From: City Council Public Comments
To: City Council Public Comments
Subject: FW: [EXTERNAL] Proposed Restructuring of Business License Tax Date: Tuesday, August 6, 2024 8:35:31 AM
Attachments: City SR budget 2024-25 comments.pdf
From: David Long < >
Sent: Monday, July 22, 2024 4:55 PM
To: _CityCouncilListPublic <[email protected]>; Smith, Maraskeshia <[email protected]>; Finance Department <[email protected]>
Subject: [EXTERNAL] Proposed Restructuring of Business License Tax
Dear Council Members, City Manager and Chief Financial Officer, Please review the attached memo that provides some thoughts on the current proposal to restructure the Business License Tax. I hope it spurs some additional creative thinking so that a
proposal can be placed on this year's ballot.
Thank you,
David Long
To: Santa Rosa City Council, City Manager, Chief Financial Officer From: David Long
Date July 22, 2024
Subject Proposed Restructuring of Business License Tax
I have observed the recent presentations to City Council regarding the City’s 2024/25 Budget and the proposed restructuring of the Business License Tax. I have also examined the proposed Business License Tax structure with an eye towards making it more equitable for all businesses. Here are some observations and suggestions that you should consider as you grapple with what to do.
1. It appears that nearly every staff member in the City will receive a 8% to 9% increase in both their salaries and benefits for 2024/25. No one should be surprised at the magnitude of the budget deficit this has created.
2. It would be fiscally irresponsible to pin the hopes of generating sufficient revenue to significantly lessen the near-term budget deficit on increased revenues from economic development. Rather, you need to create more certain sources of revenue and more certain means of reducing expenditures.
3. Proposing to revise the Business License Tax structure is a sound idea, especially in terms of eliminating the $3,000 annual cap that is outdated by more than 30 years. I applaud your effort, but there is no getting around the pain that will be experienced from the lengthy lapse in judgement by your predecessors.
4. Unfortunately, the current proposal appears to overcompensate for the prior inequity, going from a structure that unfairly favored high-revenue businesses to one that favors existing low-revenue businesses, while also unfairly seeking to balance the budget on the backs of high-revenue businesses.
5. Given the varying tax rate for the business type groupings, it appears that you have, with one exception. thoughtfully placed businesses in one group or another according roughly to their average profit margin to create tax equity from a cash flow standpoint. That exception is Group 1a, which includes business types with widely disparate profit margins. Some rework is in order here.
6. Every business, irrespective of its annual revenue, should pay the Business License Tax according to the new structure. The City is missing out on significant, equitable and fairly generated tax revenue by allowing low revenue business to continue paying according to the current structure. Even at the proposed rates, the average small business would be paying just a few thousand dollars more per year. As alluded to in #5 above, this should be done in conjunction with lowering the per $1,000 revenue rate for low margin business types.
7. The proposed structure should also be modified to include a sliding scale that has the rate per $1,000 decreasing as annual revenues increase. The reasons that this is fair and equitable are rooted in the concept that the benefits derived from City-provided services do not have a straight-line relationship with a business’s annual revenue. It also somewhat incentivizes businesses to become more successful because they won’t feel like the City just keeps taking more and more as they grow.
8. Every City staff member should be going out of their way to make businesses feel like they are getting good value for the additional Business License Tax they will soon pay. After all, the increased tax is essentially paying for your raise.
From: Eric Fraser
To: _CityCouncilListPublic; Stapp, Mark; Rogers, Chris; MacDonald, Dianna; Alvarez, Eddie; Okrepkie, Jeff; Rogers, Natalie; Fleming, Victoria; Finance Department
Subject: [EXTERNAL] 8/6 Agenda Item: 15.2 Business License Date: Monday, August 5, 2024 7:23:19 AM
Attachments: City Council - Business License Worksheet.pdf August 6 City Council Agenda Item 15.2.pdf
City Contractors - Business License Worksheet.pdf
CAB - Business License Worksheet.pdf
Metro Chamber Board - Business License Worksheet.pdf
STR Managers - Business License Worksheet.pdf
Please find our letter and attached reports and attach all to the City council agenda for this item.
Thank you.
Eric Fraser
August 5, 2024 Dear Santa Rosa City Council, Concerned Residents and Businesses; We have performed research and analysis on the current Business License Program and we were astounded to find the number of businesses associated with council members, board members, City contractors, and board members of leading business advocacy groups NOT Licensed. (Reports attached.) In summary, we recommend that the City pull back both proposed tax measures (TOT and Business License) and instead use that money for education and accountability. There are serious problems with the administration of the current program and raising rates or changing the Business License program at this time will not cure these problems, in fact it will make them much worse. Financially, it makes more sense because of the huge potential for increased revenues from accountability within the existing program if properly administrated, with no ballot question needed and the expense (and potential failure) avoided. Refer to Nextrequest 24-775 to review the contracts for administration of the City’s business license programs. Because the City’s response to 24-775 was incomplete, additional responsive (and more enlightening) documents were produced by 24-819 (as of 8/5/24, still unpublished). There seems to be A LOT OF CONFUSION over the current Business License requirements, with a discussion about this at the 6/26/24 Community Advisory Board enlightening. Who pays? Independent contractors? Non-profits? Work-at-home? Selective enforcement? Is the program equitable? One enforcement emphasis the business program administrator, HdL, included in their contract with the City is on residents pulling permits, to demand business licenses for the named businesses performing services like roofing, electrical, concrete work, etc. In all ways and then some, expenses for businesses are passed on to consumers who are property owners and tenants, regardless of the business type. We were SHOCKED to find many businesses with contracts with the City unlicensed (!) including those with direct financial benefit from the Business License Program, and the November ballot tax questions. If our correlation between the business description found on the City’s Business License search and the Groups as identified in page 3 of the report Mr. Alton prepared for this agenda item are correct, the program administer (HdL) is being improperly charged at the lowest possible tax rate (when they should be at the highest), potentially saving them tens of thousands of dollars over the life of their contract (since 2018). Who is providing oversight on how businesses are classified or included? How is fraud and corruption detected and prosecuted? Despite staff and media accounts, according to City records, many of the short-term rental (STR) managers with 4 or more units DO have business licenses already. The City’s STR ordinance was recently enacted, and within it made provisions for taxation, and limited owners to one property. The continued attack on STRs to muster public support, due to anti-STR hysteria, for tax measure campaigning shows the City’s continued bad faith dealing with its residents. The positive impacts caused by STRs are very important during this time of a stressed City budget and to offset the outrageous increases in costs to residents caused by government (historic building alteration permits, building permits, code enforcement fraud, layers of half-baked regulations, corruption, and much more). Respectfully Submitted, Eric Fraser [email protected] Attachments: City Council – Business License Worksheet Community Advisory Board – Business License Worksheet City Contractors – Business License Worksheet STR Managers – Business License Worksheet Metro Chamber Board – Business License Worksheet Last Name
First
Name Appointed By
Paid to
Attend CAB?Business Name
HdL Business
Type RegisteredGroup? CommentsFurther ResearchSource Materials Weeks Calum Tom SchwedhelmHighly Likely
Generation
Housing NO TBD, Group 4
Policy
Director
Registration as a
lobbyist?
https://www.link
edin.com/in/calu
m-weeks-mpa-
209b0b70/
InocencioJorge Victoria FlemingNot Likely
Keysight
Technologies, Inc.Wholesale YES Group 1
Electrical
Engineer
https://www.link
edin.com/in/jorg
e-inocencio-
4a3602152/
BarnettCherie Chris Rogers Highly Likely
Sonoma County
Bike Coalition NO TBD, Group 4
Outreach and
Events
Coordinator
Registration as a
lobbyist?
https://www.link
edin.com/in/cher
iebarnett/
Rahmn Steve Tom SchwedhelmNot Likely
Firebrand Safety
Systems Contractors YES Group 3
Business
Owner
https://www.link
edin.com/in/stev
e-rahmn-jr-
2789b71b0/
Rodriguez-
Jereb AndreaDianna MacDonaldHighly Likely
Sonoma County
Water Agency NO TBD
Communicati
ons Manager
Registration as a
lobbyist?
https://www.link
edin.com/in/arod
riguezjereb/
Lange KirstyneJohn Sawyer Highly Likely
KL Consulting,
KAL Consulting NO TBD, Group 4
Business
Owner
Registration as a
lobbyist?
https://www.link
edin.com/in/kirst
yne-l-001/
Diaz de
Leon Ariana Mark Stapp Highly Likely
Santa Rosa
Community
Health
Property
Rental -
Commercial YES Group 2
Community
Engagement
Manager
Registration as a
lobbyist?
https://www.link
edin.com/in/aria
na-d%C3%ADaz-
de-le%C3%B3n-
006746176/
Chen David X.Dianna MacDonaldNot LikelyCaitelion NO TBD, Group 4President https://www.link
edin.com/in/dxch
en/
DOES NOT INCLUDE REAL ESTATE HOLDINGS
Community Advisory Board
8/3/24 - According to https://www.srcity.org/1270/Community-Advisory-Board Date of Search 8/3/24: https://santarosa.hdlgov.com/Search/Search By Holter Amy Chris Rogers Highly Likely
Community
Foundation
Sonoma County NO TBD, Group 4
Vice
President for
Community
Impact
Registration as a
lobbyist?
https://www.link
edin.com/in/amy
holter94928/
VasquezAngelinaNatalie RogersTBD
Angelina Vasquez,
Healthcare
Engagement and
Advocacy NO TBD, Group 2
Business
Owner
Registration as a
lobbyist?
https://www.link
edin.com/in/ang
elinavas/
Diaz Ana Eddie Alvarez TBD
Community
Action PartnershipMisc Services YES Group 2 Teacher
https://www.link
edin.com/in/ana-
diaz-a6a4a111b/
KnowlesDerek Victoria FlemingNot Likely
Red Dwarf
Creative, Derek
Knowles NO TBD, Group 2
Business
Owner
Business Activity
may be outside of
the City
https://reddwarf
productions.com/
about-1
Methodology: Organization names identified by LinkedIn profiles and biographies, then compared to the City's HdL database of Business License holders. There are many reasons an organization might not be recognized as a registered Santa Rosa business including spelling errors, subsidiary name being used for the search, errors in the database, categorically by industry type, jurisdictional nexus and more. The "HdL Business Type" found in the search results is correlated with the Groups found on the chart published on page 3 of the 24-0574 Staff Report. There is a question why board members, having been appointed by people not currently on the Council, are still serving.
Further research also required concerning the City's lobbyist registration ordinance, and residency requirements.
City Contractors
Role in City Business Name
HdL Business
TypeRegisteredGroup ? Comments Further Research
Source
Materials
Business Tax Admin & ConsultantsHdL Software Retail - MiscYESGroup 1 Should be classified in the highest Group 4 ? City Records Tax Campaign Strategists & ConsultantsTeamcivx NOTBD, Group 4 City Records Survey and Polling ConsultantsGodbe Research NOTBD, Group 4 City Records Technology Providers, ConsultantsGranicus NOTBD, Group 4 City Records Program Administrators, Consultants,
Advisors, Political Operatives
Santa Rosa Metro
Chamber NOTBD, Group 4
Influential lobbying group, PAC, and taxpayer-
funded program administrator. Should they be
registered as lobbyists too?
(See tab on Metro
Chamber Board)City Records
Program Administrators, Consultants,
Advisors, Political OperativesGeneration Housing NOTBD, Group 4 Influential lobbying group, PAC, and taxpayer-
funded program administrator. Should they be
registered as lobbyists too? City Records
Date of Search 8/3/24: https://santarosa.hdlgov.com/Search/Search By
DOES NOT INCLUDE CONFLICT-OF-INTEREST SEARCH
Methodology: Organization names identified by City records, then compared to the City's HdL database of Business License holders. There are many reasons an organization might not be recognized as a registered Santa Rosa business including spelling errors, subsidiary name being used for the search, errors in the database, categorically by industry type, jurisdictional nexus and more. The "HdL Business Type" found in the search results is correlated with the Groups found on the chart published on page 3 of the 24-0574 Staff Report. This list is a sampling, with potentially thousands of businesses to be examined.
Last NameFirst Name Role in City Business or Organization NameHdL Business TypeRegisteredGroup ?CommentsFurther ResearchSource Materials MacDonaldDiannaCouncil Member, District 3North Bay Commercial Services Inc. NOTBD, Group 3Business Owner https://www.linkedin.com/in/dianna-macdonald-2465bb134/ FlemingVictoriaCouncil Member, District 4Victoria Fleming Consulting NOTBD, Group 4Business OwnerDoes she still reside in Santa Rosa? https://www.linkedin.com/in/victoria-fleming-940aa58/details/experience/ FlemingVictoriaCouncil Member, District 4Victoria Fleming Psychotherapy NOTBD, Group 2Business Owner https://www.linkedin.com/in/victoria-fleming-940aa58/details/experience/ FlemingVictoriaCouncil Member, District 4Emerge California NOTBD, Group 2Regional Manager https://www.linkedin.com/in/victoria-fleming-940aa58/details/experience/ RogersChrisCouncil Member, District 5Sonoma County Conservation Action NOTBD, Group 4Executive DirectorLobbying and political action organization https://www.linkedin.com/in/chrisrogersforassembly/
OkrepkeJeffCouncil Member, District 6George Petersen Insurance AgencyInsurance Adjustors & BrokersYESGroup 4Commercial Lines Agent https://www.linkedin.com/in/jeffokrepkie/
RogersNatalieCouncil Member, District 7Natalie Rogers, LMFTCounseling YESGroup 2Business Owner https://www.linkedin.com/in/natalie-rogers-2294a9186/
AlvarezEddieCouncil Member, District 1The Hook Retail - Misc YESGroup 1Business Owner As a cannabis Business, they may be exempt from the Business License requirement, according to Alton* StappMarkCouncil Member, District 2(none found)
Date of Search 8/3/24: https://santarosa.hdlgov.com/Search/Search ByDOES NOT INCLUDE REAL ESTATE HOLDINGS.
Santa Rosa City Council
Methodology: Organization names identified by LinkedIn profiles and biographies, then compared to the City's HdL database of Business License holders. There are many reasons an organization might not be recognized as a registered Santa Rosa business including spelling errors, subsidiary name being used for the search, errors in the database, categorically by industry type, jurisdictional nexus and more. The "HdL Business Type" found in the search results is correlated with the Groups found on the chart published on page 3 of the 24-0574 Staff Report. *Mr. Alton comments at the 6-26-24 Community Advisory Board.
Last NameFirst Name Business Name HdL Business TypeRegisteredGroup ?CommentsFurther ResearchSource MaterialsWittke SchaffnerLisa North Coast Builders ExchangeProperty Rental - Commercial YESGroup 2 https://www.linkedin.com/in/lisa-wittke-schaffner-606b29b/Wittke SchaffnerLisa Sonoma County Fairgrounds and Exposition, Inc. NOTBD https://www.linkedin.com/in/lisa-wittke-schaffner-606b29b/Wittke SchaffnerLisa Redwood Credit Union NOTBD https://www.linkedin.com/in/lisa-wittke-schaffner-606b29b/ Edwards HerryMichelleBoys & Girls Club of Sonoma-Marin NOTBD https://www.linkedin.com/in/michelleheery/ BensonAliciaKeysight Technologies Wholesale YESGroup 1 https://www.linkedin.com/in/alicia-benson-0aa97720/ CarrilloBlytheTIV Branding Graphic Art & Design YESGroup 2 https://www.linkedin.com/in/blythehoekengacarrillo/ ChieffoElisaRedi Construction NOGroup 3 https://www.linkedin.com/in/elisa-chieffo-08744615/ Davis BradSanta Rosa Junior College NOTBD https://www.linkedin.com/in/brad-davis-6405888/ Evans Laniakea365 Recreational Cannabis Retail - Misc YESGroup 1 As a cannabis Business, they may be exempt from the Business License requirement, according to Alton*https://www.linkedin.com/in/laniakea-evans-7940a0148/ FurberCeliaRecology Sonoma Marin Misc Service YESGroup 2 https://www.linkedin.com/in/celia-furber-92906743/ FutrellHughHugh Futrell Corporation (See separate tab) YES $ NO https://www.linkedin.com/in/hugh-futrell-78b06a182/ Gilbert KellinPisenti & Brinker LLP NOTBD
From Linkedin: "Partner - Assurance Services"
Do they perform "independent audits" for government?https://www.linkedin.com/in/kellin-gilbert-cpa-bb3b6943/ Kalia AkashPalms Inn NOTBD https://www.linkedin.com/in/akash-kalia-8b18a14a/ Kalia AkashFunctional Zero Partners NOTBD https://www.linkedin.com/in/akash-kalia-8b18a14a/ MartinJim BPM LLP Accountants YESGroup 4 https://www.linkedin.com/in/james-a-martin-cpa-414a7829/ MendozaToddColdwell Banker (8/4/24 Linkedin says W Real Estate - searched) Real Estate YES? Regional Manager at W Real Estate https://www.linkedin.com/in/toddmendoza/ MichaudColletteChildren's Museum of Sonoma CountyNon-Profit Organization YES? https://www.linkedin.com/in/collettemichaud/ NazarioXavierC4C, Inc. (Case4Cannabis) Consultant YESGroup 4 https://www.linkedin.com/in/xavier-nazario/ NazarioXavierWorkforce Innovation Labs Consultant YESGroup 4 https://www.linkedin.com/in/xavier-nazario/Niday TroyThe Press Democrat (See separate tab for Sonoma Media Investments)NOTBD https://www.linkedin.com/in/troyniday/ PungprakeartiSamanthaCarie, Mackie, Power & Ross LLP NOTBD https://www.linkedin.com/in/samantha-pungprakearti-6565a6b/ SedgwickTyffaniSuited Hospitality (8/4/24 LinkedIn says Redwood Credit Union - searched) NOTBD https://www.linkedin.com/in/tyffani-sedgwick/ DOES NOT INCLUDE REAL ESTATE HOLDINGSDate of Search 8/3/24: https://santarosa.hdlgov.com/Search/Search By Metro Chamber BoardDate of Search 8/3/24: https://www.santarosametrochamber.com/about-us/board-and-committees/board-of-directors/ SedgwickTyffaniTyffani Sedgwick Communications May not be applicable https://www.linkedin.com/in/tyffani-sedgwick/ Smith JessicaRedwood Credit Union NOTBD https://www.linkedin.com/in/jessica-smith-b4460371/ SpitzerAllisonExchange Bank NOTBD https://www.linkedin.com/in/allison-s-8942b77/ VelazquezHectorNexo Media LLC NOTBD https://www.linkedin.com/in/hectorjvelazquez/ VelazquezHectorRed LatinX The Hub NOTBD https://www.linkedin.com/in/hectorjvelazquez/ VelazquezHectorLatinX Radio NOTBD https://www.linkedin.com/in/hectorjvelazquez/ VelazquezHectorNexo Radio NOTBD https://www.linkedin.com/in/hectorjvelazquez/ WiglesworthAnitaLuther Burbank Center for the Arts NOTBD https://www.linkedin.com/in/anitawiglesworth/ Methodology: Organization names identified by LinkedIn profiles and biographies, then compared to the City's HdL database of Business License holders. There are many reasons an organization might not be recognized as a registered Santa Rosa business including spelling errors, subsidiary name being used for the search, errors in the database, categorically by industry type, jurisdictional nexus and more. The "HdL Business Type" found in the search results is correlated with the Groups found on the chart published on page 3 of the 24-0574 Staff Report. *Mr. Alton comments at the 6-26-24 Community Advisory Board.
STR Managers of 4 units or more
Business Name HdL Business Type RegisteredGroup ? Comments Further
Research
Source
Materials
AvantStay NO Group 2
Vacasa LLC Property Rental - Residential YES Group 2
Vacasa Seasonals Inc Property Management YES Group 2
Happy Hermosillo HomesConsultant YES Group 4 Should be classified as Group 2? Date of Search 8/3/24: https://santarosa.hdlgov.com/Search/Search By STR Managers of 4 units or more
Methodology: Organization names identified by google search. There are many reasons an organization might not be recognized as a registered Santa Rosa business including spelling errors, subsidiary name being used for the search, errors in the database, categorically by industry type, jurisdictional nexus and more. The "HdL Business Type" found in the search results is correlated with the Groups found on the chart published on page 3 of the 24-0574 Staff Report.
From: Peter Rumble
To: Alvarez, Eddie; Stapp, Mark; MacDonald, Dianna; Fleming, Victoria; Rogers, Chris; Okrepkie, Jeff; Rogers, Natalie Cc: _CityCouncilListPublic; Smith, Maraskeshia; Ananda Sweet Subject: [EXTERNAL] Item 15.2 - Business Tax
Date: Monday, August 5, 2024 10:12:27 AM
Attachments: image001.png
image002.png
image003.png
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Council,
While the Santa Rosa Metro Chamber is unable to take a formal position due to the lack of time to take this proposal through our process, I want to share some of our observations of the proposal coming to you this Tuesday. I also want to express my sincere gratitude to the City Manager for her dedication to meeting with stakeholders on this issue.
It is certain, the health of our local economy requires a financially sound and stable local government, and the Santa Rosa Metro Chamber supports your efforts in finding ways to grow revenue while cutting expenditures. We look forward to working with you on both of these things. Reviewing and updating the business license/tax, that has remained unchanged for approximately 30 years, makes sense. It also makes sense for larger, high revenue, businesses to pay more compared to a small business.
Increasing the cap from $3,000 to $10,000 is a meaningful increase for our local businesses.
This increase is also approximate to the growth of the original fee had a CPI been applied to it over the last 30 years. Approaching the cap in this way has a sound logic supporting it, and provides the cost certainty our businesses need.
Establishing a higher minimum fee and several tiers of smaller business minimums also makes sense. These increases are not significant enough, in our opinion, to prevent a business from opening or operating.
The Santa Rosa Metro Chamber may still take a formal position should you place it on the ballot. Until then, thank you for seeking and incorporating our input.
Respectfully,
PETER RUMBLE | CEO
SANTA ROSA METRO CHAMBER
50 Old Courthouse Square, Suite 110, Santa Rosa, CA 95404 DIRECT 707-545-1477 | P 707-545-1414 | F 707-545-6914
SANTAROSAMETROCHAMBER.COM