Exploring a Potential Nov. 2026
Revenue Measure
City Council Special Meeting| June 8, 2026
Business License Tax Modernization
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Agenda
Agenda
• Summary of prior actions
• Summary of outreach
• Fiscal context
• Regional context
• Overview of current model
• Overview of evaluated model
• Concerns & Observations
• Possible changes & other considerations
• Direction needed
Previous Council Direction
February 1
2025
Special Meeting &
Annual Council
Planning Session
Council directed staff to
explore Nov 2026 ballot
measure
June
2025
Staff proposed $500K GF
allocation to support
further exploration
Council omitted funds from
budget & directed staff to
return upon availability of
year-end fund balance
estimates
December 15
2025
Council directed staff to
explore potential Nov.
2026 ballot measure,
including a feasibility
survey.
April 6
2026
Current Rental Registry
Deadline
July 31, 2026
February 17
2026 Council received polling
results, authorized
consulting services,
directed staff to
conduct outreach
regarding Business
License Tax
Modernization
3 Council received yearend fund balance report
and considered survey
work.
Motion to proceed did not
pass
December 1
2025
Council directed staff to
work with consultant to
conduct a poll for
Business License Tax
Modernization, Parcel
Tax, and Vacancy Tax
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SUMMARY OF OUTREACH
4/7 - 4/30: Staff commenced identifying and engaging relevant financial consultants and developing draft outreach materials
4/16: Follow-up dialogue with Chamber of Commerce commences 5/11: Staff presented project overview to Chamber of Commerce Executive Board and addressed questions • 5/20: Responded to Chamber follow-up questions via email 5/19: Online survey portal launched: www.sanleandro.org/welisten 5/19: Dedicated phone number posted for calls or texts
5/19: Mailer and survey sent to 20,000+ residents
5/20 - 6/10: Social media posts, videos + online ads posted using all City channels 5/28: Informational webpage launched: www.sanleandro.org/2026biztax 5/29-6/2: Outreach to Businesses + Public
• Press release issued
• Notice emailed to S.L. Business License database (7,200+ businesses) + housing providers • Email notification to business associations
• Methods of public feedback highlighted:
• Online survey
• eComments
• Email
• Dedicated text + call line
5 Why We’re Here: Fiscal Context
Why We’re Here: Fiscal Context
• Funding challenges:
• Capital Projects
• Infrastructure Needs
• Public Safety
• Finite revenues:
• General Fund (taxes, fees, grants)
• Reserves
• Unfunded Legacy Liabilities including:
• Pension and Other Post Employment Benefits (OPEB)
• Cost savings alone may balance the City budget, but will not address all fiscal challenges and the significant areas of need (~$300M+)
• Continued fiscal stability requires balanced approach:
• Expenditure reductions/controls + enhanced and new revenues 6 Why We’re here: Regional context
WHY WE’RE HERE: REGIONAL CONTEXT
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City Tax Basis Gross Receipts Model? Notes
1 Alameda Gross Receipts Yes Gross receipts-based tax structure for most businesses. 2 Albany Employee-based No Primarily employee-based tax structure. 3 Berkeley Gross Receipts Yes Gross receipts-based tax structure for most businesses. 4 Dublin Flat Regulatory Fee No Primarily category-based business license tax. 5 Emeryville Gross Receipts Yes Gross receipts-based tax structure for most businesses. 6 Fremont Gross Receipts Yes Gross receipts-based tax structure for most businesses. 7 Hayward Mixed Partial Tax varies by business type/employees and gross receipts. 8 Livermore Mixed Partial Combination of gross receipts and gross expenses-based calculations. 9 Newark Gross Receipts Yes Gross receipts-based tax structure for most businesses. 10 Oakland Gross Receipts Yes Gross receipts-based tax structure for most businesses. 11 Piedmont Gross Receipts Yes Gross receipts-based tax structure for most businesses. 12 Pleasanton Gross Receipts Yes Gross receipts-based tax structure for most businesses. 13 San Leandro (current) Mixed Partial Base fee + unit fee; gross receipts tax for cannabis and parking lot businesses 14 Union City Gross Receipts Yes Gross receipts-based tax structure for most businesses. 7 Steps Already Taken
Steps Already Taken
FY 2027 Mid-Cycle Budget Process:
• City closed the $11.6 million structural deficit through ongoing budget reductions and minor revenue enhancements across upcoming three fiscal years (FY 2027-2029)
• FY 2027 Amended Budget (adopted 5/4/26):
✓$0.6 million in revenue
✓$6.4 million in operating expenditure + interfund transfer reductions FY 2028 & FY 2029 (Upcoming Biennial Budget Process):
• The FY 2027 mid-cycle budget process included proposed changes in FY 2028 and FY 2029 for consideration during the upcoming biennial budget process
• FY 2028 & FY 2029
✓$0.1 million in revenue
✓$4.5 million in operating expenditure + interfund transfer reductions Current Business License Model
8 • 30 classifications
• Annual tax =
Base fee + unit fee (typically per # of employees or
square footage)
• Available online:
https://www.sanleandro.org/340/Business-License
Current Business License Model (cont’d)
9 *Based on licenses with an expiry date between 7/1/2025-6/30/2026 1 Categories
2 Business
Count
3 FY2026 Charged*
1 Contractor 2,317 $1,114,000
2 General/Retail 1,178 $745,000
3 Industrial 378 $720,000
4 Professional 856 $821,000
5 Property Rental 2,761 $1,128,000
6 Service 1,309 $1,878,000
7 Warehouse 58 $239,000
8 Mobile Home Park 5 $12,000
9 Exempt 134 $0.00
10 GRAND TOTAL 8,996 $6,657,000
This chart summarizes the current business license
environment in San Leandro, including:
• Categorized types of businesses
• Number of licensed businesses per category
• Total revenue derived by each category
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Business License Tax Modernization
BUSINESS LICENSE TAX MODERNIZATION
Preliminary analysis of potential tax modernization assumes:
• Initial model utilized Union City, CA business license tax modernization; authorized at the Nov. 2024 election
• Consolidate and simplify business categories
(from approx. 30 categories to 9 categories)
• First $25,000 of gross revenue exempted
• New funds could be directed by the City Council towards:
• Road Construction and Repair
• Public Safety
• Emergency Preparedness
• Recreation & Parks
• Addressing Homelessness
• Other citywide needs
What it would look like:
Union City Gross Receipts Model in San Leandro
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Categories
2 Business
Count
3 Minimums
4 Rates per
Thousand*
5 Actual Rates*
6 Estimated Gross
Receipts
7 Est. Annual Revenue
1 Contractor 2,317 $150.00 $2.00 0.002 $1,335,000,000 $2,614,000 2 General/Retail 1,178 $132.00 $0.43 0.00043 $2,033,000,000 $917,000 3 Industrial 378 $132.00 $0.45 0.00045 $2,021,000,000 $910,000 4 Professional 856 $264.00 $2.50 0.0025 $972,000,000 $2,457,000 5 Property Rental 2,761 $154.00 $2.25 0.00225 $242,000,000 $567,000 6 Service 1,309 $264.00 $2.00 0.002 $646,000,000 $1,408,000 7 Warehouse 58 $132.00 $1.00 0.001 $91,000,000 $91,000
8 Mobile Home Park 5 $581.00 $45 per space $45 per space $1,000,0000 $33,000 9 Exempt 134 $0.00 $0.00 0 $0 $0
10 GRAND TOTAL 8,996 $7,341,000,000 $8,997,000
*Model is based on the recently adopted rates by Union City which exempts the first $25,000 in gross receipts. *Revenue projections updated since 2/17/2026 Council meeting based on revised estimates provided by tax consultant Drilling down further:
Union City Gross Receipts Model in San Leandro*
* Numbers are rounded estimates only for illustrative purposes 12 1
Retail
2 Industrial
3 Service
A
Goods
B
Car Dealer
C
Restaurant
A
Manufacturing
B
Wholesale
C
Warehouse
A
Professional
B
Nonprofessional
C
Contractor
1 Gross Receipts $60 M $65 M $1 M $400 M $100 M $5 M $50 M $250 K $25 M 2 Employees 225 70 12 350 200 150 250 8 150
3 Current Rate $13,000 $4,000 $800 $20,000 $32,000 $25,000 $31,000 $1,000 $16,000 4 New Rate $27,000 $27,000 $320 $172,000 $45,000 $5,000 $125,000 $450 $50,000 5 Difference $14,000 $23,000 -$480 $152,000 $13,000 -$20,000 $94,000 -$550 $34,000 6 Percentage 108% 575% -60% 760% 41% -80% 303% -55% 213%
CONCERNS & OBSERVATIONS
• San Leandro has a many notable large businesses that could see significant increases in rates:
• 30+ businesses with over 150 employees
• 20+ businesses with over $50 million in annual revenue • Current rates for large businesses range between $8,000 - $200,000 • Potential new rates for large businesses range between $10,000 - $248,000 • Current lowest and highest rates for any business type: $171 - $200,640 • Estimated new lowest and highest rates for any business type: $132 - $270,000 • Some percentage increases of 200% - 700%
• Total revenue derived under Union City model exceeds earlier forecasts • Smaller businesses are anticipated to see a lesser impact • Some business types would see an annual decrease
13 POSSIBLE MITIGATIONS
• Potential Options to Mitigate Impacts
• Refine rates for highly impacted businesses categories • Phase-in of changes or max. increase/year
• Examples:
• Phase in implementation over 2 to 4 years
• Explore maximum level of gross receipts subject to taxation • Explore modified exemption thresholds
• Exemptions or reduced rates for key categories or business types prioritized in the City’s adopted Economic Development Strategy:
• Manufacturing
• Research & development
• Large sales tax generators
• High-paying large employers
• Housing providers
14 POLICY CONSIDERATIONS
Gross receipts models seek to right-size taxes to address use of city resources • Professional and other services don’t generate sales tax • Business operations can impact city infrastructure including:
•Pavement condition
•Parking
•Run-off
Tax changes should balance potential impacts to businesses • Retention
• Growth
• Hiring
• Expansion
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Council Direction Needed
COUNCIL DIRECTION NEEDED
• Provide direction on modifications to the model to better incentivize business retention, growth, hiring and expansion
• If so directed, staff will bring forward a draft ordinance in July for placement on the November 3, 2026 ballot