Council sends modernized business license tax to voters after ADU carve‑out and rate tweak

The council placed a modernized business license/gross receipts tax measure on the Nov. 3 ballot, after extensive public comment and a last‑minute change: the council reduced the proposed property rental rate from $3 per $1,000 of gross receipts to $1.50 and inserted an explicit exemption so that "rental activities does not include business activities for an owner‑occupied residential unit or for any accessory dwelling unit on the same parcel as an owner‑occupied residential unit." Staff said the updated gross‑receipts model is intended to replace a convoluted 1999 structure and to raise an estimated $4.2 million annually under the original proposal; council members said they wanted a fairer structure for small landlords and home‑sharing while still addressing a budget shortfall.

The proposal prompted a stream of public comment from HIP Housing (urging an exemption for nonprofit‑coordinated home‑sharing and protection for older homeowners), the California Apartment Association and local property managers (urging more analysis and better outreach), and small business owners concerned about timing and clarity. City staff and the consultant (HDL) explained that California law prohibits a local net‑income tax (cities tax gross receipts instead), and that the chosen industry categories reflect average profit margins and common practice among peer cities. After debate, council members asked staff and the city attorney to draft an explicit owner‑occupied/ADU carve‑out and recalculated revenue estimates; the ordinance with the property rental rate set to $1.50 passed the council 5–0 for placement on the ballot with councilmembers Hamilton and Salazar authorized to draft the council’s ballot argument.