Manhattan Beach council pauses business-license overhaul after widespread concern from businesses and residents

The Manhattan Beach City Council paused plans to place a proposed business-license modernization on the November ballot after a full evening of staff presentations, consultant analysis and dozens of public comments from local business owners and residents.

Finance Director Libby Brethower told the council the staff-recommended Model 4 would convert the city from a decades-old per-unit and categorical fee structure to a gross‑receipts model with a $100,000 threshold and variable rates by business category. She said staff’s estimates for the model discussed earlier in the summer showed an approximate $550,000 annual increase in city revenue, while acknowledging alternate caps and rate combinations could materially change that number. “Our initial goals have been to simplify, clarify and modernize the code,” Brethower said, adding that staff has met repeatedly with the downtown business association and chamber. “This has never been about generating revenue for the city,” she said.

Consultant Charles Heath told the council that poll results indicated voters respond to broad concepts — simplification, perceived fairness, and the claim that many small businesses would see lower fees — and warned that changing those parameters could change voter support. “As the maximum creeps lower, you start to lose the argument that you’re fixing a fundamental inequity,” Heath said.

Business owners packed the chambers and joined by phone to press the council for more changes or more time. Brad Sperber of Manhattan Beach Toyota said he first learned of the proposal the prior week and described what he called a startling jump in potential payments for large enterprises: “I had a hard time believing that it would go 830 times of what it currently is.” Representatives of the California Association of Realtors and the South Bay Association of Realtors urged the council to preserve longstanding exemptions for sales agents and to exempt rental housing. “Taxing rental housing providers on gross receipts does not recognize the numerous and substantial costs they incur,” a representative said.

Mayor Franklin said he would vote no at this time, calling the measure “too rushed” and saying the council lacked sufficient public outreach and clarity on the likely impacts. Other council members said they were sympathetic to the equity argument that prompted the project but concluded they needed more feedback from grocery operators, rental‑housing owners and brokers and more refined cost estimates. Council members and staff discussed phased approaches, lower caps, and targeted policy tools such as temporary exemptions or administrative policy changes that could be adopted without voter approval.

Staff warned a delay would require updating the tax study and the polling sample, imposing additional costs and extending the timetable. The city clerk also noted a county notice tied to the election timeline had already been submitted to a local newspaper and could not be retracted that day, which the city clarified would be nullified if the council did not proceed.

Council members directed staff to return with more outreach, refinements and options rather than place the measure on the November ballot as drafted. The council emphasized a desire to keep pursuing a modernization that reduces complexity while avoiding sudden, disproportionate impacts on particular sectors.