Agenda
City Council
July 23, 2024
Regular Meeting - City Hall Council Chamber - 5:00 p.m. 16400 Colorado Avenue Paramount, CA 90723 (562) 220-2000 www.paramountcity.com
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CALL TO ORDER: Mayor Annette C. Delgadillo
PLEDGE OF ALLEGIANCE:
ROLL CALL OF
COUNCILMEMBERS:
Councilmember Isabel Aguayo
Councilmember Brenda Olmos
Councilmember Vilma Cuellar Stallings
Vice Mayor Peggy Lemons
Mayor Annette C. Delgadillo
Agenda July 23, 2024
Regular Meeting City Council Page 2
PRESENTATIONS
1. VIDEO BARK IN THE PARK
CITY COUNCIL PUBLIC COMMENT UPDATES
PUBLIC COMMENTS
CONSENT CALENDAR
All items under the Consent Calendar may be enacted by one motion. Any item may be removed from the Consent Calendar and acted upon separately by the City Council.
2. APPROVAL USE OF CITIZENS’ OPTION FOR PUBLIC SAFETY (COPS) GRANT FUNDING FOR FISCAL YEAR (FY) 2024-2025
Recommended Action: Approve and authorize staff to use the State COPS grant funds in the amount of $179,600 for additional patrols and services.
NEW BUSINESS
3. ORAL REPORT 2024 FOURTH OF JULY AFTER-ACTION REPORT
4. ORAL REPORT WATER WELL 16 BACKWASH TANK WRAP
5. ORAL REPORT POLLING RESULTS - BUSINESS LICENSE TAX MEASURE
6. PUBLIC HEARING DISCUSSION AND CONSIDERATION REGARDING THE CITY COUNCIL’S INTENTION TO PLACE ON THE BALLOT A
MEASURE TO REVISE THE CURRENT BUSINESS LICENSE TAX
TO A GROSS RECEIPTS TAX
Recommended Action: Open the public hearing and take public testimony.
Following the public hearing, City Council direction is requested. If the City Council’s direction is to not proceed with the restructuring of the business license taxation system, the City Council would take no further action and receive and file this report.
If the City Council’s direction is to proceed with the proposed restructuring of the business license taxation system, then City Council should take the following actions:
Agenda July 23, 2024
Regular Meeting City Council Page 3
A. Read by title only and adopt resolution no. 24:032
“A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PARAMOUNT CALLING FOR THE HOLDING OF A SPECIAL
MUNICIPAL ELECTION TO BE HELD WITH THE
PRESIDENTIAL ELECTION ON TUESDAY, NOVEMBER 5,
2024 PURSUANT TO SECTION 10403 OF THE CALIFORNIA
ELECTIONS CODE FOR THE SUBMISSION TO THE
QUALIFIED VOTERS OF A PROPOSED ORDINANCE
AMENDING PARAMOUNT MUNICIPAL CODE CHAPTERS
5.12 AND 5.16 TO UPDATE THE EXISTING BUSINESS
LICENSE TAX STRUCTURE TO APPLY THE TAX BASED
UPON GROSS RECEIPTS AS SET FORTH IN THE
MEASURE FOR GREATER FAIRNESS/EQUITY FOR SMALL
BUSINESSES, SUCH INCREASED TAX REVENUES TO BE
USED FOR GENERAL MUNICIPAL PURPOSES INCLUDING
PUBLIC SAFETY, 911 EMERGENCY RESPONSE, GANG
PREVENTION, STREET REPAIRS AND KEEPING PUBLIC
AREAS AND PARKS SAFE/CLEAN; DIRECTING THE CITY
ATTORNEY TO PREPARE AND FILE AN IMPARTIAL
ANALYSIS OF THE MEASURE; AUTHORIZING AND
ESTABLISHING PRIORITY ORDER AND SETTING
DEADLINES FOR THE FILING OF ARGUMENTS IN THE
OFFICE OF THE CITY CLERK FOR OR AGAINST THE
MEASURE”
B. Read by title only and adopt Resolution No. 24:033
“A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
PARAMOUNT REQUESTING THE BOARD OF
SUPERVISORS OF THE COUNTY OF LOS ANGELES TO
CONSOLIDATE THE CITY OF PARAMOUNT’S SPECIAL
MUNICIPAL ELECTION TO BE HELD ON TUESDAY,
NOVEMBER 5, 2024 WITH THE PRESIDENTIAL ELECTION
ON NOVEMBER 5, 2024 PURSUANT TO SECTION 10403 OF
THE CALIFORNIA ELECTIONS CODE”
C. Authorize a member (or members) of the City Council to submit an argument in favor of the ballot measure, if desired. (It not, no action is required)
7. PUBLIC HEARING
RESOLUTION
24:029
PURCHASE AND SALE AGREEMENT – 15538 COLORADO
Recommended Action: Open the public hearing, take public testimony and read by title only and adopt Resolution 24:029 authorizing the City Manager to execute a Purchase and Sale Agreement with Gold Key Development, Inc for the City owned property at 15538 Colorado Avenue for $650,000.
COMMENTS/COMMITTEE REPORTS
CLOSED SESSION
Agenda July 23, 2024
Regular Meeting City Council Page 4
ADJOURNMENT
To an adjourned meeting on August 6, 2024 at 3:00 p.m. in the Council Chamber at City Hall, 16400 Colorado Ave., Paramount, CA
Americans with Disabilities Act: In compliance with the Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the City Clerk’s office at (562) 220-2225 at least 48 hours prior to the meeting to enable the City to make reasonable arrangements to ensure accessibility to this meeting.
Note: Physical hard copies of agenda items are on file in the City Clerk’s office and are available for public inspection during normal business hours. Materials related to an item on this Agenda submitted after distribution of the agenda packet are also available for public inspection during normal business hours in the City Clerk’s office. The office of the City Clerk is located at City Hall, 16400 Colorado Avenue, Paramount.
To: Honorable City Council
From: John Moreno, City Manager
By: Heidi Luce, City Clerk
Date: July 23, 2024
SUBJECT: BARK IN THE PARK
A video highlighting the recent Bark in the Park event will be presented.
To: Honorable City Council
From: John Moreno, City Manager
By: Margarita Matson, Public Safety Director
Date: July 23, 2024
SUBJECT: USE OF CITIZENS’ OPTION FOR PUBLIC SAFETY (COPS) GRANT FUNDING FOR FISCAL YEAR (FY) 2024-2025
BACKGROUND
The Department of Justice has provided Citizens’ Option for Public Safety (COPS) grant funds to the City since fiscal year (FY) 1996-1997. After twenty-nine years of receiving this grant, the City continues to use State COPS grant funds for a variety of law enforcement activities, which range from increasing personnel to the purchase of equipment for enhanced police effectiveness. Since FY 1996-1997, the City has received $3,227,738 in State COPS grant funds.
DISCUSSION
The FY 2024-2025 Adopted Budget includes proposed uses for the City’s State COPS funds. Staff recommends to continue providing additional loud noise patrol overtime and crime suppression overtime to assist with the high volume of calls and to address crime trends in a timely matter. Staff anticipates spending the total amount of $179,600 on these additional patrols and services.
FISCAL IMPACT
For FY 2024-2025, the approved budget for these expenditures is $179,600 under the Sworn Patrol Division. This annual grant does not require a local match.
VISION, MISSION, VALUES, AND STRATEGIC OUTCOMES
The City’s Vision, Mission, and Values set the standard for the organization, establish priorities, uniformity and guidelines; and provide the framework for policy decision making. The Strategic Outcomes were implemented to provide a pathway to achieving the City’s Vision. This item aligns with Strategic Outcome No 1: Safe Community - Provide a safe place to live, work, and visit.
Agenda Report July 23, 2024
PUBLIC SAFETY (COPS) GRANT FUNDING FOR FY 2024-2025 Page 2
RECOMMENDED ACTION
Approve and authorize staff to use the State COPS grant funds in the amount of $179,600 for additional patrols and services.
To: Honorable City Council
From: John Moreno, City Manager
By: Margarita Matson, Public Safety Director
Date: July 23, 2024
SUBJECT: 2024 FOURTH OF JULY AFTER-ACTION REPORT
Each year the City and the Los Angeles County Sheriff’s Department deploy an extensive Fourth of July education and enforcement campaign. The campaign includes public education efforts and enforcement strategies to combat illegal fireworks. In 2024, the Public Safety Department and LASD personnel continued a zero-tolerance approach to enforcing illegal fireworks within our community. Tonight’s presentation will provide a comprehensive analysis of this year’s Fourth of July deployment and an after-action results.
To: Honorable City Council
From: John Moreno, City Manager
By: Adriana Figueroa, Public Works Director
Date: July 23, 2024
SUBJECT: WATER WELL 16 BACKWASH TANK WRAP
A presentation will be given regarding a wrap design for our water well 16 backwash tank located at 16317 Garfield Avenue. The top half of the tank will include a wrap comprised of historical images of the City and the bottom half of the tank will be painted a solid color.
This will provide an aesthetically pleasing view of the water well backwash tank from both Garfield Avenue and Jackson Street.
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
Date: July 23, 2024
SUBJECT: POLLING RESULTS - BUSINESS LICENSE TAX MEASURE At the March 26, 2024 City Council meeting, staff, joined by consulting firm HdL Companies, presented City Council with the results of the study and analysis of the City’s Business License Tax, which showed a need to modernize the existing outdated tax structure. Following discussion and with City Council concurrence, staff was direct to proceed with contracting with a consultant to conduct polling regarding a potential ballot measure modernizing the City’s Business License Tax ordinance to be placed on the ballot at the November 5, 2024 election. Subsequently, staff hired FM3 Research to conduct polling services for the potential business license tax measure. FM3 Research will present its results of their poll.
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
Kim Sao, Finance Director
Anthony Martinez, Financial Services
Manager
Date: July 23, 2024
SUBJECT: DISCUSSION AND CONSIDERATION REGARDING THE CITY COUNCIL’S INTENTION TO PLACE ON THE BALLOT A MEASURE TO
REVISE THE CURRENT BUSINESS LICENSE TAX TO A GROSS
RECEIPTS TAX
BACKGROUND
On average, the City collects approximately $1.3 million annually in business license taxes. The amount collected is deposited in the general fund where these revenues are used for essential city services such as 911 emergency response, Sheriff patrols, street repairs, keeping public areas safe, and maintaining parks. One of staff’s responsibilities is to review City ordinances to ensure they reflect current laws and regulations and that they align with the goals and objectives set forth in the vision, mission, and values of the City. As such, staff recently reviewed the Business License Tax (BLT) ordinance which was adopted prior to 1974. The current ordinance requires entities or persons that conduct business in the City to obtain a business license and pay a business license tax.
The City has approximately 3,040 businesses that pay a business license tax. The current business license tax formula is based on the number of employees. Depending on their type, businesses that are located inside of the city pay a tiered rate based on the number of people they employ, and businesses located outside of the City pay a flat basic rate. Since the 1970’s, there have been significant shifts in the way business is conducted within Paramount and entirely new business sectors have emerged. This has created administrative challenges such as outdated tax classifications and definitions, tax rates that do not align with neighboring jurisdictions, limited exemptions for the small business community, and outdated capped amounts. Staff engaged HdL Companies (HdL) to conduct a study and assist in analyzing the 50 year-old Business License Tax ordinance.
The results of that study were presented at the March 26, 2024 City Council meeting. At that time, the City Council directed staff to further evaluate the proposed business license fee update and to hire a consultant to conduct research on voter interest in changes to the business license tax. Having heard the results of the voter interest polling earlier this evening, staff is now requesting direction from the City Council on whether the City should proceed with updating the business license tax as proposed below. State law requires that any changes to a tax be presented to the voters for approval. If the City Council decides to move forward with taking this item to the voters, increased revenues from the measure, if passed, would generate approximately $350,000 in additional revenues to be Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 2 spent on 911 emergency response, Sheriff patrols, street repairs, keeping public areas safe, maintaining parks as well as other general services.
DISCUSSION
Business License Tax Analysis and Ordinance Review
At the March 26, 2024 City Council meeting, HdL presented the City Council with an analysis of the City’s business license tax structure (attached for Council review). HdL found that the current tiered rate employee-based tax structure is regressive, which means that larger businesses are paying less on average per employee and smaller businesses are paying more. Small businesses make up 52% of all businesses operating in the City. Additionally, since the 1970s when Paramount’s Business License Tax was adopted, larger businesses have been better poised to adapt over time and better utilize modern technologies to achieve efficiencies. For instance, many administrative duties in larger businesses can be performed electronically with less employees. Additionally, and more recently, many administrative tasks can be done remotely and through contracted services (payroll companies, for example). In an effort to achieve equity for all businesses and help the City align with best practices, staff worked with HdL to evaluate and modernize the current outdated tax structure.
In their study, HdL developed the proposed model, shown below, with three different gross receipts based rate structure options (3A, 3B, 3C). As discussed at the March City Council meeting, the recommended option is 3C. Of these three rate options, this proposed option creates the least financial impact to Paramount’s business community and generates the least increase in revenue to the City, making it the most conservative update to the business license structure.
Under the proposed 3C option, the annual fee charged, based on business type, would range from $0.30 to $0.70 per $1,000 of a businesses’ reported gross receipts. In addition, every business (except those in the alternative taxation structure) would pay a proposed minimum tax of $25.00 for the first $25,000 of gross receipts. The proposed ordinance also includes a provision for applying annual (or cumulative) CPI adjustments to this minimum $25 flat tax.
Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 3 The proposed ordinance (attached) provides a greater definition of each of the business category types. Note there is a new category and structure for Long-term Medical Care Facilities (Group 6); which was created after the March 26, 2024 Council meeting, following further staff analysis and evaluation as described later in the report. The alternative measures category only applies to two existing business types (swap meet and solid waste/refuse sectors); these types of businesses would not be affected by the proposed 3C structure and would remain in the current taxation structure.
Below is an example of business types and descriptions by group:
Group 1: Retail-related business and General Businesses Taxed at the rate of $0.30 per $1,000 gross receipts.
Any establishment or business that conducts retail, wholesale or restaurant; manufacturing; other general activity, including but not limited to Aluminum Foundry, Amusement - Booths, Automotive - Parts Supply, Automotive - Rental, Automotive - Sales , Automotive - Service & Repair, Automotive - Tire Sales & Repairs, Bakery, Bars & Pubs, Beauty - Supply Store, Billiards & Pool Halls, Charter Bus Terminal, Clothing Store, Convenience Store, Delivery By Vehicle, Drug Stores & Pharmacies , Firearms Sales, Flower & Gift Store, Food Processor, Gasoline & Service Stations, General Merchandise Store, Grocery Store, Hardware Store, Home Furnishing & Appliances, Ice Cream & Confection Store, Imports & Exports, Jewelry & Coins, Mail Order, Manufacturing, Mobile Vendor - Food Trucks, Mobile Vendor - Ice Cream, Nursery, Printing, Restaurant - With Alcohol Sales, Restaurant - Without Alcohol Sales, Retail Sales - General, Retail Sales - Online, Retail Sales - With Liquor & Tobacco , Secondhand Dealer, Skating Rink - Ice, Roller, Solicitors, Telephone - Cell Phones & Accessories, Theater, Variety Store, Vending Machines, Warehouse & Storage, Wholesale Business).
Group 2: Professional Services
Taxed at the rate of $0.70 per $1,000 gross receipts.
Professional Services; including but not limited to Accountant, Architect/Plan Design, Attorney At Law, Bookkeeping Service, Dental Office, Engineer, Healthcare & Hospitals, Home Health Care, Interior Design, Laboratory, Mortician, Physicians Office, Professional & Semi-Professional, Real Estate - Agent, Real Estate - Broker, Tax Consultant, Veterinarian).
Group 3: Rental:
Taxed at the rate of $0.70 per $1,000 gross receipts.
Any business that leases, rents, or provides use of real or personal property; including but not limited to property management and real estate services; other Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 4 businesses (such as Commercial Leasing, Residential Rental, Parcel Leasing, Commercial Property Rental, Residential Property Rental, Equipment Leasing, Hotels and Motels, Self-Storage Facilities).
Group 4: Services
Taxed at the rate of $0.40 per $1,000 gross receipts.
Any person or business offering services that require minimal to no higher education or are not generally regarded as professional services.
Any service offered that is not classified in another group is included in Group 4; including but not limited to: Administration Office, Advertising - Agency, Advertising - Billboards, Ambulance - Emergency, Artist & Designer, Automotive - Carwashes & Detailing, Automotive - Towing & Wrecking, Barbershop, Beauty - Parlors & Salons, Catering, Computer - Consultant, Consultant, Dry Cleaning, Exercise & Fitness Studio, Handyman Service, Home Office, House Cleaning Service, Interior Design, Janitorial Services, Laundromat & Laundry Services, Personal Transport, Photography, Public Utilities, Publications Company, School/Training - Private, Schools, Service - General, Service - Repair, Service - Security & Patrol, Shoe Repair, Sports Instruction & Training, Taxicab, Telephone - Service & Transmission, Travel Agency.
Group 5: Contractors
Taxed at the rate of $0.40 per $1,000 gross receipts.
Contractors; including but not limited to: Contractor - Electrical, Contractor - General, Contractor - HVAC, Contractor - Landscape, Contractor - Masonry, Contractor - Plumbing, Contractor - Roofing, Contractor - Signs, Contractor – Specialized.
Group 6: Long-Term Medical Care Facilities
Taxed at the rate of $0.35 per $1,000 gross receipts.
Long-term medical care facilities that provide extended bed and patient care, catering to individuals requiring ongoing medical attention and support, often after release from an acute care facility; including but not limited to: Nursing homes, Rehabilitation Centers, and Long-term Acute Care (LTAC) facilities as determined by the type of state license held.
The table below provides a summary of the impact the proposed model will have on each business type.
Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 5 Based on the calculations shown above, HdL confirmed that the proposed option 3C model results in more than 75% of small businesses paying a lower tax than what they are currently paying while larger businesses would pay a higher business license tax due to their larger gross receipts. On average, the proposed model is estimated to reduce the annual business license fee by approximately $107 for a majority of the small businesses while the increased annual amount for the larger business varies based on their business type and gross receipts. Although generating more revenues is not the key purpose of this update, the proposed model, as presented, is projected to generate an estimated $350,000 in additional revenues to the City. The larger businesses will likely see a fee increase following the proposed change to the gross receipts tax structure. However, in future years, their fee could fluctuate (up or down) based on their respective annual gross receipts.
Impact Analysis
In recent weeks, staff conducted additional impact analysis and further evaluated and modified the fee structure to reduce the impact on certain larger businesses.
Recognizing the critical role that long-term health care facilities play in our community, the City worked with HdL to create a specific category for these facilities, identified as Group 6, and established a reduced rate from the original option 3C.
Long-term health care facilities provide essential services that address the critical health care needs of some of the most vulnerable members of our community, including the elderly and those requiring extended medical care. These facilities not only offer necessary medical and personal care but also contribute significantly to the overall health and well-being of our residents. By reducing the potential financial burden on these important institutions, the City aims to ensure their continued operation and capacity to serve the community effectively.
Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 6 The reduction in the business license tax for long-term health care facilities was carefully considered to mitigate the significant financial impact that the original fee structure would have imposed. This adjustment is a recognition of the invaluable service these facilities provide and the importance of maintaining their financial stability to continue delivering high-quality care while ensuring they also contribute to the broader funding of essential city services.
Based on this revision, the City estimates a reduction from the original $500,000 increased revenue projection to $350,000. The revised fee structure still achieves equity for businesses, which is the City’s objective, while minimizing the impact on some larger businesses, particularly those providing critical health services. The City currently collects approximately $1.3 million annually in business license taxes; with the proposed fee structure change, that amount may increase to $1.650 million. The estimated additional revenue is comprised of both reductions and increases in the proposed business license fees. Any future growth or reduction in the City’s business license fee revenues will depend on the reported gross receipts.
To further alleviate the impact to those other businesses facing a significant tax increase, staff has included language in the proposed ordinance allowing the City to phase-in the tax rates over no more than 2 calendar years after adoption of the tax in December 2024.
This would be done in a manner that would not reduce the City’s total business license revenue level when compared to the same revenue received prior to the implementation of the proposed tax rate. If the measure passes, staff would bring back a resolution with a recommended phase-in schedule at a future meeting date. If the measure passes, the new rates would go into effect as of January 1, 2025.
Objectives and Principles of the Modernization Efforts
The Business License Tax modernization efforts seek to:
Attract, retain, and encourage expansion of businesses within the City Create a fair, equitable, and simple business license taxing system Support small businesses and microenterprises
Address and appropriately tax emerging business models Ensure the taxing scheme is competitive with neighboring jurisdictions with similar characteristics
Minimize administration and compliance burden for the City and taxpayers Protect the City’s financial resources
The modernization efforts are guided by the following principles:
Fairness – addresses inequities in the existing tax structure Comparability – ensures the tax structure is competitive with neighboring jurisdictions
Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 7 Adaptability – reflects current and future business trends Diversity, Equity, and Inclusion – develops tools and strategies that will enhance opportunities for small and local businesses
Public Outreach and Education
As directed by City Council, staff commissioned FM3 Research (FM3) to conduct research for the business license tax measure proposal. Following the conclusion of the research as presented earlier this evening, results revealed that in large part, Paramount voters are in favor of updating the City’s existing employee-based business license tax structure to a gross-receipts tax structure.
If approved at tonight’s City Council meeting, staff will commence the public information and outreach through its consultant firm in advance of the proposed ballot measure. Staff will further engage the community and key stakeholders with a comprehensive outreach effort to share ballot measure information with the community. This would be done through a series of press releases; information in City publications; website updates; mailers; and social media posts. The information will be neutral in tone and not advocated for one outcome or another.
November 2024 Election Overview
The City’s current Business License Tax is considered a general tax because revenue generated from this tax is considered general fund revenues that can be used for general governmental purposes. If the measure is placed on the ballot at a City Council election (General Municipal Election), a simple majority is required to pass the measure. If placed on a non-City Council election (Special Election), a super majority (two-thirds) voter approval is required to pass the measure. As proposed, this tax would be placed on the November 5, 2024 ballot, which is a non-City Council election.
A majority 4/5 vote by the City Council is required to approve the resolution necessary to call for the election and place the measure on the ballot for the November 5, 2024 Special Election. Per the Elections Code, if the City Council wants to place a measure on the November 5, 2024 ballot, the City Council must adopt a resolution placing any such measures on the ballot and submit it to the Los Angeles County RegistrarRecorder/County Clerk’s Office no later than 5:00 p.m. on August 8, 2024. The attached Resolution contains the wording of the measure as it would appear on the ballot (below).
The Paramount City Services, Business License Tax Update Measure reads:
Shall the measure with no tax increase on residents and providing funding for general services such as public safety, 911 emergency response gang prevention, street repairs, keeping public areas/parks safe/clean, by updating Paramount’s existing Business License Tax to apply to gross receipts (rates benefiting small businesses set forth in the measure) generating approximately $350,000 (three hundred fifty thousand dollars) Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 8 annually until ended by voters, requiring spending disclosure, funds used locally, be adopted?
If approved by the City Council, staff would work with the Los Angeles County RegistrarRecorder/County Clerk’s office to place the measure on the ballot at the November 5, 2024 Presidential Election. As stated, a two-thirds voter approval is required in order for the proposed tax measure to pass.
The following City Council actions are required to place the measure on the ballot:
Adopt Resolution No. 24:032 calling a Special Election to place the measure as shown above on the ballot at the November 5, 2024 election. Additionally, Resolution 24:032 directs the City Attorney to prepare an impartial analysis and sets the provisions and priorities regarding the submittal of ballot measure arguments. If the City Council wishes to submit an argument in favor of the ordinance, the City Council would need to authorize a member (or members) of the City Council to do so.
Adopt Resolution No. 24:033 requesting that the Board of Supervisors of the County of Los Angeles consolidate the City’s Special Election with the Presidential Election held on November 5, 2024.
FISCAL IMPACT
The proposed business license tax measure would be collected in the same manner as the existing business license tax measure and estimated to generate an additional $350,000 per year. The revenues from the tax may be spent on 911 emergency response, Sheriff patrols, street repairs, keeping public areas safe, maintaining parks as well as other general services. Los Angeles County charges an estimated $130,000 election fee to place this ballot on the November 5, 2024 General Municipal Election. This cost was budgeted in the Fiscal Year 2024-25 Adopted General Fund Operating Budget.
VISION, MISSION, VALUES, AND STRATEGIC OUTCOMES
The City’s Vision, Mission, and Values set the standard for the organization, establish priorities, uniformity and guidelines; and provide the framework for policy decision making. The Strategic Outcomes were implemented to provide a pathway to achieving the City’s Vision. This item aligns with Strategic Outcome No 6: Efficient, Effective, and Fiscally Responsible - Deliver an efficient and effective City government in a fiscally responsible, transparent and collaborative manner.
RECOMMENDED ACTION
Open the public hearing and take public testimony.
Agenda Report July 23, 2024
POTENTIAL BALLOT MEASURE TO REVISE BUSINESS LICENSE TAX Page 9 Following the public hearing, City Council direction is requested. If the City Council’s direction is to not proceed with the restructuring of the business license taxation system, the City Council would take no further action and receive and file this report.
If the City Council’s direction is to proceed with the proposed restructuring of the business license taxation system, then City Council should take the following actions:
A. Read by title only and adopt resolution no. 24:032
“A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARAMOUNT
CALLING FOR THE HOLDING OF A SPECIAL MUNICIPAL ELECTION TO BE HELD WITH THE PRESIDENTIAL ELECTION ON TUESDAY, NOVEMBER 5, 2024 PURSUANT TO SECTION 10403 OF THE CALIFORNIA ELECTIONS
CODE FOR THE SUBMISSION TO THE QUALIFIED VOTERS OF A PROPOSED ORDINANCE AMENDING PARAMOUNT MUNICIPAL CODE CHAPTERS 5.12 AND 5.16 TO UPDATE THE EXISTING BUSINESS LICENSE TAX STRUCTURE
TO APPLY THE TAX BASED UPON GROSS RECEIPTS AS SET FORTH IN THE
MEASURE FOR GREATER FAIRNESS/EQUITY FOR SMALL BUSINESSES,
SUCH INCREASED TAX REVENUES TO BE USED FOR GENERAL MUNICIPAL PURPOSES INCLUDING PUBLIC SAFETY, 911 EMERGENCY RESPONSE,
GANG PREVENTION, STREET REPAIRS AND KEEPING PUBLIC AREAS AND PARKS SAFE/CLEAN; DIRECTING THE CITY ATTORNEY TO PREPARE AND FILE AN IMPARTIAL ANALYSIS OF THE MEASURE; AUTHORIZING AND
ESTABLISHING PRIORITY ORDER AND SETTING DEADLINES FOR THE
FILING OF ARGUMENTS IN THE OFFICE OF THE CITY CLERK FOR OR AGAINST THE MEASURE”
B. Read by title only and adopt Resolution No. 24:033
“A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARAMOUNT
REQUESTING THE BOARD OF SUPERVISORS OF THE COUNTY OF LOS ANGELES TO CONSOLIDATE THE CITY OF PARAMOUNT’S SPECIAL
MUNICIPAL ELECTION TO BE HELD ON TUESDAY, NOVEMBER 5, 2024 WITH THE PRESIDENTIAL ELECTION ON NOVEMBER 5, 2024 PURSUANT TO SECTION 10403 OF THE CALIFORNIA ELECTIONS CODE”
C. Authorize a member (or members) of the City Council to submit an argument in favor of the ballot measure, if desired. (It not, no action is required)
SUBMITTED BY
HdL Companies
120 S. State College Blvd., Ste 200
Brea, CA 92821
hdlcompanies.com
CONTACT
Eric Myers
T: (424) 228-8517 Ext. 1022
E: [email protected]
Final
March 20, 2024
Business License Analysis & Ordinance Review
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Table Of Contents
Executive Summary 3
SECTION 1 – City of Paramount & Comparative Jurisdictions 4 Business Tax - Analysis 4
Business Tax - Equity of Contribution 5
City of Paramount: Business Tax – Business Type Summary 6 City of Paramount: Comparison to Neighboring Cities 7
Comparison Cities Summary Table (Using FY 18-19 data) 8 Rate Comparison - City of Paramount vs. Neighbors 11
Current Rate Comparison (Table 4) 11
SECTION 2 – Category & Tax Analysis 12
Tax Model Revenue and Equity Comparison 12
Model 1: Existing Categories with Simple Increases 13
Models 2 and 3: Gross Receipts Tax 13
Gross Receipts Tax – Estimates 13
Model 2: Gross Receipts Tax – Single Gross Receipts Rate 14 Model 3: Gross Receipts Tax – Classification-Based Rates 15 Model 4: Employee Based Tax 17
Proposed Rates Comparisons 18
Conclusion 21
Appendix A 22
License Classification and Rate Types 22
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Executive Summary
Background
The City of Paramount requires entities or persons that are carrying on business in the City to obtain a business license and to pay what is referred to as a business license tax.1 Taxes are imposed for the primary purpose of generating revenue. In this study, we will review the revenue-generating aspect of the business license tax as well as investigate the possibilities of improving tax equity and modernizing the tax structure.
The scope of the tax study
We were asked to review the City’s current tax structure, compare that structure to a select group of cities, and, working with staff, to explore options for generating additional revenue from the business license tax while minimizing the impact on business.
Key findings and conclusions
1. The City’s business tax revenue is mostly stable after the pandemic period. There are no signs of large growth patterns. Given inflation and increased costs of services for cities in California, a stable revenue source, while reliable, is likely to lag the increasing costs the City faces.
2. The City’s current tiered rate employee-based tax results in a regressive tax structure. The benefit of Model 2 and Model 3 which are grossreceipts-based tax structures is the potential equity of their effective tax rate.
3. The City’s current tax results are in the middle of the comparison set.
Model 3 achieves higher revenue and greatly increases equity between business sizes. The rates in the variations of Model 3 can be adjusted to meet the goals and financial needs of the City.
4. The City can simplify administration by consolidating classifications.
Model 3 would modernize the City’s tax structure.
5. The City can moderately increase its tax revenue while lowering business license taxes for most small businesses.
1 City of Paramount City Municipal Code (PMC) §5.12.030 License required.
Five Key Components of A
Business License Tax
1.The taxable activity. In the City of
San Buenaventura, the taxable
activity is engaging in business in
the City.
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 tax
rates to each group. For example, a
city might want to charge
restaurants a lower rate than
commercial rentals.
5.The results. Since we are
concerned with the revenuegenerating aspect of the business license, when we refer to the
“results” of the tax, we mean the
revenue generated for the City.
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SECTION 1 – City of Paramount & Comparative Jurisdictions Business Tax - Analysis
The City currently has approximately 3,040
2 businesses that are paying their
business license tax. Over the last four fiscal years (FY), business license tax revenue has averaged approximately $941,022.25 per fiscal year3. As you can see in Chart 1, the City's business tax revenue peaked pre-pandemic and dropped each fiscal year through the pandemic. The fiscal year 2021-22 saw a climb up to and exceeding pre-pandemic levels.
Chart 1: 4-Year Revenue Trend
Actual and estimated revenues are retrieved from published City ACFR. 2 This count comprises the accounts in the City that are active and have recent payments. This gives a better representation of the businesses who will likely contribute to revenue in the future because they have contributed in the recent past. 3 This number, which we gleaned from the City’s budget documents, differs from the sum of the revenue amounts from businesses in the HdL data, which we used in creating our revenue models to be more conservative.
$947,111 $988,043
$893,150 $893,927
$988,969
$0
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
FY2018 FY2019 FY2020 FY2021 FY2022
City of Paramount Business Tax Revenue
Recent Trend
A note about fiscal years. We refer to
the fiscal year throughout this report by
the second of the two calendar years.
For example, when we refer to “FY
2019”, we mean the fiscal year that
started on July 1, 2018, and ended on
June 30, 2019.
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Business Tax - Equity of Contribution
The City currently uses employee count to calculate the tax for almost all businesses, although the City does have other categories that use other business activity metrics such as number of rental units, or a flat rate.
Table 1: Current Tax Structures
Business Category Type Total Count Primary Tax Type
Basic Business 1,174 Base + Employee
Sub-Contractors 493 Flat Rate
Services 437 Base + Employee
Rental Property 318 Per Unit
General Contractors 316 Flat Rate
All Others 302 Varies
TOTALS 3,040
As you can see in chart 2a, the City’s current tiered rate employee-based tax results in a regressive tax structure. Currently larger businesses are paying less on average per employee since the rate for over twenty-five employees goes down to $1.50 per employee as compared to $8.30 per employee for 2-5 employees. Smaller businesses pay a much higher effective tax rate because of this structure.
Chart 2a: Examples of Current Tax Rate as Percent of Estimated Gross Receipts4
4 Estimated gross receipts are based on NAICS industry averages and a more detailed explanation is available on page 14.
0.111%
0.049%
0.022%
0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12%
Business
Small Business Medium Business Large Business
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Chart 2b: Count of Current Business by Size and Category City of Paramount: Business Tax – Business Type Summary As you can see below, the composition of revenue from business licenses issued is distributed amongst various rate types.
The largest categories being all other with 38% and basic business with 22%. All other includes some large businesses that we have not identified for confidentiality purposes. If ignored, the composition of revenue is more evenly distributed between all other rate types.
Chart 3: Revenue By Business Tax
22%
11%
9%
7% 6%
3%
2%
1%
1%
38%
Total Share of Tax Revenue Generated by Business Type
BASIC BUSINESS - 22%
GENERAL CONTRACTORS - 11%
SUBCONTRACTORS - 9%
RENTAL PROPERTY - 7%
SERVICES - 7%
CAFE, RESTAURANT - 3%
VENDING MACHINES - 2%
ITINERANT RESTAURANT/GROCERY
DELIVERY - 1%
DELIVERIES - 1%
ALL OTHER - 38%
0 100
200
300
400
500
600
700
Contractor General Rental Service Professional
Distribution of Business by Size within Category
Small Medium Large
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City of Paramount: Comparison to Neighboring Cities
Below you can see the comparison jurisdictions that the City and HdL chose as a baseline. They were chosen because they were: (1) in similar geographic regions, (2) were like the City in median income, and (3) were relatively similar in population density.
As you can see below, the City is right in the middle in terms of estimated median household income and one of the higher cities for population density.
Chart 4: Demographic Comparison of Neighboring Jurisdictions
The table below highlights population, the estimated number of licensed businesses, and estimated annual revenue for quick comparison. Below the table are some key graphics showing how the City compares to other jurisdictions. For purposes of comparison, we use the fiscal year 18-19 data. We do so because that data is pre-COVID and so avoids the ‘noise’ in the data caused by the impact of the pandemic on the City and the comparison jurisdictions.
Continued on the Next Page
Paramount
Lakewood
Downey Santa Fe Springs
Bellflower
Pico Rivera
Montebello
Compton
Whittier
Culver City
Norwalk
South Gate
Bell Gardens
La Mirada
Cerritos
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Household Income (Vertical) with Population Density (Horizontal)
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Comparison Cities Summary Table (Using FY 18-19 data)
Table 3: Comparison Data
Jurisdiction Name
Est.
Square
Miles
Est.
Population
Est. Median
Household
Income
Est. Businesses
in FY 18-19*
Tax Schedules
(General)
Est. Revenue in
FY 18-19
Culver City 5.11 39,970 $105,346 8,150 Gross Receipts $13,991,391.00 Compton 10.03 93,597 $62,297 3,308 Gross Receipts $3,692,240.00 Montebello 8.33 61,204 $66,584 4,017 Base + Gross
Receipts $2,372,820.00
Downey 12.41 111,645 $77,892 6,998
Mixed - Gross
Receipts or
Employee
$1,594,678.00
South Gate 7.24 91,154 $59,647 2,908 Gross Receipts $1,560,035.00 Pico Rivera 8.32 60,764 $78,056 2,852 Gross Receipts $1,439,347.00 Cerritos 8.73 49,573 $115,600 6,237 Square Footage/
Flat Rate $1,160,597.00
Paramount 4.73 52,506 $60,456 3,064 Employee Based $988,043.00 Whittier 14.65 85,311 $80,306 6,104 Gross Receipts $972,253.00 Norwalk 9.71 100,373 $83,217 3,447 Gross Receipts $911,424.00 Bellflower 6.12 77,408 $70,236 3,353 Base Plus per
Employee $863,951.00
Lakewood 9.4 80,611 $102,163 4,268 Gross Receipts $646,702.00 La Mirada 7.82 47,987 $97,672 2,744 Tiered Gross
Receipts $357,197.00
*We did not exclude non-profits, or nonpaying businesses from this count since we did not have the detailed data to do so for FY 18-19 in other cities and it may have skewed the data when compared to the overall counts of the comparison jurisdictions whose data was not similarly adjusted.
As you can see in the above table, the City’s FY19 business tax revenues place it in the middle of this comparison group.
One interesting comparison is between the City and Compton. Both are similar in Median household income and similar estimated businesses. Compton, however, has a gross receipts structure which is leading to higher revenues as it is capturing the economic activity in the City.
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Chart 5: Est. Count of Businesses
Chart 6: Business Tax Per Capita Comparison
8,150
6,998
6,237
6,104
4,268
4,017
3,447
3,353
3,308
3,064
2,908
2,852
2,744
0 2,000 4,000 6,000 8,000 10,000
Culver City
Downey
Cerritos
Whittier
Lakewood
Montebello
Norwalk
Bellflower
Compton
Paramount
South Gate
Pico Rivera
La Mirada
Est. FY 18/19 Business Counts
$350
$39
$39
$24
$23
$19
$17
$14
$11
$11
$9
$8
$7
$0 $100 $200 $300 $400
Culver City
Compton
Montebello
Pico Rivera
Cerritos
Paramount
South Gate
Downey
Whittier
Bellflower
Norwalk
Lakewood
La Mirada
Est. FY 18/19 Business Tax Revenue
Per Capita
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Chart 7: Business Tax per Business Comparison
Continued on the next page
$1,716.74
$1,116.15
$590.69
$536.46
$504.68
$322.47
$264.41
$257.67
$227.88
$186.08
$159.28
$151.52
$130.17
$0.00 $500.00 $1,000.00 $1,500.00 $2,000.00
Culver City
Compton
Montebello
South Gate
Pico Rivera
Paramount
Norwalk
Bellflower
Downey
Cerritos
Whittier
Lakewood
La Mirada
Est. FY 18/19 Business Tax Revenue
Per Business
Rate Comparison - City of Paramount vs. Neighbors
Current Rate Comparison (Table 4)
Sample Business Paramount Lakewood Downey Bellflower
Pico Rivera
(2023) Montebello La Mirada
Small Craft Business: 1 employee /
<$20,000 $142.00 $85.00 $30.00 $103.00 $25.00 $133.25 $50.00 Restaurant: 3 Employees / $150,000 $166.90 $92.50 $48.00 $109.00 $150.00 $260.57 $70.00 Big Retailer: 195 Employees /
$45,000,000 $554.75 $6,820.00 $11,658.00 $685.00 $45,000.00 $1,380.82 $1,000.00 Hotel / Rental Property: 50 Employees /
$1,500,000 $311.00 $194.00 $296.00 $250.00 $4,450.00 $1,380.82 $240.00 Doctors Office: 20 Employees /
$2,000,000 $242.00 $675.00 $155.00 $320.00 $5,950.00 $1,380.82 $290.00 Professional Firm: 15 Employees /
$1,100,000 $222.50 $880.00 $135.00 $401.00 $3,250.00 $1,380.82 $200.00 Small Contractor: 1 Employee / $75,000
(outside) $350.55 $120.00 $62.00 $100.00 $125.00 $210.24 $55.00 Contracting Firm: 3 Employees /
$225,000 (outside) $350.55 $130.00 $62.00 $100.00 $425.00 $632.23 $85.00 Sample Business Paramount Compton Whittier Culver City Norwalk South Gate Cerritos Small Craft Business: 1 employee / <$20,000 $142.00 $200.00 $60.00 $0.00 $22.95 $0.00 $59.00 Restaurant: 3 Employees / $150,000 $166.90 $200.00 $160.00 $0.00 $76.28 $125.00 $59.00 Big Retailer: 195 Employees / $45,000,000 $554.75 $11,600.00 $9,310.00 $49,280.00 $6,133.72 $3,000.00 $2,872.00 Hotel / Rental Property: 50 Employees /
$1,500,000 $311.00 $1,000.00 $610.00 $1,690.00 $111.00 $1,475.00 $359.00 Doctors Office: 20 Employees / $2,000,000 $242.00 $2,650.00 $375.00 $6,300.00 $75.00 $1,975.00 $59.00 Professional Firm: 15 Employees / $1,100,000 $222.50 $1,750.00 $425.00 $3,150.00 $60.00 $1,075.00 $59.00 Small Contractor: 1 Employee / $75,000
(outside) $350.55 $200.00 $110.00 $0.00 $75.00 $50.00 $179.00 Contracting Firm: 3 Employees / $225,000
(outside) $350.55 $200.00 $110.00 $50.00 $75.00 $200.00 $179.00 12 | P a g e
SECTION 2 – Category & Tax Analysis
The City requested that HdL conduct an analysis of the current license structures and explore options for modifying the rates and categories. In Section 1, we summarized the current structure of the City’s business tax and compared the City to neighboring jurisdictions to give an idea of how the various tax structures and markets in nearby municipalities are creating different revenue outcomes.
In this section, we provide options for modifying the City's business tax rates and classifications. Using the data compiled in section 1 of this report on current license revenues, we developed models to estimate potential fiscal impacts to the City from the different models. You can find summary charts on pages 17-19 that provide a quick look at each proposed model's impact on the City revenues and the business community.
Tax Model Revenue and Equity Comparison
The three models below illustrate different frameworks the City can adopt to better meet the needs of the City and possibly achieve greater equity in the taxation of the business community. Model one is a straight increase in the current rates and structure of the tax code. It adds substantial additional revenue but does nothing to address any inequities inherent in the current taxation structure. Model two provides advantages in three areas: it provides equality in the taxation of the whole business community, increases revenue, and simplifies the tax structure, making it the easiest to administer and calculate.
Model 3’s focus is on maximizing equity by structuring the rates for business industries or categories in a way that considers other revenue contributions to the City, like sales tax and property tax. Model 3 allows businesses that contribute in other ways a tax break in the Business License portion of their total local taxation. Below is an illustration comparing each model’s effect on revenue and equity. Total equity, as represented below, is a heuristic estimate of the potential additional equity to be expected with the proposed models. Equity is a complex and difficult concept to quantify, so we use the effective tax rate as a proxy for equitability. The effective tax rate is the ratio or percentage of the total business license tax burden to the total gross receipts. The goal of an equitable tax code is to create a fair and reasonable tax load for all businesses. Equality would be defined as everyone paying the same effective tax rate. However, because certain industries contribute to local revenues in other areas, such as sales and property taxes, allowing them to have a lower tax rate may be fairer (or more equitable) even if it is not “equal.” While a perfectly equitable tax code is, in practice, an impossibility, modern tax codes try to maximize the total equity in taxation.
Chart 8: Model Revenue to Equity Comparison
Current Tax Structure
(Continued on Next Page)
Total Tax Code Equity
Total Revenue
1 Model Revenue to Equity Comparison
4a
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Model 1: Existing Categories with Simple Increases
The City may elect to retain the existing structure while modifying the tax amounts for each category. Keeping the current structure in place would eliminate the need to create different categories and allow for a much simpler implementation for the City and the business community.
Table 5: Estimated revenue from a simple percentage increase Number of
Businesses Current Revenue 20% Increase
40%
Increase
3,040 $1,009,031.93 $1,210,838.32 $1,412,644.70
*Business count is lower here and in models 2 and 3, than in the comparisons above since we used only the businesses who paid and are active in the City to get the best representation of historical revenues and potential changes in revenue.
Model 1 – Highlights and Impact Review
As indicated in the model above, a simple increase could keep the existing structures in place while yielding higher revenues to the City. A 20%-40% increase across all sectors of industry is easy to implement but it does nothing to address equity.
The drawback of model 1 is that the tax remains regressive.
Models 2 and 3: Gross Receipts Tax
We now turn to consider two models that are variations on the theme of a gross-receipts-based tax.
Many California cities use some form of gross receipts tax structure. Many of those cities use a standard rate multiplier to determine the tax amount owed or by setting the rate for each business category. For example, a city may charge $1 per thousand dollars of gross receipts (0.001 x Gross) for a retail business while charging a rate of $3.00 per thousand dollars of gross receipts (0.003 x Gross) for service or professional businesses.
The benefits of gross receipts-based taxes are the potential equity of their effective tax rate, ease of calculation, and potential for capturing revenue from economic growth. The drawback is that it exposes City revenues to the fluctuations of gross receipts in the economy.
Gross Receipts Tax – Estimates
Since we do not have complete information on gross receipts for the City's current businesses, we used multiple assumptions in the options below, which are meant to estimate the possible impact and should not be relied upon for precise budgeting.
We have used NAICS industry averages to estimate the gross receipts of the City. These averages are nationwide averages for businesses in that industry. While they may not perfectly reflect the business activity of Paramount specifically, they do give us a reasonable gross receipts estimate of what a typical business with that NAICS code assigned would have. The following information was used as a basis for the tax tables and models in the options below.
Table 6: Key estimates used in the gross-receipts models.
Number of Businesses Total Business Taxable Gross
Receipts (Est.)
3,040 $2.97 billion
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Model 2: Gross Receipts Tax – Single Gross Receipts Rate Model 2 reflects the potential revenues for converting the City tax to a single-rate, gross-receipts model. This model is simple to administer—everyone is charged the same rate—but it allows the City to increase revenue. Model 2 also creates an annual minimum rate at a uniform $25, to provide some tax relief for very small businesses.
Table 7: Model 2—Potential Tax Structure
Tax Basis Tax Rate
Minimum Tax $25 Minimum (up to $25,000 Gross Receipts)
Gross Receipts Tax $1.25 per thousand dollars of Gross Receipts (0.00125 x Gross Receipts)
Model 2 Estimates Table
The table below indicates the potential revenues from implementing a gross receipts tax with two options, $1.25 per thousand and $0.50 per thousand. Information for the estimates comes from the data in the section above. Please note that this model and model three do not include the actual gross receipts, since this data is not currently collected. These models use estimated gross receipts based on the business classification which may overestimate or underestimate the actual gross receipts in the City. We believe, however, that the model gives a useful representation of the potential impact of the proposed tax structures. While these numbers should not be used for precise budgeting there are useful insights contained in the industry averages for the business classifications.
Table 8: Model 2 – Rough Estimates from a simple gross receipts structure Number of
Accts
Taxable Gross
Receipts
Tax Amount
$1.25/ thousand
Tax Amount
$1.50/ thousand
3,040 $2.97 billion $3,697,019.60 $4,421,223.52
*These estimates heavily depend on the estimated taxable gross receipts being close to the actual gross receipts in the City.
Model 2 – Highlights and Impact Review
The "single rate" method of taxing on gross receipts provides an even distribution of the effective tax rate because all businesses subject to the tax will pay the same rate. Under this method, there is no cap, and therefore, most of the revenues are received from the highest-grossing businesses. For Model 2a ($1.25 per thousand dollars in gross receipts), approximately 80% of total revenue is generated by businesses in the large category. Model 2 expands revenue while keeping the tax structure simple and easy to understand for businesses while asking larger businesses to pay a proportionally equivalent share. It does, however, more than quadruple the tax rate for some businesses and could face significant opposition from the business community. For the smallest businesses, the base minimum of $25 up to $25,000 in gross receipts places the effective tax rate slightly above equal. This is, however, a small sum of money, and the economic impact of lowering the base rate from the current structure would be most noticeable for the smallest businesses.
Model 2c – Manufacturing Businesses: Effects of Model 2a and 2b Table 9: Model 2c – Rough Estimates for Manufacturing businesses Number of
Accts
Taxable Gross
Receipts
Current Revenue
Contribution
Tax Amount
$1.25/ thousand
Tax Amount
$1.50/ thousand
183 $400,765,667.82 $39,794.91 $499,813.33 $598,861.00
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Chart 9: Estimated Effective Tax Rates Under a Simple Gross Receipt Model Model 3: Gross Receipts Tax – Classification-Based Rates Model 3, as indicated below, would create different rates for different business classifications. For example, the City might choose to implement a rate for the retail/wholesale/miscellaneous business activities at a base rate of 0.001, recognizing the higher costs of goods sold and lower profit margins for these types of business as well as their contribution to other City revenues such as sales tax. At the same time, the City could consider implementing a higher rate for professionals due to the nature of their business model. This model offers the most flexibility for increasing revenues while accommodating certain business categories.
We have tailored Model 3 to provide a revenue increase and to focus on shifting more of the tax to property rentals and professional services.
0.150%
0.147%
0.144%
0.125%
0.124%
0.122%
0.111%
0.049%
0.022%
0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14% 0.16%
Large Business
Medium Business
Small Business
Current vs. New Effective Tax Rates Current Tax Structure $1.25 per $1,000
$1.50 per $1,000
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Tax Structure and Estimated Revenue
The structure provided in the table below is just one example of how the City might utilize a gross receipt model to improve the equity of rates and increase revenue. Should the City decide to use a gross receipts model like model 3, HdL will work with City staff to finalize a structure that best serves the City's goals. Categories are defined and summary statistics are available in the Appendix below. It is important to remember that, like model 2, these models use estimated gross receipts based on the business classification which may overestimate or underestimate the actual gross receipts in the City. We believe however, it gives a useful representation of the potential impact of the proposed tax structure. While these numbers should not be used for precise budgeting, there are useful insights contained in the industry averages for the business classifications.
Table 10: Basic tax structure for classification-based gross receipts Categories Minimum Rate Tax Rate 3A Tax Rate 3B Tax Rate 3C
CONTRACTOR
$25 (GR less
than $25,000)
0.002 X Gross 0.0015 X Gross 0.0004 X Gross
GENERAL COMMERCE/RETAIL 0.001 X Gross 0.0005 X Gross 0.0003 X Gross RENTAL (COMMERCIAL & RESIDENTIAL) 0.003 X Gross 0.0014 X Gross 0.0007 X Gross SERVICE 0.002 X Gross 0.001 X Gross 0.0004 X Gross
PROFESSIONAL 0.003 X Gross 0.0025 X Gross 0.0007 X Gross NON-GROSS RECEIPTS BASED Previous Structure Previous Structure Previous Structure
Table 11: Estimated revenue from classification-based gross receipts Business Type Number
of Accts
Est. Taxable Gross
Receipts* Current Taxes
Est. Annual
Gross
Receipts Tax
Model 3A
Est. Annual
Gross
Receipts Tax
Model 3B
Est. Annual
Gross
Receipts Tax
Model 3C
CONTRACTOR 803 $269,905,000 $198,321.24 $519,735.00 $394,820.00 $120,007.00
GENERAL
COMMERCE/RETAIL** 1,067 $1,900,424,000 $230,857.64 $1,900,478.00 $963,576.50 $588,815.90 RENTAL (COMM. &
RES.) 373 $112,069,000 $87,103.24 $317,557.00 $153,166.60 $81,245.80 SERVICE 577 $314,330,000 $108,210.39 $614,259.00 $314,342.00 $134,391.80 PROFESSIONAL 213 $360,681,000 $36,670.69 $1,071,393.00 $893,715.00 $254,074.20
NON-GROSS RECEIPTS
BASED 4 $13,898,000 $347,868.73 $347,868.73 $347,868.73 $347,868.73 EXEMPT 3 $1,399,000 $0.00 $0.00 $0.00 $0.00
3,040 $2,972,706,000 $1,009,031.93 $4,771,290.73 $3,067,488.83 $1,526,403.43 *These estimates heavily depend on the estimated taxable gross receipts being close to the actual gross receipts in the City. **This total is from the available data in the HdL environment which may be different from another section where City revenue is presented as reported FY2022 Revenues. The amount used in our models is based on the most recent payment history of active accounts which are most likely to renew and goes over multiple years.
Model 3 – Highlights and Impact Review
This option has the benefit of spreading the burden of an increase across multiple business types. This model retains some administrative efficiency by having a simple structure of five categories and would increase revenue, and, as the City will see in the charts that follow, there would be improved equity in the effective tax rates compared to the current model. 17 | P a g e
Model 4: Employee Based Tax
Table 12: Model 4 – Estimated Revenue from Employee Based Structure Total Number
of Accts
Businesses with
Employee
Based Tax
Current Revenues Model 4a
Revenue
Model 4b
Revenue
3,040 1,279 $1,009,031.93** $773,151.20 $801,729.89
**This total is from the available data in the HdL environment and may be missing information from the data conversion. Fiscal Year 2022 revenue data is used in other sections of this document.
Model 4a explores removing the decreasing rates for additional reported employees. Currently, the city taxes at a base rate of $149.25 with an additional fee of $8.70 for employees 2-5, $4.10 for employees 6-25, and $1.60 for any employee over 25 employees for businesses in the “Basic Business” tax category. Model 4 keeps the $149.25 base rate but charges $8.70 for every employee above 1. All other tax categories remain unchanged. The overall impact of this change is an ~8% increase in total revenues. Adjusting the tax structure in this way keeps many of the current strengths of an employeebased tax while also marginally increasing revenues and slightly increasing equity between business sizes. However, it is still subject to the same vulnerabilities as the current tax structure.
Model 4b explores adjusting the per-employee rates to $8.70 per employee for the first 25 employees and then raising the rate to $15.00 per employee over 25 employees. All other tax categories remain unchanged. The overall impact of this change is a ~12% increase in total revenue. This model has the same benefits and limitations as model 4a with ~$30,000 in additional revenue.
Continued on the next page.
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Proposed Rates Comparisons
Table 13: Comparing Gross-Receipt Models by Hypothetical Business Type Sample Business
City's
Current
Rates
Model 2a
$1.25/$100
0 Model 3a
Gross
Receipts
Model 3c
Gross
Receipts
Pico Rivera
(2023) Culver City Cerritos
Count of
Similar
Businesses
in City
Current
Classification
Small Craft Business:
1 employee /
<$20,000
$142.00 $25.00 $25.00 $25.00 $25.00 $0.00 $59.00 306 Basic Business Restaurant: 3
Employees /
$150,000
$166.90 $181.25 $150.00 $75.00 $150.00 $0.00 $59.00 118 Restaurant Big Retailer: 275
Employees /
$45,000,000
$554.75 $56,243.75 $45,000.00 $18,015.00 $45,000.00 $49,280.00 $2,872.00 150 Basic Business Hotel / Rental
Property: 50
Employees /
$1,500,000/50 units
$311.00 $1,868.75 $2,237.50 $1,278.75 $4,450.00 $1,690.00 $359.00 4 Rental
Property
Doctors Office: 20
Employees /
$2,000,000
$242.00 $2,493.75 $6,937.50 $1,703.75 $5,950.00 $6,300.00 $59.00 48 Basic Business Professional Firm:
15 Employees /
$1,100,000
$222.50 $1,368.75 $3,787.50 $938.75 $3,250.00 $3,150.00 $59.00 48 Basic Business Small Contractor: 1
Employee / $75,000
(outside)
$350.55 $87.50 $125.00 $50.00 $125.00 $0.00 $179.00 474 Contractor/ Subcontractor
Contracting Firm: 3
Employees /
$225,000 (outside)
$350.55 $275.00 $425.00 $125.00 $425.00 $50.00 $179.00 324 Contractor/ Subcontractor
Estimated Totals $2,434.00 $62,543.75 $58,687.50 $22,211.25 $59,375.00 $60,470.00 $3,825.00
19 | P a g e
Chart 10: Average Revenue Yield Per Model by Business Category $-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
CONTRACTORS GENERAL
COMMERCE/RETAIL
PROFESSIONAL RENTAL (COMMERCIAL &
RESIDENTIAL)
SERVICE
Current Model 2A ($1.25/$1000) Model 3C
20 | P a g e
Chart 11: Equity of Models
0.056%
0.043%
0.052%
0.125%
0.124%
0.122%
0.022%
0.049%
0.111%
0.00% 0.02% 0.04% 0.06% 0.08% 0.10% 0.12% 0.14%
Large Business
Medium Business
Small Business
Current vs. New Effective Tax Rates
Current Tax Structure Model 2a Tax Rate Structure ($1.25/1000) Model 3c Tax Rate Structure 21 | P a g e
Conclusion
The City’s business tax revenue is mostly stable after the pandemic period. There are no signs of large growth patterns.
Given inflation and increased cost of services for cities in California, a stable revenue source, while reliable, is likely to lag compared to the increasing costs the City faces. The City’s current tax results are in the middle of the comparison set.
Model 3 greatly increases equity between business sizes. Model 3 has the benefit of spreading the tax burden across multiple business types and achieves administrative efficiencies by reducing the number of classifications. The rates in the variations of Model 3 can be adjusted to meet the goals of the City. 22 | P a g e
Appendix A
License Classification and Rate Types
In Model 3, we use five basic categories of businesses. 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 Commerce/Retail: These are retailers, wholesalers, hoteliers, restaurateurs, and manufacturers. All these businesses are likely to contribute to your tax base in other ways (i.e., property tax and sales tax) and often have lower profit margins.
Rental (Commercial & Residential): 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, etc. This would also be a category where the City could include language and rates for taxing short-term rentals.
Service: This is the offering of services that require minimal to no higher education training. This is also the default category for any business that is not specifically defined in one of the other five categories. Examples include but are not limited to hair stylists, gardeners, nail salons, etc.
Professional: These businesses offer services that require a rigorous amount of training through any type of higher education, or vocational institutions that exclusively certifies, complete obtainment of skills and the ability to offer such professional services. Examples include but are not limited to a doctors’ office, a law office, a consulting firm, etc.
Please note that in the table below we have excluded the non-profit businesses along with the “revenue” attributable to their fees to give a clearer picture of the tax revenue producing businesses in the City.
Approximate grouping of City's Businesses by the proposed categories Business Category Type Total Count Total Current
Taxes
General 1,068 $230,857.64
Professional 213 $36,670.69
Rental 373 $87,103.24
Service 580 $108,210.39
Contractor 803 $198,321.24
Non-Gross Receipts Based 4 $347,868.73
Exempt 3 $0.00
Total 3,040 $1,009,031.93
CITY OF PARAMOUNT
COUNTY OF LOS ANGELES, CALIFORNIA
RESOLUTION NO. 24:032
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARAMOUNT CALLING
FOR THE HOLDING OF A SPECIAL MUNICIPAL ELECTION TO BE HELD WITH THE PRESIDENTIAL ELECTION ON TUESDAY, NOVEMBER 5, 2024 PURSUANT TO SECTION 10403 OF THE CALIFORNIA ELECTIONS CODE FOR THE SUBMISSION
TO THE QUALIFIED VOTERS OF A PROPOSED ORDINANCE AMENDING PARAMOUNT MUNICIPAL CODE CHAPTERS 5.12 AND 5.16 TO UPDATE THE
EXISTING BUSINESS LICENSE TAX STRUCTURE TO APPLY THE TAX BASED
UPON GROSS RECEIPTS AS SET FORTH IN THE MEASURE FOR GREATER
FAIRNESS/EQUITY FOR SMALL BUSINESSES, SUCH INCREASED TAX
REVENUES TO BE USED FOR GENERAL MUNICIPAL PURPOSES INCLUDING PUBLIC SAFETY, 911 EMERGENCY RESPONSE, GANG PREVENTION, STREET REPAIRS AND KEEPING PUBLIC AREAS AND PARKS SAFE/CLEAN; DIRECTING
THE CITY ATTORNEY TO PREPARE AND FILE AN IMPARTIAL ANALYSIS OF THE MEASURE; AUTHORIZING AND ESTABLISHING PRIORITY ORDER AND SETTING
DEADLINES FOR THE FILING OF ARGUMENTS IN THE OFFICE OF THE CITY CLERK
FOR OR AGAINST THE MEASURE
WHEREAS, the City Council of the City of Paramount, California desires to submit to the voters, at a Special Municipal Election, a proposed ordinance to update and revise the current business license tax structure which is levied on the number of employees of the business taxed; and
WHEREAS, the proposed modification identifies six categories of small businesses for which the rate of tax will be reapportioned in a more equitable manner; and
WHEREAS, for those categories of businesses, a tax based upon number of employees may penalize smaller companies; and
WHEREAS, revision of the business license tax for the following six categories of businesses which result in a more fair tax rate and additional revenue to the City of approximately $350,000 per fiscal year; and
WHEREAS, the types of business to which the revised tax rate will apply are Retailrelated Business and General Business, Professional Services, Rental, Services, Contractors, and Long Term Medical Care Facilities as those categories are defined in the proposed ordinance; and
WHEREAS, the business license tax rate for other types of businesses will remain the same; and
WHEREAS, the business license tax is a revenue raising measure and not a transactions or use tax; and
RESOLUTION NO. 24:032
WHEREAS, the business license tax is a general tax which may be spent for general governmental purposes, including but not limited to public safety, 911 emergency response, gang prevention, street repairs, and keeping public areas/park safe/clean; and WHEREAS, approval of the measure requires a vote of Paramount voters and the City Council is authorized and directed by statute to submit the proposed ordinance to the voters; and
WHEREAS, because this measure is submitted at an election which is not an election for Paramount City Council members, a 2/3rds vote is required to approve the measure.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARAMOUNT FOLLOWS:
SECTION 1. The above recitation is true and correct.
SECTION 2. Vote Required. That the vote requirement for the measure to pass is 2/3 (.666%) of the votes cast.
SECTION 3. This Resolution was approved by an affirmative vote of four-fifths (4/5) of the five (5) members of the Paramount City Council.
SECTION 4. That pursuant to the requirements of the laws of the State of California relating to general law cities, there is called and ordered to be held in the City of Paramount, California on Tuesday, November 5, 2024, a Special Municipal Election for the purpose of submitting the following proposed ordinance to the voters:
PARAMOUNT CITY SERVICES, BUSINESS
LICENSE TAX UPDATE MEASURE
YES
Shall the measure with no tax increase on residents and providing funding for general services such as public safety, 911 emergency response, gang prevention, street repairs, keeping public areas/parks safe, by updating Paramount’s existing Business License Tax to apply to gross receipts (rates benefitting small businesses set forth in the measure) generating approximately $350,000 (three hundred fifty
thousand dollars) annually until ended by voters, requiring spending disclosure, funds used locally, be adopted?
NO
SECTION 5. Ordinance. The Measure to be submitted to the City's voters is set forth in full in Exhibit “A” attached hereto and incorporated by this reference.
RESOLUTION NO. 24:032
SECTION 6. Impartial Analysis. In accordance with California Elections Code section 9280, the City Council directs the City Clerk to transmit a copy of the proposed Measure to the City Attorney, who is hereby directed to prepare an impartial analysis of the Measure.
a. The impartial analysis of the Measure, not to exceed 500 words, shall illustrate the effect of the Measure on existing law and the operation of the Measure. b. The impartial analysis shall include a statement indicating the Measure was placed on the ballot by the Paramount City Council.
c. The City Attorney shall file the impartial analysis in the Office of the City Clerk, Paramount City Hall, 16400 Colorado Avenue, Paramount, California, by 5:00 p.m. on August 6, 2024 during normal office hours, as posted, which is the date set by the City Clerk for the filing of primary arguments.
SECTION 8 Arguments. The City Council authorizes that the legislative body, or members of the legislative body authorized by that body, or an individual voter who is eligible to vote on the ballot measure, or a bona fide association of citizens, or combination of voters and associations, may file a written argument for or against the ballot measure, not to exceed 300 words, accompanied by the printed names and signatures of the authors submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument.
a. Direct arguments for or against the Measure shall be filed in the Office of the City Clerk, Paramount City Hall, 16400 Colorado Avenue, Paramount, California by 5:00 p.m. on August 6, 2024 during normal office hours, as posted, which is the date fixed by the City Clerk. Filed arguments may be changed or withdrawn until the filing deadline. The arguments shall be prepared and filed in accordance with the California Elections Code. The City Clerk shall follow Elections Code sections 9281 through 9287 in determining the selection and printing of all arguments in favor and against the Measure. b. In accordance with Elections Code Section 9285, rebuttal arguments, not exceeding 250 words and signed by no more than five (5) persons, may be filed in the Office of the City Clerk, Paramount City Hall, 16400 Colorado Avenue, during normal working hours, as posted, and by 5:00 p.m. on August 16, 2024, which is the date fixed by the City Clerk as the last date to file rebuttal.
SECTION 9. Election. The election shall be conducted pursuant to the requirements of the laws of the State of California relating to general law cities as follows:
a. That the ballots to be used at the election shall be in a form and content as required by law.
RESOLUTION NO. 24:032
b. That the City Clerk, in coordination with the County Registrar, is authorized, instructed and directed to procure and furnish any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election. c. The vote centers, operated by the County Registrar, for the election shall be open as required during the identified voting period pursuant to Sections 4007 and 14401 of the Elections Code of the State of California. d. That in all particulars not reflected in this resolution, the election shall be held and conducted as provided by law for holding municipal elections. e. That notice of the time and place of holding the election is given and the City Clerk and County Registrar are authorized, instructed and directed to give further or additional notice of the election, in time, form, and manner as required by law.
f. The City Council authorizes the City Clerk, in coordination with the County Registrar, to administer said election and all reasonable and actual election expenses shall be paid by the City upon presentation of a properly submitted bill.
SECTION 10. CEQA. The adoption of this Resolution is exempt from the California Environmental Quality Act (Public Resources Code, §§ 21000 et seq.) and 14 Cal. Code Reg. §§ 15000 et seq. This Resolution is not a project within the meaning of CEQA Guidelines section 15378. It raises general funds to be appropriated by subsequent action of the City Council and is not a commitment to any particular project which may have a physical impact on the environment.
SECTION 11. Severability. If any section, subsection, sentence, clause, phrase or portion of this Resolution or its application to any person or circumstance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Resolution or its application to other persons and circumstances. The City Council of the City of Paramount hereby declares that it would have adopted this Resolution and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases or portions be declared invalid or unconstitutional and, to that end, the provisions hereof are hereby declared to be severable.
SECTION 12. Certification. The City Clerk shall certify to the passage and adoption of this resolution and enter it into the book of original resolutions.
SECTION 13. Effective Date. This Resolution shall take effect immediately upon its adoption.
RESOLUTION NO. 24:032
PASSED, APPROVED and ADOPTED by the City Council of the City of Paramount this 23rd day of July 2024.
Annette C. Delgadillo, Mayor
ATTEST:
Heidi Luce, City Clerk
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF PARAMOUNT )
I, Heidi Luce, City Clerk of the City of Paramount, California, DO HEREBY CERTIFY that the foregoing RESOLUTION NO. 24:032 was duly approved and adopted by the City Council of the City of Paramount at a meeting held on July 23, 2024, and said resolution has been signed by the Mayor and attested by the City Clerk, and that the same was approved and adopted by the following vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Dated: July 23, 2024
___________________________________
Heidi Luce, City Clerk
1 CITY OF PARAMOUNT
LOS ANGELES COUNTY, CALIFORNIA
ORDINANCE NO. ____
AN ORDINANCE OF THE PEOPLE OF THE CITY OF PARAMOUNT
AMENDING PARAMOUNT MUNICIPAL CODE CHAPTERS 5.12 AND
5.16 TO UPDATE THE EXISTING BUSINESS LICENSE TAX
STRUCTURE TO APPLY THE TAX BASED UPON GROSS RECEIPTS AS
SET FORTH IN THE MEASURE FOR GREATER FAIRNESS/EQUITY
FOR SMALL BUSINESSES, SUCH INCREASED TAX REVENUES TO BE
USED FOR GENERAL MUNICIPAL PURPOSES INCLUDING PUBLIC
SAFETY, 911 EMERGENCY RESPONSE, GANG PREVENTION,
STREET REPAIRS AND KEEPING PUBLIC AREAS AND PARKS
SAFE/CLEAN
WHEREAS, the People of the City of Paramount wish to update the existing business license tax structure which is based upon the number of employees which a business has, as defined in the current ordinance and instead revising it to be based upon gross receipts, which is more fair for small businesses; and WHEREAS, the proposed modification identifies six categories of businesses for which the rate of tax will be reapportioned in a more equitable manner to be a tax based upon gross receipts, as a tax based upon number of employees may penalize smaller companies; and
WHEREAS, revision of the business license tax for the following six categories of businesses will result in a more fair tax rate: Retail-related Business and General Business, Professional Services, Rental, Services, Contractors, and Long Term Medical Care Facilities; and
WHEREAS, the current non-gross receipts tax rate will remain in place for other categories of businesses such as swap meets; and
WHEREAS, this revision to the business license tax structure may result in increased revenues to the City of approximately $350,000 per year and thus is a revenue raising measure;
WHEREAS, this restructure is not a transaction or use tax; and WHEREAS, the business license tax is a general tax which may be spent for general governmental purposes, including but not limited to public safety, 911 emergency response, gang prevention, street repairs, and keeping public areas/parks safe/clean; and WHEREAS, residents and the City Council place a high priority on fighting crime through a well-funded public safety service and related anti-gang programming that has changed the direction of the community over decades; and 2 WHEREAS, Paramount has made consistent investments in quality streets to ensure they are safe and reduce damage to resident vehicles through ongoing investments and such investments must continue; and
WHEREAS, funds raised by this measure will include strict accountability requirements such as an independent annual audit, and public disclosure and review to ensure funds are used effectively to benefit Paramount residents and businesses; WHEREAS, Paramount places a high priority on our youth and the funds generated from this measure can support after-school and summer programming that keeps Paramount youth active, safe and away from gangs; and WHEREAS, funds raised by this measure will not be sent to the State and will remain local to fund services that are important to Paramount residents; and WHEREAS, approval of the measure requires a vote of Paramount voters and the City Council is authorized and directed by statute to submit the proposed ordinance to the voters; and
WHEREAS, because this measure is submitted at an election which is not an election for Paramount City Council members, a 2/3rds vote is required to approve the measure; and
WHEREAS the City Council finds that it is in the best interests of the residents of Paramount to ensure that the revenues generated from this updated tax are used effectively and efficiently to maintain and enhance city services.
NOW THEREFORE, THE PEOPLE OF THE CITY OF PARAMOUNT DO
HEREBY ORDAIN AS FOLLOWS:
SECTION 1. Incorporation of Recitals. The recitals set forth in the preamble to this ordinance are hereby incorporated by reference and made a part of this ordinance as if fully set forth herein. The People of the City of Paramount find that each of those recitals is true and correct and rely upon them as a basis for adopting this ordinance.
SECTION 2. Adoption of Tax; Municipal Code Amendment. Chapters 5.12 and 5.16 of the Paramount Municipal Code revising the business license tax structure to add a gross receipts tax for certain categories of businesses, while retaining the remaining business license tax structure, as set forth in Exhibit A to this Ordinance and incorporated as though written in full, is hereby adopted and added to the Paramount Municipal Code.
SECTION 3. Amendments. This ordinance may be amended only by a vote of the registered voters of the City of Paramount voting on the proposed amendment at a regular or special election. Any proposed amendment to this ordinance shall be presented to the voters in compliance with the applicable provisions of the California Elections Code and other relevant state and local laws. The City Council may propose amendments for voter consideration in accordance with these requirements. 3 SECTION 4. Independent annual audit. The proceeds resulting from the tax imposed by this chapter shall be deposited into the City’s general fund and shall be subject to the same independent annual audit requirements as other general fund revenue. The independent auditor’s report, which shall include an accounting of the revenues received and expenditures made from the transactions and use tax, will be presented annually to the City Council and made available for public review.
SECTION 5. Severability. If any section, subsection, sentence, clause, phrase, or portion of this ordinance or its application to any person or circumstance is held to be invalid or unconstitutional by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The People of the City of Paramount hereby declare that they would have adopted this ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional.
SECTION 6. Legal Defense. The People of the City of Paramount desire that this Ordinance, if approved by the voters and thereafter challenged in court, be defended by the City Attorney. The City Attorney shall defend this Ordinance, appeal any adverse judgment against the constitutionality, statutory permissibility, and implementation, and take other such action as in his or her reasonable legal judgment is necessary to defend the Ordinance.
SECTION 7. CEQA. The People of the City of Paramount find that this Ordinance is not subject to the California Environmental Quality Act (CEQA) because pursuant to Section 15060(c)(2) (the activity will not result in a direct or reasonably foreseeable indirect physical change in the environment) Section 10560(c)(3) (the activity is not a project as defined by Section 15378).
SECTION 8. Adjustment of Appropriations Limit. The City Council finds that there is no requirement to adjust the appropriations limit for the City if the Ordinance is approved.
SECTION 9. Liberal Construction. This Ordinance shall be liberally construed to effectuate its purposes.
SECTION 10. Effective Date. This Ordinance shall be adopted upon its approval by a two-thirds vote of the electorate of the City of Paramount and shall be effective on January 1, 2025.
SECTION 11. Municipal Affair. The People of the City of Paramount hereby declare that, separately and together, the purposes encompassed by this Ordinance constitute municipal affairs. The People of the City of Paramount hereby further declare their desire for this Ordinance to coexist with any similar tax measures adopted by the city, county or state.
SECTION 12. Certification. The City Clerk shall certify to the passage of this Ordinance and publish the same as required by applicable law. 4 STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF PARAMOUNT )
I, Heidi Luce, City Clerk of the City of Paramount, California, DO HEREBY CERTIFY that the foregoing ORDINANCE was duly approved and adopted by the electorate of the City of Paramount at a Special Municipal Election held in the City of Paramount on November 5, 2024.
Dated: December ___, 2024
___________________________________
Heidi Luce, City Clerk
1 City of Paramount, CA
Title 5, Chapter 5.12 shall be amended in its entirety to read as follows:
Chapter 5.12
BUSINESS LICENSE TAX
§ 5.12.010. Definitions.
For the purposes of this chapter, the following words and phrases shall have the meanings respectively ascribed to them by this section:
Business, profession, occupation or trade. All businesses, professions, occupations or trades of all and every kind of calling carried on within the City for the purpose of earning a profit or livelihood whether or not a profit or livelihood is actually earned hereby. "Business, profession, occupations or trades" shall include, but is not limited thereto, commission merchants, salesmen, brokers, retailers, wholesalers, vendors, suppliers, the renting or supplying of living quarters, or rooms or board, or both for guests, tenants or occupiers and any other type of endeavor entered into within the City for the purpose of earning a livelihood or profit whether paid for in money, goods, labor or otherwise and whether or not such business, profession, occupation or trade has a fixed place of business in the City. The term "businesses, profession, occupation or trade" shall not apply to any person engaged in business, profession, occupation or trade, solely as an employee of any other person conducting, managing or carrying on any such business in the City.
Business license tax. Business license tax shall mean the revenue-raising and non-regulatory tax set, applied and collected pursuant to the provisions of this Chapter 5.12.
Employee. All persons engaged in the operation or conduct of any business, profession, occupation or trade, and includes any member of the owner's family, agent, manager, solicitor and any and all other persons employed or working in the business.
Fee. As used here, “fee” means the business license tax.
Gross receipts. As used in this chapter, "gross receipts" means and includes the total amounts actually received or receivable by businesses, professions, occupations and trades from sales and the total amounts actually received or receivable for the performance of any act or service, of whatever nature it may be, for which charge is made or credit allowed, whether or not such act or service is done as a part of or in connection with the sale of materials, goods, wares or merchandise.
Included in "gross receipts" shall be all receipts, cash, credits, and property of any kind or nature, without any deduction therefrom on account of the cost of the property sold, the cost of materials used, labor or service costs, interest paid or payable, or losses or other expenses whatsoever. Where the gross receipts are less than the cost of maintaining the business's operations, then the business shall be deemed to produce gross receipts in an amount at least equal to the cost of maintaining its operations. Such cost of operations includes, but is not limited to, rent, depreciation, salaries, wages, fixed charges, and other expenses.
Excluded from gross receipts shall be:
A. Cash discounts allowed and taken on sales;
B. The value of property accepted as part of the purchase price for subsequent resale; 2 C. Any California state, city or county tax required by law to be included in or added to the purchase price and collected from the consumer or purchaser;
D. Any City of Paramount transient occupancy tax required to be included in or added to the price of a room and collected from a transient;
E. Such part of the sales price of property returned by the purchaser upon the recission of the contract or sale as is refunded either in cash or by credit;
F. Deposits which by law or contract must be refunded and which actually are refunded; G. Collections for others when the business is acting as an agent or trustee to the extent that payments are made to those for whom collected;
H. The cash value of sales, trades, or transactions between departments or units of the same business.
The License Collector from time to time may promulgate examples and guidance as to the calculation of gross receipts.
License. “License” means business tax payment receipt.
License Collector. “License Collector” (also “Collector”) means the Finance Director or written designee and shall be the custodian of all funds collected thereunder. Wherever this Chapter refers to the “City Clerk” that shall mean the License Collector.
Person. ”Person” has the same meaning as it does in section 1.04.030 of this Code.
Restaurant. Any facility where meals, prepared food, and/or beverages are provided to customers, including but not limited to dine-in, drive through, delivery or pick-up facilities as well as food halls or mobile food vendors.
Sale. “Sale" or “sales” means and includes: Any transfer of title or possession, exchange, or barter, conditional or otherwise, in any manner or by any means whatsoever, of personal property for a consideration.
Year. “Year” as used here shall mean fiscal year.
§ 5.12.020. Applicability of chapter generally.
This chapter is enacted solely to raise revenue for municipal purposes and is not adopted or intended for regulation. This chapter shall apply to all persons conducting a business, profession or trade within the City whether or not such person maintains a fixed place of business in the City and whether or not such person may primarily conduct his or her business, profession or trade elsewhere. A person shall be deemed to be conducting a business, profession, trade or occupation within the City if that business, or its agents or employees, engage in any activities related to such business, profession, or trade within the City. § 5.12.030. License required.
A. No person shall commence or carry on any business, profession or trade or occupation of any kind, nature or calling within the City, whether or not such person has a fixed place of business within the City or elsewhere, and where such business, profession, and trade or occupation is not otherwise exempt from the provisions of license requirements hereunder by Federal or State law or by the provisions of this chapter, without first having procured a license, as required by this chapter, from the City to do so and without first complying with any and all regulations contained in this chapter. 3 B. The carrying on of any business, profession, occupation or trade without first having procured a license from the City to do so, or without complying with any and all regulations pertaining to such business as provided in this chapter, shall constitute a separate violation of this chapter for each and every day that such business, profession, trade or occupation is so carried on.
C. The business tax payment receipts issued under the authority of this Chapter ( “license”) are receipts for payment of the business taxes levied on the privilege of carrying on or engaging in a business, profession or occupation under the City's taxing power. The business tax payment receipt is not a regulatory license issued under the City's police power. § 5.12.040 Exemptions from chapter.
A. Non-profit organizations. Includes those exempt from taxes under the provisions of state or federal law, and specifically include but are not limited to a Chamber of Commerce. Such nonprofit organization shall obtain a business license tax receipt but the tax amount due shall be waived.
B. Exemption Under Federal and State Constitution and State law. Nothing in this chapter shall be deemed as applying to any person managing or carrying on or engaging in any business exempt from taxation by municipal corporations by Article 13, Section 14, of the Constitution of the State, the laws of the State and the Constitution of the United States.
C. Disabled Veterans. Every honorably discharged or honorably relieved soldier, sailor, or marine of the United States, who served in any active duty, who is physically unable to obtain a livelihood by manual labor and who is a registered voter of the State, may distribute circulars and hawk, peddle and vend, except from a fixed or permanent location, any goods, wares or merchandise owned by him or her, except spirituous, malt, vinous or other intoxicating liquor, without payment of any license fees or tax whatsoever, and shall be granted an exempt license by the License Collector upon filing with the License Collector the proper application and evidence of eligibility approved by the License Collector.
D. Blind. No blind person who is certified as blind by the Bureau of Vocational Rehabilitation, Department of Education of the State and engaged in retail sales, wholesale merchandising or manufacturing, shall be required to pay any fee for the license required in this chapter.
E. Minors. Minors under the age of 18 years shall be entitled to a free license for engaging in parttime activities coming within the definition and license requirements of this chapter but they shall be subject to all permit and registration procedures.
F. Interstate Commerce. Notwithstanding any other provision of this Chapter, none of the business taxes provided for by this Chapter shall be so applied as to occasion an undue burden upon interstate commerce or be violative of the equal protection and due process clauses of the Constitutions of the United States and the state.
If the holder of or applicant for a business license believes that the proposed business tax payment places an undue burden upon interstate commerce or would be violative of such constitutional clauses, the authorized representative for that entity may apply to the License Collector for an adjustment of the tax by filing an apportionment application. The taxable entity must make any apportionment application within six calendar months after the date of payment of the business tax. The entity shall, by sworn statement, show its method of business, its cost of operations for all locations within the City, and such other information as the License Collector may deem necessary to determine the extent, if any, of such undue burden on interstate commerce or other violation of constitutional protection.
4 The License Collector shall then conduct an investigation, which may include but is not limited to inspecting the entity’s books and records and other tax filings, and, after having first obtained the written approval of the city attorney, shall fix as the business tax for the entity an amount that is reasonable and nondiscriminatory, or if the business tax has already been paid, shall order a refund of the amount over and above the business tax so fixed.
In fixing the amount of the business tax, the License Collector shall take the cost of operations for the locations in the City as the minimum amount owed in tax (absent extraordinary evidence to the contrary).
If it appears that the applicant is entitled to such exemption, the License Collector shall forthwith issue a free license.
In case of dispute the decision of the City Manager shall be final.
G. Exemption Under Other Provisions of State Law. Every person claiming to be entitled to an exemption from payment of any license fee provided for in this section upon the ground that such license fee is exempt under State law shall file a verified statement with the License Collector disclosing the character of the business entitling such exemption. The statement shall state the name and location of the company or firm claiming the exemption, the type of business conducted and facts establishing that the person, organization or firm comes within the exemption of State law. Additional information shall be supplied to the License Collector upon request in order to ascertain whether or not the claimant meets the exemption of the State law. In case of dispute, the decision of the City Manager shall be final.
H. Revocation of License Exemptions. At any time that it shall appear to the satisfaction of the License Collector and City Manager that none of the conditions specified in this chapter as meriting exemption from license requirements exists as to any person to whom any such exemption has been allowed, the City Manager may revoke such exemption and the exempt license issued thereunder.
§ 5.12.050. Branch establishments.
A separate business tax shall be obtained for each branch establishment or location of a business, profession, or trade engaged in by the licensee and each tax receipt shall be for the business, profession or trade licensed thereby at the location or in the manner designated in such license; provided, that warehouses and distributing plants used in connection with and incidental to a business licensed under the provisions of this chapter shall not be deemed to be separate places of business or branch establishments.
For the purposes of this provision, "incidental" operations refer to activities that are secondary and supplementary to the main business activities at the licensed business location and do not generate separate income or function as separate business entities. Warehouses and distribution centers qualify for this exemption only if they exclusively serve a single, licensed business location, operating solely to support the main business activities of that location without engaging in any independent transactions. § 5.12.060. Application; Compliance with Applicable Codes.
The applicant must submit evidence of compliance with all codes and regulations applicable to the applicant’s business, including but not limited to zoning and health and safety provisions. The applicant, in addition, shall submit any further information or evidence in writing as required by the License Collector or other designated agency of the City. The application shall be verified by the applicant before filing.
5 § 5.12.065. “ Confidentiality”
It is unlawful for the License Collector or any person having an administrative duty under the provisions of this chapter to make known in any manner whatever the business affairs, operations, or information obtained by an investigation of records and equipment of any person required to submit such information to the tax collector, or any other person visited or examined in the discharge of official duty, or the amount or source of income, profits, losses, expenditures, or any particular thereof, set forth in any statement or application, or to permit any statement or application, or copy of either, or any book containing any abstract or particulars thereof to be seen or examined by any person; provided that nothing in this section shall be construed to prevent:
The disclosure to, or the examination of records and equipment by, another City official, employee, or agent for collection of taxes for the sole purpose of administering or enforcing any provisions of this chapter, or collecting taxes imposed hereunder;
1. The disclosure of information and/or the results of an examination of records of a particular taxpayer, or relating to a particular taxpayer, in judicial proceedings brought to determine the existence and/or the amount of any tax liability of the particular taxpayer to the City or to the City Attorney for the defense of the City or any employee or official thereof, against a claim filed by the taxpayer against the City or any employee or official thereof;
2. The disclosure after the filing of a written request to that effect, to the taxpayer him or herself, or to his or her successors, receivers, trustees, executors, administrators, assignees and guarantors, if directly interested, of information as to the items included in the measure of any paid tax, any unpaid tax or amounts of tax required to be collected, interest and penalties; further provided, however, that the City Attorney approves each such disclosure and that the collector may refuse to make any disclosure referred to in this subsection when in his or her opinion the public interest would suffer thereby;
3. The disclosure of the names and business addresses of persons to whom business tax receipts have been issued, and the general type or nature of their business;
4. The disclosure by way of public meeting or otherwise of such information as may be necessary to the City Manager in order to permit it to be fully advised as to the facts when a taxpayer files a claim for refund of taxes, or submits an offer of compromise with regard to a claim asserted against him or her by the City for delinquent taxes, or when acting upon any other matter;
5. The disclosure of general statistics regarding taxes collected or business done in the City;
6. The disclosure of information and records as may be required under State law or required by subpoena served on the City.
§ 5.12.075. “ Business License Tax Classification Groups and Rates” A business, profession, occupation or trade shall pay the business license tax for each tax year based on the licensee’s business Group as defined below. The rates for the tax are expressed in dollars per thousand dollars of the licensee’s gross receipts derived from business conducted in the City for the previous tax year, except for the first tax year of operation in the City for which the tax is instead measured by the licensee’s gross receipts derived from business conducted in the City only during the period of that first year of operation.
The Director of Finance or designee (“Director of Finance”) shall determine the license classification for each business in the City. Such determination shall be final and not subject to appeal. 6 The Groups and tax rates are defined as follows:
Group 1: Retail-related business and General Businesses Businesses in Group 1 pay business tax at the rate of $0.30 per $1,000 gross receipts.
Group 1 consists of any of the following types of business operating within the City:
Retail: Any business conducting or carrying on retail sales (the sale of goods to ultimate consumers, usually in small quantities), or wholesale sales (the sale of goods in quantity, as to retailers or jobbers, for resale), including but not limited to restaurants
Manufacturing: Any businesses conducting or carrying on manufacturing, packing, or processing any goods, wares, merchandise or commodities or conducting or carrying on a business of cold storage or refrigeration at a fixed place of business within the City General Businesses: This group also includes general businesses, as listed below by way of example and not of limitation:
Aluminum Foundry
Amusement - Booths
Automotive - Parts Supply
Automotive - Rental
Automotive - Sales
Automotive - Service & Repair
Automotive - Tire Sales & Repairs
Bakery
Bars & Pubs
Beauty - Supply Store
Billiards & Pool Halls
Brewery
Butcher/Meat Market
Charter Bus Terminal
Clothing Store
Convenience Store
Delivery By Vehicle
Distillery
Drug Stores & Pharmacies
Firearms Sales
Flower & Gift Store
Food Sales
Food Processor
7 Gasoline & Service Stations
General Merchandise Store
Grocery Store
Hardware Store
Home Furnishing & Appliances
Ice Cream & Confection Store
Imports & Exports
Jewelry & Coins
Mailing Services or Mail Order
Manufacturing
Mobile Vendor - Food Trucks
Mobile Vendor - Ice Cream
Movie theaters
Nursery
Printing
Restaurant - With Alcohol Sales
Restaurant - Without Alcohol Sales
Restaurant – Drive through
Retail Sales - General
Retail Sales - Online
Retail Sales – With or without Liquor & Tobacco
Secondhand Dealer
Skating Rink - Ice, Roller
Solicitors
Telephone - Cell Phones & Accessories
Theater
Variety Store
Vending Machines
Warehouse & Storage
Wholesale Business
Group 2: Professional Services
Businesses in Group 2 pay business tax at the rate of $0.70 per $1,000 gross receipts.
Group 2 consists of any of the following types of business:
8 “Professional Services” means any services, as that term is ordinarily and commonly used and understood, where individuals are engaged in the business of offering to the public professional services for compensation, and not specifically covered under any other part, or section of this Chapter, and includes (but is not limited to) professions generally requiring governmental certification or a professional degree.
Group 2 includes, but is not limited to, the following types of businesses:
Accountant
Architect and Plan Design
Attorney At Law
Bookkeeping Service
Dental Office and Dental Training School
Chiropractor or similar services
Consultants, including but not limited to Tax Consultant Engineer
Healthcare & Hospitals, excluding those in Group 6
Home Health Care Training and Services
Interior Design
Laboratory
Medical offices and clinics, including but not limited to urgent care Mortuary and Mortician or related services
Physician’s Office
Professional & Semi-Professional
Real Estate - Agent
Real Estate - Broker
Training Businesses and Services
Veterinarian
Group 3: Rental:
Businesses in Group 3 pay business tax at the rate of $0.70 per $1,000 gross receipts.
Group 3 consists of any of the following types of business:
Any business that leases, rents, or provides use of real or personal property to another individual or entity for compensation. This category also includes real-property-related businesses such as property management and real estate services.
Group 3 includes, but is not limited to, the following types of businesses:
Commercial Leasing
Residential Rental
Parcel Leasing
9 Commercial Property Rental
Residential Property Rental
Equipment Rental or Leasing
Hotels and Motels
Self-Storage Facilities
Vehicle rentals or leasing
Group 4: Services
Businesses in Group 4 pay business tax at the rate of $0.40 per $1,000 gross receipts.
Group 4 consists of any of the following types of business:
Any person or business offering services that require minimal to no higher education or are not generally regarded as professional services.
Any service offered that is not classified in another group is included in Group 4.
Group 4 includes, but is not limited to the following types of businesses:
Administration Office
Advertising - Agency
Advertising – Billboards or reader boards
Ambulance - Emergency
Artist & Designer
Automotive - Carwashes & Detailing
Automotive - Towing & Wrecking
Astrologers
Barbershop
Beauty - Parlors & Salons
Catering service
Computer set up or repair
Childcare
Dry Cleaning
Exercise & Fitness Studio and related services
Handyperson Service
Home Office
House Cleaning Service
Janitorial Services
Laundromat & Laundry Services
10 Personal Trainer
Personal Transport
Pet services including but not limited to doggy day care Photography
Public Utilities
Publications Company
School/Training - Private, Schools
Service - General, Service
Repair Service
Security & Patrol
Shoe Repair
Sports Instruction & Training
Taxicab
Telephone - Service & Transmission
Travel Agency
Group 5: Contractors
Businesses in Group 5 pay business tax at the rate of $0.40 per $1,000 gross receipts.
Group 5 consists of any of the following types of business:
“Contractors” means and includes every person, firm, or corporation conducting, managing or carrying on the business of contractor, subcontractor, or builder; or engaging in the construction or repair of any buildings; or engaged in any engineering, construction, or operating whatsoever, or advertising as such, or representing itself as such, and
Group 5 includes, but is not limited to, the following types of businesses:
Contractor - Electrical
Contractor - General
Contractor - HVAC
Contractor - Landscape
Contractor - Masonry
Contractor - Plumbing
Contractor - Roofing
Contractor - Signs
Contractor – Specialized
Group 6: Long-Term Medical Care Facilities
Businesses in Group 6 pay business tax at the rate of $0.35 per $1,000 gross receipts. 11 Group 6 consists of any of the following types of business:
Long-term medical care facilities are establishments that provide extended bed and patient care, catering to individuals requiring ongoing medical attention and support, often after release from an acute care facility
Group 6 includes, but is not limited to: Nursing homes, Rehabilitation Centers, and Long-term Acute Care (LTAC) facilities as determined by the type of state license held. § 5.12.076 “ Minimum Tax”
Each business in Groups 1-6 shall pay a minimum tax of $25.00. That minimum tax shall be applied to the first $25,000 in gross receipts.
§ 5.12.077 “CPI Adjustments”
A. The minimum tax under section 5.12.076 and all flat rates for calculating the business license fee in the City of Paramount shall be adjusted annually by an amount equal to the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U) for the Los Angeles/Long Beach/Anaheim area or any equivalent successor index, as established by the U.S. Bureau of Labor Statistics for the 12 months ending February 28th or 29th each year, not seasonally.
B. The adjusted flat rates will be effective at the beginning of each fiscal year and will be communicated to all affected businesses by the License Collector. Said increase shall be cumulative but shall not exceed 10% in any one year.
§ 5.12.078 “ Authority for Phase-In”
The City Council at its sole discretion may by resolution phase-in the gross receipts tax rates in this Chapter over the two calendar years after adoption of the tax by the voters. No rates may exceed those set out in this Chapter, as adjusted pursuant to Section 5.12.077. No phase-in may cause a reduction in the total business license revenue received by the City when compared to the revenue of the fiscal year prior to the adoption of this ordinance.
§ 5.12.080. Tax payment.
A. In Advance—Determination of Amount of Taxes Generally—Establishing a business license tax for New Businesses. All license amounts shall be paid in advance to the License Collector in lawful money of the United States. The amount to be paid shall be determined in accordance with the terms and provisions of this Chapter. In case of dispute, the decision of the City Manager as to the amount to be paid pursuant to the provisions of this chapter shall be final.
B. When Fees Are Due and Payable Generally.
1. All business taxes, unless otherwise expressly stated herein, shall be construed to be annual taxes.
2. All taxes shall be payable in advance, and in full amount, in lawful money of the United States in the manner or place set forth by the City.
3. No greater or lesser amount of money shall be charged or received for any tax hereunder than is specified therefor in this chapter, and, except as hereinafter provided, no business license payment receipt shall be granted or issued for any period of time other than the full 12 and current tax period provided herein for such tax. All businesses applying for a business license tax receipt where the tax rate is annual shall pay the appropriate tax for a 12-month period. Expiration shall be the last day of the preceding month of the succeeding issuance.
Taxes shall be due and payable on the first day of the following month of expiration.
4. When a licensee first begins operating a business in the city, the tax imposed by this chapter is due 30 calendar days after the first day of business operation in the city and is delinquent 60 days after the first day of business operation if not paid.
5. After the first tax year of operation and for all subsequent tax years, the tax is due 30 days after the first day of the tax year and is delinquent 60 days after the first day of the tax year if not paid.
C. Payment Dates. Except as otherwise provided for in this chapter, licenses required under this chapter shall be due and payable at the following times:
1. Semiannual licenses, July 1st and January 1st of each year.
2. Quarterly licenses, July 1st, October 1st, January 1st and April 1st of each year.
3. Monthly licenses, first day of each and every month.
4. Weekly license, Monday of each week in advance.
5. Daily license, in advance of each day.
§ 5.12.081 “Issuance of Business License”
Upon full payment of the tax imposed by this chapter, a business license receipt will be issued for the tax year for which the tax has been paid.
§ 5.12.083 “Business License Application for a New Business” A. When a licensee begins operating a business in the city for the first time, the licensee must provide the Collector with the following information and any other information required by the Collector:
1. The name of the business and the address at which it will be operating.
2. The date on which the business will begin operating.
3. The nature of the business’s activities sufficient for the License Collector to determine the business classification and category of the business.
4. An estimate of the business’s gross receipts for the first tax year.
5. Compliance with § 5.12.060
B. For the first tax year that a business operates in the city, it must pay tax measured by the estimate of the business’s gross receipts for the first tax year.
C. Within 30 days of the end of a business’s first tax year operating in the city, the business must provide the License Collector with a statement of the business’s actual gross receipts for the first tax year with supporting records.
1. If the actual gross receipts for the first tax year are more than the estimated gross receipts on which the tax for the first tax year was calculated and paid, then an additional amount of tax based on the additional gross receipts will be assessed and due within 60 days of the start of the second tax year.
13 2. If the actual gross receipts for the first tax year are less than the estimated gross receipts on which the tax for the first tax year was calculated and paid, then the excess amount of tax will be refunded to the business or applied to the business’s tax for the second tax year. §5.12.085 Business License Renewal
A. After the first tax year of operating in the city and for all subsequent tax years, a business’s license renewal application is due 30 days after the first day of the tax year.
B. The business license renewal application must provide the following information and any other information required by the Collector:
1. The name of the business and the address at which it will be operating.
2. The nature of the business’s activities sufficient for the Collector to determine the business classification and category of the business.
3. The business’s gross receipts for the previous tax year or other information necessary for calculating the tax owed.
§ 5.12.090. Penalties for delinquent payments—Compliance with chapter.
A. To every business license tax and applicable assessments provided for in this chapter remaining unpaid at the close of the 30th day of the month in which the business license receipt is issued, whether it be monthly, quarterly, semiannual or annual license, a penalty of 10% of the amount of such license shall be added and an additional five percent shall be added each 30 days thereafter until paid. The penalty shall be collected and the payment thereof shall be enforced in the same manner as other licenses are collected and the payment thereof enforced.
B. Daily business license tax and applicable assessments remaining unpaid at the close of 24 hours after the same becomes due, shall have a penalty of 10% of the amount of such license added. The penalty shall be collected and the payment thereof shall be enforced in the same manner as other licenses are collected and the payment thereof enforced.
C. Weekly business license tax and applicable assessments remaining unpaid at the close of 48 hours after the same becomes due, shall have a penalty of 10% of the amount of such license added. The penalty shall be collected and the payment thereof shall be enforced in the same manner as other licenses are collected and the payment thereof enforced. § 5.12.100. Suit for recovery of unpaid fees and charges.
Any sum required to be paid under this chapter shall be deemed a debt to the City and any person who engages in any business required to be licensed, without obtaining a license to do so, shall be liable to an action by and in the name of the City in any court of competent jurisdiction for the recovery of any such amount, in any such proceeding. The City may recover the costs of enforcement, including, but not limited to, third-party collection costs in addition to the tax and penalty owed. § 5.12.140. Determination of fee by License Collector upon failure to file application statement.
If any person fails to file any application statement required by this chapter within the time prescribed hereby, or after demand therefor made by the License Collector, fails to file a corrected application statement, the License Collector, with the consent of the City Manager first obtained, may determine the amount of the license fee due from such person from such information as he or she may be able to obtain 14 and if necessary may estimate the fee required to be paid upon the basis of external indices on hand, capital invested, dividends paid, sales or other taxes paid, number of people employed or by considering other facts.
In case such determination is made, the License Collector shall give notice of the amount so assessed by serving the same personally, or by depositing same in the United States post office, with postage prepaid thereon, addressed to the person so assessed at his or her last known address.
Such person may within 10 days after the mailing or serving of such notice, make application in writing to the License Collector for hearing on the amount of the tax. If such application is not so made within the time prescribed, the assessment shall become final.
After such an application is filed the License Collector shall cause the matter to be set for hearing, within 15 days before the City Manager. The City Manager shall consider all evidence produced and shall make written findings thereon, a copy of such findings to be served upon the applicant, in the manner prescribed above for service of notice of assessment. Such findings shall become final at the expiration of five (5) days from the date of service, within which time exceptions may be filed by the applicant with the License Collector. If filed, the City Manager shall consider the same and make such modification as may be deemed necessary; thereupon the final assessment shall be made. § 5.12.150. Accepting less fee than required.
No person charged with the enforcement of any of the provisions of this chapter shall knowingly accept or receive any sum for any license which is less than or greater than the amount actually to be paid under the provisions of this chapter. Notwithstanding the foregoing, the License Collector, in the exercise of discretionary powers, may within the limits and terms of the provisions of this chapter, set the amount of the license fee to be paid based upon the facts before him or her pursuant to application and investigation and in accordance with the terms and provisions of this chapter. § 5.12.160. Effect of convictions on liability for fees—Remedies cumulative.
The conviction and imprisonment of any person for engaging in any business without first obtaining a license to conduct such business shall not relieve such person from paying the license fee to conduct such business, nor shall the payment of any license fee prevent a criminal prosecution for the violation of any of the provisions of this chapter. All remedies prescribed in this chapter shall be cumulative and the use of one or more remedies by the City shall not bar the use of any other remedy for the purpose of enforcing the prosecution of violations of this chapter.
§ 5.12.170. Contents of license—Effect of mistake of License Collector.
A. Each business license receipt issued under this chapter shall state upon the face thereof the following:
1. Person to whom the same is issued.
2. Kind of business licensed thereby.
3. Location of such business.
4. Date of expiration of such license.
B. In no case shall any mistake of the License Collector in stating the amount of a license prevent or prejudice the collection by the City of what should be actually due from any person carrying on a business subject to a license under the provisions of this chapter. 15 § 5.12.180. Issuance where applicant indebted for unpaid license fee.
No license for any succeeding current or unexpired license period shall knowingly be issued to any person who at the time of making application for any license is indebted to the City for any unpaid license fee; provided, that the License Collector, or duly authorized deputy, may enter into an agreement with any person indebted to the City for nonpayment of license fees for any past license period, agreeing with such person that such person may pay delinquent license fees for any past license period in equal installments extending over a period not to exceed one year. In such agreement, such debtor shall acknowledge its debt to the City and agree in case default is made in the payment of any installment agreed to be paid thereunder that the whole amount agreed to be paid shall become immediately due and payable and that in case suit is brought to enforce collection of the amount agreed to be paid under such agreement that the debtor will pay all costs of suit incurred by the City. In case such an agreement is executed, licenses for any current or ensuing license period may be issued to any such person paying the fee prescribed for the current or ensuing license period, together with penalties, if any. § 5.12.190. Issuance not to constitute authorization to conduct unlawful business.
No license issued under the provisions of this chapter shall be construed as authorizing the conduct of or continuance of any illegal or unlawful business.
§ 5.12.200. Transferability.
No business tax receipt issued pursuant to this chapter shall be transferable. § 5.12.210. Issuance of duplicate license, tag or decal.
A. A duplicate license, tag or decal may be issued by the License Collector to replace any license previously issued which has been lost or destroyed, upon the applicant therefor filing an affidavit attesting to such fact.
B. Before any duplicate license, license tag or decal may be issued by the License Collector, as provided herein, applicant therefor shall show proof to the License Collector that the loss of such license, license tag or decal has been reported to the Sheriff's office. § 5.12.220. Posting and display.
Except as otherwise specifically provided by the provisions of this chapter, all licenses shall be kept and posted in the following manner:
A. Subject to other provisions of this chapter, any licensee engaged in business at a fixed place of business, shall keep the license issued posted in a conspicuous place upon the premises where such business is conducted.
B. Any person engaged in business in the City, but not operating from a fixed place of business, shall keep the license issued to him or her upon his or her person at all times while engaged in such business.
C. As directed by the License Collector, each person driving, operating or having control of any wagon, cart or other vehicle or using or controlling any tray, basket or other receptacle, or controlling, possessing or operating any machine, device or equipment, including vending machines, where a license is required under the provisions of this chapter, shall fix thereon a metal license tag, plate or decal as issued by the License Collector and at the place directed by the License 16 Collector, or if the License Collector shall so direct, shall procure a license holder and fix thereon for the purpose of holding the City license, or, if the License Collector shall so direct, shall carry a license or identification card as directed by the License Collector upon his or her person. Any license plate, tag or decal, shall be placed so that it is always plainly visible. No person shall keep any license plate, tag, decal or identification card longer than 30 days after the expiration of the term for which the license is issued and no person, except the licensee or authorized agent, shall take or remove any license plate, tag or decal or identification card from the person lawfully entitled to the same or remove from the place where posted or fixed. § 5.12.230. Inspection of records generally—Right of entry of inspectors.
The License Collector, or authorized deputy, may examine all places of business in the City to ascertain whether or not the provisions of this chapter have been complied with. The License Collector, his or her deputy, the City Manager, City Attorney, and any duly authorized employee shall have the power to examine all necessary books and records of all persons doing business in the City required to be licensed by the terms of this chapter for the purpose of ascertaining the amount of license fee required to be paid by the provisions thereof. The officer and each and all of his or her deputies and duly authorized employees shall have the power and authority to enter free of charge at any reasonable time any place of business required to be licensed by the provisions of this chapter and to demand an exhibition of such license, books or other matters of record. Any person having any such license in his or her possession or under his or her control who fails to exhibit the same on demand shall be guilty of a violation of this chapter. It shall be the right of the License Collector, his or her deputies or the contractual law enforcement agencies of the City to cause a complaint to be filed against any and all persons found to be a violator of any provisions of this chapter.
Licensees must maintain for six years records of gross receipts and other information necessary to calculate the tax. If the Collector serves notice of the initiation of an audit, the information pertinent for the years subject to the audit must be maintained until the conclusion of the audit. § 5.12.240. Examination of records by qualified third-party.
For the purpose of the enforcement of this chapter, the License Collector may, with the prior consent of the City Manager, deputize a qualified third party to examine the necessary books and records of any person doing business in the City. Any failure on the part of any person licensed under this chapter to exhibit to and allow examination by the accountant so deputized shall constitute a violation of this chapter. § 5.12.250. Power of License Collector to extend the time for filing statement—Compromise of claims for fees.
The License Collector shall have, in addition to all other powers conferred upon him or her, for good cause shown, the power to extend the time for filing any statement for a period of not to exceed 30 days, and in such case waive any penalty that would have otherwise accrued; and with the approval of the City Manager, to compromise any claim for license fee subject to the provisions of this chapter. § 5.12.260. Hearings generally.
Any person aggrieved by any decision of the Collector or his or her designee concerning the amount of such license taxes may appeal to the City Manager by filing a notice of appeal with the City Manager. The City Manager shall thereupon fix a time and place for hearing such appeal. The City Manager shall give notice to such person of the time and place of the hearing by serving it personally or by depositing it in 17 the United States Post Office, postage prepaid, addressed to such person at his last known address. The City Manager shall have the authority to determine all questions raised on such appeal such determination shall conflict with any substantive provision of this chapter. § 5.12.270. Notices.
A. Procedure for Delivery of Notice. Any notice required to be given under this chapter may be given either by personal delivery thereof to the licensee or permittee by personal delivery thereof to any employee of such licensee or permittee at his or her place of business mentioned in the license or permit, providing the licensee or permittee is absent from the place of business, or by depositing in the United States mail in a sealed envelope, postage prepaid, addressed to such person to be notified in the license, or in other public records pertaining to the matter to which such notice is directed. Service by mail shall be deemed to have been completed at the time of deposit in the post office.
B. Proof of Notice. Proof of giving any notice provided for in this chapter may be made by the certificate of any officer or employee of this City, or by affidavit of any person over the age of 18 years, which shows service in conformity with this chapter. § 5.12.320. False, misleading, etc., statements in applications.
No person shall make any false, misleading or fraudulent statement, or misrepresentation of any fact in any application for a license or permit required to be filed or submitted under this Chapter. § 5.12.380. Penalty for failure to file application or pay fee.
Any person who fails to file any required application statement or fails to pay the amount required under this chapter within the time fixed by this chapter shall be assessed the same penalty provided in this chapter for failure to pay a license fee before it shall become delinquent, which sum shall become a part of the license fee required to be paid under this chapter.
No statement shall be conclusive as to the matters set forth herein, nor shall the filing of the same preclude the City from collecting by appropriate action such sum as is actually due and payable hereunder.
Such statement and each of the several items therein contained shall be subject to audit and verification by the License Collector, who is hereby authorized to examine, audit and inspect such books and records of any licensee or applicant for license as may be necessary in his or her judgment to ascertain the correct amount of license due.
All licensees, applicants for licenses and persons engaged in business are hereby required to permit the examination of such books or records for the purposes aforesaid. The information required hereunder shall be used for the purpose of enforcing the provisions of this chapter and for no other purpose. § 5.12.390. Rules and Regulations
The License Collector may adopt rules and regulations that are not inconsistent with the provisions of this article as may be necessary to aid in the application and enforcement of this article. 18 City of Paramount, CA
Title 5, Chapter 5.16 shall be amended in its entirety to read as follows:
Chapter 5.16
SCHEDULE OF FEES FOR CERTAIN BUSINESSES
§ 5.16.010. License fees for businesses, professions, trades and occupations not covered by Section
5.12; Application and Compliance with Applicable Codes.
A. Businesses, professions, trades and occupations that are listed in Chapter 5.12 shall procure a license and pay a fee as provided for in that chapter. Chapter 5.16 shall not apply to those businesses, professions, trade and occupations.
B. The businesses, professions, trades and occupations set out in this Section 5.16, because of their nature and circumstances, shall have the license fee set out in this Section 5.16.
C. The applicant must submit evidence of compliance with all codes and regulations applicable to the applicant’s business, including but not limited to zoning and health and safety provisions.
The applicant, in addition, shall submit any further information or evidence in writing as required by the License Collector or other designated agency of the City. The application shall be verified by the applicant before filing.
§ 5.16.020. Determination of average employee and working days.
A “Average employee,” as used in this chapter, shall be computed at the rate of one employee for each 260 working days or fraction thereof performed by the owners, employees or agents of the business, profession, trade or occupation. In computing average employee, the proprietor shall not be counted.
B. “Working days or fraction thereof” means those performed within the City or without the City when related to business performed within the City.
§ 5.16.030. License fees for solid waste facilities.
The fee and the duration of the license shall be annual, quarterly, monthly, weekly or daily as indicated in this section. The letter "A" following the fee shall indicate an annual fee, the letter "D" shall indicate daily fee, the letter "M" shall indicate monthly fee, the letter "Q" shall indicate quarterly fee and the letter "W" shall indicate weekly fee. The fees in this chapter shall be set out in the resolution approving the fee schedule and/or municipal operating budget adopted annually by the City Council; this includes but is not limited to the fee for the average number of employees referenced in this section 5.160.030.
Notwithstanding anything to the contrary in this chapter, any business license tax owed may be offset by any host fee agreement with the City.
The table below outlines the fees for solid waste facilities in this section:
Transfer Station. Any entity which receives solid wastes, temporarily stores, separates, converts, or otherwise processes the materials in the solid wastes, or transfers the solid wastes directly from smaller to larger vehicles for transport, and those facilities utilized for transformation. Transfer station does not include any of the following:
1. A facility, whose principal function is to receive, store, separate, convert, or otherwise process in accordance with State minimum standards, manure. 19 2. A facility, whose principal function is to receive, store, convert, or otherwise process wastes which have already been separated for reuse and are not intended for disposal.
3. The operation premises of a duly licensed solid waste handling operator who receives, stores, transfers, or otherwise processes wastes as an activity incidental to the conduct of a refuse collection and disposal business in accordance with regulations adopted pursuant to Section 43309 (Public Resource Code).
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of material received at facility
M
Material Recovery Facility. A permitted solid waste facility where solid wastes or recyclable materials are sorted or separated, by hand or by use of machinery, for the purposes of recycling or composting.
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of material received at facility.
M
Recycling Center. Any entity, mechanism, or device which deals in the wholesale or retail sale, purchase, collection, or transport, of any products or byproducts of the waste stream which have a tangible market value and are intended to be recycled, including, but not limited to, paper and paper byproducts, metals, glass, plastic, wood, tires, rubber, etc. A Recycling Center may also engage in Redemption Center activities License Fee: An annual amount of $1,181.85 plus fees for the number of average employees.
A
Refuse/Recycling Collector/ Enterprise (non-franchise). Any entity which is regularly engaged in the business of providing solid waste handling services or recycling handling services, including, but not limited to, collecting, transporting, sorting, or processing; and which is not operating under an exclusive or semi-exclusive franchise granted by the City.
License Fee: An annual amount of $2,955.15 and an amount equivalent to 3% of gross receipts for each single business. Gross receipts/revenues shall include all monies directly or indirectly generated through normal business operations attributable to activities within City boundaries, including, but not limited to, fees for service, resale of recyclable materials, transportation charges, etc.
A
Redemption Center. Any entity, mechanism or device which accepts one or more types of empty beverage containers from consumers, and pays or provides the refund value for one or more types of empty beverage containers intended to be recycled.
License Fee: An annual amount equivalent to $154.80 plus fees for the number of average employees.
A
20 Hazardous Waste Facility. All contiguous land and structures, other appurtenances, and improvements on the land used for the treatment, transfer, storage, resource recovery, disposal, or recycling of hazardous waste. A hazardous waste facility may consist of one or more treatment, transfer, storage, resource recovery, disposal, or recycling hazardous waste management units, or combinations of these units. Hazardous waste means either of the following:
A waste, or combination of wastes, which because of its quantity, concentration, or physical, chemical, or infectious characteristics may either:
1. Cause, or significantly contribute to an increase in mortality or an increase in serious irreversible, or incapacitating reversible, illness.
2. Pose a substantial present or potential hazard to human health or environment when improperly treated stored, transported, or disposed of, or otherwise managed.
A waste which meets any of the criteria for the identification of a hazardous waste adopted by the department pursuant to Section 25141 (Health and Safety Code).
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of material received at facility
M
Transformation, Reuse, Composting Facility. Any entity involved in the transformation, incineration, pyrolysis, distillation, gasification, or biological conversion other than composting of refuse or refuse byproducts. Compost means the product resulting from the controlled biological decomposition of organic wastes that are source separated from the municipal solid waste stream, or which are separated at a centralized facility. Compost includes vegetable, yard, and wood wastes which are not hazardous waste.
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of material received at facility.
M
Electronic Waste Facility. Any entity, mechanism, dismantling operation, or combination thereof which collects, accepts or receives, in whatever manner, one or more types of electronic devices, machines or other devices, including, but not limited to, computer monitors, televisions, cash registers and oscilloscopes (CRT devices), computers, computer peripherals, telephones, answering machines, radios, stereo equipment, tape players/records, phonographs, video cassette players/records, compact disc player/recorder, calculators, MP3/MP4 players, microwave ovens and other items containing electronic components or plugs; ("e-waste") which are dismantled, demanufactured, segregated or broken down into component or sub-component pieces intended for recycling, reuse, in whole or in part, or distributed as commodities.
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of e-waste received at facility.
M
21 Medical Waste Disposal Facility. A permitted medical waste facility, entity, mechanism or operation which collects, accepts or receives, in whatever manner, biohazardous medical waste, including, but not limited to, pathology waste, chemotherapy waste, pharmaceutical waste, animal waste, or animal and plant health inspection service waste ("APHIS") for the purpose of treating or disposing such medical waste through various methods, including, but not limited to, incineration, thermal treatment, electro pyrolysis, chemical/mechanical systems, or steam sterilization, such as autoclaving. A medical waste disposal facility may consist of one or more treatment, transfer, storage, disposal, or recycling medical waste management units, or a combination of these units
1. Medical Waste is defined as biohazardous or sharps waste and waste which is generated or produced as a result of the diagnosis, treatment, or immunization of human being/animals, research pertaining to the diagnosis, treatment, or immunization of human beings/animals, production/testing of biologicals, or the accumulation of properly contained home-generated sharps waste.
2. APHIS waste consists of all food, plant and animal waste, and all material coming in contact with such waste, generated on board by any means of conveyance during movements to or from foreign locations. Sources of APHIS waste include: cruise and cargo ships, agriculture and food importers, and international airline flights.
License Fee: A monthly amount equivalent to 5% of County landfill tipping fee per ton of medical waste received at facility.
M
§ 5.16.040. Business license taxes for swap meets, outdoor markets and flea markets.
A. Definitions. As used in this section, the following words, terms, or phrases shall have the meanings hereinafter set forth:
1. Swap meet, outdoor market, or flea market. Any event:
a. At which two or more persons offer tangible personal property for sale or exchange; and
b. At which a fee is charged for the privilege of offering or displaying tangible personal property for sale or exchange; or
c. At which a fee is charged to prospective buyers for admission to the area where tangible personal property is offered or displayed for sale or exchange.
2. Exhibitor. Any person, association, partnership, or corporation exhibiting, displaying, selling, exchanging, offering for sale, or offering for exchange any identifiable, tangible personal property at a swap meet, outdoor market, or flea market.
3. Operator. Any person, association, partnership, or corporation conducting, operating, or managing the business of a swap meet, outdoor market, or flea market within the City limits.
4. Exhibit stall. Designated ground space, assigned to, or rented, or occupied for one day or fraction thereof, by an exhibitor.
B. Operator Tax and Exhibitor Tax. The following taxes, collection process, and record keeping requirements shall apply to this section:
1. Operator Tax.
22 a. Every swap meet, outdoor market, and flea market operator engaged in the operation of a swap meet, outdoor market, or flea market shall pay a semi-annual business tax of $1,968.75 every six months. The tax shall be paid at the time of application and thereafter on the first business day of January and July. This fee may be pro-rated.
b. Additionally, every swap meet, outdoor market and flea market operator engaged in the operation of a swap meet, outdoor market or flea market shall pay a daily business tax as outlined in the following schedule, based upon occupancy of exhibitor stalls for each day. Where two or more exhibitors share a single stall, each exhibitor shall be counted separately. The operator daily business tax shall be two dollars and forty cents per exhibitor per day.
2. Exhibitor Tax.
a. Every exhibitor shall pay a daily business tax as outlined in the following schedule regardless of whether the exhibitor is charged a fee for the privilege of exhibiting, selling, exchanging, or displaying identifiable, tangible personal property. Where two or more exhibitors share a single stall, each such exhibitor shall pay a separate daily business tax.
b. The exhibitor daily business tax shall be two dollars and forty cents per exhibitor per day.
3. Tax Collection and Record Keeping.
a. The exhibitor shall pay the applicable business tax to the operator on or before the day the exhibitor participates in the swap meet, outdoor market, or flea market. The operator shall collect the applicable business tax either at the time an exhibitor stall location is assigned to the exhibitor or when the exhibitor is admitted to the swap meet, outdoor market, or flea market. The City Manager may establish a program to accept payments of the tax in advance. No exhibitor shall be allowed to participate in the swap meet, outdoor market, or flea market until the exhibitor has paid the applicable exhibitor business tax.
b. The operator shall issue pre-numbered written receipts for the receipt of exhibitor business taxes; the amount of tax shall be separately stated on the receipt from any other money collected by the operator. The City Manager may approve use of receipts issued by the operator in lieu of City-issued receipts. Each receipt issued shall contain the stall number assigned, date for which the stall was assigned, rented, or occupied, and the amount of exhibitor business tax paid. The original receipt shall be furnished to the exhibitor and is to be displayed at the exhibitor stall. A copy shall be filed with the License Collector along with the tax collected.
A copy shall be retained by the operator for a period of six months for audit purposes.
c. The operator shall be held responsible for the safekeeping of all taxes collected under this section until such taxes are turned over to the License Collector. The full amount of the exhibitor's tax collected each day, the appropriate copies of the receipts issued for each day, and an accounting for all receipts voided shall be submitted to the License Collector by the close of business the following workday or in accordance with the payment program/procedure established by the License Collector.
23 d. The full amount of the operator's daily business tax shall also be submitted to the License Collector by the close of business on the workday following the day the tax was incurred or in accordance with the payment program/procedure established by the City Manager.
e. The operator shall be required to keep accurate daily records of all exhibitors' taxes collected and shall retain these records for a period of three years. Duly authorized representatives of the License Collector shall have the right to inspect, check, and audit such records, books of account, cashier procedures, and all other procedures, documents, or records relating to the collection and documentation of the exhibitor tax and payment of the operator's daily tax at any time during regular business hours. The duly authorized representatives of the License Collector shall also have the right to inspect any exhibitor stall for a valid receipt for payment of an exhibitor business tax.
§ 5.16.050. Annual increases.
On July 1st of each year, the rates established under Sections 5.16.030 and 5.16.040 shall be increased by an amount equal to the percentage change in the Consumer Price Index for all Urban Consumers (CPIU) for the Los Angeles/Long Beach/Anaheim area or an equivalent successor index, as established by the U.S. Bureau of Labor Statistics for the 12 months ending February 28th or 29th each year; not seasonally.
Said increase shall be cumulative but shall not exceed 10% in any one year.
CITY OF PARAMOUNT
LOS ANGELES COUNTY, CALIFORNIA
RESOLUTION NO. 24:033
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARAMOUNT
REQUESTING THE BOARD OF SUPERVISORS OF THE COUNTY OF
LOS ANGELES TO CONSOLIDATE THE CITY OF PARAMOUNT’S
SPECIAL MUNICIPAL ELECTION TO BE HELD ON TUESDAY,
NOVEMBER 5, 2024 WITH THE PRESIDENTIAL ELECTION ON
NOVEMBER 5, 2024 PURSUANT TO SECTION 10403 OF THE
CALIFORNIA ELECTIONS CODE
WHEREAS, the City Council of the City of Paramount has called a Special Municipal Election to be held on Tuesday, November 5, 2024 for the submission to the qualified voters of a proposed ordinance of the People of the City of Paramount Amending the Paramount Municipal Code Chapters 5.12 and 5.16 To Update the Existing Business License Tax Structure to Apply the Tax Based upon Gross Receipts as set forth in the Measure for Greater Fairness/Equity for Small Businesses, such increased tax revenues to be used for general municipal purposes including public safety, 911 Emergency Response, gang prevention, street repairs and keeping public areas and parks safe/clean.
WHEREAS, it is desirable that the Special Municipal Election be consolidated with the Presidential Election to be held on the same date and that within the City, precincts, vote centers, and election officers of the two (2) elections be the same, and that the Los Angeles County Registrar-Recorder/County Clerk (“County Registrar”) canvass the returns of the Special Municipal Election, and that the election be held in all respects as if there were only one (1) election; and
WHEREAS, Elections Code Section 10002 authorizes the City to request by resolution that the Board of Supervisors of Los Angeles County (“Board of Supervisors”) authorize the County Registrar to conduct specified election services.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARAMOUNT AS FOLLOWS:
SECTION 1. The above recitations are true and correct.
SECTION 2. The City Council adopted Resolution No. 24:032 on July 23, 2024 calling and ordering to be held in the City of Paramount, California, on Tuesday, November 5, 2024, a Special Municipal Election for submission to the qualified voters of a proposed ordinance of the People of the City of Paramount Amending the Paramount Municipal Code Chapters 5.12 and 5.16 to Update the Existing Business License Tax Structure to Apply the Tax Based upon Gross Receipts as set forth in the Measure for Greater Fairness/Equity for Small Businesses, such increased tax revenues to be used for general municipal purposes including public safety, 911 Emergency Response, gang prevention, street repairs and keeping public areas and parks safe/clean.
RESOLUTION NO. 24:033
SECTION 3. The City Council requests the Board of Supervisors to direct the County Registrar to administer, manage and perform all necessary functions, services and tasks related to the complete and successful conduct of the consolidated election; including the provision of all election materials and equipment; the hiring, training and supervision of poll workers and other election personnel; the printing and distribution of ballot materials; the translation of ballot materials in the required languages for the City of Paramount; the collection of submitted ballots; the tallying of votes; and canvassing of election results.
SECTION 4. The foregoing notwithstanding, County Registrar’s services shall not include final declaration of the results by the City Council pursuant to Elections Code Sections 10262 through 10265.
SECTION 5. The City Council further requests the Board of Supervisors to consent and agree to the consolidation of the City of Paramount’s Special Municipal Election with the Presidential Election to be held on November 5, 2024, and that the County of Los Angeles take all necessary steps to hold a consolidated election.
SECTION 6. The City of Paramount recognizes that expenses will be incurred by the County by reason of this consolidation and agrees to reimburse the County for these costs.
SECTION 7. The vote centers, operated by the County Registrar, for the election shall be open as required during the identified voting period pursuant to Sections 4007 and 14401 of the Elections Code of the State of California.
SECTION 8. In all particulars not otherwise specifically provided in this resolution, the election shall be held and conducted as provided by law.
SECTION 9. The City Council directs the City Clerk to file a certified copy of this resolution with the County Registrar and the Board of Supervisors.
SECTION 10. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original Resolutions.
SECTION 11. This Resolution shall take effect immediately upon its adoption.
PASSED, APPROVED and ADOPTED this 23rd day of July 2024.
Annette C. Delgadillo, Mayor
ATTEST:
Heidi Luce, City Clerk
RESOLUTION NO. 24:033
STATE OF CALIFORNIA )
COUNTY OF LOS ANGELES ) ss.
CITY OF PARAMOUNT )
I, Heidi Luce, City Clerk of the City of Paramount, California, DO HEREBY CERTIFY that the foregoing RESOLUTION NO. 24:033 was duly approved and adopted by the City Council of the City of Paramount at a meeting held on July 23, 2024, and said resolution has been signed by the Mayor and attested by the City Clerk, and that the same was approved and adopted by the following vote, to wit:
AYES: COUNCILMEMBERS:
NOES: COUNCILMEMBERS:
ABSENT: COUNCILMEMBERS:
ABSTAIN: COUNCILMEMBERS:
Dated: July 23, 2024
___________________________________
Heidi Luce, City Clerk
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
Date: July 23, 2024
SUBJECT: PURCHASE AND SALE AGREEMENT – 15538 COLORADO
BACKGROUND
This item is a public hearing for the City Council to consider the sale of the City owned property located at 15538 Colorado Avenue (see Attachment A for site photos). On March 14, 2023, the City Council approved Resolution No. 23:010 declaring the property located at 15538 Colorado Avenue surplus land, pursuant to the Surplus Land Act (Government Code Section 54220 et seq.). On March 6, 2024, the Planning Commission approved Resolution No. PC 24:009 declaring conformity with the Paramount General Plan as it related to the City’s disposition of this property. Staff completed the State-mandated surplus property disposition process in coordination with the City’s consultant, Kosmont Real Estate Services (Kosmont Realty).
The property located at 15538 Colorado Avenue served as a fire station decades ago and was converted to a civic use building after the Los Angeles County Fire Department vacated the premises.
The building is currently vacant and was last used for City storage. From 1989 to 2001, the City had operated the site as an afterschool homework center. Following the City’s closure of the center, the City had leased the building for use by the YMCA and other nonprofits (Southeast Area Social Services Funding Authority and Consolidated Youth Services Network) for youth programs and workforce development.
The Property has been fully vacant since 2016 after SASSFA ended its lease with the City, and currently is uninhabitable due to its deteriorating condition.
Prior to the sale of the property, the City is required to hold a public hearing.
DISCUSSION
Based on review of permits, the property was constructed circa 1951 and has a gross site area of 11,250 square feet.
The site is zoned R-M (Multiple-Family Residential) zone and was appraised on June 9, 2023 at $620,000.
Agenda Report July 23, 2024
PURCHASE AND SALE AGREEMENT – 15538 COLORADO Page 2
The City received an offer from Gold Key Development, Inc. for the purchase of the subject property in the amount of $650,000. The potential buyer is interested in pursuing the construction of market rate residential units on the lot. The existing zoning would allow the construction of a maximum of 3 residential units. A zone change to PD-PS (Planned Development with Performance Standards)/Single Family Residential would allow for 4 detached residential townhome units. The addition of new residential units in the City would help meet the City’s Regional Housing Needs Assessment (RHNA) allocation of 364 units for the period of 2021-2029.
Attached for the City Council’s review is a Purchase and Sale Agreement with Gold Key Development, Inc. The Agreement provides for the sale of the property in its as-is condition. It also grants the Buyer a 45-day due diligence period including a 30-day extension for an agreed upon additional good faith deposit of $10,000. Escrow will open within 5 business days of the date of the executed agreement and shall close 30 days subsequent to the expiration of the due diligence period and Seller (City) and Buyer obligations have been satisfied. The proceeds from the sale will be paid to the Seller (City) net of customary escrow fees (50% split between Buyer and Seller) and real estate commissions owed as part of the transaction.
Also included with this staff report is Resolution No 24:029 which makes the required findings that the City has conducted all the Surplus Land Act proceedings necessary and in compliance with State Law and the Municipal Code; that the sale of this property would help create additional housing in the City to meet the City’s RHNA allocation; and that the offer received for the sale of the property meets or exceeds the appraised property value.
As is required by law, a public hearing notice was published in the Paramount Journal on July 4, 2024 and July 11, 2024.
FISCAL IMPACT
After the payment of anticipated escrow fees in the amount of $44,000, the City would receive approximately $606,000 from the sale of this property located at 15538 Colorado Avenue. The proceeds will be used to offset the City’s consulting costs of $10,000 for the surplus land act process. The balance will be deposited into the City’s general fund budget for future City programming.
VISION, MISSION, VALUES, AND STRATEGIC OUTCOMES
The City’s Vision, Mission, and Values set the standard for the organization, establish priorities, uniformity and guidelines; and provide the framework for policy decision making. The Strategic Outcomes were implemented to provide a pathway to achieving the City’s Vision. This item aligns with Strategic Outcome No 5: Attractive and WellMaintained Infrastructure - Develop and maintain City-owned infrastructure, parks, facilities, and amenities that enhance quality of life and the attractiveness of the community.
Agenda Report July 23, 2024
PURCHASE AND SALE AGREEMENT – 15538 COLORADO Page 3
RECOMMENDED ACTION
Open the public hearing, take public testimony and read by title only and adopt Resolution 24:029 authorizing the City Manager to execute a Purchase and Sale Agreement with Gold Key Development, Inc for the City owned property at 15538 Colorado Avenue for $650,000.
Attachment A – Site Photos and Aerial
Lot 8 and the north one-half of Lot 9, Block 30, Town of Clearwater, City of Paramount, County of Los Angeles, State of California, as shown on map recorded in Book 19, pages 51 and 54, inclusive, of Miscellaneous Records, in the office of the Recorder of said County.
Reserving and excepting therefrom unto the Couty of Los Angeles, all oil, gas, hydrocarbons, or other minerals in and under above described parcel of land without this right of surface entry for development thereof.
CITY OF PARAMOUNT
LOS ANGELES COUNTY, CALIFORNIA
RESOLUTION NO. 24:029
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PARAMOUNT APPROVING THE PURCHASE AND SALE OF THE PROPERTY AT 15538
COLORADO AVENUE IN THE CITY OF PARAMOUNT
WHEREAS, the City owns all right, title, and interest in and to certain real property (“15538 Colorado Avenue”), identified as 15538 Colorado Avenue, referenced by APN:
6270-015-900, and generally located on Colorado Avenue between Jefferson Street and Madison Street; and
WHEREAS, the City of Paramount and Gold Key Development, Inc, a California corporation (the “Purchaser”) have negotiated a proposed Purchase and Sale Agreement, as the same may be amended, supplemented or modified from time to time in accordance with the terms thereof (the “Purchase Agreement”). The Purchase Agreement pertains to the sale to and development by the Purchaser of the 15538 Colorado Avenue property, comprising in total of approximately 11,250 square feet (collectively defined in the Purchase Agreement as the “Site”); and
WHEREAS, prior to the sale, the City Council approved Resolution No. 23:010 declaring the property located at 15538 Colorado Avenue surplus land, pursuant to the Surplus Land Act (Government Code Section 54220 et seq.).
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARAMOUNT AS FOLLOWS:
SECTION 1. The above recitations are true and correct.
SECTION 2. The City Council finds that it has conducted all the Surplus Land Act proceedings necessary and in compliance with State Law and the Municipal Code of the City of Paramount.
SECTION 3. The City Council finds that the evidence presented does justify the sale of the subject property for the following reasons:
1. That the City completed the Surplus Land Act proceedings as required by law.
2. That the sale of such property would help create additional housing in the City to meet the City’s RHNA allocation.
3. That such offer received for the sale of the property meets or exceeds the appraised property value.
SECTION 4. This Resolution shall take effect immediately upon its adoption.
RESOLUTION NO. 24:029
PASSED, APPROVED, and ADOPTED by the City Council of the City of Paramount this 23rd day of July 2024.
Annette C. Delgadillo, Mayor
ATTEST:
Heidi Luce, City Clerk