DISCUSSION
City of San Bernardino
Request for Council Action
Date: October 7, 2026
To: Honorable Mayor and City Council Members
From: Zuyva Ruiz, Deputy Director of Finance & Management Services Department: Finance & Management Services Department
Subject: Potential Revenue Generating Initiatives - Industrial and Logistics Revenue and Economic Opportunity Feasibility
Study - Direction to Proceed (All Wards)
Recommendation:
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Discuss and provide direction regarding whether the City should proceed with an independent fiscal, economic, and revenue feasibility study concerning warehouse, logistics, industrial storage, truck parking, and related commercial and industrial activities;
2. Direct the Finance & Management Services Department to release a formal competitive Request for Proposals (RFP) for an Industrial and Logistics Revenue and Economic Opportunity Feasibility Study;
3. Direct the City Attorney’s Office to complete a parallel review of the City’s existing taxing, regulatory, permitting, development, and cost-recovery authority, including whether potential revenue mechanisms would constitute a tax, regulatory fee, development-related charge, or other charge, and whether voter approval or other governmental authorizations would be required;
4. Direct the Finance & Management Services Department, in coordination with appropriate City departments, to begin an internal reconciliation of the City’s existing warehouse, logistics, storage, truck parking, industrial-property, business-registration, permitting, and revenue information; and
5. Direct staff to return to the Mayor and City Council with the recommended consultant, final scope of work, contract amount, and identified funding source, or necessary budget amendment, before the full study begins.
City Manager's Comments
The City Council is seeking to diversify the City’s revenue base. The proposed study would evaluate several options in diversifying the City’s revenue base. The areas outlined came from evaluating other cities in the region. The City Manager requests City Council consideration in developing an RFP as outlined in the report.
Executive Summary
The City of San Bernardino has a substantial concentration of warehouse, logistics, industrial, storage, distribution, and related commercial activity. These activities generate business activity and employment, while also creating demands for transportation infrastructure, permitting, inspection, code enforcement, public services, and other municipal functions. The City therefore has an opportunity to evaluate its overall fiscal position with respect to this sector rather than examining a single potential warehouse tax in isolation. A 2022 regional warehouse inventory (Attachment 3) identified 76 large warehouse sites within the City totaling approximately 27.5 million square feet. That figure provides a useful starting point for a preliminary screening but is not a current City inventory and should not be treated as the City’s current taxable or chargeable base. Using the 27.5 million square feet solely as an initial screening base, staff modeled preliminary warehouse scenarios at different hypothetical and qualifying shares. The resulting gross annual figures range from approximately $267,000 to $2.4 million, with a middle screening case of approximately $1.4 million.
These figures are not revenue forecasts. The proposed study would establish a current factual baseline and answer four principal questions: 1) What revenue is the City already authorized to collect, and is it being fully captured?; 2) Do existing business-tax classification adequately reflect today’s warehouse, logistics, storage, and related activities?; 3) What additional taxes, fees, charges, cost-recovery mechanisms, or other revenue opportunities may be legally and economically feasible?; 4) What are the net fiscal, economic, administrative, and implementation consequences of each material opportunity? The study would focus primarily on existing revenue, revenue leakage, business-tax modernization, potential new revenue mechanisms, cost recovery, and the fiscal implication of current and reasonably foreseeable industrial and logistics activity. Limited analysis of future development and City-owned property may also be included where those opportunities have a direct and material relationship to the study’s core purpose. The final product would include a Revenue Opportunity Matrix comparing material opportunities based on estimated gross and net revenue, recurring versus one-time revenue, implementation costs, legal pathway, implementation timing, economic considerations, and confidence in the estimate. No new revenue is assumed in the City’s budget as a result of this action.
Background
The concept of evaluating additional revenue associated with warehouse and logistics activity was raised during the City’s spring 2026 budget discussions. Finance subsequently received comparative information regarding warehouse activity and the City’s existing business-tax and business-registration structures. The preliminary information estimated approximately 15 to 20 million square feet of warehouse space in San Bernardino. Finance does not recommend using that estimate for City planning purposes.
A separate 2022 regional warehouse inventory (Attachment 3) identified 76 large warehouse sites within San Bernardino totaling 27.5 million square feet. While that provides a stronger independent starting point, it has limitations. The information predates development occurring after 2022, may not capture every smaller warehouse or logistics properties, and does not distinguish between gross building area and the space that could legally and practically be included within any future tax base or fee structure.
The City therefore still needs an updated and reconciled inventory. San Bernardino already regulates and taxes businesses through Chapter 5.04 of the Municipal Code.
Section 5.04.525 addresses, among other classifications, wholesale businesses, manufacturers and wholesalers, and persons leasing commercial and industrial property, expressly including freight-forwarding storehouses and warehouses.
Business registration charges applicable to these businesses are established under the City’s existing structure. Sections 5.04.055 and 5.04.070 also provide the City with reporting and examination authority where registration charges depend upon gross receipts or other reported measures The feasibility analysis should not begin with the assumption that a new tax is necessary. The first question should instead be whether the City is fully capturing revenue that is already authorized under existing law.
Discussion
The proposed study intends to establish a factual basis for future Council decisions concerning the City’s industrial and logistics revenue base. The study should determine:
1. Whether existing revenue authorized under current law is being fully captured by the City;
2. Whether existing business-tax classifications appropriately capture modern industrial and logistics activities;
3. Whether material revenue leakage exists;
4. Whether legally permissible new or modified revenue mechanisms could generate meaningful net new revenue;
5. Whether identifiable municipal costs associated with these activities can appropriately be recovered; and
6. What fiscal, economic, administrative, legal, and implementation consequences would result from each material option.
The consultant should provide independent fiscal and economic analysis and should not advocate for a predetermined revenue mechanism.
Existing Revenue and Revenue Leakage
Before considering a new tax or fee, the City should clearly establish its existing revenue baseline to then appropriately be able to model scenarios. The proposed study will reconcile available property, business registration, permitting, land use, and revenue information to identify businesses and facilities associated with warehouse, logistics, storage, truck parking, and related industrial activity. The analysis should determine whether:
• Businesses subject to existing requirements are properly registered; • Businesses are correctly classified;
• Applicable tax bases are being accurately reported;
• Changes in ownership, operators, or use are reflected in City records; and • Material gaps exist between revenue potentially authorized under existing law and revenue currently collected.
Any revenue that can reasonably be recovered under existing law should be reported separately from revenue that would require a new tax, fee, charge, or other governmental action. This distinction is essential throughout the study. The consultant will begin with the inventory and reconciliation prepared by City staff and will validate and complete it.
Warehouse, Logistics, Storage, and Truck Parking Revenue The consultant should evaluate the main revenue opportunities associated with warehouse, logistics, storage, and truck parking activities. The study should not assume that all activities are treated identically as different operating models may warrant different revenue bases or structures. Potential approaches may include modernization of existing business tax classifications, square footage measures, gross-receipts measures, tiered structures, per-space measure, or other legally permissible approaches. For each material alternative, the consultant should identify:
• The applicable activity or taxpayer;
• The potential revenue base;
• Estimated gross revenue;
• Existing revenue affected or replaced;
• Estimated net new revenue;
• Administrative and compliance costs;
• Economic implications;
• Implementation requirements; and
• Applicable legal or approval considerations.
The purpose is to determine which opportunities, if there are any, are financially meaningful and practically feasible within the City, rather than to establish a particular tax or fee in advance.
Staff prepared a model to test the potential scale of a warehouse-related revenue opportunity. This model tested the estimated gross annual revenue related to a per square-foot tax rate for warehousing. The preliminary screening model produced estimated revenue ranges from $267,000 to $2.4 million gross annually. The detailed explanation of the model is outlined in Attachment 2.
Cost Recovery and Development-Related Revenue
The study should evaluate whether the City is appropriately recovering allowable costs associated with industrial and logistics activity. This may include permitting, plan review, inspection, business registration, code enforcement, transportation-related services, infrastructure, stormwater, and other identifiable governmental functions.
The consultant should distinguish cost recovery mechanisms from taxes and other revenue measures and should base any fee analysis on documented municipal costs.
The study could also evaluate development related revenue associated with industrial, warehouse, logistics, storage, and truck-parking development, including applicable development, permitting, infrastructure, and transportation-related charges. Future development revenue should be presented separately from existing recurring revenue and should not be treated as current-year revenue. The cost-recovery analysis will be a screening-level review of existing fees against available City cost information. It will identify where a separate cost of service or fee nexus study may be warranted but will not include such a study.
Economic and Administrative Feasibility
Another core focus of this study should be the concept that fiscal opportunity must be considered together with economic and administrative feasibility. The consultant should evaluate the likely effects of material revenue options on business costs, investment within the City, development within the City, leasing, employment, industrial competitiveness, land values, and truck parking availability. The analysis should also consider comparable jurisdictions and the relative magnitude of potential City revenue mechanisms. Administrative feasibility should include the cost and requirements associated with registration, reporting, data maintenance, verification, collection, auditing, appeals, enforcement, staffing, technology, and ongoing administration. The purpose of this is to identify the net fiscal opportunity, rather than simply focusing on the gross revenue it produces.
Future Development and Public-Property Opportunities
The study should separately consider likely future industrial and logistics development, to a reasonable degree, where it could materially affect the City’s fiscal position. The consultant should distinguish existing operating facilities from approved, entitled, permitted, under construction and foreseeable future projects. A limited screening of City-owned properties may also identify whether existing public assets could support compatible revenue generating uses such as truck parking, storage, or other industrial related activities. These tasks are intended to identify opportunities directly relevant to the study and are not intended to become a separate comprehensive economicdevelopment, asset management, or land-development study. Those studies could be developed separately by the appropriate departments, in coordination with the City Manager’s Office.
Revenue Opportunity Matrix
The principal Council-facing deliverable should be a Revenue Opportunity Matrix. The matrix should allow the Mayor and City Council to compare material opportunities on a consistent basis, including Opportunity, Gross Revenue, Net New Revenue, Recurring (Yes or No), Cost, Legal Path, Implementation, Economic Considerations, and Confidence. The matrix should distinguish between existing revenue recovery, net new recurring revenue, one-time revenue, cost avoidance or recovery, and future revenue. It should also identify the level of confidence in each estimate so that preliminary or assumption-dependent opportunities are not presented as established revenue.
Legal Review
The City Attorney’s Office should conduct a parallel legal review. The legal review should determine the City’s authority under existing law and identify the applicable legal classification and approval requirements for material revenue mechanisms. This should include consideration of whether an option presented by the consultant constitutes a tax, regulatory fee, development-related charge, or another form of governmental charge and whether Municipal Code amendments, resolutions, fee schedules, voter approval, or other governmental authorization may be required. The consultant will provide fiscal and economic analysis but will not provide the City’s legal determination, that guidance strictly lies with the City Attorney’s Office.
Proposed Consultant Scope
The detailed consultant scope will be included in Attachment 1- Request for Proposals - Industrial and Logistics Revenue and Economic Opportunity Feasibility Study. At a minimum, the consultant’s work should include:
1. Current property and business inventory;
2. Existing revenue and compliance analysis;
3. Revenue leakage analysis;
4. Warehouse, logistics, storage, and truck-parking revenue analysis;
5. Cost-recovery and development-related revenue analysis;
6. Economic and administrative feasibility analysis;
7. Future revenue analysis;
8. Limited public-property opportunity screening;
9. Implementation analysis; and
10.Final Revenue Opportunity Matrix and Council presentation.
The RFP should require the consultant to identify assumptions, data sources, methodology, confidence levels, and limitations for all material revenue estimates. To remain within the planning budget, the RFP structures the work in two phases. The first phase establishes the baseline and screens potential opportunities. Staff will then select a limited number of material opportunities for detailed modeling and economic and administrative analysis.
Procurement Guideline
SBMC Chapter 3.04 requires formal competitive bidding or competitive selection for purchases above $40,000. At the proposed $100,000 planning level, the ultimate professional services agreement (PSA) would fall within the City Manager’s approval.
Staff nevertheless recommends returning the proposed selection to the Mayor and City Council to provide transparency concerning the scope, cost, and purpose of the work, as well as a budget appropriation tied to the contract amount. Polling, campaign strategy, public advocacy, and election consulting should not be included in this study.
Work Plan and Schedule
The proposed schedule assumes Council direction on October 7, 2026. Procurement dates may be adjusted in consultation with Purchasing and the City Clerk without changing the overall objective of returning with the completed analysis in spring 2027.
Target Date Action
October 7, 2026 Mayor and City Council discussion and direction on whether to proceed October 8 – November
1, 2026
Finance begins reconciliation of business-registration accounts and current revenue; Planning/GIS begins warehouse-property reconciliation; City Attorney begins review of existing tax authority and election requirements
October 12, 2026 Target release of formal competitive RFP November 9, 2026 Target proposal deadline
November 10-17, 2026 Proposal evaluation, reference review and clarification November 18-20, 2026 Consultant interviews and scope/price clarification, if necessary December 2026 Return to Mayor and City Council with recommended consultant, final scope, contract amount and funding source
Late December
2026/January 2027
Consultant kickoff
January-April 2027 Data reconciliation, revenue modeling, economic analysis and implementation work
April 2027 Draft consultant report, staff factual review and City Attorney legal analysis May 2027 Return to Mayor and City Council with final study, legal framework and staff recommendation
Remainder of 2027 Additional policy, administrative and stakeholder work only if directed by Council
2028 If subsequently directed, prepare any proposed tax ordinance, updated revenue analysis, voter research if authorized, election documents and implementation plan
November 28 Current ordinary planning horizon for a potential Council-sponsored general tax measure requiring voter approval
Any subsequent policy, ordinance, fee, tax, ballot, or implementation action would require separate Council considerations and applicable legal and governmental approvals. No new tax, fee, charge, ballot measure, or other revenue mechanism is proposed or authorized by this action.
Strategic Goals and Priorities
This item is aligned with Strategic Goal #1: Fiscal Sustainability as it evaluates potential revenue opportunities within the City.
Fiscal Impact
There is no immediate fiscal impact associated with this action. If the Mayor and City Council direct staff to proceed, staff will return to the Mayor and City Council to present the selection and request the necessary budget amendment within the General Fund prior to any work beginning.
Conclusion
It is recommended that the Mayor and City Council of the City of San Bernardino, California:
1. Discuss and provide direction regarding whether the City should proceed with an independent fiscal, economic, and revenue feasibility study concerning warehouse, logistics, industrial storage, truck parking, and related commercial and industrial activities;
2. Direct the Finance & Management Services Department to release a formal competitive Request for Proposals (RFP) for an Industrial and Logistics Revenue and Economic Opportunity Feasibility Study;
3. Direct the City Attorney’s Office to complete a parallel review of the City’s existing taxing, regulatory, permitting, development, and cost-recovery authority, including whether potential revenue mechanisms would constitute a tax, regulatory fee, development-related charge, or other charge, and whether voter approval or other governmental authorizations would be required;
4. Direct the Finance & Management Services Department, in coordination with appropriate City departments, to begin an internal reconciliation of the City’s existing warehouse, logistics, storage, truck parking, industrial-property, business-registration, permitting, and revenue information; and
5. Direct staff to return to the Mayor and City Council with the recommended consultant, final scope of work, contract amount, and identified funding source, or necessary budget amendment, before the full study begins.
Attachments
1. Attachment 1: Request for Proposals - Industrial and Logistics Revenue and Economic Opportunity Feasibility Study
2. Attachment 2: Preliminary Warehouse Screening Model
3. Attachment 3: 2022 Regional Warehouse Inventory
Ward:
All Wards
Synopsis of Previous Council Actions:
N/A
CC
Eric Levitt, City Manager