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Agenda Report
October 13, 2026
TO: Honorable Mayor and City Council
FROM: Department of Finance
SUBJECT: ADOPT A RESOLUTION AUTHORIZING THE C\Tf MANAGER TO ENTER INTO AGREEMENT NO. 131285 AND SUBSEQUENT RENEWAL
AGREEMENTS WITH THE STATE OF CALIFORNIA FRANCHISE TAX
BOARD (FTB) FOR PARTICIPATION IN FTB CITY BUSINESS TAX
DATA PROGRAM
RECOIVIMENDATION:
Staff recommends that the City Council:
1. Find that the action proposed is not a "project" subject to the California Environmental Quality Act (CEQA) pursuant to Public Resources Code Section 21065 and within the meaning of State CEQA Guidelines Section 15378;
2. Adopt the resolution for the purpose of the City's continued participation in the State of California Franchise Tax Board (FTB) City Business Tax Program;
3. Authorize the City Manager to enter into agreement no. 131285 with the California FTB, for tax years 2026 through 2028 with data sharing through December 2029 and for subsequent tax years at the discretion of the City Manager, for the City's participation in the FTB City Business Tax Data Program. Competitive price biddingis not required pursuant to City Charter Section 1002(1-1) (Contracts with other governmental entities), and competitive selection is not required pursuant to Pasadena Municipal Code Section 4.08.049(A)(3), contracts with othergovernmental entities.
BACKGROUND:
The City participates in the Franchise Tax Board (FTB) City Business Tax Data Program through a reciprocal data-sharing agreement with the State of California. The program enables the City to use information provided by the FTB to identify businessesoperating in Pasadena without a City business license, while information provided by the City assists the FTB in identifying businesses that may not be reporting required 1I
MEETING OF 10/13/2n9(, AGENDA ITEM NO. 3
Authorization for Reciprocal Agreement with Franchise Tax Board for Current and Future Tax Years October 13, 2026
income to the State. In 2021, the City entered into an agreement for these services.
On November 13, 2023, the City Council authorized the continuation of the agreement for tax years 2023 through 2025, with data sharing through December 2026.
Effective January 2009, as a result of the enactment of Senate Bill 1146 (Cedilla)(Chapter 345, Statutes of 2008), FTB began exchanging data through a reciprocalagreement with cities at no charge to either party. The program helps identify selfemployed individuals who are not reporting required income and paying local business taxes. The following types of data are exchanged between cities and the FTB:
Cities/Counties provide FTB FTB provides Cities/Counties Business and owner's name Taxpayer nameBusiness or residence address Taxpayer addressFEIN or Social Security Number Taxpayer FEIN or Social Security Number North American Industry Classification Code Entity type Standard Industry Classification Code Principal Business Activity (PBA) Code Under the program, participating cities and counties provide local business license data to FTB annually through Secured Web Internet File Transfer (SWIFT). FTB performs a data match and returns information that assists the City in identifying potentially unlicensed businesses within its jurisdiction. The City is required to provide its annual data extract between April and July of each year of the agreement. FTB agrees to match the data and provide the report in December of the following tax year. Bothentities retain ownership of their respective data and are required to maintain theconfidentiality of pertinent taxpayer information in accordance with the California Revenue and Taxation Code and applicable federal standards including InternalRevenue Code.
Participation in this program requires the City to periodically execute an agreement renewal with FTB. Since the substantive purpose of the agreement remains consistent and at no charge to either party, requiring separate City Council approval for each routine agreement renewal not only potentially delays the annual data exchangeprocess and the City's vital access to FTB's records but also adds an administrativestep to an established reciprocal program. Continued participation provides the Citywith an important compliance and validation tool to identify businesses operating within Pasadena that may not be properly licensed and to pursue applicable business taxobligations.Staff, therefore, recommend the City Council authorize the City Manager to execute theagreement for tax years 2026 through 2028 and future agreement renewals with FTB for subsequent tax years at the discretion of the City Manager. The agreement is for the City's continuous participation in the FTB's City Business Tax Data Program, so long as there is no material change to the program's purpose and no fiscal obligation to Authorization for Reciprocal Agreement with Franchise Tax Board for Current and Future Tax Years October 13, 2026
the City. This authorization will streamline future agreement renewals and avoid interruptions to the City's business tax compliance efforts.
COUNCIL POLICY CONSIDERATION:
This action for the proposed agreement(s) with the State of California FTB supports the City's fiscal responsibility and stability by securing data that supports the City's business tax compliance operations.
ENVIRONMENTAL ANALYSIS:CEQA excludes, from environmental review, actions that are not "projects" as defined by Public Resources Code Section 21065 and within the meaning of CEQA GuidelinesSection 15378. Sections 21065 and 15378 define a project as an action which may cause either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. Section 15378(b) excludes from the definition of "project" continuing administrative or maintenance activities, such as securing services. The actions proposed herein, authorizing the City Manager toparticipates in the FTB City Business Tax Data Program through a reciprocal datasharing agreement with the State of California, is an administrative activity for thesecuring of services, and therefore is not a "project" as defined by CEQA. Since theaction is not a project subject to CEQA, no environmental document is required.
Authorization for Reciprocal Agreement with Franchise Tax Board for Current and Future Tax Years October 13, 2026
FISCAL IMPACT:There is no fiscal impact as a result of this action and no anticipated indirect or supportcost requirements. The FTB City Business Tax Data Program is a reciprocal datasharing program provided at no charge to either party.
Respectfully submitted,
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KARlf^ SCHNAIDER
Director of Finance
Prepared by:
^ Ariel Arzate
Municipal Sen/ices Manager
Approved by:
ThEWE.
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MATTHEW E. b<AWKESWORTH
Interim City ManagerAttachment: (1)Attachment A - Standard Agreement Scope of Work