7/12/2022 item 3
City of Santa Clara
Discussion and Adoption of a
Resolution Calling for a Municipal
General Election and Ordering
CITY OF Consolidation with the
Gubernatorial General Election for
the Purpose of Submitting to the
1852 Voters a Business License Tax (BLT)
Modernization Measure;
THE MISSION CITY (Continued from July 5, 2022)
July 12, 2022
Background
• • Staff presented draft resolution on July 5
• Council continued discussion on the Business License Tax (BLT) Modernization Measure to July 12, 2022 and asked staff to facilitate an ad hoc working group comprised of Councilmembers Chahal, Hardy and Park to further engage with the Chamber and any other stakeholders, regarding comments received on the proposed measure at the July 5, 2022 meeting
• Meetings with stakeholders held on July 6, July 8 and July 11 • Working Group met on July 8, reviewed data 7/8 through 7/10; met on July 11 and 12
City of
Santa Clara
2 POST MEETING MATERIAL
1 Business Tax:
Original Proposal - Projected Revenue $9.8M*
Schedule for Businesses on Per Employee Count Basis, effective January 1, 2024 Employee Employee # of Estimated Average
Range Business Tax Rate Range Businesses Revenue per Business 1-4 $75 plus $15 per employee 1-4 3,838 $ 366,315 $ 95
5-9 842 173,820 206
5-9 $135 plus $30 per employee over 4
10-19 559 268,620 481
10-19 $285 plus $45 per employee over 9
20-49 445 607,635 1,365
20-49 $735 plus $60 per employee over 19
50-99 151 591,135 3,915
50-99 $2,535 plus $75 per employee over 49
100-249 87 977,715 11,238
100-249 $6,285 plus $90 per employee over 99
250-499 34 1,053,945 30,998
250-499 $19,785 plus $105 per employee over 249 500-999 32 2,211,720 69,116
500-999 $46,035 plus $120 per employee over 499 1000+ 15 3,218,490 214,566 1000+ $106,035 plus $135 per employee over 999 6,003 $ 9,469,395 *Total revenue includes approximately $365,760 from rental units based on $75 base and $15 per unit tax City of
Santa Clara
3 Business Tax Original Proposal:
Ballot Language
CITY OF SANTA CLARA BUSINESS LICENSE UPDATE / TAX
EQUITY MEASURE To protect Santa Clara's financial stability and maintain essential services such as 911 emergency/public safety/crime reduction services, safe/clean public areas, pothole repair, parks and libraries, shall an ordinance to update Santa Clara's 1992 business license tax to $75, increasing
incrementally between $15 to $135 per employee or rental unit, with larger businesses paying more, generating approximately $9,000,000 annually until ended by voters with independent financial audits, all funds staying local, be adopted?
City of
Santa Clara
The Center of What's Possible
4 2
Business Tax Alternative #1:
Flat Tax
• Projected Revenue: Approximately $6 million (includes rental); Effective July 1, 2023, Rolling Implementation
• Flat tax of $45 per employee or $15 per rental unit
• Business with gross receipts < $5,000 exempt
• Cap of $350,000
Employee Subsidy per
• CPI, with cap of 5% Range Business
0-4 $ 30
• Subsidies for companies 5-9 75
10-19 100
20-49 200
City of
Santa Clara
5 Business Tax Alternative #1:
Flat Tax
Schedule for Businesses on Per Employee Count Basis
Number of Number of Revenue *
Employees Businesses Subject (Includes
Employee Range Business Tax Rate Subject to Tax to Cap Rental) All employees
including owner $45 per employee 127,619 1 $6.0m
*Total revenue includes approximately $300,000 from rental units based on $15 per unit tax City of
Santa Clara
6 Business Tax Alternative #1:
Flat Tax Ballot Language
CITY OF SANTA CLARA BUSINESS LICENSE UPDATE / TAX
EQUITY MEASURE To protect Santa Clara's financial stability and maintain essential services including 911 emergency/public safety/crime reduction services, safe/clean public areas, pothole repair, parks and libraries, shall an ordinance to update Santa Clara's 1992 business license tax on businesses to $45 per employee and on landlords to $15 per rental unit, generating approximately $6,000,000 annually, until ended by voters, with independent financial audits, all funds staying local, be adopted? City of
Santa Clara
Business Tax Alternative #2:
Flat Tax Hybrid $45 / $60 per employee
• Projected Revenue: Approximately $6.5 million; Effective July 1, 2023, Rolling Implementation
• Flat tax of $45 per employee up to 499 employees; $60 per employee for 500+ employees
• $15 per rental unit
• Business with gross receipts < $5,000 exempt
• Cap of $350,000,
Employee Subsidy per
Range Business
• CPI, with cap of 5%
0-4 $ 30
5-9 75
• Subsidies for companies
10_19 100
20-49 200
City of
Santa Clara
8 4
Business Tax Alternative #2:
Flat Tax Hybrid $45 / $60 per employee
Schedule for Businesses on Per Employee Count Basis
Number of
Businesses Estimated
Employee Range Business Tax Rate Subject to Cap Revenue 1-499 $45 per employee $ 3,065,715
$22,455 plus $60
500+ 2 3,105,340
per employee over
$6,171,055
*Total revenue of $6.5 million includes approximately $300,000 from rental units based on $15 per unit tax City of
Santa Clara
9 Business Tax Alternative #2:
Flat Tax Hybrid $45 / $60 per employee
To protect Santa Clara's financial stability and maintain essential services including 911 emergency/public safety/crime reduction services, safe/clean public areas, pothole repair, parks and libraries, shall an ordinance to update Santa Clara's 1992 license tax on businesses to $45 per employee, increasing to $60, with larger businesses paying more, and on landlords to $15 per rental unit, generating approximately $6,500,000 annually, until ended by voters, with independent financial audits, all funds staying local, be adopted?
City of
Santa Clara
10 5
Business Tax: Benchmarking Alternatives
Single 50 100 250 1,000 2,500 5,000
City Employee Employees Employees Employees Employees Employees Employees Employees Mountain View $75 $95 $445 $4,195 $15,445 $84,195 $271,695 $584,195 San Jose $210 $313 $2,023 $4,304 $12,855 $61,343 $164,048 $171,301 Santa Clara - $6,375 $106,170 $308,670 $350,000
$90 $165 $2,610 $19,890
Original Proposal
Santa Clara - $45,000 $112,500 $225,000
$45 $225 $2,250 $4,500 $11,250
Flat Tax $45 / emp.
Santa Clara -
Flat Tax Hybrid $45 $225 $2,250 $4,500 $11,250 $52,515 $142,515 $292,515 $45 / $60 per
employee
Sunnyvale* $42 $72 $720 $1,439 $3,598 $13,671 $13,671 $13,671 * Last major update in 2005, on current workplan to update City of
Santa Clara 11
The Center of Whats Possible
11 Business Tax: Alternatives
Approx.
Position
Reduction Still
Range Cap Revenue
Alternatives Necessary to
Balance
Budget
Santa Clara - $15 $9.8 M*
$350,000 (72)
Current Proposal increments
Santa Clara - $6.0 M*
$45 $350,000 (97)
Flat Tax $45 per emp.
Santa Clara -
Flat Tax Hybrid $45 / 60 per $45 - $60 $350,000 $6.5 M* (94) emp.
* Includes rental unit tax revenue
City of
Santa Clara
The Center of What's Possible
12 6
Recommendations
1. Adopt a resolution ordering submission of a ballot measure to the qualified electors of the City; calling for a Special Municipal Election to be held in the City of Santa Clara on Tuesday, November 8, 2022, for the purpose of submitting to City voters a measure modernizing the City's Business License Tax; requesting consolidation with the Gubernatorial General Election and election services from Santa Clara County; directing the City Attorney to prepare an impartial analysis; setting priorities for ballot arguments; and approval of the draft amendment to the Santa Clara City Code to incorporate the proposed changes if the measure is approved by the voters.
City of
Santa Clara
13 13
Next Steps
November 2022 Election
November
Action Required Election Cycle
Council Adopts Resolution to Place Measure on Ballot and Call for Election July 12, 2022 Arguments due to City Clerk's Office July 26, 2022
Rebuttals due to City Clerk's Office August 5, 2022
City Attorney draft an Impartial Analysis August 5, 2022 Deadline to submit resolution to County Registrar of Voters by 5 p.m. August 12, 2022 Deadline to submit Arguments to County Registrar of Voters by 5 p.m. August 16, 2022 Deadline to submit Rebuttals & Impartial Analysis to ROV by 5 p.m. August 23, 2022 City of
Santa Clara
14 7
City of Santa Clara
SATA CLARA CANA Discussion and Adoption of a
Resolution Calling for a Municipal
General Election and Ordering
Consolidation with the
- Gubernatorial General Election for
the Purpose of Submitting to the
1852 Voters a Business License Tax (BLT)
Modernization Measure;
THE MISSION CIT (Continued from July 5, 2022)
adaaaaaad
July 12, 2022
15 7/12/2022 Item 3
Santa Clara Parks Impact Fees
June 20, 2014 Adopted June 24, 2014
Table A-Comparable Parkland Acquisition & Dedication Ordinances Municipal Code Titles (Date) Type
City Quimby-LoS MFA
Campbell Park Impact Fees and Land Dedication Subdivisions (1994) Yes -3.0 cupertino Parkland Dedication Ordinance (1986, 2011) Yes - 3.0 Yes Fremont Development Impact Fees (1990) Yes - 5.0 Yes
Gilroy Public Facilities Impact Fees (2004) Yes
Milpitas Dedication of and or Payment of Fee or Both, for Recreation Yes - 3.5 Purposes (1976, 1998, 2001
Morgan HIl Development Impact Mitigation Fees (1993, 2003, 2009) Yes Mtn. View Park Land Dedication or Fees In Lie Thereof (1997) N/A-3.0 Yes Palo Alto Parkland Dedication or Fees In Lieu Thereof (2006) Yes - 5.0 Parkland Dedication Ordinance (1988) Yes - 3.0
San Jose Park Impact Ordinance (1992) Yes
Sonta Clara Dwelling Unit Tox (1969) $15 1st bedroom+$5 add, max $50/unit No - 24 No Sunnyvale Park & Open Space Dedication (1986, 1999, 2009, 2011) Yes-4.25 Yes Total Fees Collected Comparisons
Table B-Comparable Cties Fees Collected FY 2012-13
Campbell $618,323
ad occupant density (average persons pe Cupertino $2,484,000 nit, and the Fair Market Value of land $2,671,792
Using such formulas, comparable cites are Morgan HIll 51,601,885 receiving from about $5,000 dollars per unit Mtn. View $13,268,690 in Morgan Hill, to almost $39,000 per unit in $1,284,000 North San Jose. In terms of total révenues $24,100,000
generated from development for parkland Santa Clara $895 quisition, the City of Santa Clara ranke Sunnyvale 53,30,249 owest in FY 2012-13 with less than $89
When accounting for inflation, a 3 bedroom single Family residence would pay $96.90 + 32.30 + 32.30 = $161.50
"The City of Santa Clara has accumulated less than $9,500 in total over the past five (5) fiscal years, and dedicated 1 acres of parkland.''
2 POST MEETING MATERIAL
1 Table C-Comparable Cities' Fees
(Fee/Dwelling Unit Type) (based on land values)
Secondary Residential
City/Area Single Family Multi Family Unit <700sqft
North San Jose $38,900 $34,800 $5,900
Santa Clara (Quimby Act Fee) $34,849 * $26,918 * $4,575* Santa Clara (Mitigation Fee Act) : $29,764 * $22,990 * $3,900* Mountain View $25,000 $25,000 n/a
Downtown San Jose $21,600 $19,300 $3,250
West San Jose $19,500: $17,400 $2,950
Campbell $17,105 $17,105 n/a
Cupertino $15,750 $9,100 n/a
Fremont $11,578 $9,500 $3,196
Palo Alto $10,639 $6,964 $3,521
South San Jose $8,700 $7,700 $1,300
Morgan Hill $4,987 $4,805 n/a
Sunnyvale $69/sf $69/sf $69/st
Comparable cities' fees are actuals adopted by resolution. *Santa Clara values are proposed based on the maximum amount justified in the New Housing Development Impact Nexus Study; see tables 9a and 9b. If the ordinance is approved, Council will adopt an annual fee resolution to set actual fees to be charged using Fair Market Value. See ordinance 17.35.040.
Single Family MFA: $29,764 / $161.50 = 184.3 = 18,430 % 3 Increase to Parks Impact Fees 5/25/2022
City of
Santa Clara
I Crucian Pose
Current & Proposed Fees
Proposed In-Lieu Fees FY20201/22
Quimby MFA
Housing
Area Type Current Proposed % Diff.
95050 $40,588 $51,567 27% $36,044 $45,828
SF
MULTI $32,688 $41,530 $29,028 $36,908
555,214 28.7% $38,059 $48,989 28.7%
95051 SF $42,913
MULTI $34,561 $44,468 $30,651 $39,454
$43,296 $52,570 21.4% $38,390 $46,697 21.6%
95054 SF
MULTI $34,869 $42,338 $30,918 $37,609
Current calculation uses 2017 land values & 50% park improvement value 10 Proposed calculation uses 2020 land value & 75% park improvement value.
Santa Clara's MA is 2.6 acres / 1000 residents and Sunnyale's is 5.0 acres 4 2
Itm 3
Carina Navarrete
Subject: FW: For Council Meeting 7/12/2022 PLEASE READ MY COMMENT OUTLOUD for Head Tax item #3
Importance: High
From: Linda Leca <[email protected]>
Sent: Monday, July 11, 2022 10:12 AM
To: Clerk <[email protected]>
Cc: Linda Leca < [email protected]>
Subject: For Council Meeting 7/12/2022 PLEASE READ MY COMMENT OUTLOUD for Head Tax item #3 Hello and good evening:
My name is Linda Leca, and I am the General Manager at Mariani's Restaurant and Inn.
I have been working at Mariani's Inn for the past 23 years. Many of you know me from working at Marian's and as a resident of Santa Clara for the past 11 years.
My husband's small business was recently one of the casualties of the pandemic and had to close. Not unlike many other businesses that have found themselves in similar situations due to our being isolated to our homes and not supporting local businesses as a result.
At Mariani's we are in a similar situation where the revenue stream had stopped, and we are now faced with an uncertain future which is still under discussions within the Mariani Family.
Other businesses are barely surviving due to the difficulties in getting staff help to run and support their businesses. Business owners are now having to depend on family members to work long hours due to the shortage of help available to support their businesses. Some are paying more for hourly workers in order to attract them to work for their store and in some cases wage bidding wars are taking place between competing businesses. The cost of their products are increasing as a result of this practice as well as being hit with inflation that continues to affect all our financial planning not only in all our personal lives, but our businesses as well.
I have heard many discussions of the head tax being added to all businesses in Santa Clara as proposed by City Staff. I also understand that the Business License tax had not been updated or at least stayed in step with inflation and now, due to the General Funds' shortfall, City Staff and Council are looking at ways to reduce the general fund's gap by taxing the local small, medium and larger size businesses.
In the end, it will be Santa Clarans that will suffer the consequences of the head tax with the already inflated costs that will be passed on to all of us. Then the cycle begins with businesses suffering due to losing their loyal customers who can't afford to eat, buy or use the services of those businesses in Santa Clara .........and will go to neighboring cities to enjoy a lower cost for any goods and services..... and the City losses by not enjoying the sales tax or the business-to-business tax that would have otherwise been generated in Santa Clara.
Please come to some compromise in meeting somewhere in the middle. Businesses understand the plight the City is in but don't put it back on the businesses as the answer to the City's bailout. Please reach a compromise.
Thank you
Linda Leca
2 Carina Navarrete
From: KJ KJ <[email protected]>
Sent: Tuesday, July 12, 2022 3:02 PM
To: Clerk
Cc: Admin, Ascend Technology
Subject: PLEASE READ MY COMMENT OUT LOUD AT 7/12 CITY COUNCIL MEETING FOR HEAD TAX AGENDA ITEM NO.3
Attachments: 7.12.22 City Council Statement Kawser Jamal .docx.pdf Dear Sir,
Here it is attached
Re: PLEASE READ MY COMMENT OUT LOUD AT 7/12 CITY COUNCIL MEETING FOR HEAD TAX AGENDA ITEM NO.3 If you need to reach me my contact is 501-786-2720
Kawser Jamal ( KJ)
KJ
Founder and CEO
Ascend Technology Inc.
Silicon Valley-San Jose | Dallas | Little Rock
USA- Canada-Singapore-Dubai-UAE- India-Bangladesh
Global Corporate Headquarters Office:
Ascend Technology Inc
1879 Lundy Avenue, Suite 289
San Jose, California 95131
Office: 1-888-782-2361 Ext 101
Cell: 1-501-786-2720
Fax: 1-888.782.2361
1 Email : [email protected]
Web: www.ascendglobaltech.com
This e-mail and any attachments may contain confidential information of Ascend Corporation. If you are not the intended recipient of this message, be aware that any disclosure, copying, distribution or use of this e-mail and any attachments is prohibited. If you have received this e-mail in error, please notify Ascend Corporation by returning it to the sender and delete all copies from your system. Thank you for City of Santa Clara
City Council Meeting
Tuesday, July 12, 2022
Hello and good evening Madam Mayor Lisa Gillmor, City Councilmembers and City Manager Batra:
My name is Kawser Jamal (KJ for short), and I am the CEO of Ascend Technologies where we have offices throughout the world and in Santa Clara.
I established Ascend Technologies over _19 _years ago, and I have been a resident of Santa Clara for the past _8 years and formed the Ascend Santa Clara office in 2015.
As a business owner, I would support a Business License tax increase since it hadn't been updated to coincide with inflation over the past 30 years.
With that said however, the City Council ......and sure you all have taken this under advisement with the situation as it exists for many businesses in Santa Clara that have been struggling to make ends meet due to the pandemic.
I have witnessed the impact firsthand on a local scale, but on a global scale as well. Other companies have not been as fortunate as Ascend Technologies who were not able to withstand the COVID impacts and had to take more drastic actions. Some closing their businesses while others significantly reduce their overhead by cutting staff and just getting by.
A compromise should be established on the Business License Tax so businesses can continue to enjoy the business-friendly environment in the City of Santa Clara and services it provides. Anything beyond a gradual increase would be unsustainable for some businesses and could change the whole completion of Santa Clara being a business-friendly City.
Thank you
Naval
Kawser Jamal(KJ
Ascend Technology Inc
5201 Great America Pkwy., Suite 320, Santa Clara, CA 95054
Carina Navarrete
Subject: FW: For Council Meeting 7/12/2022 PLEASE READ MY COMMENT OUTLOUD for Head Tax item #3
Importance: High
From: Linda Leca <[email protected]>
Sent: Monday, July 11, 2022 10:12 AM
To: Clerk <[email protected]>
Cc: Linda Leca <[email protected]>
Subject: For Council Meeting 7/12/2022 PLEASE READ MY COMMENT OUTLOUD for Head Tax item #3 Hello and good evening:
My name is Linda Leca, and l am the General Manager at Mariani's Restaurant and Inn.
I have been working at Mariani's Inn for the past 23 years. Many of you know me from working at Mariani's and as a resident of Santa Clara for the past 11 years.
My husband's small business was recently one of the casualties of the pandemic and had to close. Not unlike many other businesses that have found themselves in similar situations due to our being isolated to our homes and not supporting local businesses as a result.
At Mariani's we are in a similar situation where the revenue stream had stopped, and we are now faced with an uncertain future which is still under discussions within the Mariani Family.
Other businesses are barely surviving due to the difficulties in getting staff help to run and support their businesses. Business owners are now having to depend on family members to work long hours due to the shortage of help available to support their businesses. Some are paying more for hourly workers in order to attract them to work for their store and in some cases wage bidding wars are taking place between competing businesses. The cost of their products are increasing as a result of this practice as well as being hit with inflation that continues to affect all our financial planning not only in all our personal lives, but our businesses as well.
I have heard many discussions of the head tax being added to all businesses in Santa Clara as proposed by City Staff. I also understand that the Business License tax had not been updated or at least stayed in step with inflation and now, due to the General Funds' shortfall, City Staff and Council are looking at ways to reduce the general fund's gap by taxing the local small, medium and larger size businesses.
In the end, it will be Santa Clarans that will suffer the consequences of the head tax with the already inflated costs that will be passed on to all of us. Then the cycle begins with businesses suffering due to losing their loyal customers who can't afford to eat, buy or use the services of those businesses in Santa Clara ........and will go to neighboring cities to enjoy a lower cost for any goods and services.....and the City losses by not enjoying the sales tax or the business-to-business tax that would have otherwise been generated in Santa Clara.
Please come to some compromise in meeting somewhere in the middle. Businesses understand the plight the City is in but don't put it back on the businesses as the answer to the City's bailout. Please reach a compromise.
Thank you
Linda Leca
2