San Bruno council refines business license tax proposal; ADUs, room rentals would be newly taxable

San Bruno — City staff presented a refined proposal for a business license tax to be placed on the 2026 ballot and the council signaled support to continue refining the recommended hybrid structure.

Assistant City Manager (staff) summarized options the council considered at a June 23 study session and the revenue subcommittee’s June 30 recommendations, saying the hybrid model would flatten the current regressive code and place many businesses into five categories (contractors; retail/administrative; restaurants; professional; property rental; services/other). "A little more than 70% of San Bruno businesses will have a $100 or less impact in this model," staff told the council, citing consultant HDL’s analysis.

The proposal includes a $75 minimum license for businesses with gross receipts below $75,000 and tiered per‑$1,000 rates above that threshold under the subcommittee’s hybrid approach. Staff said gambling clubs and airport parking are excluded from the current discussion.

Mayor Rico Medina and several council members pressed staff to clarify how the plan would treat accessory dwelling units and small room rentals. The mayor asked whether an ADU or in‑law unit rented for income would be new to the tax base; staff replied that, under the city’s current code, some apartment rentals have limited coverage but the proposed restructuring would make many small rental arrangements newly subject to the minimum $75 fee. "That would technically be new," staff said.

Council members asked that the outreach package include plain‑language examples and per‑category sample calculations so voters can see what a typical mom‑and‑pop business, a contractor or a property rental would pay now and what the proposal would change. Council member Hamilton said the outreach should show "what it looks like today" and side‑by‑side comparisons for representative businesses; staff agreed to provide those figures and business‑count breakdowns by category.

City Manager and staff asked the council to authorize continued work with the ad hoc revenue subcommittee for two more weeks so the city could return with a resolution on July 28 in time for the county’s Aug. 7 filing deadline; the council agreed to that timeline. Staff also said it would expand business outreach, send a formal letter to local businesses and hold meetings as needed.

Next steps: staff will continue refining the ordinance language with the subcommittee, provide per‑category examples and counts, and bring a resolution back to the council on July 28 for potential placement on the November ballot.