Business License Overview
Agenda Item 12.C
By Jorge E. Garcia, City Manager
Nadia Feeser, Administrative Services Director
Meeting Date: September 16, 2025
Topics
History of Business Licenses
Purpose of Business Licenses
Why Gross Receipts for Commercial Rentals?
Business License Enforcement
Business Licenses Enforcement in Other Cities
Adjustments to Business License Ordinance
Communication between Commercial Property Owners and the City Conclusion
Questions
History of Business Licenses
First ordinance adopted
May 20, 1946
(Ordinance O-001).
Amended over decades
to include more business
types and fees.
Major update in 1987
(Ordinance O-1987-10)
creating gross receipts–
based structure.
Only minor updates
since; Pismo Beach rates
remain among the
lowest in San Luis
Obispo County.
Flat rates apply to
specific business types;
residential rentals use
per-unit rates; all others
default to gross receipts.
Purposes of Business Licenses
•Regulatory oversight: compliance with zoning, building, fire, health, and safety codes. •Public safety: provides accurate business data for emergency response. •Consumer protection: ensures accountability and standards. •Equity: all businesses, including rentals, contribute fairly to City services. •Community engagement: updated contact information for outreach. •Revenues support General Fund: police, fire, streets, sidewalks, facilities, and restrooms.
Why Gross Receipts for Commercial Rentals?
Ensures equity: larger
businesses pay more,
smaller businesses pay
less.
Flat fees can be unfair:
small and large landlords
pay the same.
Gross receipts prevent
small businesses from
subsidizing larger
operators.
Reflects scale of business
activity and reliance on
City services
Business License Enforcement
HdL contracted to administer licenses and audit compliance.
Agreement authorized by City Manager and Administrative Services Director.
HdL began audit in February 2025.
Identified underreporting of commercial rentals, a common issue in many cities.
Notices sent using County property tax records, tenant data, and online research.
Currently 14 commercial property owners registered; estimate of 80 unlicensed.
Confidentiality of Business License Data
All gross receipts data is
treated as confidential
taxpayer information.
Not shared publicly.
HdL provides direct
contacts for assistance.
Businesses encouraged
to work directly with
staff for clarification.
HdL Communication
Outreach letters to
hundreds of unlicensed
businesses.
Process began in 2025
with initial letter and
application, followed by
two reminders.
Letters requested
application, valid license,
or exemption
explanation.
Applications include
reporting of 3 years of
gross receipts.
Routine practice, but
vendor communication
adjusted to meet
community standards.
Business License Enforcement in Other Cities
•Most cities in SLO County use gross receipts or hybrid models.
•HdL reports 170 of 175 client cities tax commercial
rentals.
•Common statewide practice to require licensing of
commercial landlords.
•Pismo Beach’s rates remain modest due to unchanged
1987 structure.
Business License Fees in SLO County
Jurisdiction Amount Structure Description
Pismo Beach Gross receipts–based; tiered by gross receipts amount San Luis Obispo (City)Gross receipts-based; 0.05% of gross receipts, with a $25 minimum
Arroyo Grande $30 flat fee
Grover Beach Based on square footage of their property $60.00- $950.00 plus other fees that may be owed with the tax
Paso Robles Gross receipts–based
Atascadero Flat $50 plus $10 each per full-time employee and $5 each per part-time employee
Morro Bay Gross receipts-based
Santa Barbara Gross receipts-based; tiered by gross receipts amount ($1.00 per thousand dollars of gross receipts)
Current Pismo Beach Rate
Amount of Business Gross Receipts
(exclusive of liquor sales)Annual Amount Comments
New applications $45.00 plus:
SB 1186 Fee $4.00 plus:
00,000–25,000 $ 20
25,001–50,000 30
50,001–75,000 40
75,001–100,000 50
100,001–125,000 60
125,001–150,000 65
150,001–175,000 70
175,001–200,000 75
200,001–225,000 80
225,001–250,000 85
250,001–275,000 90
275,001–300,000 95
$ 300,001–750,000 $ 95 plus $10 for each additional $50,000 or portion thereof over $300,001.
$ 750,001 and up $ 230 plus $20 for each additional $50,000 or portion thereof over $750,001.
Current Pismo Beach Rate
Amount of Business Gross Receipts
(exclusive of liquor sales)Annual Amount
New applications $45.00 plus:
SB 1186 Fee $4.00 plus:
$350,001 $ 105
$500,001 135
$750,001 230
$1,000,001 330
$1,500,001 530
$2,000,001 730
$2,500,001 930
$5,000,001 1,930
Comparison of $1,000,001 Gross Receipts
Jurisdiction Amount for $1,000,001 Gross Receipts
Pismo Beach $330
San Luis Obispo (City)$500
Arroyo Grande $30
Grover Beach Based on square footage of their property $60.00 - $950.00 plus other fees that may be owed with the tax
Paso Robles $402 + additional fee if in Business Improvement Area Atascadero Flat $50 plus $10 each per full-time employee and $5 each per part-time employee
Santa Barbara $1,000
Adjustments to Business License Ordinance
•Administrative changes do not require voter approval.
•Substantive changes (e.g., new taxes or restructuring
rates) require voter approval under Prop 218/26.
Communication with Commercial Property Owners
•Multiple owners raised concerns by group email.
•Council cannot engage via email due to Brown Act.
•Staff provided responses and clarifications.
•City concessions:
1.Paused enforcement for commercial property rentals.
2.One license allowed for multiple properties/units.
3.Waiver of retroactive penalties/interest if licensed by Oct 1, 2025.
4.Extended compliance deadline to Oct 1, 2025.
Conclusion and Recommendation
•City’s audit and enforcement are consistent with
statewide best practices.
•Gross receipts taxation is the standard across California. •Ensures fairness, consistency, and proper alignment of contributions with City services.
•Staff recommends Council accept the presentation on the City’s business license ordinance and practices.