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California
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City Counci1 Meeting 4-24-90
Santa Monica,
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STAFF REPORT
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TO:
Mayor and City council
FROM:
City Attorney
Ordinance Repealing Various sections of Chapters
1 and 2 of Article VI of the Santa Monica Municipal
Code and Adding Subchapters LA, 18, lC, and 10 to
Article VI of the Santa Monica Municipal Code
Relating to Business License Taxes
SUBJECT:
At its meeting on March 27, 1990, the city Council directed
the City Attorney to prepare an ordinance making substantive and
technical changes to the city's Business License Tax Ordinance.
In response to this direction, the accompanying ordinance has
been prepared and is presented to the City Council for its
consideration.
The accompanying ordinance makes various substantive
changes in the City's Business License Tax Ordinance by providing
for new business license classifications and a new tax rate
structure.
All provisions of the current Code relating to
business license tax administration, license classifications, and
tax rates have been reorganized into a new chapter consisting of
four subchapters.
A subsequent ordinance will be returned to the City Council
that makes various technical and housekeeping changes to
remaining provisions of Article VI, such as police permit
requirements and other regulatory provisions.
The revision of
these sections have no bUdgetary impact.
The city Manager and
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city Attorney agreed that separate ordinances were appropriate
because a single ordinance would have been well over 100 pages,
making review by the city Council and the public more difficult.
The tax rate changes made by the accompanying ordinance are
summarized in Attachment 1.
SECTION-BY-SECTION ANALYSIS
Section 6000. Defini tions . The section was previously
Section 6100. Several changes have been made to this Section,
including: the definition of business has been expanded; a
definition of City has been added; the definition of "evidence of
doing business" has been changed; former Sections 6116B has been
moved into this Section as a definition of "gross receipts"; and
a new definition has been given to the term "independent
contractor." The definition of business has been expanded to
include commercial enterprise, vocation or other means of
livelihood, whether or not they are carried on for gain or
profi t. Receipts from subleasing have been included as gross
receipts under the expanded definition of gross receipts, a new
exempt category of fees for actual costs of governmental
requirements paid by a licensee on behalf of a third party has
been added, and former exclusions from the definition of gross
receipts ( i . e., cash discounts; receipts of persons acting as
agents or brokers; sales within a single business entity; income
from incidental activities) have been deleted.
Section 6001. License Required. This Section was formerly
Section 6103 and has been amende.d to provide that a person
operating any business specified in the Code must pay the
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required business tax and obtain the appropriate permits whether
or not the business is carried on for qain or profit.
Section 6002. Taxinq Power. This Section was formerly
section 6104 and the only amendment was to qive this section a
title.
section 6003. Issuance of Licenses. This Section was
formerly Section 6106, and has been amended to include a title
for the entire section and for each subsection thereof. The fee
for duplicate licenses has been increased to $10.00.
Section 6004. Payment of License Fees. A new subsection
(b) has been added to this section to require a charge of $10.00
for any check returned for lack of sufficient funds.
Section 6005. Separate License for Each Place of Business.
This Section was formerly part of Section 6107A. Clarification
has been added that this provision is not applicable to
businesses licensed under the classification of "Auto Dealers"
per section 6052B.
Section 6006. Separate License for Each Type of Business
Activity. This section is new and provides that a separate
business license is required for each business activity which
comes within the purview of Chapter lB.
Section 6007. Contractor Engaged in Business. This
section was formerly Section 62120 and remains unchanged, except
for a new title.
section 6008. City Licensinq Requirements for Contractors
or Owner-Builders. This Section was formerly section 6212D1 and
remains unchanged, except for a new title.
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~ection 6009. Builder Owners. This section was formerly
Section 6212A and remains unchanged.
Section 6010. Term of License. This Section was formerly
section 6107B through O. This Section was amended to delete
weekly licenses.
Section 6011. Portion of License Period, No Pro-Ration.
This Section was formerly part of section 6108. It has been
revised to provide that no pro-ration shall be allowed for any
type of license issued, whether annual, monthly or daily.
Section 6012. Bond Requirement. This Section was formerly
Section 6107E and remains unchanged.
section 6013. Determination of Date Payment Made. This is
a new Section which sets forth the method by which the City will
determine the date of payment of license fees.
Section 6014. Renewals. This is a new Section which
provides that all delinquent business license taxes must be paid
prior to renewal of a business license. In addition, it is the
licensee's responsibility to obtain and pay for a renewal
license, whether or not the licensee receives a renewal notice
from the city.
section 6015. Penalties for Late Payment and Non-Payment.
This Section was formerly Sections 6109 and 6112. The Section
combines the two sections into one and adds late payment
provisions, including a penalty of 10% of the original license
fee for each month that a license fee remains unpaid.
Section 6016. Disabled Persons, Exemption. This Section
was formerly Section 6100 and has been revised to provide that a
person who is disabled within the meaning of any federal or state
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law may request and be issued a certificate of exemption from the
payment of the business license for any retail, manufacturing, or
wholesaling business in which he or she is engaged if the gross
receipts of the business are less than Sixty Thousand Dollars
($60,000.00).
section 6017. Exemption for Non-Profit Entity. This
section was formerly Section 6111 and has been revised and
expanded. References to "charity corporation or organization"
have been changed to "non-profit corporation or organization"
throughout this Section. In addition, a definition of non-profit
corporation or organization has been added to this Section, as
well as a paragraph which allows the Director of Finance to
require documentation evidencing the non-profit status of an
applicant.
section 6018. Refunds. This section combines former
sections 6113 and 6114, and makes two changes. The first change
is that the period after which refunds may not be given has been
extended from 90 days to one year to comply with state law. In
addition, a subsection (c) has been added to provide that refunds
will not be given on a business license if there are any
delinquent fees outstanding, and any overpayment of business
license fees shall first be applied to any delinquent fees.
Section 6019. Effect of Prosecution. This Section was
formerly Section 6115.
Section 6020. Annual statement of Licensee. This Section
was formerly Section 6116 and has been amended. Former Section
6116(b) has been deleted, which dealt with closely related
businesses and non-related businesses at one location. A new
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provision has been added to provide that if a business is subject
to a business license tax based upon qross receipts, an
additional fee shall be charged based upon the annual qross
receipts of the business at the time of license renewal.
Section 6021. License Decals Required on Taxes and
Vehicles for Hire. This Section was formerly Section 6119 and
has been revised to eliminate references to City Clerk and
substitute the Director of Finance. The location for affixing
the required decal has also been amended.
Section 6022. Gross Receipts Reporting Period. This
Section was formerly Section 6116B(b) (1) and has been revised to
remove the reference to 1986, thus making this Section apply to
all taxes due.
Section 6023. Apportionment. This Section was formerly
section 6116(b) (d) (1)-(3) and remains unchanged.
Section 6024. Revocation of License. This Section was
formerly Section 6117 and remains unchanged.
Section 6025. License to be Posted. This section was
formerly Section 6118 and remains unchanged.
section 6026. Business Tax Audit Proqram. This Section
was formerly Section 6129 and remains unchanged.
section 6030. Operation of 1990 Business License Tax
Amendments. This is a new section that provides that the repeal
of various Sections does not affect the prosecution for
violations thereof which were commi tted prior to the date of
repeal, nor will it affect the payment of any taxes due prior to
the effective date of the Ordinance. This section provides that
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the new license tax rates shall apply to all taxes due on or
after July 1, 1990.
section 6050. This Section describes the function of the
new Chapter 1B, "Business Classifications," to the Santa Monica
Municipal Code.
section 6051. Determination of Business Classification.
This is a new Section which provides that the Director of Finance
will determine business classifications.
section 6052. Business Taxed on Gross Receipts. This
Section is new and provides that business classifications set
forth in sections 6052A through 6052N shall pay a business
license fee based upon gross receipts.
sections 6052A. Aqent/Broker. This is a new Section which
adds a new classification of Agent/Broker to the list of
classifications which must pay business license fees based upon
gross receipts.
section 6052B. Auto Dealers. This is a new Section which
adds a new classification of Auto Dealers to the list of
classifications which must pay business license fees based upon
gross receipts.
Section
Engineering).
unchanged.
Section 60520. Sub or Specialty Contractors and Building
Trades. This Section was formerly Section 6212B and has been
amended to include electrical contractor and plumbing as building
trades falling within this classification. In addition, the
6052C. Contractors (General Building and
This section was formerly section 6212 and remains
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surety bond for businesses engaged in the sewer trade has been
increased from $1,000 to $5,000.
section 6052E. Corporate or Administrative Headquarters.
This is a new Section which adds the new classification of
corporate or administrative headquarters to the list of
businesses which must pay a business license fee based upon gross
receipts.
Section 6052F. Manufacturers. This Section was formerly
part of Section 6226 and remains unchanged.
section 6052G. Professions. This Section was formerly
Section 6236 and the list of professions included within this
classification has been modified by moving several professions to
other classifications such as Services and Agent/Broker.
Section 6052H. Recreation and Entertainment. This is a
new Section which adds a new classification of recreation and
entertainment to the list of businesses which must pay a business
license fee based upon gross receipts.
Section 60521. Rental of Non-Residential Property
(Commercial Property). This Section was formerly Section 6219A
and has been revised to include persons or entities who/which
sublease. In addition, a provision has been added to require
that gross receipts include 100$ of gross receipts from the
rental of property and that separate licenses are required for
each rental property.
Section 6052J. Rental of Residential Property (Apartment,
Hotel, Motel, Rooming House, Trailer Court, Auto Court). This
Section was formerly Section 6129 and has been revised to include
joint ventures and subleasing as activities included within this
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category. In addition, gross receipts for these businesses shall
include loot of gross receipts from such rentals, as well as all
monies received from rental of furniture, parking spaces, and the
like, monies received for payment of utilities, and monies
received in connection with providing additional amenities.
section 6052K. Retail. This section was formerly Section
6225, Included in this business classification are persons
defined as "itinerant peddlers." A definition of "itinerant
peddler I' is provided.
section 6052L. Services. This Section was formerly
Section 6240 and has been revised to include additional kinds of
services within this business classification as well as revises
definitions of some of the services listed.
Section 6052M. Wholesalers. This Section was formerly
part of section 6226 and remains unchanged.
section 6052N. utilities. This Section was formerly
section 6225A and remains unchanged.
Section 6053. Businesses Taxed at Flat Rates. This is a
new section which provides that the business classifications set
forth in Sections 6053A through 60530 shall pay a business
license tax based upon the flat annual rate indicated.
Section 6053A. Delivery Pick-Up. This Section was
formerly Section 6214 and remains unchanged.
Section 6053B. Special Event. This Section adds a new
classification of business which must pay a business license tax
based upon gross receipts. This section applies to recreation,
entertainment, cultural, and educational events and exhibitions
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conducted from a non-permanent location for a limited period of
time.
Section 6053C. Taxi Cabs. This section was formerly
section 6400(a) and remains unchanged.
Section 6060. This Section is new and sets forth the
schedule of license fees by business classifieation and tax rate
groups. All license fees have been increased.
The tax rate for Tax Rate Group I is $75.00 for less than
$60,000 of gross receipts with an additional $1.25 for each
$1,000 of gross receipts over $60,000. Businesses includes in
this Tax Rate Group are: auto dealers, corporation or
administrative headquarters, manufacturers, recreation and
entertainment, rental of non-residential property, rental of
residential property, retail, utilities, and wholesalers.
The tax rate for Tax Rate Group II is $75.00 for less than
$60,000 of gross receipts with an additional $3.00 for each
$1,000 of gross receipts over $60,000. The businesses included
in this Tax Rate Group are: agent/brokers, contractors, builder
- owners, services, and sub or specialty contractors.
The tax rate for Tax Rate Group III is $75.00 for less than
$60,000 of gross receipts with an additional $5.00 for each
$1,000 of gross receipts over $60,000. Included in this Tax Rate
Group are all businesses included within the "professions"
business classification.
The tax rate for Tax Rate Group IV is $150 for each day or
fraction of any day in which business is conducted. All business
categories included in the "special event" business
classification are included in this Tax Rate Group.
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The tax rate for Tax Rate Group V is $50 per vehicle per
year.
The "delivery
pick-up" business classification is
included in this Tax Rate Group.
The tax rate for Tax Rate Group VI is $250 per vehicle per
year. The "taxi cab" business classification is included in this
Tax Rate Group.
section 6070. Appeals. This section was formerly Section
6124 and has been amended to add a new subsection (b), which
provides that there is no right of appeal as to the determination
as to the business classification designated and as to the amount
of any tax, fee, interest, or penalties due.
Section 6071. Void License or Permit. This Section was
former Section 6125 and remains unchanged.
Section 6072. Appeal Procedure. This Section was former
Section 6126 and remains unchanged.
SECTION 2.
This section repeals various Sections of
Article VI of the Santa Monica Municipal Code pertaining to the
business license regulations of the City. The Sections which
conflict with the above set forth new Sections have been
repealed.
SECTIONS 3, 4 r AND 5.
These sections are the standard
ordinance
sections
pertaining
to
inconsistency,
unconstitutionality, and effective date of the ordinance.
RECOMMENDATION
It is respectfully recommended that the accompanying
ordinance be introduced for first reading.
PREPARED BY: Robert M. Myers, City Attorney
Linda A. Moxon, Deputy City Attorney
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ATTACHMENT 1
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