CF 10.10
City of Paramount 16400 Colorado Avenue Paramount, CA 90723 (562) 220-2000 www.paramountcity.gov
NOTICE OF SPECIAL MEETING
Paramount City Council
NOTICE IS HEREBY GIVEN that a Special Meeting of the Paramount City Council will be held on Tuesday, February 3, 2026 at 4:00 p.m. in the Council Chamber at City Hall, 16400 Colorado Avenue, Paramount, California. The purpose of said special meeting is to consider the following item:
1. ORAL REPORT – SPECIAL PARCEL TAX – RESPONSE TO CITY
COUNCIL INQUIRY FROM OCTOBER 2025 REVENUE
ENHANCEMENT WORKSHOP – PARCEL TAX TIERING AND SALES
TAX CONTRIBUTION ANALYSIS
Recommended Action: Receive report and provide direction to staff.
2. ORAL REPORT – RESULTS OF POTENTIAL SALES TAX MEASURE
POLLING
Recommended Action: Receive report and provide direction to staff.
Notice of this Special Meeting is furnished to each Member of the City Council in compliance with applicable laws of the State of California.
Dated: January 30, 2026
Peggy Lemons, Mayor
I, Heidi Luce, City Clerk of the City of Paramount, California, hereby certify that I caused the aforementioned Notice of Special Meeting to be posted on the Paramount City Hall, Paramount Library, Paramount Park Community Center and Paramount Sheriff’s Station bulletin boards and on the City’s website at least 24 hours prior to the time set for the special meeting in accordance with Government Code Section 54956.
Dated: January 30, 2026
Heidi Luce, City Clerk
Agenda
City Council
February 03, 2026
Special Meeting - City Hall Council Chamber - 4:00 PM
16400 Colorado Avenue Paramount, CA 90723 (562) 220-2000 www.paramountcity.com
PUBLIC PARTICIPATION NOTICE
In-person Attendance: The public may attend the City Council meetings in-person.
View the City Council meeting live stream:
• YouTube Channel https://www.youtube.com/user/cityofparamount • Spectrum Cable TV Channel 36
Public Comments: Members of the public wanting to address the City Council, either during public comments or for a specific agenda item, or both, may do so by the following methods:
• In-Person
If you wish to make a statement, please complete a Speaker’s Card prior to the commencement of the Public Comments period of the meeting. Speaker’s Cards are located at the entrance. Give your completed card to a staff member and when your name is called, please go to the podium provided for the public. • E-mail: [email protected]
E-mail public comments must be received by 15 minutes prior to the start of the meeting. The e-mail should specify the following information: 1) Full Name; 2) City of Residence; 3) Phone Number; 4) Public Comment or Agenda Item No; 5) Subject; 6) Written Comments.
All public comments are limited to a maximum of three (3) minutes unless an extension is granted. No action may be taken on items not on the agenda except as provided by law. All public comments will be recorded and rules of decorum and procedures for the conduct of City meetings will apply when addressing the City Council whether in-person, via email or by teleconference.
CALL TO ORDER: Mayor Peggy Lemons
PLEDGE OF ALLEGIANCE:
ROLL CALL OF
COUNCILMEMBERS:
Councilmember Isabel Aguayo
Councilmember Annette C. Delgadillo
Councilmember Vilma Cuellar Stallings
Vice Mayor Brenda Olmos
Mayor Peggy Lemons
Packet February 03, 2026
Special Meeting City Council Page 2
PUBLIC COMMENTS
NEW BUSINESS
1. ORAL REPORT SPECIAL PARCEL TAX – RESPONSE TO CITY COUNCIL INQUIRY FROM OCTOBER 2025 REVENUE ENHANCEMENT
WORKSHOP – PARCEL TAX TIERING AND SALES TAX
CONTRIBUTION ANALYSIS
Recommended Action: Receive report and provide direction to staff.
2. ORAL REPORT RESULTS OF POTENTIAL SALES TAX MEASURE POLLING Recommended Action: Receive report and provide direction to staff.
ADJOURNMENT
To a meeting on February 10, 2026 at 6:00 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: Lana Dich, Finance Director
Date: February 3, 2026
SUBJECT: SPECIAL PARCEL TAX – RESPONSE TO CITY COUNCIL INQUIRY FROM OCTOBER 2025 REVENUE ENHANCEMENT WORKSHOP –
PARCEL TAX TIERING AND SALES TAX CONTRIBUTION ANALYSIS
BACKGROUND
At the October 2025 Revenue Enhancement Measures Workshop, the City Council reviewed a range of potential revenue options to address the City’s projected long-term structural deficit. During that discussion, Council requested additional information on two specific questions:
1. Whether a parcel tax could be structured so that tax rates are tiered based on the proportion of sales tax contributions generated by businesses operating on a parcel; and
2. What percentage of the City’s total sales tax revenue is generated by different business categories.
City Council directed staff to further evaluate these questions and return with additional analysis to support future policy discussion. This report responds directly to that direction.
DISCUSSION
The questions raised by City Council reflect a desire to better align potential parcel tax structures with economic activity occurring within the City, while also gaining a clearer understanding of how sales tax revenues are distributed across business sectors.
To respond to Council’s request, staff reviewed available sales tax data, evaluated the legal framework governing parcel taxes, and assessed the operational, administrative, and equity implications of tying parcel tax tiers to sales tax contributions. The analysis focused on feasibility, sustainability, and potential unintended consequences, rather than advancing a specific policy recommendation.
Agenda Report February 3, 2026
SPECIAL PARCEL TAX Page 2
ANALYSIS
1. Parcel Tax Tiering Based on Sales Tax Contributions
Legal Considerations
From a legal standpoint, structuring parcel tax tiers using objective economic criteria is generally permissible. However, legal risk increases if the tiering methodology becomes disconnected from property ownership or lacks a clear nexus between the tax imposed and the parcel being taxed.
Operational and Administrative Considerations
Sales tax revenues fluctuate from year to year as business activity changes. As a result, parcel tax tiers based on sales tax contribution would require annual recalibration, reducing predictability for both taxpayers and the City. Because sales tax data is reported by business activity rather than by parcel, and parcel tax administration relies on parcel data from the County Assessor’s Office, reconciling these datasets presents a significant challenge. In many cases, multiple businesses may occupy a single parcel, creating uncertainty as to which sales tax contribution should be used to determine the applicable parcel tax tier.
Not all businesses generate taxable sales, and available sales tax data does not capture all economic activity occurring on a parcel. These data limitations further complicate the ability to consistently and accurately assign parcel tax tiers.
Implementing and maintaining this approach would likely require the ongoing engagement of a specialized consultant to annually update, reconcile, and validate the underlying database as business activity changes. In addition, staff time would be required for coordination, compliance, and oversight. These ongoing administrative demands would increase costs and reduce the net revenue benefit of the tiered structure.
Equity and Fairness Considerations
Parcel taxes are levied on property owners, whereas sales tax is generated by businesses operating on the property. In many cases, the property owner subject to the parcel tax is not the business owner generating the sales tax. This misalignment raises equity and nexus concerns, particularly where businesses with little or no taxable sales occupy high-value commercial or industrial parcels. The resulting tax outcomes may be perceived as inequitable among taxpayers.
Agenda Report February 3, 2026
SPECIAL PARCEL TAX Page 3
Data Integrity Considerations
Sales tax databases are incomplete and are subject to confidentiality restrictions that limit parcel-level transparency and verification. Errors, omissions, or changes in business reporting could result in incorrect tier assignments. These limitations increase the risk of inconsistent application and administrative disputes.
Appeals and Litigation Considerations
A parcel tax structure tied to sales tax contribution would require the City to adopt formal administrative policies and establish an appeals process to address disputes from property owners who contest their assigned tax tier. Disagreements may arise due to changes in tenancy, business operations, or sales tax reporting. The volume and complexity of potential appeals could delay implementation and create uncertainty in revenue collection.
Revenue Stability Considerations
Because sales tax contributions fluctuate annually, parcel tax tiers would also shift over time. This variability would reduce revenue predictability and make long-term budgeting and financial planning more difficult.
Overall Assessment
Tiering a parcel tax based on the proportion of sales tax contributions is legally permissible, but it presents significant practical, administrative, equity, and data-related limitations that materially increase implementation risk.
2. Percentage of Sales Tax Contribution by Business Category The City is heavily reliant on sales tax, which currently accounts for approximately 42% of total General Fund revenue. As requested by City Council, staff analyzed available sales tax data to better understand how total sales tax revenue is distributed across business categories.
This analysis indicates that:
• Sales tax revenue is highly concentrated among a relatively small number of business groups, with the top three sales tax producers collectively accounting for approximately 28% of total sales tax revenue.
Agenda Report February 3, 2026
SPECIAL PARCEL TAX Page 4
• Commercial and retail activities contribute approximately 88% of total sales tax, while industrial uses contribute approximately 7%, and other categories account for the remaining 5%.
• Sales tax contributions vary significantly by major industry group.
The analysis further demonstrates that fuel and service stations represent the single largest contributor, accounting for 21.5% of total sales tax revenue, despite having only 23 active accounts. This concentration underscores the City’s exposure to changes in a limited number of high-volume taxpayers.
In addition, approximately 18.6% of sales tax revenue is derived from State and County pools, which are allocated through statewide and regional formulas and are not directly linked to identifiable parcels or businesses within City limits. As a result, this portion of revenue cannot be used as a basis for parcel-level tax allocation or tiering.
Other major contributors include Building and Construction (15.6%), Business and Industry (14.8%), and General Consumer Goods (11.9%), which collectively reflect broader commercial activity across a large number of businesses with more moderate individual contributions.
Agenda Report February 3, 2026
SPECIAL PARCEL TAX Page 5
Conversely, sectors such as Restaurants and Hotels, Food and Drugs, and Automotive and Transportation account for a substantial number of establishments but generate a smaller share of overall sales tax revenue, illustrating the uneven relationship between business count and revenue contribution. In addition, many businesses generate little or no taxable sales despite occupying commercial or industrial parcels.
While this information is valuable for understanding the City’s revenue concentration and economic base, it also illustrates why translating business-level sales tax percentages into parcel-level tax tiers is complex and potentially problematic.
CONCLUSION
Staff’s analysis confirms that, while tiering a parcel tax based on sales tax contributions is legally feasible, it presents substantial operational, administrative, equity, and datarelated challenges. Sales tax contribution data is useful for understanding economic activity within the City, but it is not well suited for use as a parcel-based tax metric.
This report is intended to provide technical background and respond directly to City Council’s October workshop questions. It does not advance a specific revenue recommendation at this time.
FISCAL IMPACT
This report is informational only and does not result in an immediate fiscal impact.
However, the analysis identifies potential ongoing consultant, administrative, and appeals-related costs that would reduce net revenues if a sales-tax-based parcel tax structure were pursued.
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
Receive and file this report providing staff’s response and analysis related to City Council questions from the October 2025 Revenue Enhancement Measures Workshop concerning parcel tax tiering and sales tax contribution percentages.
To: Honorable City Council
From: John Moreno, City Manager
By: Grissel Chavez, Assistant City Manager
Date: February 3, 2026
SUBJECT: RESULTS OF POTENTIAL SALES TAX MEASURE POLLING At the October 14, 2025 City Council meeting, staff presented a report about the City’s long term financial outlook which included a looming structural financial deficit. During the presentation, the City Council directed staff to further pursue a potential sales tax increase ballot measure that would help resolve the structural deficit.
One of the most common first steps in the pursuit of a ballot measure is to conduct a poll of likely voters. At the December 16, 2025 City Council meeting, the City Council approved a contract with Fairbank, Maslin, Maullin, Metz & Associates (FM3) to conduct such a poll. At tonight’s City Council meeting, a representative from FM3 will present the results of their community polling effort for a potential sales tax measure on the upcoming June 2026 election.