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SR-5-A (12) / (. ,. -- e 20'8-0/5 s-fJ- ... CA:RMM:rm6100B City Councll Meetlnq 10-25-83 OCT 25 1983 Santa Monlea, Callfornia STAFF REPORT TO: Mayor and City Councll FROM: City Attorney SUBJECT: Business License Tax Ordinance In connection with the aooption of tne 1983-84 Budget, the City Councll directed the City Attorney to prepare an oralnance making varlOUS changes in the hUSlness llcense tax structure of the Clty of Santa Monlca. In response to tpis olrection, the Clty Attorney presented to the Clty Councll at lts September 27, 1983, Meetlng a proposed ordlnance ~aking various changes in the business llcense tax structure. Following a public hearing, conSloeratlon of the ordlnance was continued to October 25, 1983. On October 18, 1983, the Clty Councl1 conducted a study session on the proposed changes to the business llcense tax structure. The acconpanYlna ordlnance reflects tpe varlOUS revlsions discussed by the City Manaaer dllrlng tne studv spssion. GF,NERAL OVERVIEW Wlth the adoptlon of the 1983-84 Budqet, the City Council endorsed bUslness llcense tax changes desiqned to lncrease current flscal year revenues by $1.3 Ml11ion. The Clty Councll has prevlously received a variety of reports summarizinq the r-ff 1 OCT 2 5 1983 .. - e t . proposed business llcense tax chanoes. The followlnq summarlzes the proposed changes: 1. Tax rates will change, not categories for licenslnq. (The only exceot1on oiscussed helow 16 to chanqe the category of regulated utllltles to re~pond to a constltutional obJection ralsed by one utl1lty. See d16cussion in connectlon with Section 6225A. ) 2. 1984-85. The tax chanqes wl1l not be fully effect1ve until For fiscal year 1983-84, taxes will increase or decrease by one-half the change requ1red by the new rates, to be collected in special bll1lnq in early 1984. 3. Iod1vHlual firrns may realize tax decreases, tax lncreases, or no change 1n tax payments. About one-th1rd of the approx1mately 15,600 llcensees in the City of Santa Mon1ca will not re affected by the tax changes, since they are 10 categories not covered by the proposed ordinance. 4. Tax ]urlsdict1ons Los Angeles. rates are lower than or of the clt1es of Beverly equal to the comparison Hills, Culver Clty, and 5. The tax rate chancres will not result ln 1ncreased assesSMents under Ordlnance Number 702 (ccs) for businesses located 1n the Downtown Parklng and Buslness ImproveMent Area or Ordlnance NUI'1ber 960 (CCS) for bus1nesses locaten in t_he Montana Avenue bUs1ness promotlon area. 2 r , e e The proposed ord~nance chanqes the tax rate, generally TAX RATE CHANGES determined on the baS1S of qross rece1pts, for six aeneral categorles of licensees: Currently, 1. Profess1ons, Occupations, and Serv1ces. the business license tax pald by professlons, MlnimUM occupations, and serVlces 1S: 'T'ax Rate $20 $.65 per Sl,OOO > $6,000 MaxiMuJ"'l $2,000 HlnlMUI'1 The revised tax rate containeo in the ord1nance lS: Jl,1axirnum S50 Tax Rate $1 per $1,000 > S50,OOO <= $100,000 $3 per $1,000 > $100,000 ~one ApprOXlwately 3,399 bUSlnesses wl11 be affected by the proposed amendment. The Munlcipal Code provisions amended to effectuate thls change are Sectlons 6236, 6240, ana 6240A. 2. Retail Sales. Currently, the business license tax pald by retail sellers lS: HinlIDuPl S25 Tax Rate $.60 per $1,000 > $10,000 MaximuM The revlsed tax rate contalneo In the ordlnance is: $2,000 r>linirouIll $50 Tax Rate S.60 per Sl,OOO > $50,000 <= $250,000 Sl.25 per Sl,OOO > S250,OOO 3 MaXlI'lUIfl !,Tone ... It e Approximately ~,120 DUS1nesses will he affected by the proposed amendMent. The Hunicipal Code provision aP1.ended to effectuate this chanae 18 Section 6225. 3. Manufacturers and ~lliolesalers. Currently, the bUS1ness license tax paid hy manufacturers and wholesalers is: Minimum Tax Rate Maximum 825 $.50 per $1,000 > $10,000 $5,000 The revlsed tax rate contalned in the ordlnance lS: M1n1mum Tax Rate MaX1JTlUM $50 $.50 per $1,000 > $50,000 <~ $250,000 Sl.OO per Sl,OOO > $250,000 ~Tone ApprOX1P1.ately 461 businesses w1ll be affected by the proposed amendment. 'I'he ~1un1clpal Code prov1s1on aMenden to effectuate thls change 15 Sect10n 6226. 4. AutOttlot1ve Dealers. Currently, the hus1ness 11cense tax pa1d by autoMot1ve dealers is: M1nilTlum Tax Rate Maximum S100 $.50 per $10,000 > $100,000 $1,000 The rev18ed tax rate contained ln the ordlnance 1S: H1nimuPl '1'ax Rate Max1mum SlOO $1. 25 per Sl,OOO 82,500 (The maX1mum tax would be 1ncreased to $5,000 in f1scal year 1985-86 and each year thereafter.) 4 It e Aoproximately 46 businesses will he affected hy the proposed a~end~ent. The r1unic1pa1 Code provision amended to effectuate th1s cnange is Sect10n 6209. 5. COMMerC1al Rentals. Currently, the bus1ness llcense tax paid by co~erc1al rental llcensees 1S: H1nimum Tax Rate MaXlmurn $10 $.75 per $1,000 > $10,000 None The rev1sed tax rate contained 1n the ord1nancp 1S: Mln1mum Tax Rate MaxiPlum S50 $1 per Sl,OOO > $50,000 <~ $100,000 S 1.25 per $1,000 > $100,000 None Approx1mately 740 businesses w1l1 be affected by the proposed a~end~ent. 'T'he Hun1c1pal Code prov1s1on amended to effectuate thlS chanqe 18 Sectlon 6219A. 6. Contractors ann Subcontractors. Currently, the hus1ness license tax pain by contractors and subcontractors Varles depending upon the type of bUSlness. The following SUI'1JTlarlZeS the current tax structure: M1nimuJTl Tax Rate MaX1mUPl $40 - SlOO 8.65 per 81,000 > 820,000 None The revised tax rate conta1ned in the ordinance 1S: M1ni~nm Tax Rate MaX1mUJTl $50 $1 per $1,000 > S50,000 <= $100,000 $1.25 per $1,000 > $100,000 !'~one AnprOX1Mately 4,371 buslnesses will be affected by the 5 e e proposed a~end~ent. The Munlc1pal Code prov1s1ons aMended to effectuate th1S chanqe are Sectlons 62l2B, 62l2C, and 62l2E. SECTION BY SECTION ANALYSIS The following lS a sectlon by section delet1ons, and add1tions analysis of the contained 1n the proposed amendnents, accompanY1ng ordinance: Bectlon 6106. Section 6106 has been anended to suhst1tute the D1rector of Flnance for the Clty Clerk. In add1t1on, a provision has been added substitutinq the Director of F1nance for the C1ty Cler~ throuqhout Article VI of tne Munlclpal Code. Finally, the fee for lssuina a duplicate llcense has been lncreasea fron S.50 to $2.00. Section 6107. Seetlon 6107 has been anended to substltute the Director of Finance for the City Clerk. Beetlon 6116. Seetlon 6116 has been aMended to substitute the Dlreetor of Flnanee for the Clty Clerk~ to require that written statements of licensees be in a prescrlbed format witn specific docuMentation; and to tax businesses w1th mu1tJple locations in the Clty on the basis of total gross recelpts at all locat1ons rather than taxinq each locatlon separately. Sectlon 6116B. Section 61l6R has been added to provlde a definltlon of gross recelpts. The definition of aross receipts lS consistent with the deflnition of qross recelPts in the Clty 6 e e of Los Anqeles and surrounding wunic~pal~t~es. Var~ous exclusions fro~ aross recelpts are set forth 1n subdivlsion (c). As has been previously dlscussed, the ell~~nation of max1muw taxes lS llkely to raise issues of apportionment. Issues of apportlonment arise when certain receipts from actlvitles generated from the City. Bectlon 6116R provldes that the Clty Councl1 shall adopt businesses have gross hoth wltnin and without general apportionment standards by resolution. In addition, t}1e Section provldes that the Pirector of Flnance, w~th the approval of the C~ty Attorney, nay adopt rules and requlat10ns relating to apportlonment. A procedure for Clty Councl1 review of the rules and regulations 1S contalned in the Seetlon. Beetlon 6127. The purpose of this Seetlon lS to describe the operation of the tax rate changes implemented by the accompanying ordlnance. As the Bectlon indicates, buslnesses subJect to the changes wllJ recelve 1n Janauary 1984 a special stateMent provlding theM wlth the amount of add1tional taxes owed or the anount of the refund resultlng fron the changes made by the accowpanying ordlnanee. The additlonal taxes or refunds will be calculated by totallng taxes under the old tax structure wlth taxes under the new tax structure, with the total divided by two. ThlS w1lI result ln an effectlve 1983-84 bUSlness 11eense tax Wh1Ch is hiaher or lower than the oln. tax by an a~ount equal to one-half of the aMount of the changes implemented in the acconpanYlng ordlnance. (For exa~ple, if the tax under the old 7 e e law was $50.00 and the tax under the new law was SlOO.OO, the tax for the current year would be $75.00.) In addition, this Sectlon lS desloned to ensure that businesses in the Downtown Parking and Ruslness Improvement Area do not pay an lncreased special business llcense tax pursuant to Ordinance KUrlber 702 (CCS) ln addltlon to any increased bUS1ness llcense tax. Under Ordlnance 702 (ccs), a spec1al business llcense tax lS assessed ln the Downtown Park1no and Business I~provement Area. The spec1al buslness llcense tax 1S calculated at five t1mes the regular hUS1ness license tax. Section 6127 provldes that the business license tax, for purposes of determinlng the speclal business llcense tax required by Ordinance 702 (CCS), 18 the buslnes8 license tax determlned hy the law 1n effect on July 1, 1983. Accordingly, the amount of the special bUSlne8S ]lcense tax will not increase or decrease 702 (CCS) changes in the tax rate conta1ned in the accompanY1nq In the future, lt may he des1rable to anend Ordinance to change the spec1al bU51ness license tax rate set wlth the ordinance. forth in that ordlnance. T-Iowever, since a resolution of 1ntentlon 1S reauired before Ordinance Pumber 702 (CCS) can he amended, Sectlon 6127 prov1des an interin solution to implement the City Councl1's obJect1ve of not providing an 1ncreased spec1al business license tax ln the Downtown Parkinq and RUS1ness Improvement Area. 8 It e The Clty has also establ1sned by ordlnance business pro~otlon areas. See Ordinance Nu~ber 725 (CCS) (Downtown); Ordinance Nunrer 960 (CCS) (Montana Avenue). The Downtown buslness promotion area neternines the amount of the speclal assessnent on the basis of a percentage of taxable sales; accorolngly, the changes l.n the amount of t'be business license tax wlll not change asseSSMents for th1.S proMotlon area. The Montana Avenue business promotlon area oetermines the a~ount of tne special asseSSMent on the basis of 25% of the business l1.cense tax with a mlnlmUM of S25 and a naX1.Mum of $200. Because the amount of the speclal asseSSMent is tled to the bus1.ness llcense tax, Sectlon 6127 provldes that the business llcense tax, for purpose of determlnlng the spec1.al business license tax required by Ordlnance Nu~ber 960 (CCS), is the buslness llcense tax oetermlnen by the law in effect on July 1, 1983. Accordinqly, the a~ount of the special business license tax for the Montana Avenue business proMot1.0n area will not lncrease or decrease wlth the changes In the tax rate contalned ln the acconpanY1.nQ ordinance. Flnally, Sectlon 6127 provides in suhnlvlsion (d) that the Clty Manaqer will prepare a report for the Cltv Cauncll on or before June 1, 1985, describlnq the operatlon of the changes in the tax rate structure, the approprlateness and tax lncidence of rates, the revenue proouced, and recommendations concerning any adJustments In the rates. 9 e e Sectlon 6209. Bectlon 6209 has been a~ended to chanae the tax rate for auto and trailer sales husinesses frow $100 minimum plus S.50 per each $10,000 of gross receipts in excess of $100,000 up to a ~aximum tax of Sl,OOO to S100 ~inlmum or $1.25 per each $1,000 of gross receipts, whlchever lS greater, up to a ~aX1num of $2,500 until 1984-85 and $5,000 10 1985-86 and thereafter. Section 62128, 6212C, and 6212E. Currently, contractors and subcontractors, depend1ng on the type, pay a mlnlMUM llcense fee ranglng froM 540 to 5100. In addition, a qross receipts tax of S.65 is leV1ed on each Sl,OOO 1n excess of $20,000. The proposed ord1nance aMends these sections to provlde for a unifo~ minimuw tax of $50 plus $1.00 for each $1,000 of gross receipts 1n excess of $50,000 and less than or equal to S100,000 and $1.25 for each SI,OOO of aross recelpts In excess of SlOO,OOO. Section 6719A. Sect10n 62l9A has been aMended to change the tax rate for cOMmercial rental bUS1nesses from $10.00 ~lnimum plus 8.75 per each Sl,OOO of gross receipts in excess of SlO,OOO to S50 minimum plus $1.00 per $1,000 of gross receipts ln excess of $50,000 and less than or equal to S100,000 and $3.00 per $1,000 of gross recelpts in excess of $100,000. Seetlon 6223. Sectlon 6223 establishes the tax rate for loans, buildlng and loans and savlngs and loans businesses at a flat rate of S100. In the earlier verSlon of thlS ord1nanee, th1S Seetlon was aMended to increase the tax by taxinq cross 10 e e recelpts. In response to varlOUS concerns, amendment to this Section has been eli~inated. the proposed Section 6225. Bectlon 6225 has been amended to change the tax rate on retall sellers from $.60 per $1,000 of qross reeelpt~ ln excess of SlO,OOO up to a ~aX1Mun tax of $2,000 to $50.00 plus $.60 per $1,000 of gross recelpts In excess of $50,000 and less than or equal to S250,OOO and $1.25 per Sl,OOO of aro~s receipts ln excess of $250,000 with no rrtaximuITl tax. Beetlon 6225A. At the present tl~e, certain cross and service rate. In response the professional, to the proposed will result in recelpts of occupational, chanqes ln utilltles have been taxed at the tax rate structure, wh 1ch professional, occupatlonal and serVlce llcensees paY1ng more than reta11 and Manufacturlng 11censees, General 'J'elephone COJ11pany contacted the City and lndicated that a category change was appropriate. Artlcle XIII, Bectlon 19 of the Constitutlon of the State of Callfornla provldes that the City may not tax utilities ln an aITlount "wn1ch differs from that imposed on mercantlle, rnanufactur~nq, and other bus1.ness corporations." Gi yen tP1S constitutional prOV1Slon, the C1ty Attorney recommends that utll1.tles subject to this const1.tutional provlslon be taxed at the rate qenerally appllcable to retall sellers. ny belng placed in thlS category, WhlCh was recommended by General 'J'elep~one COITlpany, utilltles wlll be taxed In conformity wlth the taxes assessed on tpe overwhelmlng number of buslnesses falling within 11 e e the deflnitlon of mercantlle, ~anufacturlng, and other buslness corporatlons. See City of LlverMore v. Pacific Gas & Flectric Co., 120 Cal. App. 3d IDOl, 175 Cal. Rptr. 100 (1981). Section 6226. Sectlon 6226 has heen amended to chancre tne tax rate on manufacturers-wholesalers from $.50 per Sl,OOO of gross recelpts ln excess of $20,000 up to a MaXlmu~ tax of $5,000 to S50.00 plus $.50 per Sl,OOO of gross receipts In excess of $50,000 and less than or equal to $250,000 and $1.00 per $1,000 of gross recelpts ln excess of S250,000 with no MaXlmum tax. Sectlon 6736. Sectlon 6236 has been amended to change the tax rate on professionals from $20.00 Mlnimum plus $.65 per $1,000 of gross receipts ln excess of 86,000 up to a maximum tax of S2,OOO to S50.00 Minimum, plus Sl.OO per $1,000 of Gross recelpts ln excess of $50,000 and less than or equal to S100,000 and $3.00 per $1,000 of gross receipts ln excess of S100,000, wlth no maxiMUM tax. The new sectlon also suhstitutes the Director of Finance for the City Clerk. Section 6240. Beetlon 6240 has been amended to chancre the tax rate on services businesses froP1 $20 roinimum plus $.65 per $1,000 of gross recelpts in excess of S6,OOO to $50.00 rrtiniMurn, plus $1.00 per Sl,OOO of gross recelpts in excess of S50,000 and less than or equal to $100,000 and $3.00 per $1,000 of gross receipts in excess of 8100,000, wlth no IT'aximum tax. Bectlon 6240A. Sectlon 6240A ~as been repealed to e1iMlnate the maXlmUM tax liMlt of $2,000 on services businesses. 12 e e Other techn1cal c~anaes have been made in Many of the sect10ns addit10n d1scussed above. These technical of new subdivisions, renumbering changes include of subdiv1sions, eliMinat10n of sex 1st lanquage, and conform1tv of provisions to more recent aMendments of the Municipal Code. REcm1MEFDATI0N It 18 respectfully recoMMenned that the accompanY1ng ord1nance be introducted for first read1ng. PREPARED BY: Robert M. Myers, City Attorney 13 e e CA: RMM: rm6100R City Council Meetlnq 10-25-83 Santa Monica, Callfornla ORDINANCE ~~MRER (Clty Council series) AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA MONICA AMENDING SECTIONS 6106, 6107, 6116, 6209, 6212B, 6212C, 6212E, 6219A, 6225, 6226, 6236, AND 6240 OF THE SANTA ~ONICA MillJICIPAL CODE, REPPALHm SECTIOt--T 6240A OF THE SANTA MONICA MillTICIPAL CODE, ~TD ADDING SECTIONS 6l16B, 6127, AND 6225A TO THE SA1ITA MONICA MlmICIP~L CODE RELATING TO THE BllSINESS LICENSE TAX THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES OPDAIN AS FOLLOWS: SEC'TIOF 1. Section 6106 of the Santa Monica ~unicipal Code is aMended to reac as follows: SECTION 6106. Dlrector of Finance to Issue. (a) The Licenses required by thlS Code shall be issued by the Director of Finance and shall state thereln the amount thereof, the period of tlMe covered thereby, the name of the person to whom lssued, the buslness licensed and the locatlon or place of bUSlness where such buslness is to be carrled on. 1 e e (b) No 11cense granted or issued under provlslons of the Code shall be in any manner transferred or asslgned. (c) The Dlrector of Flnance shall Make a charge of S2.00 for each duplicate llcense issued under the provisions of thlS Code Wh1Ch has been lost or destroyed. (d) In no case shall any mistake made by the Dlrector of Flnance 1n stating the amount of a llcense prevent or preJudice the collect1on by the City of the aRount actually due froM any licensee. (e) ~fuenever 1n thls Article the City Clerk 1S charged w1t~ the respons1h111ty of processing, 1ssuing, or admin1stering a license or permlt, the reference to the C1ty Clerk shall be deemed a reference to the D1rector of F1nance. SECTION 2. Section 6107 of the Santa ~onica Municipal Code lS aMended to read as follows: SECTION 6107. Term of L1cense. (a) All license fees shall be paid in advance 1n legal money of the Un1ted States, at the office of the D1rector of F1nance. A separate license must be obta1ned for each branch establlshment or separate place of bus 1nes s, 1n which bUS1ness is carried on, 2 e e and eacn obtalnlnq descrlbed locatlon license shall authorize the party lt to operate only tl1at huslness ln such llcense, and onlv at the or place of business which is indicated thereby. (b) Fvery weekly license s~all expire at midnlght on the Sunday next succeedinq its day of lSSUance. (c) Every monthly llcense shall explre at ~ldnlght of the last dav of the Month nuring WhlCh it was lssued. (d) Every annual llcense shall expire at mldnlght on the June 30th next succeeding its issuance unless specified otherWlse in this Code. (e) In the event a bond is required no llcense shall be lssued until said bond has been flIed with the Dlrector of Flnance. (f) No greater or lesser amount of money shall be charged or received for any 11cense than is provlded in thlS Cone, and no license shall be sold or issued for any Derlod of tlme other than lS provided in thlS Code. SECTION 3. Seetlon 6116 of the Santa ~fonica lVIunJ_Clpal Code 1S amended to read as follows: 3 e e SECTION 6116. Statement of LJcensee. (a) In all CRses where the a~ounr of 11cense to be palo by any person lS haseo upon the amount of receipts, or sales or of business transacted, or upon t~e nUMber of persons employed or upon the nUMher of wagons or other vehicles, used, or upon the amount of the maX~MU~ admiss10n fee charged, or upon the number of tables or cha1rs used for any gaMe or upon the nUMber of units in any buildlng or upon the Aea~inq capaclty, such person, hefore obtainlng a license for such bus1ness and with1n tnlrty (30) days after the beqlnning of eac~ file with the Director llcense perio~, shall of Flnance a wrltten statement 1n the form requlred by the Director of F1nance, supported by such documentation requested by the Dlrector of Flnance, showlng the total amount of receipts or sales or of bUS1ness transacted durlng the preceding 11cense year, or the number of wagons, or other vehicles used or the amount of the Maximum admisslon fee charged, or tne number of unlts contalnec'l 1n such building, or the seating capacity at the date of SUCD statement. 4 e e (b) If two or More closely related buslnesses are carrled on at the same locatlon and under the same ownership and the ruslnesses are on a gross receipts basls, the gross recelpts shall be reported together and the greater of the rates applicable will be used for the compllation of the annual llcense fee. vfuen two or more non-related buslnesses are operated at one locatlon, separate 11censes shall be requlreQ. (c) If any person 18 requlred to have two or more licenses subJect to a llcense fee under Sections 622S, 6225~, 6226, 6236, or 6240 of thls Code, the person shall pay, in additlon to the rrini!T1um annual license -Fee for each llcense, a single llcense fee for all licenses computed on the baS1S of the total gross recelpts of all 11censes. (d) No stateMent filerl pursuant to thlS Sectlon shall be concluslve upon the City or upon any offlcer thereof as to tne matters therein set forth, and the same shall not preJudice the rlght of the Clty to recover any amount that May be ascertained to be due from such person 1n addition to the amount shown by such state~ent should lt be found to be 1ncorrect. 5 e e (e) If any person required to f~le any statement pursuant to thlS Sectlon shall fa~l to do so, such person shall he requ~red to pay a license fee at the max~mum rate herein prescribed for t}-le bUS1ness carr~ed on by such person and shall he guilty of a th1s Code and shall be v1olat1on of punishable therefor as hereinafter provided. (f) In any case where the 11cense lS to be 1ssued for a f~rst newly established bus1ness, t~e Minimum tax for that the type of business shall be pa~d, and at termination of the l~cense perlod dur1ng wh~ch the operation of such bus~ness is cOJT11Tlenced, the period shall be manner provided license for such license adJusted by this and paid in the Section for the ascerta1ning and paY1ng of l~censes for otper license per~ods, after deductlng frOM the amount so found to be due the aJl10unt pald at the time such first l~cense was issued. (g) The correctness of any statement flIed pursuant to this Sect10n shall be subJect to aud1t and verif~catlon by the D1rector of Flnance, who ~s hereby autporized and empowered to ~nspect and audit the books and records of any and all persons licensed 6 e e to carryon any bUSlness spccifieo in this Code. this (h) Any statement flIed pursuant to Sectlon shall be s19ned and shall contain the followlna: "I declare, under penalty of makina a false declaratlon, that I aw authorlzed to ~a~e thlS state~ent and to the best of my knowledae and belief it is a true, correct and complete statement, made in qood falth for the period stated." For naking a false statement or declaratlon the person slqnlng the stateMent shall be guilty of a ~lsdemeanor. (i) Any statement filed pursuant to thlS Bectlon shall be confidential in character and shall not be subject to public lnspectlon. It shall he tDe duty of the Dlrector of Flnance to preserve and ~eep the statements not becoMe charged by thlS Code. so that the contents thereof May known except to the persons law with the administration of SECTION 4. Seetlon 6209 of the Santa Monlca Munlclpal Code 15 aMended to read as follows: 7 It - SECTION 6209. Auto and Traller Sales. BUYlno, selling or offering for sale new or used automobiles, trucks, trailers, house trallers, or campers, including parts and repairs, the annual llcense fee shall he SlOO.OO or $1.25 per each $1,000 or fraction thereof of gross receipts, whlC'hever lS greater. In no event shall any license fee required to be paid pursuant to thlS Section be in excess of 52,500 for license year 1983-84, $2,500 for llcense year 1984-85, and $5,000 for license year 1985-86 and each license year thereafter. SF:CTIOF 5. Sectlon 6212B of the Santa Monica Munlclnal Code lS amended to read as follows: SECTION 6212R. Sub or Specialty Contractors and RUlldlno Trades. Enqaging in any of the ~ollowing listen buslnesses, tne annual 11cense fee shall be $50.00. 1 . Awnlnq. 2. BOllers, not water hearting, steam flttlng. 3. Burglar Alarm. 4. Cabinet and mill work. 5. CeMent and concrete. 8 .. e e 6. Electric slgns. 7. Elevator lnstal1atlon. 8. Excavating, grading, trenchl.ng, pavlng, surfaclng. 9. Fire protectlon en~lneerlng. 10. Flooctllght service. 11. Floorlnq. 12. Glazing. 13. Heating and air condltloning. 14. House and huildlng Moving or wrecking. IS. Insulatlon. 16. Landscaplng. 17. Lathinq. 18. !'1asonry. 19. Mlscellaneous. 20. Ornamental ~etals. 21. Painting and decoratino. 22. Pest control. 23. Plasterl.ng only. 24. Refrigeration. 25. Roofing. 26. Screens. 27. Sewer (Sl,OOO surety bond). 28. Sheet metal. 29. Slgns. 9 e 30. 31. 32. 33. 34. 35. e Sprinklln9. Steel. Tile (cera~ic and mosaic). Weather stripping. Vlelchng. Well drlllinq. Lathlnq and plasterina comb~ned and w~o hold a state 11cense for both and who uses hlS or her own eMployees to do both may be issued one license coverlng both businesses for the annual 11cense fee of $50.00. SECTION 6. Section 6212C of the Santa Monica Municlpal Code lS amended to read as follows: SECTION contractors. followlng 6212C. Subcontractors, Engaging in any of the 11sted bus~nesses, the annual license fee shall he S50.00. 1. Plumbinq Contractor. 2. Heatinq Contractor. 3. Electrlcal Contractor. SECTION 7. Sectlon 6212E of the Santa Monlca Munlcipal Code is amended to read as follows: SECTION 6212E. Gross Receipts ln Seetlon 6212, Excess of $50,000. Any person oescribed in 62l2B, and 6212C whose gross recelpts from work performed ln the Clty of 10 e e Santa Monica exceed S50,000 ln additlon to the fee herelnabove set forth, shall be requlred to pay an addltional annual license fee of $1.00 per each $1,000 or fraction thereof of gross reeelpts ln excess of $50,000 and less than or equal to $100,000 and $1.25 per each $1,000 or fraction thereof of gross recelpts ln excess of S100,OOO. SECTION 8. Section 6219A of the Santa Monlca Hunlcipal Code is a~ended to read as follows: SECTIO~ 6219A. COflmerclal Rental. Any person, group, aSRoelatlon, partnershlp, fir~ or corporatlon, whether as the owner or as t~e agent for the owner, who rents, leases or has avallable for rent or lease, one or more co~ercial bUlldlnq, industrla1 bUlldinq, offices or offlce building, land or vacant lots that May be utlllzed for commerical, lndustrial or offlce uses, whether at one or multiple locatlons, the annual 11cense fee shall be $50.00 plus $1.00 per each $1,000 or fraction thereof of gross recelpts in excess of $50,000 and less than or equal to $100,000 and Sl.25 per each $I,OOO or fraction thereof of qross receipts in excess of $100,000. SECTION 9. Section 6225 of the Santa Monlca Munlclpal Code is amended to read as follows: 11 e - SECTION 6225. Merchants-Retail. Manufacturlng ann selllng anv Goons, wares or merchandise at retall or selling any goods, wares or merchandlse at retail and not otherwise speclflcally llcensed by otper provisions of thlS Code, or not specifically exempted from the pa~ent of llcenses by this Code, the annual license fee shall be $50.00 mlniMum, plus $.60 per each $1,000 or fraction thereof of gross receipts ln excess of SSO,OOO and less than or equal to $250,000 and $1.25 per each SI,OOO or fractlon thereof of gross recelpts ln excess of $250,000. SECTION 10. Section 6226 of the Santa Monica Municlpal Code lS amended to read as Tollows: SECTION 6226. Manufacturers- Hholesalers. Manufacturlng and selllnq any goods, wares, or Merchandlse at wholesale or selling wholesale goods, wares, or Merchandise at and not otherwJ_se specifically llcensed by other provisions of this Code, or not speclflcally exeMpted from the payment of licenses by thlS Code, the annual license fee shall be $50.00 ~lnlmu~, plus $.50 per each $1,000 or fraction thereof of gross recelpts ln excess of $50,000 and less than or equal to $250,000 and $1.00 per each $I,OOO or 12 ~ e e fractlon thereof of oross recelpts in excess of $250,000. SECTION 11. Section 6236 of the Santa Monlca Municipal Code 18 amended to read as follows: SECTION 6236. Professional. Any person, qroup, association, partnersDlp, firn or corporat~on engaoed in a professlon, voeatlon or call1ng, llsted hereinafter or not speciflcal1y provldeo for In any other Sectlon of this Code, the annual license fee shall be S50.00 plus Sl.00 per each $1,000 or fraction thereof of gross recelpts In excess of 850,000 and less than or equal to $100,000 and $3.00 per each SI,OOO or fraction thereof of gross recelpts ln excess of $100,000. The professions, voeatlons or callings referred to herein lne1ude, 11mited to the fo11owlng: but are not l. Accountant. 2. Appraiser. 3. Archltect. 4. Assayer. 5. Attorney-at-law. 6. Auditor. 7. 13acterlologist. 8. Bond Broker. 13 _ e 9. Certlfled Public Acountant. 10. Chern st. II. Chlropodist. 12. Chlropractor. 13. C1Vl1 Englneer. 14. Co~erclal Artlst. 15. CO~~lSnlon ~erchant. 16. Credlt Report. 17. Decorator (Interior). 18. Dental ~echnlclan. 19. Dentlst. 20. Deslqner. 21. Doctor-Medical. 22. Draftsnan. 23. Drugless Practltioner. 24. Electrical Engineer. 25. Electrologist. 26. Geologist. 27. Hypnotlst or Hypnotherapist. 28. Insurance AdJuster. 29. Insurance Broker. 30. Landscape Architect. 31. Manufacturer's Agent. 32. Mechanlca1 Fngineer. 33. Mlnlnq Enqlneer. 34. Ocullst. 14 . e 35. Optician. 36. Optometr1st. 37. Osteopath. 38. Physlc1an. 39. Psych~atr~st. 40. Public~ty Agent. 41. Real Estate Broker. 42. Stock Broker. 43. Surgeon. 44. Surveyor. 45. Tax Counselor. 46. Veterlnary. ~fuenever a State of California license 1S requ1reo to entitle a person to practice a professlon, the D1reetor of Finance may require, before issuing a llcense pursuant to this Sect lon, the applicant to exh~nit an unexp1rea ana unrevokeo license entltling sald applicant to practlce in the State of Californ1a. SECTION 12. Sectlon 6240 of the Santa r-10nica Municlpal Code 18 amended to read as follows: SECTION 6240 . Serv1ces. Selling or ,,,hich 1S not provldlng for pay any serV1ce otherwise speciflcally licensed by other provisions of thlS Code, or not speciflC'ally exe~pted from the payment of licenses by th1S 15 e e Code, the annual llcense fee shall be $50.00 Sl.00 per each Sl,OOO or fraction plus the reo f of gross recelpts In excess of $50,000 and less than or equal to SIOO,OOO and $3.00 per each $1,000 or fraction thereof of qross receipts ln excess of $100,000. The serVlces referred to hereln lnc1ude, but are not llmlted to, the following: 1. Advertislng, Publlcity or Public Relations Agency. 2. AlarJTI. 3. Anlmal Care or Leaslng. 4. Auto SerVlce Station. 5. Auto Wash. 6. Auto Wrecklng. A permit is requ1red prlor to Ilcens1ng (see Sections 6120 and 6122). other 7. Barber Shop, Beauty Parlor, or any establlshment engaged ln tonsorial JTlanlcurinq, shampooing, halr-dressinq, arts, shavlng or faClal massage. 8. Bath House or Bath ~reatMent. A permit 18 requlred prior to licenslng (see Sectlons 6120 and 6122). 9. Bookkeeplng. 16 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. . e Booking or Theatrical Agent. Brokerage, Stocks and Bonds. Caterer. Check Casninq. Collection Agency. Co~erclal Art1st. Consultant. Data Proeesslng. E~ploYMent Bureaus. Gardenlng and Landscapino. Fouse, COfTll"lerc1al Ru~ldlnq, Industrial Plant, etc., cleaninq, includln0 janitorlal, household furnishings and window-washlng services. 21. 22. Illustrator. Institutions, schools, or persons engaged In the bUS1ness of providing for pay lnstructlon 1n such matters as art, aviatlon, beauty culture, self-defense, trade or business or other accoMplish~ent. A permit is reau1rerl for dance and physical culture lnstruction prlor to licenslng (see Sections 6120 and 6122). ThlS sub-section shall not apply to any gymnaslum conducted in connectlon wlth any private club or any publ1C or private school where other courses of lnstruction are given. 17 . - 23. Letter Agency. ~'Jrl tinq or Addressing 24. 25. Lithographer. Masseur or Masseuse. A per~it is prl0r to lieenslng (see Sections requlred 6120 and 6122). 26. ~10rtlclan. 27. Odor Control. 28. Private Investiqation, Patrol or Securlty Aqency. 29. Publ1C Stenographlc SerV1ce. 30. Rental of Vehlcles, Trailers, Appl1ances, etc. 31. Repalr service of any type when not ln conjunct~on wlth a bus1ness already llcensed. 32. Research Firm. 33. Storage or Warehouse Facilities. 34. Tallors or Dressmakers. 35. Telephone Answer1ng Service. 36. Ticket Agency. 37. Tree Care. 38. Typewrlter Pepalr. SECT ION 1 3 . Sect10n 6240A of the Santa Monica Munlcloal Code lS repealed. SFCTION 14. Sectlon 6116B 1S added to the Santa Monica Munleipal Code to read as follows: 18 ~ . SECTIOF 61l6B. Gross Receipts. (a) "Gross recelpt s," whenever used in this Artlcle, shall be construed as deflned ln this Sectlon unless from the context a dlfferent meaning is lntended or unless a nifferent ~eanlng 18 speciflcally defined. (b) "Gross recelpts" shall mean the qross receipts for the flscal year COmIDenclnq on July 1 and ending on June 30 of the followlng year and shall mean: (1) The total aMount of the sale prlce of all sales, the total amount charged or received for the performance of any act, serVlce or employMent of whatever nature it may be, whether such service, act or emploYJ11ent is done as part of or in connectlon with the sale of gooos, wares, merchandise or not, for WhlCh a charge is made or eredlt allowed, lncludlng all recelpts, cash, credits and property of any kind or nature, any amount for WhlCh ereolt lS allowed by tne seller to the purchaser wlthout any deductlon therefrom on account of the cost of the property sold, the cost of the Materlals used, labor or service costs, lnterest paid or payable, losses or any other expense whatsoever. 19 -- . (2) The a~ount of any federal manufacturers' or importers' eXC1se tax lnc1uded ln tDe price of property sold, even though the Manufacturer or importer is also the retailer thereof and whether or not the amount of such tax is charqe. stated as a separate (3) In connection wlth a person leaslng or rentlng property, all aMounts paid by a tenant to a lessor for the services performed, or Materlals used, or util1tles or facili tles furnlshed by tDe lessor on the premlses or 1n connectlon with the tenant's use, possession, or the rlght to possess the property; any recelpts paid by a tenant to a lessor for the use or possession of land, or the right to use or possess land other than that upon which the bUlldlng or structure is located but WhlCh lS used or possessed or is available for use or possesslon hy a tenant for purposes related to the tenancYi and all anounts palO as prepald rent. (4 ) Recelpts of any person received as commiSSlons or fees earned, or charges of any character Made or compensatlon of any character received, for the performance of any service by sald person or 20 ~- . any of sald person's eMployees and receipts of any person reee1ved as partial or full COMpensatlon or relMbursenent for salaries, payroll taxes, frlnge heneflts and any and all simllar expenses for persons who are employees of said person and reC€lpts of any person recelved as part1al or full compensatlon or re1mbursement for equipI'1ent, supplies, utlllt1es, or other 1tems or serVlces acquired by sald person ln that person's naMe and used or consumed ln the perforMance of serVlces. ( c) lnelude: "Gross receipts" sha 11 not (I) The anount of any federal tax imposed on or with respect to retail sales whether lmposed upon the retaller or upon the consumer and reqardless of whether or not the aMount of federal tax lS stated to customers as a seoarate charge. (2) Any California state, Clty, or city and county sales or use tax requlred bv law to be lncluded in or added to the purchase prlce and collected froM the consUMer or purchaser. (3) Such part of the sales prlee of any property previously sold and returned 21 e e hy the purchaser to the seller wh~ch is refunded hy the seller by way of cash or credit allowances given or taken as part payment on any property so accepted for resale. (4) Cash discounts allowed or taken on sales. (5) Rece1pts of persons acting as agents or brokers, other than receipts reeelved as commissions or fees earned and other than net lnterest incoMe earned fro~ marg ln ac count loans, or charges of any cOMpensation of any character Made or character received for the perforwance of any serVlce as aqent or brOKer: provided, however, any agent or broker dealing in stocks or other sl~ilar wrltten lnstruements eVldenelng a riq~t to participate in the as se ts of any buslness, or deallng 1n bonds or other evidences of indebtedness, who also deals in such property as a pr1nc~pal, shall lnclude in qrass recelpts the a~ount of tradlng proflts resulting frOM such dealings. (6) Any refundable deposlt wh~ch is returned to the depositor. (7) Gross reeelprs from any actlvity for which a business 11cense would 22 e e not be requlreo under this Code and WhlCh is received from incidential actlvltles of the llcensee. of (8) That portion of the receipts qeneral contractor 11censed under a Sections 6212, 6212R, 6212C, or 6212F. WhlCh represents provlded such payments to subcontractors subcontractors are licensed under the provlsions of thlS Chapter and that the qeneral contractor furnishes the Dlrector of Flnance with the names and addresses of the subcontractors ana the amounts pain to each subcontractor. (9) Gross rece1pts attributable to sales withln a slngle business entlty when no net ga1n results, corporatlons when one lnterest in the including affiliated has at least an 80% other, wholly-owned eorporatlons, and partnershlps and partners. (10 ) Rad debts taken froM qross recelpts reported durlna a prior tax year ln accordance with generally acceptable accountlng practlces. (II) Anythlng whleh the City of Santa Monica nay not lawfully lnclude by virtue of the Constitution of t"he Unlted 23 It e States or the Constitutlon of the State of Californla. (d) When, by reason of the provislons of the Constltution of the United States or the Const1tut~on of the State of Cal1fornia, the bUS1ness license fee lmposed by this Article cannot be enforced without there be1ng an apportionMent according to the aMount of buslness done 1n the city of Santa ~on1ea, or ln the State of Cal1forn1a, as the case may be, apportlonment rules shall he established as follows: (I) The Clty Council from time to tlme shall adopt by resolution general gUldelines for apportlonment. (2) The Director of Plnance, wlth the approval of the City Attorney, May ~ake such rules and regulations for the apportionment of tne tax as are necessary and deslrable to overCOMe the constitutional Ob]ect1ons and WhlCh are conslstent with the general apportlonment Guidelines adopted by resolution of the Clty Councll. The Dlrector of Flnance snaIl publish such rules and regulatlons once ln a newspaper of general clrculation withln the C1ty of Santa Monica. Wlthln IO days of the date of publication of 24 e e such rules and regulations, any lnterested person may file a request with the City Clerk that the Clty Council review the rules and regulatlons so published. The rules and regulations shall be flnal at the expiration of the perlod for requesting review ln the event no reauest for review lS flIed, or ln the event of the fllinq of a reouest for reVlew, when the rules and requlatlons have been aoopted by the C1ty Councll. (3) The apportlonment shall be ~ade on the bas~s of payroll value and Sltus of tanqlble property, general expense, or by reference to any other method of apportionment as wlll fairly determine the a~ount of gross recelpts derived from or attrlbutable to engaginq in bUSlness in the Clty. Gross reeelpts derived from lsolated or occasional transactlons at places outside the City but with~n the State of California, where the llcensee is not regularly engaged ln a course of business transactions shall be deemed gross receipts derlveo frOM enoaglna in bUSlness in the Clty. Gross rece~pts derlved from or attributable to sources wlthin the Clty lnclude gross receipts from tanglble or lntanglble property located or 25 e e having a Sltus 1n the City and, when not contrary to la'tT, <?,TOSS rece1.pts from any aetlv1tles carrled on ln the C1.ty reqardless of whether carrled on in 1nterstate, 1ntrastate, or fore1qn commerce. SECTION 15. Section 6127 is added to the Santa Monlca Mun1cipal Code to read as follows: SECT ION 6127. Operation of 1983-84 Tax Rate Changes. (a) The amendments to Sectlons 62 09 , 62 25A, 6212R, 6212C, 62l2F, 6219A, 6225, 6226, 6236, 6240, and 6240A contained 1n the ordinance adopting thlS Section shall be effect1ve for license year cOMmencing on July I, 1983, and ending on June 30, 1984, as follows: (1) The annual license fee required by such Sectlons shall be determined on the basls of the aross receipts reported in license year 1983-84 ln accordance with this Code. ( 2 ) The annual license fee required by the predecessor of such Sections, as effectlve prlor to the date of of adopt1on of the ordinance adopting this Section, shall be deter~ined on the basis of qross recelpts 26 e e . reported in license year 1983-84 in accordance wlth thlS Code. (3 ) Th e amount determined. In accordance with subdivls10n (a){l) of this Sectlon and the aMount r'!eterJluned in accordance with subch vislon (a) (2) of this Section shall he totaled and divided hy 2. The aMount deterMlned ln accordance wlth this suhdivis10n shall be the amount of the annual llcense fee for license year 1983-84. (4) If a person has previouslv paid to the C1ty an annual license fee for llcense year 1983-84 WhlCh is less than the aMount deter['luned ln accordance with the subdlvlsion (a) (3) of this Sectlon, person shall pay to the Clty on or before March I, 1984, an aMount equal to the dlfferenee between the annual license fee determlned in accordance (a) (3 ) of this Bectlon with and subdlvision such arn.ount prev10usly pa1d not lnclur1ing any penalties. (5 ) If a person nas previously paid to the Clty an annual license fee for l.l.cense year 1983-84 ,,,hi en 18 greater than the aMount determinec'l. ln accordance with subdlvision (a) (3) of thlS Section, the Clty shall refund to the person on or before March 27 e e 1, 1984, an amount equal to the difference between such amount prevlously paid not 1ncludlng any penaltles and the annual license fee determlned ln accordance with subdivlslon (a) (3) of th1S Section. ( 6 ) For llcense year 1983-84 only, and from the effectlve date of this Sectlnn, in 11eu of the penalties provlded for ln Sections 6109 and 6112 of thlS COQe, a penalty of twenty-five percent (25%) shall be lmposed on the anount of the annual 11cense fee determlned in accordance with subdlvision (a) (3) of tlns Section. No person shall be entltled to a refund of any penalties paid prior to the effectlve elate of tJois Section. (7 ) In addition to the penalty imposed by subdlvlsion (a) (6) of this Sect lon, a penalty of twenty-flve percent (25%) shall he i~posed on the amount of any annual 11cense fee determined in accordance wlth suhdlVlsion (a) (3) of thlS Section remalninq unpa1d after March 1, 1984. (8) The Dlrector of Flnance shall mall to all persons subJect to an annual llcense fee pursuant to the Seetlons set forth ln subd1vlsion (a) of thlS Sectlon, a statement setting forth the determination 28 . e e ..- of the annual license fee for license year 1983-84. (b) The Seetlons described ln subch vlsion (a) of this Section shall be fully effectlve, wlthout regard to suhdlvlsion (a) of this Sectlon and without other proratlon or other reductlon, except as required by other provls1ons of this Code, for l1cense year 1984-85 and each llcense year thereafter. (c) For those Dersons suhJect to the annual license fee required by Sectlons 6209, 62l2R, 6226, ( ccs ) 6212C, 6212F, 6219A, 62::>5, 6225A, 6236, ann 6240, the special bUSlness fee requ1ren by Ordlnance Number 702 or Ord~nance Number 960 (CCS) shall be 11cense netermlned on the bas1s of the annual 11cense fee netermined in accordance with subdivislon (a)(2) of this Seetlon. (d) On or before March 1, 1985, the City Manager shall prepare a wrltten report to the Clty Council descrlblnq the operat1on of the tax rate chanqes made by the amendments contalned In the ordinance adopting thlS Section, lncluding the appropriateness and tax incldence of rates, the revenue produced, ana recoMmendatlons 29 f . . e e concernlng any adJustment in the rates. If the revenues generated by the tax rate changed made by the aMendMents contalned in ordlnance adopting this Sectlon substantially exceed proJected revenues from the changes, the Clty Council shall conslder a downward adJustroent of the rates. SECTIO!\T 16. Sectlon 6225A lS aoded to the Santa ~onica Hunlc1pal rooe to read as follows: SECTION 6225A. Annual License Fee of ReQulaterl Utillties. this Code an annual Whenever bv vlrtue of license fee is requlred to be pald by any ut1lity subJect to Artlele XIII, Sectlon 19 of the Constltutlon of tpe State of Callfornia, the annual license fee, notwlthstandinq any provislon to the contrary contalned in th1S Code, shall be $50.00 Mlnimum, plus $.60 per each $1,000 or fraction thereof of gross receipts in excess of S50,OOO and less tran or equal to S250,OOO and Sl.25 per each Sl,OOO or fraction thereof of gross recelpts In excess of S250,OOO. SECTIO~ 17. Any provislon of the Santa Monica Municlpal Code or appendices thereto inconslstent witD the provisions of thlS ordlnance, to the extent of such lnconsistencies and no further, are nereby repealed or ~odlfied to that extent necessary to affect the provlslons of this ordinance. 30 " . e .,..:11 . SECTION 19. If any sectlon, subsectlon, sentence, clause, or phrase of thlS ordlnance is for any reason held to be invallo or unconstltutlonal by a deels10n of any court of any co~petent Jur~ Sdlction, such declsion shall not affect the validlty of the remainlng port1ons of the orolnance. The City Council hereby declares that lt would have passed this ordinance and each an0 every section, subsection, sentence, clause or phrase not declared invalid or unconstltutional wlthout regard to whether any portlon of the ordlnance would be subsequently declared lnvalld or unconstitutlonal. SECTION 20. The Mayor shall Slgn and the City Clerk shall attest to the passage of thls ordinance. ThlS City Clerk shall cause the same to be puhllshed once in the official newspaper withln 15 da~s after its adoption. The ordlnanee shall hecome effectlve after 30 days from lts adoption. APPROVED AS TO FORM: ~~. ~~r- Robert M. Myers City Attorney 31 '" , I ,.. . e Santa Monica Bar Association 225 Santa Momca Boulevard '7 SUite 906. Crocker Bank BUlldmg ~ tf!? 8--0/<3 Santa Momca, Cahforma 90401 (213) 451-5633 October 25, 1983 b---R _~~t Honorable Ken Edwards, Mayor City of Santa Monica 1685 Main Street Santa Monica, CA 90401 Re: Business License Tax Increase Ordinance Dear Mayor Edwards: The Board of Trustees of the Santa Monica Bar Association held a Special Meeting October 24, 1983 to consider whether the Bar Association should take a position pro or con on the above matter which we understand will be before you this evening for "first reading.t1 The following resolution was duly adopted at the meeting (6 in favor, 1 opposed, and 1 abstention): RESOLVED: That the Board of Trustees of the Santa Monica Bar Association opposes the proposed increase of the business tax for the professions, occupations and services catagory by the City Council of the City of Santa Monica. I was asked to express the position of Board of Trustee of the Bar Association on the issue. Briefly stated, their opposition to the proposed increase appears to be based upon strong feelings that the same is both discriminatory and arbitrary. These complaints go to the aspects of the nature of the tax itself, being based in the particular catagory mentioned, on Ugross receiptstf without regard to the expenses involved in generating the same, or put in a different manner, the profit involved. It was generally felt that to tax substantially in such a manner was not an appropriate way to fairly share the tax burden. Also, even the so-called "compromise" proposal does not appear to fairly treat those in the middle and upper or top catagories and cannot but have adverse effects on professional services available and the costs thereof in the community. V7~Z tfff-!ft: DURST President