Employees
35 Gross Receipts
$20,000,000
Estimated SQFT
125,000
22
Appendix
23
Appendix A
Category Definitions
In Variable Gross Receipts Model, we use five basic business categories along with an exempt category. These are five basic structures that are common across municipalities. The definitions below are general and not meant to be the complete definitions that would appear in a municipal code.
Contractors: These are persons or firms that are carrying on the business of a contractor, subcontractor, or builder, particularly the construction or repair of any buildings.
Examples include but are not limited to construction, plumbing, HVAC, etc.
General Business/Retail: These are retailers, restaurateurs, and other general businesses. All these businesses are likely to contribute to your tax base in other ways (i.e., sales tax) and often have lower profit margins.
Professional and Advanced: These businesses offer services that require rigorous training through higher education or vocational institutions that certify the complete acquisition of skills and the ability to provide such professional services. This also includes businesses that can be considered "Advanced Services," such as those in the research and development and scientific fields. Examples include, but are not limited to, a doctor’s office, a law office, a consulting firm, etc.
Property Rental: Although listed separately, this category includes any business that leases, rents, or provides use of real property to another individual or entity for compensation. Examples include, but are not limited to, commercial leasing, residential rental, parcel leasing, hoteliers, etc. The city could also include language and rates for taxing short-term rentals in this category.
Services: This sector offers services that require minimal to no higher education or training. It is also the default category for any business that is not explicitly defined in one of the other five categories. Examples include, but are not limited to, hair stylists, gardeners, nail salons, etc. 24
Appendix B: Detailed Comparison Analysis
Business Scenarios – Tax Structure
Business
Scenario Business Type Gross Receipts Employees Other Units National City Chula Vista(Per Employee) Oceanside
(Gross Receipts)
Vista
(Gross Receipts)
San Diego
(Per Employee)
Single Family Housing
Construction Contractor $45,000 3
Class 1
$5k - $99.99k
$20
General Business
$105 +$13 each additional
person
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (>
$2.0M).
Per Employee
$34 if employee <= 12
Commercial Property Property Rental $75,000 3 10 Units
Class 1
$5k - $99.99k
$26
Rental
$12 + $1.20 per each over 3
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (> $2.0M
Per Employee
$34 if employee <= 12
Automotive Dealer Retail $400,000 6
Class 1
$Above 22M = $1,720
$1,720
General Business
$105 +$13 each additional
person
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (> $2.0M
Per Employee
$125 + $5 per Emp if
emp .>=13
Laundry Service Service $1,200,000 8
Class 5
$1.2M - $1.299M
$371
General Business
$105 +$13 each additional
person
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (> $2.0M
Per Employee
$34 if employee <= 12
Dental Office Professional $3,000,000 10 5 Prof.
Class 6
$3M - $3.499M
$938
Professional
$210 per professional
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (> $2.0M
Per Employee
$34 if employee <= 12
Apartment Complex Property Rental $5,000,000 15 200 Units Residential Rental
$150 + $5k for GR over
$4.5M
Rental
$12 + $1.20 per each over 3
Gross Receipts
$0.50 per $1k of GR
Apartment Houses
$2.50 per Unit
Per Employee
$125 + $5 per Emp if
emp .>=13
Department Store Retail $20,000,000 35
Class 2
$20M - $21.99M
$2,126
General Business
$105 +$13 each additional
person
Gross Receipts
$0.50 per $1k of GR
Gross Receipts
$15 base (≤$15k) + marginal rates from
0.001 (15–20k) down to 0.0002 (> $2.0M
Per Employee
$125 + $5 per Emp if
emp .>=13
25
1. The taxable activity. The typical taxable activity for business license tax is “any business, commercial enterprise, trade, calling, vocation, profession, or any other means of livelihood, whether or not it is carried on for gain or profit, engaged in by any person or company."
2. The measure of the taxable activity. Once we know what is taxed, we must measure how much of that taxable activity is occurring. Some cities may measure the number of employees. A more modern trend is to measure the gross receipts.
3. The rate. Given a certain amount of taxable activity, a rate is applied to determine how much tax is owed.
4. The classification. Cities will often group certain kinds of businesses together and apply different each group. For example, a city might want to charge restaurants a lower rate than commercial
5. The results. Since we are concerned with the revenue-generating aspect of the business license, refer to the “results” of the tax, we mean the revenue generated for the City.
Appendix C: Five Key Components Of A Business License Tax 26
Focus Group Discussions
BUSINESS LICENSE TAX
REFORM
Agenda
• WELCOME & INTRODUCTION
• CITY BUDGET OVERVIEW
• Budget Deficit
• Identified Potential Solutions
• CURRENT BUSINESS LICENSE TAX REFORM PROPOSAL
• CLARIFYING QUESTIONS
• FOCUSED INPUT
• Budget
• BLTR Proposal
Why Do We Exist?
Public Safety
• It’s not just police & fire
• Safe pedestrian routes
• Clean Air, Water & Public Spaces
• Building & Fire Codes
• Emergency Preparedness
Community Pride
• Maintaining parks, playgrounds, streets & facilities
• Planting trees & flowers
• Public Art
• Social Capital
• Cultural Identity
• Economic Development
• Effective Leadership
Budget Deficit
Total Budget
$89,326,951
Public Safety
$53,922,706
Mandatory
$20,988,572
Discretionary
$14,415,674
Identified Solutions
REVENUES
• Port of San Diego: MSA, Balanced Plan, and
Maritime Impact Investment Fund
• Downtown Business Improvement District
• Boarded & Vacant Property Ordinance
• Digital Billboards
• Downtown Parking Meters
• Cannabis Program Reform
• Business License Tax Reform
• Local Purchasing Policy
• Prioritization of Broader Revenue Initiatives
• Aggressively Pursue Grant Funding
EXPENDITURES
• Implement Priority Based Budgeting
• Evaluate Organizational Right-sizing
• Review Professional Services Contracts
• Evaluate Bond Re-funding Opportunities
• Evaluate & Implement Efficiency Opportunities
• Consider Partnerships for Service Delivery
• Avoid Duplication of Services
• Re-evaluate Departmental Subsidies
• Consider Phasing Infrastructure Projects
• Consider Deferring Technology Upgrades
Business License Tax Reform Proposal
Business Category Rate
General/Retail .001
Property Rental/Hospitality .003
Services .002
Professional .003
If City Council places measure on the November 2026 Ballot AND if voters pass the measure, Effective Date would be 1/1/2028.
Clarifying Questions
July 16, 2026
• BUDGET REVENUES & EXPENDITURES
• TECHNICAL ASPECTS OF THE BUSINESS LICENSE TAX REFORM
Focused Input
Together We Can!
THANK YOU FOR YOUR TIME &
PARTICIPATION
Public Outreach Summary
On April 16, 2026, the City Council directed staff to conduct public outreach with the business community regarding the City’s evaluation of a potential reform to the Business License Tax, a gross receipts-based reform structure. In response to that direction, staff coordinated and participated in several stakeholder meetings to provide information, answer questions, and receive feedback from the business community and other interested parties.
Staff presented information regarding the potential Business License Tax reform to the following stakeholder groups:
Mile of Cars Association;
South County Economic Development Council;
National City Chamber of Commerce – Economic Development Committee; and Working Waterfront.
In addition to these stakeholder meetings, staff also provided support to Councilmembers with focus groups involving various business and community leaders over the past several weeks.
The purpose of the outreach was to provide an overview of the City’s fiscal condition, the existing Business License Tax structure, potential reform options, and the City services that could be supported by additional locally controlled revenue. Staff also sought to better understand business community concerns, including how a potential gross receipts-based structure could affect different types of businesses operating in National City.
Overall, the feedback received from the business community reflected significant concern regarding any new or increased business tax at this time. Stakeholders generally expressed that they were not supportive of the proposed reform, citing concerns related to current economic conditions, the rising cost of doing business, accountability for City spending, and the financial pressure already facing local businesses.
A recurring concern raised during outreach was that many businesses operate on narrow profit margins and may have limited ability to absorb additional costs. For example, representatives from the automotive dealership community noted that while dealerships may have high gross sales figures, their actual profit margins are often much thinner. As a result, stakeholders expressed concern that a tax based on gross receipts may not fully reflect a business’s ability to pay.
Stakeholders also raised questions regarding how the proposed structure would affect small businesses, whether costs could be passed on to customers or residents, and how the City would ensure transparency and accountability in the use of any new revenue. These concerns were expressed consistently across multiple outreach discussions.
Staff did receive some limited positive feedback regarding the structure of the proposed reform.
However, this feedback was limited and did not change the overall tone of the outreach, which reflected broad concern and opposition from the business community regarding a new or increased business tax.
The outreach process provided staff and Council with important feedback regarding the business community’s perspective. While stakeholders recognized the importance of maintaining City services, the feedback was that businesses are concerned about the timing, financial impact, and accountability associated with the proposed reform. This feedback has been considered as part of staff’s continued evaluation of potential Business License Tax modernization options.
220-7986
National City Budget Priority Survey
Highlights of a Survey of Likely Voters
2 Survey Methodology
(Note: Not All Results Will Sum to 100% Due to Rounding) Dates June 4-25, 2026
Survey Type Dual-mode Voter Survey
Research Population Likely November 2026 Voters in the City of National City Total Interviews 412
Margin of Sampling Error (Full Sample) ±4.9% at the 95% Confidence Level (Half Sample) ±6.9% at the 95% Confidence Level
Contact Methods
Data Collection Modes
Languages English & Spanish
Text
Invitations
Telephone
Calls
Email
Invitations
Telephone
Interviews
Online
Interviews
3 Context
4 A majority perceive the City is headed in the right direction.
Do you think things in National City are generally headed in the right direction, or do you feel that things are off on the wrong track?
Q.
Right
Direction
56%
Wrong
Track
30%
Don't
Know
14%
5 High percentages have favorable views of the public safety departments, and local small businessowners.
Q. Next, are some names of organizations or groups. For each one, please indicate whether you have a very favorable, somewhat favorable, somewhat unfavorable, or very unfavorable opinion of that organization or group. If you have never heard of that organization or group or have heard of them, but do not have enough information to off er an opinion, you can indicate that instead. ^Not Part of Split Sample (Ranked by Total Favorable)
56%
31%
30%
7%
12%
6%
35%
60%
40%
58%
49%
50%
19%
12%
12%
9%
8%
10%
13%
4%
6%
6%
12%
14%
31%
National City Fire Department
Local small business owners
National City Police Department
^National City government overall
^National City City Council
National City Chamber of Commerce
Very Favorable Somewhat Favorable Somewhat Unfavorable Very Unfavorable Never Heard of/Heard of No Opinion Total Favorable
Total
Unfavorable
91% 2%
91% 4%
70% 27%
65% 22%
62% 24%
56% 13%
6 More than 8-in-10 perceive there is at least some need for additional funds to provide the level of City services residents need and want.
Q. Next, in your personal opinion, do you think there is a great need, some need, a little need, or no real need for addition al funds to provide the level of city services that National City residents need and want? 37%
45%
6%
10%
2%
Great need
Some need
A little need
No real need
Don't know
A Little/
No Real Need
15%
Great/
Some Need
82%
7 Potential
Ballot Measure
8 Hypothetical Potential Ballot Measure Tested
Q. If the election were held today, do you think you would vote “yes” in favor of this measure or “no” to oppose it? (As Approved by Legal Counsel)
Business License Reform Measure: Without increasing taxes on residents, for maintaining 911 response/police/fire protection, preventing crime, keeping public areas safe/clean, addressing homelessness, repairing streets/potholes, and general fund city services, shall the measure reforming National City’s annual business license tax rate to 0.1%-0.3% of gross receipts for large businesses, and a $25 flat rate for small businesses,
generating approximately $7,500,000 annually, with annual public spending disclosures, until ended by voters, be adopted?
9 Seven-in-ten initially support the Business Reform
(simple majority) Measure.
Q. If the election were held today, do you think you would vote “yes” in favor of this measure or “no” to oppose it? 44%
26%
1%
1%
7%
13%
8%
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Total
Yes
71%
70%
Total
No
21%
(MOE: ±4.9%)
10 The Community’s Top
Budget Priorities
11 Keeping public areas safe and clean, maintaining firefighters, 911 response times and public safety are top priorities
Q. Next, please consider some ways that funding could be used or provisions that could be included in the Business License Reform Measure you have been considering. Regardless of whether you support this measure, for each one, please indicate how important it is to you that each use of funds or provision be included in the measure: extremely important, very important, somewhat important, or not too important. ^Not Part of Split Sample
(Ranked by Extremely/Very Important)
58%
59%
57%
54%
48%
53%
48%
53%
50%
48%
52%
38%
36%
37%
38%
44%
38%
42%
36%
39%
41%
36%
7%
5%
7%
8%
6%
9%
8%
9%
4%
Keeping public areas safe and clean
Recruiting and retaining well-trained firefighters and paramedics Maintaining fire protection
^Repairing streets and potholes
Maintaining 911 response
^Addressing homelessness
Preventing crime and thefts
^Not increasing taxes on residents
^Attracting and retaining local jobs
Responding to thefts and burglaries of local small businesses Preventing cuts to 911 response
Extremely Important Very Important Somewhat Important Not Too Important Don't Know Extremely/ Very Important
96%
95%
94%
92%
92%
91%
90%
89%
89%
89%
88%
12 Extremely/
Very Important
87%
87%
87%
86%
86%
85%
85%
85%
84%
84%
Continued
Q. Next, please consider some ways that funding could be used or provisions that could be included in the Business License Reform Measure you have been considering. Regardless of whether you support this measure, for each one, please indicate how important it is to you that each use of funds or provision be included in the measure: extremely important, very important, somewhat important, or not too important. ^Not Part of Split Sample
(Ranked by Extremely/Very Important)
51%
44%
43%
56%
46%
52%
48%
42%
43%
42%
36%
44%
43%
29%
40%
33%
37%
43%
41%
41%
9%
11%
5%
11%
12%
10%
6%
9%
11%
14%
4%
8%
4%
4%
8%
4%
4%
Cleaning up illegal dumping
Maintaining anti-gang programs and enforcement
Preventing cuts to fire protection
Requiring annual spending disclosures
Keeping public and business areas safe and clean
Ensuring large businesses pay their fair share
^Ensuring equity to all businesses
Preventing cuts to senior programs
Ensuring fairness to all businesses
Extremely Important Very Important Somewhat Important Not Too Important Don't Know Preventing cuts to the City’s free to low-cost meal program for seniors
13 Effects of Education Statements
14 Ensuring larger businesses pay their fair share, that the city can continue to qualify for federal and state matching funds are top priorities Q. First, please consider the following statements from people who may support the measure. For each statement, please indicate if it makes you much more inclined or somewhat more inclined to vote Yes on the measure. Split Sample
(Ranked by Total More Inclined to Vote Yes)
51%
60%
53%
38%
26%
31%
89%
86%
84%
Much More Inclined Somewhat More Inclined
(FAIR SHARE) Large industrial and commercial businesses in National City cause more wear and tear on our streets and roads and require more city services than our local small businesses.
Passing this measure would ensure these large businesses pay their fair share to maintain local streets, parks, police and fire services, and other essential services. (MATCHING FUNDS) National City has successfully brought in millions of dollars in state and federal matching funds to help maintain our essential city services. And this measure would qualify the City for millions of dollars more in matching funds that would otherwise go to other cities instead. These funds could be used to fill potholes, keep parks safe and clean, protect public safety, and for other city services.
(CRIME RATE) National City has one of the highest crime rates in the County, and public safety represents over 70% of the City budget. If this measure doesn’t pass, the City will be forced to significantly cut anti-gang programs, neighborhood police patrols, crime investigation, and other public safety services. Passing this measure is essential to keeping our community safe.
15 Q. First, please consider the following statements from people who may support the measure. For each statement, please indicate if it makes you much more inclined or somewhat more inclined to vote Yes on the measure. ^Not Part of Split Sample
(Ranked by Total More Inclined to Vote Yes)
50%
51%
45%
45%
33%
30%
35%
30%
83%
81%
80%
75%
Much More Inclined Somewhat More Inclined
^(ACCOUNTABILITY) This measure includes strict accountability provisions, including public disclosure of all spending and independent annual financial audits, to make sure all funds are used effectively, efficiently, and as promised.
(HOMELESS)Homelessness in National City has nearly doubled in the last four years. This measure could continue to help get people off the streets and into housing, treatment, and other services.
This would also help ensure our parks, sidewalks, and business areas are clean and safe for residents, families, and local businesses.
^(NO TAX TO RESIDENTS) This measure will NOT increase taxes on residents. It is paid only by businesses to support the city services they use and benefit from, such as crime prevention, 911 response, repairing potholes and roads, and keeping business and public areas safe and clean. (NUMBER OF CRIMES) Last year there were over 800 violent crimes and more than 1,500 property crimes, including auto thefts and burglaries, in National City. If this measure doesn’t pass, the City will be forced to significantly cut anti-gang programs, neighborhood police patrols, crime investigation, and other public safety services. Passing this measure is essential to keeping our community safe.
Continued
16 After education, overall support rises six percentage points, from 71% to 77%, with more than half saying they would definitely vote yes on this simple majority measure.
Q. If the election were held today, do you think you would vote “yes” in favor of this measure or “no” to oppose it? 55%
20%
3%
0%
5%
12%
6%
Initial Vote Vote After Education
44%
26%
1%
1%
7%
13%
8%
Definitely yes
Probably yes
Undecided, lean yes
Undecided, lean no
Probably no
Definitely no
Undecided
Total
Yes
71%
Total
Yes
77%
70% 75%
Total
No
21%
Total
No
17%
(MOE: ±4.9%)
17 Community’s Views on Variable vs
Flat Business License Reform
18 There is overwhelming preference for larger/more profitable business categories paying higher percentages than smaller businesses versus all businesses paying the same percentage.
Q.
72%
23%
5%
We should protect smaller businesses in National City
by larger or more profitable business categories
paying a higher percentage than smaller businesses.
All businesses should pay the same percentage of
what they bring in.
Don’t know
Which statement comes closer to your opinion when thinking about reforming National City’s business license tax? OR
19 Conclusions
20 In Summary
Context:
A majority (56%) perceive the City is headed in the right direction. A larger majority have favorable views of City government, its public safety departments and the Council.
Eight-in-ten perceive that the City has at least some need for additional funds.
Business License Reform Measure:
Initially, 7-in-10 would vote yes on the measure, with 44% saying they would definitely vote yes.
After education, support rises to 77%, with a healthy 55% saying they would definitely vote yes.
21 Summary; Continued
Leading Measure Budget Priorities:
A number of public safety investments;
keeping public areas safe and clean;
addressing streets and potholes;
addressing homelessness; and
attracting and retaining local jobs.
22 Summary; Continued
Leading Reasons to Support the Measure:
Ensuring larger industrial and commercial businesses pay their fair share for the wear and tear on the local streets and for the services they rely on. The funds from this measure will help the City continue to attract state and federal matching funds to maintain essential city services.
This measure will not increase taxes on residents, but is paid only by businesses for city services they use and benefit from.
The measure includes strict accountability.
The measure is viable for November 2026 ballot placement consideration, if the City provides a robust outreach effort.
220-7986
National City Budget Priority Survey
Highlights of a Survey of Likely Voters
Business License Tax Reform
Key Facts & FAQ
What does National City's business community look like? National City currently has 5,480 active business licenses. Of those, 4,835 businesses (approximately 88%) report annual gross receipts of $1 million or less, while 645 businesses report annual gross receipts exceeding $1 million.
How high are the proposed tax rates?
The proposed Business License Tax ranges from 0.1% (.001) to 0.3% (.003) of taxable gross receipts depending on business classification.
The highest proposed rate equals:
$3 per $1,000 of taxable gross receipts.
Why do different industries have different rates?
The proposed structure recognizes that different industries contribute to the City's economy in different ways.
For example:
Retail businesses are proposed at the lowest rate because they already generate local sales tax revenue.
Professional and service industries are assigned different rates consistent with the City's modernization objectives.
Variable rates by industry are a longstanding practice used by many California cities.
Can this tax be applied to profit rather than gross receipts? No.
California law does not authorize cities to impose a local business license tax based on net profit.
Can businesses operating in multiple cities apportion gross receipts? Yes.
The proposed ordinance includes procedures allowing businesses operating in multiple jurisdictions to request apportionment where appropriate.
This is a standard feature of modern gross receipts tax ordinances.
Does the City tax the full sale price of real estate?
No.
For real estate professionals, taxable gross receipts generally consist of commissions earned, not the value of the property being sold.
For example:
Property value: $1,000,000
Commission (5%): $50,000
Tax applies to the commission, not the $1 million sale price.
Will businesses automatically pass the tax on to customers? Pricing decisions are made by individual businesses.
Whether a business absorbs, shares, or passes through costs depends on market conditions, competition, and each business's pricing strategy.
Can the tax increase automatically in the future?
No.
Any future increase to the Business License Tax would require voter approval consistent with California law.
Is this the only revenue strategy the City is considering? No.
The City continues to advance a variety of revenue opportunities including grants, digital billboards, economic development and land activation opportunities, in addition to streamlining operations and implementing priority-based budgeting. However, these initiatives alone will not close the City’s structural budget deficit. Business License Tax Reform represents one component of a broader fiscal strategy.
If approved, when would the new tax take effect?
If approved by voters:
2027: Business education, outreach, system updates, and implementation planning January 1, 2028: Proposed implementation date
This provides businesses with approximately one full year to prepare before implementation.
What did the public opinion survey find?
The independent public opinion survey found that 71% of likely voters surveyed indicated support for the proposed Business License Tax Reform measure.
The complete survey methodology and results are available in the attached Public Opinion Survey Report.
Ballot language subject to modifications.
Proposed Ballot Measure Language
Business License Reform Measure: Without increasing taxes on residents, for maintaining 911 response/police/fire protection, preventing crime, keeping public areas safe/clean, addressing homelessness, repairing streets/potholes, and general fund city services, shall the measure reforming National City’s annual business license tax rate to 0.1%-0.3% of gross receipts for large businesses, and a $25 flat rate for small businesses, generating approximately $7,500,000 annually, with annual public spending disclosures, until ended by voters, be adopted?