CC SR 20190521 03 - Business License TaxRANCHO PALOS VERDES CITY COUNCIL MEETING DATE: 05/21/2019
AGENDA REPORT AGENDA HEADING: Regular Business
AGENDA DESCRIPTION:
Consideration and possible action to receive information related to the collection of
business license tax from home occupancy businesses and businesses categorized as
“outside businesses” and the potential modification to language in Section 5.04.050 of
the Municipal Code
RECOMMENDED COUNCIL ACTION:
1. Receive and file this report related to business license tax collected from home
occupancy businesses and businesses categorized as “outside business”;
2. Eliminate the collection of business license tax from home occupancy
businesses; and
3. Request that the City Attorney draft new language related to business license
tax in all relevant sections of the Municipal Code.
FISCAL IMPACT: Reduction in the 2020 calendar year business license tax revenue
in the amount of $53,000
Amount Budgeted: $904,100
Additional Appropriation: N/A
Account Number(s): 101-300-0000-3210
ORIGINATED BY: Christopher Browning, Senior Administrative Analyst
REVIEWED BY: Deborah Cullen, Director of Finance
APPROVED BY: Doug Willmore, City Manager
BACKGROUND AND DISCUSSION:
At the March 19, 2019, City Council meeting, Staff presented an analysis of business
license tax (BLT) revenue and business licenses issued. The City Council members
requested further review of BLT revenue for home occupancy businesses as well as a
review and possible clarification of the language in the Municipal Code relating to
businesses located outside of the City.
In general, the City has a passive approach to collecting BLT. For home occupancy
businesses and businesses located outside City limits, the City relies on the owner to
self-report and obtain an annual business license. If the business does have an
interaction with the City, Staff will confirm if there is a valid business license. For
example, business owners who come to either the Public Works or Community
Development counters to request a permit or inspection, etc., would be asked if they
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have a valid business license and if they do not, they would be required to pay for a
business license at that time.
Finance staff completed a detailed analysis of BLT revenue and licenses issued during
calendar year 2018. During this time, $863,642 in BLT revenue was collected as
follows:
As noted in the data and pie chart above, there are 370 business licenses issued to
home occupancy businesses, which make up $53,403 or 6% of total BLT revenue, while
$810,239 or 94% of the revenue comes from all other businesses.
Business Type # of Business Licenses Revenue
Home Occupancy 370 53,403.42$
Businesses Located Outside of City 283 70,017.74$
All Other Businesses 1,016 740,221.24$
Total 1,669 863,642.40$
2018 Business License Data
Home Occupancy
6%
Businesses Located
Outside of City
8%
All Other Businesses
86%
CALENDAR YEAR 2018 BUSINESS LICENSE DATA
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CONCLUSION:
Based on the discussion at the Council meeting, Staff recommends the home
occupancy BLT be rescinded and the language in the Municipal Code be modified and
clarified for the “outside business” category. Staff will work with the City Attorney to add
language to this section of the Municipal Code to make it clear that the requirement to
obtain a business license is limited to businesses that are:
Physically located within the City of Rancho Palos Verdes and/or
Conducting work in such a manner that requires their physical presence within
the City of Rancho Palos Verdes.
ALTERNATIVES:
In addition to the Staff recommendation, the following alternative action s are available
for the City Council’s consideration:
1. Take other action as deemed appropriate by the City Council
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