City Council - Regular Meeting

As soon as that information was available, it was presented to Council on December 1st of 2025, along with a request to proceed forward with exploration of such a measure. At that time, Council did not authorize staff to proceed, though the item was reconsidered at the December 15th to 2025 meeting, at which time Council did direct staff to proceed forward. Then in February, on February 17th of this year, council directed staff to work with a consultant to conduct a poll and to specifically test three different possible measures, one of which was a business license tax monetization as well as a parcel tax and a vacancy tax. The polling was then conducted, and once that polling information was available, we presented it at the April 6th, 2026 meeting, at which time Council received those results, authorized consulting services to help support the effort, and Council also directed us to proceed forward with conducting outreach and analysis related to the business license tax modernization. Since that time, we have up in here some highlights of the various outreach that we've done to various stakeholder groups and the public and business owners. So you can see there, beginning basically the day after we received the direction from council, we began identifying and lining up relevant financial consultants and developing draft outreach materials. um we also engaged in dialogue with the chamber of commerce via email initially and then we want to thank the chamber for inviting city staff to attend a an exec a special executive board meeting to provide a presentation of that april presentation slide deck and address any questions the chamber then followed up with some additional follow-up questions via email and responsive information was provided back to them Then on May 19th, you can see there we launched a city survey portal and that is still live and available today. One can click on these links here in the materials or visit them and still continue to provide feedback. We also established a dedicated project phone line for calls or texts for questions or input. A physical paper mailer was actually was mailed out as well to nearly 20,000 residents or over 20,000 residents, notifying them of these discussions. There was also related social media posts, online videos, and other ads notifying the public as well on all of our social media channels. Late in May last month, we also launched a dedicated project website. You can see the address there that has just a lot of information on the model and the proposal that's under evaluation right now, including an estimator so that business owners who might be interested to understand the ramifications of the model could calculate and derive some estimates. and then of course we in addition to that we had various other outreach that took place you can see there including issuance of a press release notification via email over 7 200 businesses in our database emails to our business associations and then in all the materials we also included a variety of ways in which feedback could be provided in addition to attending tonight's meeting I think we also wanted to provide just some fiscal context. Much of this information on the slide should look familiar to the council, as we've highlighted these topics in various other public forums and public meetings. As we know, the city continues to face a number of long-term funding challenges, including related to capital projects, infrastructure needs, and public safety. um yet like all municipalities we do face we have finite revenue sources right we basically have our general fund and we have reserves so it is uh challenging in terms of the on the revenue side additionally like like virtually all other municipalities here in california we also face a number of legacy unfunded liabilities included including those related to pension and opeb obligations and i guess long story short and suffices to say that Cost savings alone, while they may balance the city budget, they won't fully address all of the fiscal challenges that we face. And then also I think just general mantra as staff has evaluated this is the notion that really one has to look at both sides of the budget, both on the expenditure side as well as on the expenditure side. I think it's also worth noting some regional context that helped inform this discussion. You can just see here on the screen before us the kind of overall environment here in Alameda County. And you can see the vast majority of cities already have what are known as gross receipts, business license tax models already in effect. and in addition to these it's also worth noting we're aware of at least three or four other cities that are actively involved in a very similar process that we're in right now of evaluating the possibility of modifying or shifting over to a gross receipts model and indeed just last week our understanding is that the city of hayward city council adopted an ordinance to formally place a business license tax modernization with a grocery sheet structure on the upcoming november ballot Also worth noting all the efforts and all of the work that your council has done to help reduce our ongoing expenditures and address our fiscal challenges through budgetary reductions. Most of this should look familiar to us. As a reminder, it's part of the mid-cycle budget process that just wrapped up. We've identified a path forward to closing an $11.6 million structural deficit, and you can see the highlights there of some of the approaches that are being taken to do that, including $6.4 million in operating expenditure reductions and inter-fund transfer reductions that have already been adopted, and then looking ahead to the upcoming biennium that'll start about a little over a year from now. You can see there's also quite a number of other cuts that have already been identified and that will be baked into our baseline budget planning process. Also worth noting here, you can kind of see an overview of our current business license model. Acknowledging that there's a lot of information on that screenshot on the right-hand side, but rest assured one can just click on that link that's visible on the page there to see this in greater detail. At a high level though, our current structure, which is quite dated, my understanding is that it was last updated in maybe the mid-90s, although some of the definitions and classifications even go back to as early as the 1960s in some cases. And you can see, just to highlight a few, You can even see we even have a classification for fortune telling with its own distinct rate as well. It just kind of highlights the era in which some of this was originally developed. And at a high level, basically that tax is typically calculated with a base fee along with an additional unit fee that's typically based on either the number of employees or the square footage of the business. Some highlights here. You can see this is, again, our current business license model as it's currently in effect and already being implemented in this current fiscal year. We're expecting to derive about a little under $6.7 million from that current model. you see this is really just kind of a breakdown of the sources of that revenue under that current model and you can see you know different kind of categories of business types how many of any of those licensed businesses exist here in san leandro that have business licenses and the amount of funds that were derived by break and broken down by category Now we're going to kind of pivot a little bit here in terms of this concept of a business license tax modernization. And it includes a number of assumptions. It'll go over here. As an initial model, we took a look at Union City just down the road from us as a potential model to analyze and to analyze what that model would look like here in San Leandro. The reason why Union City was selected is is for a number of reasons, one of which is, generally speaking, they are known as a community that prioritizes economic development. Also worth noting that they just remodernized their own structure in 2024 following a robust public process. And based on feedback we've heard from staff in that organization that, generally speaking, the community has adapted to it and they have not seen some kind of large-scale departure of businesses or something along those lines following the adoption of that measure. As I mentioned earlier, too, one of the things is our current structure has approximately 30 categories, and so a modernization typically we see in other cities, including Union Cities, to narrow that and consolidate those categories. Also, the first $25,000 of gross revenue is exempted under the Union City model. And just a reminder here in this last item, this last bullet point, and the sub-bullets therein really reminds us, again, why we're here today and why we're having this discussion. Again, there's just quite a lot of community needs that we hear about in these meetings and in other forums. The public has identified concerns for all these issue areas for which sufficient funds to really address all the needs we don't currently have. And so ultimately, if a measure were to move forward, you know you can see some of the highlights of the various funds or service areas and programs that could be funded by the council so here we have i know we have a lot of numbers on the screen but just at a high level What this is showing us is if we were to take the Union City model that was just updated and modernized in 2024 as part of that election cycle and transpose that here in San Leandro to our business community, you can see kind of what that would look like. So those categories at the left should look familiar from two slides ago when we outlined the current revenues we're already deriving. And in the bottom here, right-hand corner, you can see the grand total of revenue that could be derived, again, if that union city model were transposed here. Worth noting, though, again, this is the grand total of revenue, so a little under $9 million. And recall, for comparison, From two slides ago, our current model is generating a little under 6.7 million. So it's the delta between those two is what we're talking about. So this 8.997 would replace the 6.6. So what that means is essentially a net increase of less than $3 million annually. So just to drill down further, like what would this actually mean for a number of businesses in our community? As I mentioned earlier, this is a complicated text structure, and they are inherently so, but you can see a number of variety of different examples here of different business types. And you can see, I would draw your attention to these rows three and four that are highlighted in beige color. And you can see the difference of what they would experience. So taking one example here, say highlighting cell 1C, you can see basically if you have a restaurant here in San Leandro that currently generates about a million dollars of gross receipts with 12 employees, they're currently paying about $800 a year for their business license tax in our current model. And if we were to transition to a Union City model, their tax would actually decrease. But now, conversely, you can take something like a car dealership that's generating $65 million with 70 employees, and they would see quite a market increase from $4,000 a year to $27,000 a year. So you can see there's a number of scenarios here where there could be quite significant percentile increases if we were to simply transpose the Union City model. And to be clear, staff is not recommending that at this time. So just kind of highlighting, again, to drill down further on some of those, what I would classify as concerns and observations that we've noted based on this model. There's just some inherent differences between Union City and San Leandro. We certainly have a number of, I would say, a larger business community here, a larger number of businesses. We also have a number of very large businesses, including over 30 businesses with over 150 employees, greater than 20 businesses with over $50 million in annual revenue. We're also doing there some examples or ranges for large businesses with the current rates range from a low end of about 8,000 a year all the way up to a high end of some businesses that are already paying $200,000 a year under the current structure. And you can see below that how those ranges could change under the Union City model from between 10,000 on the low end to 248,000 on the high end. And then for any business type, you can see the low end is currently $171 per year, and then the high again is about $200,000. And you can see the new rates as well. But notably, and this is certainly a concern we want to flag, is that in some instances, such as the ones I just went over in the preceding slide, you can see some businesses would see quite significant increases. Nevertheless, there are a number of smaller business types who are anticipated to see a lesser impact of increase. And in some cases, there are even businesses who would see an annual decrease. And so that's why we're highlighting for your awareness what we're classifying as potential mitigations. And so the idea is part of the direction we received, we analyzed in depth the Union City model, did a lot of analysis, did quite a bit of robust outreach, listened to business owners' feedback, really drilled down on certain examples, and we identified some concerns with that model. Union City model if we were to just boilerplate transfer it over without making any changes to it So we want to identify there's these options that do exist to potentially mitigate those impacts if you all directed us to do so Including what I would say and we're kind of put these in order of prioritization from the staff's perspective Certainly, I think refining those rates for the highly impacted business communities would be a a logical next step in terms of trying to mitigate those impacts and i would say this is commonplace no two cities are precisely alike and so just about every city that has a gross receipts model has done some customization to reflect the conditions in their in their local community other options could in phasing it in over time and that could be baked into the ordinance into the language of the tax so that you kind of try to allow time for businesses to adapt to that new model over time rather than just like a full conversion in year one. And other options could include exploring maximum level gross receipts that are subject to taxation, though that is not very typical in other cities. There's also, you know, we could look at modifying those exemption thresholds. As I mentioned earlier, Union City currently exempts the first $25,000 of annual revenue. There could be other ways of increasing that exemption. to capture more businesses with with exemptions um and then other options also just as a reminder as you recall from prior meetings our economic development team has been working in partnership with the council um through the process of their economic adopted economic development strategy which highlights a number of what we call supplies like priority business areas that we're trying to incentivize here in san leandro including manufacturing r d other large sales tax generators, high paying large employers, and of course housing providers, many of whom have been impacted as a result of recent policy changes. Some other just generalized policy considerations we want to highlight is that part of the context as to why we're exploring this, in addition to the fact that most other cities in Alameda County are already using such a model or actively exploring converting to one, It's also worth noting that there are some business types that just by their nature don't necessarily fully offset the cost or the service level impacts that their operations may have on the city. So for example, there are certain examples of professional services using just some examples like dental offices or law firms or others like that where most of their revenue is derived from services being provided, not actual products that are being sold. So there's no sales tax that's coming along with that. Additionally, using the example of, say, warehouses or some of the more industrial-type businesses where they have a lot of truck trips involved, they can have a very significant impact on pavement condition or, in some cases, parking or just urban runoff as well. And then, nevertheless, with all that said, we also want to ensure that any changes balance those impacts with the potential impacts of the businesses. And note that these items all come out of our ED strategy as well. Of course, we always want to focus on retaining the businesses that we have, supporting their long-term growth and hiring and expansion. So now we're on the last slide here. It just highlights the direction that we're seeking from you all tonight, but in particular providing direction on those potential mitigations or modification measures that I just highlighted a few moments ago. to help better incentivize business retention, growth, hiring, and expansion. And if so directed, the staff is prepared to bring forward a draft ordinance in July for placement on the November 26th measure. And just for broader context on that too, to the extent there is still a desire to proceed forward with the measure for November, our deadline essentially is July in order to meet those deadlines in order to get it on the ballot. And that wraps up SNAP's presentation. I'm happy to answer any questions.

Thank you for your presentation. So what we'll do is we'll take questions, and we'll go to public comment, and then we'll come back for further discussion and elaboration. So questions first, please.

And may I also interject? Certainly. I apologize. I would on note, too, we have Eric Myers, who is our tax consultant from HDL, who's on the line virtually via Zoom, and he's available to answer more kind of technical questions about the model and the analysis that took place. And we also have Bonnie Moss from Clifford Moss, who's been our strategic advisor on this initiative, as well as our team from the Economic Development Division, as well as our finance department here to help.

Thank you for the fairness of resources that are available to us. So at this point in time, we'll go to questions from council members. So we'll start with Council Member Bolt.

Yes, thank you for the presentation. I know we spoke a lot about Union City, and I get it, it's two communities that are quite often looked at similarly, but are we taking into consideration if there's a business in San Leandro that also does the same type of business in a different community, not Union City, what they're paying in that city to kind of, you know, because I don't want to be in a position where we're going so far here and then in a different city they're not really doing that and then we lose to that city a certain business.

That is certainly some of the types of analysis that you all could direct us to do. I will share that by the very nature of these models of this particular business tax or this particular tax structure is inherently complicated. And there's all these various permutations. Every city does it in a different way. It's a much more complex model than say some of the other general purpose taxes that we've looked at in past election cycles, like the real property transfer tax or sales tax, where it's much more straightforward and clean, apples to apples comparisons. But to the extent the council is interested in further analysis of other cities, we can certainly do so beyond the information that's already presented here.

I think mine's geared more to just if we have businesses that operate in multiple cities, understanding what they're paying in those cities as well. So I'm not saying go figure out what all the other cities are making people pay, but to the point that we're looking at specific businesses that are here in San Leandro, And they say, for them, it's apples to apples. They're doing the same thing in this city and that city. That we're taking time to understand what that number is. That's all I'm requesting. But it's a full council. That's all I have.

Thank you. So we'll come to Council Member Victor Aguilar.

Thank you, Mayor. And thank you, Eric, for the presentation. I just, Mike, what I'm having a hard time wrapping my head around is the Potential 700% increase with regards to manufacturing. Yes, it's great that we could potentially garner the revenue, but I just wanted to, you know, having a trouble trying to figure out like, what is equitable? And, you know, with regards to warehouses, I mean, you know, warehouses, does that include storage facilities, like public storage? that considered a warehouse because I I I think that that decrease is something that shouldn't not be existent but then increase with regards to manufacturing I think there's you know and we received a lot of emails from a lot of businesses with regards to this and I and I can see why folks are talking about this is trying to figure out what makes sense. And like my council colleague mentioned, what are other businesses in other cities being charged? Because the last thing I want to do is lose a major company. to a neighboring city who is not charging these astronomical rates with a 700% increase. So how are we going to make this equitable?

Thank you, Councilmember, for your question. I think this all speaks to these concerns and observation, acknowledging, given the time constraints available, we provided this analysis. We worked with our tax consultant to derive it. These estimates were derived. We've highlighted for you the very similar concerns you just highlighted as well in your comments just now. And so that's why we're suggesting mitigation measures. I think this all speaks to this kind of first bullet point here about refining those rates and modifying the structure so that we're not just cloning the Union City model, but we're taking into account those local impacts. Gotcha.

Thank you for that. That's my question.

And then if I could clarify, he did ask a question about public storage. Do you know which category that would fit into off the top of your head? I don't offhand, but I will look to Michael. Okay, so what we'll do is we'll let them do the research and we'll continue with council members with their questions. Council Member Bowen.

Thank you, Mayor. I'll try to ask just the questions and then come back for comments. I really appreciate the initial outreach that's been done. But I know that if we go to that slide of the outreach, when the council gave direction to go out there and figure out if we want to do this, This does not seem like enough time to come up with a fully baked policy for this November. Would we best practice normally spend more time than what we've had to come up with what this structure would look like?

I would say certainly in other cities that have done this, there's typically an ideal world, there's more time.

Okay, because I did notice earlier you said there were time constraints, and it does feel really truncated. The other question I had is on the slide six, in terms of a regional context. Nine of the 14 cities in Alameda County use gross receipts. Hayward and Livermore do some sort of mix, but most businesses do, so it seems that only Dublin and Albany do not. And so it does seem like we are on the right track, if I'm understanding correctly, to be able to look at our current structure to see what modifications there are. Would you say that that is, that for us to be, to sort of fall in line with the other cities in Alameda County, the majority of which are using gross receipts, we're one of the only ones that do not, except for with cannabis and parking lot businesses?

That is, I mean, I would say it is correct that we are, for lack of a better term, somewhat of an outlier now in terms of the model that we have. And most, the majority of cities in Alameda County have transitioned away from that type of model and towards this gross receipts model. Also, I would share, I have some information here while it's coming in in real time, that public storage in the model is listed under property rental. So I can answer Council Member Aguilar's question from earlier.

Okay. And then in terms of possible mitigations, help me, Eric, if you could understand the timeframe for this. Do we need to build out what these sort of mitigations would actually look like? Would we be able to do that before putting it on the ballot this November? Or would this be something that would require us to give staff more time to be able to fully understand what these possible mitigation efforts would look like.

Sure. I would say either is possible. I mean, certainly we are prepared if so directed. If the goal was to focus on the November ballot, that means we need to come back to you all in July and we're prepared to do that and come back with some proposed refinements with that said you know certainly there are that is that is a tight period of time and so to in you know optimal circumstances having additional time we could do more robust analysis and working with our tax consultant and doing more research and kind of drilling down on these various permutations as you can imagine with a stroke of attacks like this the there's just quite a different ways that variety and ways in which it could be modified

Great. And then the last question is for the last slide, or slide 15, around policy considerations. Tax changes should balance potential impacts to businesses, retention, growth, hiring, expansion. Is that what is driving what would need to happen for slide 14, possible mitigations?

I would certainly say that is a lens through which we would certainly be evaluating any such refinements.

Thank you.

Can I, through the mayor, too, just to respond to confirming that public storage would fall under warehousing? To your question.

Oh, it is warehousing? I thought I heard property rentals.

We verified it looked like it would be under warehousing.

Under warehousing. Okay, thank you. Thank you. Thank you, Council Member Bowen. Coming to Council Member James Aguilar.

Yeah, I have one question. I think that kind of fits into Councilmember Bowen's point about timing. Do you have a drop-dead deadline for us to communicate with the registrar of voters that we're placing something on the November ballot? What is that deadline?

Sure. I'll, of course, defer to the clerk on that one. But my understanding is it's, I believe, the very beginning of August. And given that we typically have an August recess, what that means as a practical matter is by the end of July, basically. Okay, and according to our current scale adopted council's calendar. That would be basically the last meeting in July Okay in the absence of a special meeting. Thank you. That's helpful.

Thank you And I know you had been in there councilmember Simon you're out you're back in okay, there you go Councilman Simon Thank you for the presentation just so I understand the slide here our current the model is based upon number of employees in square footage and

Generally speaking. The majority here are all pilots.

And this gross receipts that we're considering, are we looking at or considering profit margins for businesses if they're pulling in a lot of money but their expenses are really high?

Yes. I would say this in general, uh, best practice and is, and is incorporated into the union city models. There is the intention is to have customized rates for these different categories that takes into account like certain examples, like restaurants would typically have very low margins, right. Would be an example of a business that is typically, and there's others, but versus high margin businesses. And so there's the intent is to have some customization there, um, to reflect that.

Okay. So regarding the restaurants you mentioned, Your current rate goes from $800 to $320. Could you illustrate how that happens?

Well, I think in this instance, with the comparison here, and again, this is a specific hypothetical example, and knowing that every restaurant is different. But under this example, let's assume we have a restaurant that makes $1 million even of annual revenue. And then you apply the new formula, Union City formula. for that category of business, and then the output of that formula is basically this new rate of $320. Conversely, their current rate is based, and we go back to that earlier slide with the, and you can see, I don't know if you can see restaurants on here, but you can see how the current formula works, which is really more focused on, well, it's just not focused on gross receipts.

So are you pulling in expenses? telling what their profit margin is?

So state law for these types of taxes really limits us to gross receipts. We're not able to have some kind of net. It's not a structure or a model that we're able to utilize. And so the idea is ideally that the structure itself or the formula that's applicable for a category takes into account the generalized conditions of these types of categories of businesses. but we cannot take legally take into account or start like deducting costs or things like that off their business.

Yeah. I just be curious as this progresses to understand a little bit more how that works, how to see that formula, how that equation works. That's quite a drastic cut for the restaurants, um, which may be helpful to them if they have a high profit margin, but just trying to understand how that works, that profit margin factor. And, Is there a summary of comments from the business community? Do we have...

we do yeah we do i would say this we certainly have through the well we have i would say this a couple things in terms of feedback received today certainly there was the polling data scientific polling information that we presented in april in addition to that we do have summaries of the responses that we've gotten through the polling and feedback sessions and outreach work we've done over the last since the last check-in with council we did not include that in the presentation tonight because part of our intent for tonight's meeting is really to create that forum to hear from the business owners who are coming tonight, so to give them the feedback session. And additionally, I would note that the channel that we have right now, for example, that We Listen page, I mean, it is not exclusively limited to only business owners who can provide the feedback. Really, the public can provide feedback to it as well. But we certainly have information on feedback received to date on an aggregated basis that we can share with council.

Okay, that'd be helpful. And my last question, SO IF THE IF THIS GOES ON A BALLOT IT'S VOTED ON BY THE RESIDENTS YEAH CORRECT THE SANDLANDER ELECT REGISTERED VOTERS WHO LIVE IN THERE WE LIVE IN SANDLANDER AND THE BUSINESSES AREN'T VOTING UH SO WHAT SAY DO THE BUSINESSES HAVE IN THIS BESIDES I MEAN IS IT JUST GIVING US COMMENTS OR BECAUSE IT'S INTERESTING HOW THERE'S CERTAIN TAX MEASURES THAT ARE OUT THERE THAT WE HAVE ANALYZED THROUGHOUT THIS WHOLE PROCESS AND the businesses don't have a vote.

They have to the extent they live in town or the owners live in town, they have a vote in that respect. But you're correct. That's the nature of of taxation, local taxes is that the the authorization for local taxes is derived from the consent of the voters in that city. And that's a crew across the boarding.

Okay, because there's certain taxes that are like that, like the vacancy tax, I believe, has that issue. This one does too.

I mean, there are examples of like for like Prop 218 fees, like we went through that stormwater fee process maybe a year or two ago. And that's different because that's like a different, that's a fee. And that's actually voted on by the property owners directly. Okay, thank you.

A couple of questions or a few questions from me. Have we tracked any sort of tax holidays that other cities are undertaking currently for either new or existing businesses?

We have heard anecdotally of some that are doing that. We don't have a slide though summarizing that.

And then I know that the focus is the sales, gross receipts for sales tied to San Leandro. I don't have the exact language at play, but tell me a little bit more about what that means as a practical matter. Obviously for a restaurant, it's pretty easy because the restaurant site's in San Leandro. I'm looking more to companies that sell products around the country.

Sure. So, I mean, by and large, I would say this. This is state law and constitutional provisions. We can only tax activity that takes place within our jurisdiction, within the bounds of the jurisdiction of the city of San Leandro. So using an example, say, of a big contracting company that may be headquartered here, but they do construction projects all over the Bay Area. We can only tax the gross receipts on activity or projects that actually happen to take place in San Leandro.

So let's run with that a little bit. I've got a consultant that's based here. Let's change it to an accountant. I've got an accountant that's based here. But they provide services to businesses throughout the East Bay. The accountants sit here in San Leandro. Their offices are here. Their computers are here. But their services are for clients in Union City, Hayward, Oakland, maybe even San Francisco. Is all of that activity tied to San Leandro?

Mayor, I'm going to ask if we have Eric Myers from HDL, who's our tax consultant, available on the line here. Certainly. Thank you. He may be able to drill down on some of these more technical questions. Thank you.

Sure. Good evening.

Good evening.

In that hypothetical that you stated, Mr. Mayor, we're going to, as a general rule for the taxation of conducting the business, we're not going to take into account where the customers are located. So if their only participating location is in San Leandro, they may go to the customer sites to do some of their consulting. They may do it virtually. They may send things via email. But the business activity is going to get generally sourced to San Leandro. And to the extent that that business says, well, I actually have an office somewhere else, great. Let's talk about that under what are called constitutional apportionment rules. But generally speaking, in your hypothetical, all of that revenue is going to be sourced to San Leandro. The location of the customer is not determinative.

Would it be different for construction businesses?

Well, for construction businesses, because the service is actually happening at another site that may be outside the city, generally the answer is yes. Where the job site is is often going to have the majority of the revenue attributed there.

OK. And then what about some of our large manufacturers that sell their product around the world?

So again, I mean, setting aside any of the complexities of sort of water's edge for the moment, what we're going to look at is how much taxable activity is happening in the city of San Leandro. We don't really look to where the customer is located. So what we're looking to is how much taxable activity as measured by gross receipts is happening in San Leandro. constitutional apportionment provisions for that. If a city if a business says hey look I know that we're doing a lot of the work here but we're not doing all of it here.

Great.

We can work with a business to come up with that determination. But generally speaking if they've got a single location and they're shipping worldwide this is the source location for their gross receipts.

If they have transfers to another location, so they manufacture in San Leandro, but they say, you know what, we're gonna open up a warehouse in Tracy and then we're gonna sell out of the city of Tracy. They make it here and then they ship it to Tracy and they sell it out of Tracy. Would that change the tax that's paid?

It would, but it wouldn't eradicate their tax obligation in San Leandro. So you'd now have a second location that's participating in the sale, but a gross receipts business license tax is not a tax on sales at retail. So that's why it can reach services. It can reach other items in the stream of commerce that a retail sales tax does not reach.

But to be clear, I think your answer to my question was, in my hypothetical, it would eradicate the gross receipts tax?

It would not.

It would not. So why is that, since there's no receipt for activity in San Leandro?

The manufacturer is part of the stream of commerce Mr. Mayor and that is taxable activity occurring in your city. So you'd have to come up with an apportionment between let's call it just for the sake of the hypothetical 50 50. There's two locations participating. One builds the stuff transships it and then the other sells it out of their location. That's still participating. That is taxable activity. Conducting a business is typically the taxable activity, not just receiving the sales. So if the entity, the broader legal entity, receives gross receipts because of that, you will portion some of that to what's happening in San Leandro.

So if you look at the tax code for international transfer pricing, Section 482, is that akin to that type of transfer pricing analysis?

I think it's simpler, though I'm not an expert in international transfer pricing.

But this concept of apportioning economic activity is going to be at the core for our bigger businesses in the city?

That is correct. Okay. And it is similar to what you will see in the income tax realm, right? Maybe not necessarily the international treaties, but The general apportionment rules will look to payroll and property as proxies for business activity in a given location.

Okay. Let's talk, let's take public comment on this item.

Mayor, we have received six comment cards from within the room, and there are presently three, four hands raised online.

OK, we'll start in person. Make sure if you'd like to speak on this item, now's the chance to put in a card. Because when we close public comment, we'll be done with public comment in person. Then we'll go online and we'll listen to those speakers. So if you'd like to speak, make sure you have your card turned in. So let's open up public comment in person, please.

Our first in-person speakers, the first three are James A. Begir. Thank you. James A. Begir, followed by David Stark and Jennifer Rizzo. Mr. McGeer.

I'm James McGeer. Good evening, Mayor and members of the City Council. I'm James McGeer, Cross Street. We have McGeer Avenue.

Purely for online reasons, if you wouldn't mind standing there. Perfect. They can hear you online. Thank you.

My great-great-grandfather started this Cherry Festival parade that you enjoyed yesterday, 117 years ago, in 1909. We came from Germany in 1885. That's what my dealer plate says. On my dealer plate, 1885, we were able to choose that number for the DMV. So anyway, we're a long established dealership in San Leandro. We want you to recognize that we've been here a long time. Other dealerships here too. We don't want you to kill auto industry. As you can see, Volvo and Hyundai is gone now within the last week or two. They're gone. Okay. And so I'm going to get laser focused, not drift along too much. So We strongly urge the council to adjust the current draft of the business license tax extremely. Modification measure, gross receipts are deeply unfair for high volume, low margin industries. A vehicle sales involves high asset costs, but extremely thin net profit margin, especially in new cars. you have often just 1% or 2% profit. Modeling this measure with the Union City, I notice you guys don't talk about San Jose, you don't talk about Fremont, all the big cities that have a lot of cars. We're talking about Union City. Modeling the measure for the Union City without protections intentionally DISINVESTIGATE LOCAL DEALERSHIPS, CHARGING A RETAIL RATE $1.25 PER THOUSAND OF GROSS REVENUE, SOUNDS TINY, BUT FOR A DEALERSHIP MOVING $50 MILLION IN INVENTORY, THAT IS $62,500 ANNUAL TAX BILL. THAT EATS UP OVER 10% OF OUR ACTUAL NET INCOME. HIGH MARGIN SOFTWARE CONSULTANTS OR LANDLORDS WILL ONLY PAY A FRACTION OF PERCENT OF THAT PROFITS. The structure penalizes us simply for selling high ticket items, okay? Neighboring auto heavy cities protect their sectors.

Sorry, your time has elapsed. The next three speakers.

So what we're gonna ask you to do is to take what you have prepared and can you email that to us, please? Thank you for that additional context. And again, feel free to email us, because we do review that information. You can also speak with us. Our contact information is available online, and we are ready and willing to listen.

The next three speakers are David Stark, Jennifer Rizzo, and Robert Jones.

Good evening, Mayor and members of the City Council. I'm David Stark, representing the Bay East Association of Realtors, which includes many housing providers and real estate professionals who live and work in San Leandro. We have two concerns about the proposed business license tax structure that may affect particularly smaller housing providers and the local real estate industry. First, we ask the Council to carefully consider the cumulative impact on smaller rental housing providers, especially those who own or manage five or fewer units, who are trying to maintain aging housing while also managing rising insurance, maintenance, financing, and new regulatory costs. Now, action that you took during your last meeting means housing providers must now absorb the full cost of both the rental registry and rent stabilization programs. Of course, staff has indicated there will be savings from the proposed gross receipt model, but they may be modest and may be outweighed by the newly adopted rent program expenses. We ask you to evaluate the cumulative effect of these policies, not just the proposed business license structure. Second, the unknown impact on real estate agents and brokers. Now, real estate is different for many businesses because compensation is governed both by state law and structured through independent contractor relationships. Commissions are actually paid to brokerages and then distributed to agents, and it's unclear how gross receipts would be calculated, whether agents would be taxed on total commissions or net earnings, how brokerages would be treated, and whether overlapping taxation will occur. We ask that you provide greater clarity regarding the impact both on housing providers and on real estate professionals before you send this to the voters. And I understand that you already have some concerns about the timing and whether there's been enough time to fully vet this. We ask you to think very carefully. Take your time before you send anything to the voters. And I appreciate the opportunity to share our perspective. Thank you.

Thank you. The next three speakers are Jennifer Rizzo, Robert Jones, and Jeff Carey.

Good evening. I'm Jennifer Rizzo. I'm with the California Apartment Association representing San Leandro rental housing providers. And rental housing is one of San Leandro's largest business categories. There are more than 2,700 rental homes and apartments in the city, and those homes are essential to San Leandro's housing supply. CAA understands the city's need to fund essential services, but the proposed business license tax measure would move the city to a gross receipts formula, and that is a serious problem for rental housing. A gross receipts tax does not tax the profit. It taxes the revenue before a provider pays the insurance, the repairs, the utilities, the labor, property taxes. And those expenses have risen sharply, and they're not optional. A property can look healthy on paper based on gross revenue while still struggling to cover the actual cost of operating and maintaining housing. And this proposal is especially concerning because it comes at the heels of the new rent control and rent registry program, which is projected to tax the local rental housing providers more than $2 million annually. Layering a new gross receipts tax on top of that would add yet another cost to the same housing providers the city depends on to preserve existing homes. That matters because when the cost of operating rental housing increases, owners have fewer dollars available for maintenance and repairs and upgrades and long-term reinvestment. At a time when cities across California are trying to preserve existing housing, encourage investment, San Leandro should not adopt a tax structure that makes rental housing more expensive to operate and harder to maintain. So we urge the council not to move forward with the measure as currently proposed. At a minimum, the city should include safeguards for highly impacted businesses, such as reduced rates for housing providers or caps on gross receipts subject to the tax.

Thank you. Your time has elapsed. Our next three speakers are Robert Jones, Jeff Carey, and San Leandro Chamber of Commerce.

I'm Robert Jones. I grew up here in town. I'm a real estate broker. I just wondered, do any of you people own a business? Because this, I mean, you passed that rent control where the state already had it. And then I've had clients that kept their rents low because they had low interest rates on their loans, five-year fixed. Well, those just got jacked up 50%. And the insurance rates have gone through the roof. And you penalize the good landlords. It's just sad to see. Just why do we have to be so anti-business? Thank you.

Thank you. The next three speakers are Jeff Carey, San Leandro Chamber of Commerce, and Jeff Kropp.

I'm Jeff Carey, a longtime business owner in San Leandro, a resident for a long time. I'd just like to know how this tax is going to go ahead and affect the small businesses in San Leandro. We're a small business. A lot of our business has been terribly affected by the parking. in the downtown area. We think it's unfair. We have never had an official accounting as if the city was going to go ahead and remove additional parking on Callen Avenue. But you've killed our business, and now you're asking for more taxes. I'd just like to know how much that's going to go ahead and cost us in the long run. But the thing is, we're terribly hurt. by the San Leandro business practices in the downtown regarding their parking. Thank you.

Thank you. The next two speakers are San Leandro Chamber of Commerce and Jeff Krupp.

Good evening, Mayor and members of the City Council. I'm Emily Grego. CEO of the San Leandro Chamber of Commerce. I want to share with you a little bit of data and some of the comments we've received from a membership survey that we sent out. I also emailed all of you and put all of those comments in there so that you can read them. We also know that this is, you all are looking to modernize the tax structure as other cities have done. And we are being told that it's gonna help close deferred maintenance budget gaps. But our survey and the comments from our members really reveal a deep and practical disconnect between theory and local reality. 98% of our respondents reported that their fees will go up, impacting employers of every size and of all sectors responded. This is not an abstract policy. It's a direct increase in the cost of doing business, and it will trickle down to San Leandro consumers. The council needs to ask itself if this measure will inadvertently trigger long-term economic flight. One of our members who has operated and established business here since 1989, who is a food distributor and retailer, stated clearly that this proposal has caused them to entirely halt their plans to purchase another commercial property in San Leandro. When multi-decade investors begin rethinking their future footprint here, it's a warning sign. We had a lot of long-term businesses. Furthermore, there is immense frustration regarding how this is being marketed at the community. It's saying, doesn't San Leandro deserve new roads? Doesn't San Leandro deserve new facilities? But legally, the money goes to the general fund, and there's no guarantee that it's going to be locked into infrastructure or deferred maintenance. So we are urging the council, we ask the council to please pause action on this. Don't rush this to the ballot. Have further conversation, more dialogue with the businesses. Find out more how this is really going to affect them, especially from what we've heard in the present.

Thank you. Your time has elapsed. Our last in-person speaker is Jeff Kropp.

Hello, council members. I wasn't planning on speaking, but I was looking at the slide 11, what it would look like, Union City gross receipts model in San Leandro. And I'm kind of there with Council Member Bolt in that, why is it just one city you're comparing to? Why aren't you looking at more cities? And looking at this number, I'm seeing that the amounts are different for different categories. And I wondered what this proposal would look like if you had only two actual rates, one at .002 and the other one at .004, with a minimum of $150 for all categories. That feels to me like it would seem like you're being even-handed with all businesses, regardless of category, rather than preferential for particular categories, exemptions of who knows what special interest wants your attention. But my suggestion is handle it more even-handedly than that and compare to other groups. When I did receive my poll, it seemed like your polling company is looking for the bias that was most likely to get your measure to pass. There was no actionable information provided to the citizens in that. It's just like tax the business and you won't have to pay anything and you'll have better situation. I really think you should reconsider that approach that your pollster has provided you. Thank you.

Thank you. Mayor, there are no more speaker cards.

So we will close public comment in person and go online to continue with online public comment.

Our first online commenter is Claire Ibrahim. Claire, you may unmute yourself.

Thank you. Can you hear me okay?

Yep.

My name is Claire Ibrahim. I'm the founder of East Bay Child Development Center. We are a pediatric therapy center here in San Leandro, and we serve over 400 families per year. Under the proposed gross receipts model, our estimated tax liability would be around $7,500. Our gross revenue is around $3 million, but pediatric therapy operates on very thin margins. That revenue flows almost entirely to staff salaries, overhead and direct care costs, not profit. We are in our sixth year in business here in San Leandro and we have not yet reached consistent profitability. Grouping health and social services into the same category as law firms, accounting firms and other high margin professional services does not reflect the economic reality of how we operate. Taxing gross receipts without regard for expenses treats our practice the same as a highly profitable enterprise of equal revenue, which is not an accurate measure of financial capacity. While we support a modernized tax structure, we simply ask that it reflect the real economic conditions of the businesses and the community effects. Thank you.

Thank you. The next online speaker is Alvaro Ramos.

Can you hear me?

Yes.

Okay. Well, the one thing that I did take away from looking at this was the It looks to me like progressive taxation. I mean, what I'm getting from this is like you have flat tax rates already, or at least what was the base fee. And I just want to point out that flat taxes are just financially destructive and then they contribute to deficits to the United States. Flat taxes are unfair because they provide an unequal voice to each taxpayer. It's basically like putting inequality and building it into the tax code. And the federal government granted tax cuts, which should be considered a part of mitigation. And even so far as those tax cuts are also very destructive to the U.S. economy. I mean, the hard truth is that the federal government delivered a budget shortfalls for American households, which include cuts to health care, to food and energy. And that's not even everything, but that's just to sum it up. And I think we can expect more destruction in the next fiscal year. I mean, the city of San Leandro has cut public services that we all needed last year and then this next fiscal year again. Austerity will kill thousands of American people each year. So if a business had a good year, the community should have relief after all this stress. Governments need the resources to keep people alive. We need to stop worrying about companies leaving and have a discussion about workers and consumers disappearing. I'm concerned about the funding priorities too, and I would appreciate a clearer focus like housing services to save us money and provide stability. Public transportation to so that we can limit the car dependency We're not prepared for the oil shock that we're about to face and BART is also in a in a deficit to Library operating days and hours are getting cut for the second time when we have illiteracy.

Thank you, sir. Your time is up Our next online speaker is Stacy Cooper Denton

Good evening, Mayor Gonzalez and council members. My name is Stacey Cooper Dent, and for almost 25 years, I've worked at Tarani. I am proud to be a part of this 100-year-old independent manufacturing company headquartered on Marina Boulevard. The decision in front of you tonight has real consequences for companies like ours. Tarani moved to San Leandro in 2020, and we made a long-term commitment to build our forever home right here in San Leandro. We made that decision at a time when many manufacturers were choosing to leave the Bay Area due to high cost and complexity to do business. We chose to stay here because we believe San Leandro is a place where a company like ours could grow and thrive. Since then, we've grown to almost 500 people, doubled with almost half living within 10 miles of our factory. And at Tarani, we're creating high-quality jobs with strong wages and growth opportunities. These are jobs that contribute to the long-term health of our families and this community. With the limited information that we have available tonight, we believe the proposed business license fee structure would increase our fee to 10x today, not 7x, 10x the cost. And at that level, it's much more than a marginal change. It meaningfully shapes how we think about growing, hiring, and investing. And our ask is simple. Let's work together. Let's figure out how to create a more balanced approach. We understand this is a difficult decision, and we're here to partner to do it with you. Thank you.

Thank you. The next speaker is Kristen Anderson.

Good evening, council. My name is Kristen Anderson, and I'm here to talk to the council as both a business owner in San Leandro and a board member for the Chamber of Commerce. This initiative is being proposed to generate significant revenue for our city, but at whose cost? San Leandro has always promoted itself as a business friendly, city, a place where many industries call home from warehousing, manufacturing, retail, biotech, hospitality, construction, healthcare, professional services, nonprofits, and many more. To own and operate a business in California is very expensive, yet here we are doing it. We provide jobs in San Leandro. We pay property taxes. We generate sales tax revenue. We provide goods and services to the residents of this city. We have invested in this community. So when the city polled the residents regarding the measure and asking if businesses should pay their fair share to the city, the poll in itself was unfair to us. Gross receipts is not an indication of affordability or profitability in a business. Yes, some businesses will end up paying less, but clearly some businesses are going to pay significantly more. which may cause the elimination of jobs or businesses leaving San Leandro completely. Some businesses could see an increase of 760%. I ask you, is that fair? Tonight, I request the City Council delay their decision and talk to your business community before agreeing to this measure. This measure needs more time, more data, more outreach to the business community. We have invested in this city and now we ask the city invest their time in us. Thank you.

Thank you. The next online speaker is Douglas Spaulding.

Thank you. I support this proposal as reasonable, smart, and fair. It's no secret the city needs to increase our revenue and that's become more necessary with the apparent postponement of the citizens parcel tax. This proposal is The percent to look at is the tax rate. It's fair to pay hundreds of dollars in taxes on hundreds of thousands of dollars in revenue, just as it is to pay thousands of dollars in taxes and millions of dollars in revenue. San Leandro is a good place to do business. I would say in some cases a little too sweet. And to my friends who turned out from the business community, I don't believe this is going to bankrupt any business. I don't believe this is going to result in any economic the sky is not falling. This is not analogous to businesses moving from California to Texas. I don't know of a lot of Fortune 500 companies in San Leandro for whom it would be worthwhile. This is merely the cost of doing business in San Leandro and the criteria for ensuring the quality of life in San Leandro. Torriani is an exemplary business. So, you know, have your employees move to San Leandro to take advantage of the rent stabilization ordinance, our excellent schools, our progressive policing, our reconciling with redlining and our racist past. So I know the concern that many members of the community hold is that if this passes, we need some guardrails so it doesn't just go into the next internal investigation. I know you all want to wish, express your commitment to reopening Lake Chabot Road. I ask, will you commit to rebuilding the three firehouses in San Leandro? A business does not do a lot of good, generate a lot of revenue if it burns down. Thank you very much.

Thank you. The next online speaker is Tuan Ngo.

Yes, I'd like to just raise concern on behalf of the businesses that there needs to be more input. The gross revenue receipts are not an accurate measure of how well a business is doing. A lot of businesses are struggling, especially with COVID. For example, many housing providers have not been made whole and are out Tens of thousands of dollars and gross revenue receipt doesn't take into account whether business is profitable or not. And you're hammering people who literally immigrants who labor day in and day out to provide essential housing service. Your alternatives to that is really non-existent because nonprofit housing providers were evicting people after the pandemic ended. And that was tracked in Berkeley because they have high overhead costs, including office staff and not being accountable because they're using tax dollars and money not coming out of their pocket. Well, Immigrant and local residents were doing weekend and doing labor for very little cost and not getting paid. So how are you going to provide effective, efficient, lower cost housing that is more affordable for low income renters? You talk like you care about housing, but how many of you actually care? roll up your sleeves and do the essential service of housing and actually put a roof over people's head. You pass policy without outreach to stakeholders that are harming people. You need to look at policy that works and spend money wisely. Dublin, as you know, has an excess in money and they don't have this kind of revenue, gross tax receipts base.

Sir, your time has elapsed. Mayor, there are no more hands raised on line.

So we're closing public comment on line and coming back to the chambers for any further questions or discussions, beginning with Council Member Bowen.

Thank you, Mayor. A few things that I want to share. I think from the very first priority workshop I attended, we talked about the looming deficit and all the things that the city needs to be able to pay for. And the question was, how do we get more money? Council has always directed staff to figure out a way to do so and actually you know last year I actually submitted a referral to explore potential revenue measures and you know last year the world looked a little different than it does now and very recently we had recently when we took the vote to expend money to be able to go out there and figure out if we actually do even want to do this process, I had actually voted no. And the reason why I had voted no was not because I didn't want the city to be able to find more money, but the reality is that it is a very hard time for everyone, businesses included and people included. Just yesterday, today, an announcement around the reduction of WIC benefits for people. We're literally taking away um basic needs from people and that includes people that own businesses and people that work at these businesses and so i appreciate the work that staff has done to to explore this because that was the direction that this council gave to do so i don't think that we had enough time to be able to do um to create a proposal for this um election that would be what the um what i think would be balanced and what i think um what i'm hearing from the businesses here as well The reality is that we do need to do something and if we look at the cities around us, including Fremont that's on there, including Dublin where my car dealership is, all of these things, we do need to find a way to modernize, we do need to find a way to be able to work together with the business community. I recently took a trip to Oklahoma City and the revitalization down there was amazing and the business community came out and said we decided to work with the city. we knew that we also had to invest in the city as well, because when we invest in the city and the city invests in us, we both can succeed. And so my... My recommendation, my position is that we actually defer on this proposal and look at a new proposal, look at what we actually mean when we say that we want to make it balanced, that we want retention, we want growth, we want hiring, we want expansion. It really worries me that some of the percentage hikes are 200% to 700%. These are real impacts on the city and the community. and we need to figure out what that actually means. Right now, I appreciate that that is the lens of which we are looking at the mitigations, but I don't really know what that means. I would really need to see something that was more concrete in that, and I definitely love all the things that we want to fund, but I think at this point, we have to be realistic about where we're at and what we're asking of our residents, what we're asking of our businesses, what we're asking of people that work at these businesses. Thank you.

Well, I wait for the next council member. You're saying defer from November. Would you also like to see further work done? Yes. Thank you. So that's yes. I know that the mic didn't punch in, but it was a yes. And for the deferral and more work. Going to Council Member Bolt, please.

Yes. Start and finish with the same sentence. We need help. It should go from both sides. It's both sides of the equation, the residents and the businesses. With that said, some of the comments that I do agree with coming from the business, and I saw notes being taken, and I appreciate that by staff, but the overlapping taxes, that should be a no-go. If we figure that out and we see that's happening, that's something we need to correct. a cap on certain industries where we're seeing an astronomical increase. know that is the intention of staff I felt it through the presentation so I want us to continue to work on that to understand that and and know that we're not going to lose businesses to other cities that are doing business here in another city like I mentioned earlier because our taxes just go so far that it's not smart to do business here anymore um i don't like employee based i think that could and would have a negative effect on our growth and most importantly jobs you know someone's in that bridge area of do I hire someone else and what does it mean to the bottom line instead of yes let's hire more we have more work to do so I like that we haven't really approached that thank you and I don't want to see us go that way the last thing I'll ask is And I don't know who to ask this of. Someone put it out there. Not look at anybody in particular, but hopefully I get a response. Could we earmark the increase in funds towards infrastructure? So if we know we're bringing in now, and then there's an overall increase, Could it? Maybe we can't do that. But if we could, I'd like to see that happen. And then, well, I'll stop there and see if anybody could answer that.

OK, so that last piece is a legal question, because this is a general tax. And I will come to city attorney for that.

Correct. As proposed right now, just confirming with Mr. Engelbart, this would be a general tax, 50% plus one approval, and would be used for any and all municipal services.

So the question is, could we earmark the increase to go strictly to infrastructure?

No.

OK. That solves that. Lastly, I'll just say this, second to last. I don't want to see a decrease. I know businesses don't want to hear that, especially if they saw this and they're like, sweet. I don't think anybody should get a decrease in these times. And then I'm going to end with what I started with. We need help. And it should come from both sides of the equation, the residents and the businesses. So I support us going forward and getting more information so that we have a better understanding of what it's going to look like for the November ballot. And I'll stop there.

So just to clarify, I hear let's continue studying. From your perspective, you're still ready to possibly put it on the November ballot? With more information, you want to have that discussion again at some point before the end of July? Correct. Thank you. So next I will come to Councilmember Simon.

Thank you. I agree with most of what my colleagues have said so far. And I do want to highlight again, and everyone probably already knows this, but I'm just going to say it. We need the money in every shape, way, and form, from our streets to our firehouse that we heard that's not got earthquake issues, building falls on the truck, can't serve the businesses or the residents. And then that comes back to Councilmember Bolt's comment, and I agree fully. This should come from both the businesses and the residents. And I understand it's allowed by law by this process, but it just really does not seem fair that the residents can dictate what the businesses get taxed. I know it's the process, but it just does not seem fair. have no say and they can get stuck with whatever the residents say i don't think the residents would like that if the businesses could do that to their residents so i think we should be fair here as a council i do believe we should look at the profit margins more so than just the gross receipts it just seems like way out of whack for some businesses that show lots of money coming in but When you pencil it out with the expenses, it may not be that case. So I think more work needs to be done. I would like it to be in the November ballot. Do we have time is the question. Do we have time to do the analysis, to get more input from the businesses, and to really let the residents know that we all have to pitch in. I know folks don't like to hear it, but it is a reality. We all live and share in this city. and we have to step up, every one of us. But I do support this measure, not in the shape and form, we need to modify it and make sure that it's fair to the businesses, but I don't know if we're ready for November. I would love to, but I'd like to hear what my other colleagues say, thank you.

So we will proceed with Council Member James Aguilar.

Thank you, Mayor. I'm going to agree with the sentiment. Something needs to happen. That's 100% sure. And I think Councilmember Bolt has it right on the nose that it needs to be both sides. Both sides need to contribute, especially right now. But I really do want to spend more time studying. I want to spend time understanding. Um, and I also want to spend more time sitting down with businesses and keep getting emails and start to work through my mind what equity looks like in this scenario. Um, and so. I, I am also along with council members, Simon. I'm not sure we're ready for November. Um. i i really just want to push the narrative of we need to talk more we need to work more and so um i i'm willing to put the work in to get something that looks a lot more polished and move forward from there okay coming to council member victor are you there

Thank you, Mayor. I agree with my council colleagues, with Councilmember Bull and Simon and Aguilar. I think we all have to work together to pitch in to establish some sort of revenue measure to come in. And I have been supportive of this, but I think we need to work together. And I had asked a question to staff with regards to equity. and to make sure that we look at some sort of models that make sense, that are not completely astronomical, but that are equitable and somewhat competitive. But I think we need to go back and do some more research, but I will be supporting this to move forward on the November 3rd ballot. Those are my comments. Thank you, Mayor.

Vice Mayor, please.

A couple of thoughts that I wanted to share just in terms of moving. My hope is that we get to November with something, and I think having just voted on an annual budget for this upcoming fiscal year, we are heading into planning for our biannual budget. Essentially, it's happening now. um and we are looking at a runway um we're looking at a short runway at our fiscal cliff um and the short runway to get to something that's equitable in november a couple and so that's kind of what i'm in my head those are those concurrent lanes and figuring out what that how both of those things can be balanced. Just a couple of two main kind of drill downs for our discussion in July is what does high paying mean in terms of a high paying employer? I definitely want to ensure that we think about is it like an executive level position versus an employer that does manufacturing but pays a livable wage and even more than that. So what is high paying employers and what does that mean within the context of the salient economy? I did submit an item for the last planning session on research and development, and so I know that there's a lot more information in our economic development strategy around our research and development to attract and retain R&D. That continues to be a growing field. Looking ahead, I am thinking about what our neighboring, not just cities in Alameda County, but throughout the Bay, Where would, for example, where would like a data center fit in here? That is something that is hot. It's an emerging issue for many communities. And it's unclear to me how forward facing this strategy is. It looks to me that is... It is based on who is here now. And so I'm trying to think ahead on those emerging types of industry that may be coming our way. And how do we plan for that? I'm not necessarily supportive of that one example. But that's something that I'm thinking about. Where would that fit within the categories? So I know our economic development team has thought about what are some of those emerging industries. I also wanted to balance the climate impact of some of the industries that we have. And how is that offset? And so like how many of them would fit into these categories, right? Like high-pay employers, large revenue, or sorry, receipts. But I'm also thinking about some of the other impacts that as a community and as a regional community that we're all kind of bearing through. And so that's kind of where I'm... thinking about balancing some of the other impacts that are not necessarily bottom line to the business, but that are also beneficial to the community at large. So I'm thinking of climate impact. I'm thinking of resource impact, such as water and electricity. So if they're a high water, high electric user or business user, fine-tuning this to mitigate for that, but also kind of mitigating the, you know, they are large sales tax generators. So that's kind of where my head is at. I would like to see something in July. I hope. that we can be ready by the end of july to send something in the november ballot because we do need we do need revenue on the city books because we are in a fiscal cliff and that is not an interpretation of the budget it is where we are and it's a reality of what we're facing in the upcoming by annual budget and so um appreciate uh the business community and the community at large who took the time to answer the survey and who took the time to email us and to call us and to ask of our time. Appreciate the thoughtfulness that went into everyone's comments and the time it took to put together a communication to us, whether it was email or phone call. Thank you. As you can tell, we're all listening and we're trying to kind of balance and negotiate that so that we can come with an equitable proposal that balances the needs of the city and how we also contribute to the social contract. So, thank you.

Okay, so my thoughts on this first, let me thank staff. I know you guys have done a lot of work in a short period of time trying to give us something to contemplate. The bottom line for me is that there hasn't been enough time. There just isn't, there has not been enough time. This is not, some people might say it's not fully baked. Some people said that in the community. This is not fully baked. I think it's more than that. We're still stirring the ingredients. We're still trying to figure out definitions. We're still trying to figure out impact. I think the concept that was raised by one of the council members, I don't remember who exactly was, hey, for this business that operates in multiple cities, how does it play out for that business across multiple cities and what they pay here in San Leandro, what they will pay someplace else? So these kinds of things are really particularly important to me because I don't think there's been enough time. I also have to say that I do think that the survey, I did not like the structure of the survey because I thought the survey was a bit self-serving, that Do you think that businesses should pay their fair share? That implies flat out that they're not paying their fair share. I don't know. I did not like it. I've had a number of businesses say that to me. I've had residents who, like the idea of themselves not paying the tax, say to me that they thought that the survey was not fair in itself. And that's problematic because that's our brand. Our brand needs to be one of fairness and fairness. and equity in treating people right. I've also gotten a lot of pushback from both residents and from businesses on what exactly is happening here. What are the impacts going to be for different businesses? the businesses that I've heard from feel like they're not quite clear what the impact would be for them. So I think that that clarity is particularly important. But for me, the bottom, bottom line, and I probably should have started with this because that's what I preach. I always start with the most important point. For me, the single most important point is that for a general tax, we cannot control how that money will be used. And I'm opposed to any more general taxes in the city of San Leandro, unless someone can convince me otherwise. And it's very simple, because general taxes have been increased and increased and increased through time. And we've always told the residents, it's for the roads. But when we look empirically at how we spend the money, the answer is that's not where the money goes. So I think we need a mechanism, whether it's parcel taxes or some other specific tax that makes us spend the money on that purpose. And while we might be able to raise our right hand and promise that we're going to use it a certain way, the council rotates every two years and you get new council members and different needs. And that's what we see over and over and over and over. So I cannot, I will not support a general tax in November. I will only support specific taxes because we need to have that fiscal discipline as a city to be forced to spend the money on the fire stations that are in danger of collapse, on the roads where 30% of our neighborhood roads are failed. So I will not be supporting this tax in November, even if we vote to put it on. I will not be supporting this tax in November and I will campaign against this tax. So city, no, please don't, please don't do that. Please don't do that. We just don't for whatever the opinion is, we keep it flat in here. Um, so city manager, I know you've kind of been telling the remarks. It is my impression that what council would like to do is to come back in July and get more information. Is that what you have tracked as well?

Thank you, Mr. Mayor. Yes, that is what I have here is that staff has a list of questions, further information pieces that the council would like. Due to the fact there is a small amount of time, we will do our best to bring you what we can, and whatever's left, we will let you know what answers, what questions we could not answer at that time, and then council could direct us what they'd like to do, whether that's a November ballot or not.

And I would also encourage just council members to, because we've had question and answer time here, just more questions, right? Would you like those to come through you? How would you like additional questions? You know, we walk out of this room and say, oh, my goodness, I wish I had asked. How would you like to find questions directly to me? Okay. Thank you very much. Council Member Victor Aguilar.

Just a brief question. It said we'll be forwarded a draft ordinance in July for placement. Do we have an exact date in July?

I do not have an exact date right now. Tomorrow the team meets our executive team. Now that we have quite a bit of feedback, our original plan was to come back on the 15th, but due to the fact that we have some work to do and that agenda would be issued on Wednesday, we'll need more time to prepare what we can for July. But as soon as I know, I will make sure to let council members know.

Thank you. And for the record, I will be out on the 15th. I will not attend the meeting on the 15th. I will be out of the country. Yes.

What we most likely will do is bring it back in one of those first two meetings. The reason why is as Deputy City Manager Engelbert has shared, we only have July for the decision and if we come back at the, the only time we come back is the very last meeting in July. That leaves no room for council to ask more questions or get more clarity. So it most likely will be one of those first two meetings just in case there's something else you need to follow up on.

Council Member Simon.

This is a follow-up question on where the money would go, and I agree. I want the money to go to fix roads and firehouses specifically. I got that. I agree with that. But just so I understand the different revenue measures, does the revenue measure that specifies that, it has to be two-thirds voting by the residents if it specifies a specific project?

Coming to city attorney. Yes. A tax for a specifically defined use would be a special tax. Requires two-thirds vote to pass. Okay. Excuse me. Sorry, Mayor. Did you want me to mention?

Yes.

There is a provision under state law that's court created that provides that a tax for a special purpose, specific purpose put on by an initiative by residents or citizens would only require 50% plus one. The citizens initiative? Yes. Got it.

MY MY ANOTHER FOLLOW-UP QUESTION IS FROM A PARCEL TAX PERSPECTIVE AND THIS IS KIND OF MAYBE OUT THERE BUT LIKE PROP 13 AND SOME BUSINESSES THAT HAVE BEEN HERE FOR A LONG LONG TIME BARELY PAYING ANY PROPERTY TAXES THERE'S A NEW BUSINESS THAT COMES IN LIKE TURANI OR SOMEONE PAYING HIGH PROPERTY TAX IS THERE ANY WAY THAT WE AS A CITY CAN TRY TO ADDRESS THAT INEQUITY BETWEEN BUSINESSES IN THAT SCENARIO

Because it's not an agendized item, I'm going to say let's take that conversation offline as opposed to having that discussion in an open session where it's not agendized. Okay, at this point in time, I see no further hands. I believe you have the direction that you need. So we will come to our last item on the agenda, which is adjournment. The time is 8.51, and we are adjourned.