Finance Highlights 2006 1004 - Laserfiche WebLink

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CITY OF SAN LEANDRO STAFF REPORT DATE: October 4, 2006 TO: Finance Committee FROM: Jesse Baloca, Finance Dire~ Victor Chan, Budget and Compliance Manager ve.... BY: SUBJECT: Update on Business License Tax Exemption for Related Party Residential Property Rentals (RPRP's) BACKGROUND AND DISCUSSION As requested by the Finance Committee on September 6, 2006, staff has brought back some business license tax (BL T) statistics on residential property rentals and revenues collected. At the last meeting regarding a BLT exemption forRPRP's, the following two alternatives were shared for discussion: 1. Creating a definition for family and extended family, and crafting an exemption for rentals made to both relationship categories. The concern with this alternative is that it could be considered discriminatory since the definition of family is legally broader. A letter from the City Attorney is provided and explains the challenges with implementing and enforcing an ordinance that creates an exemption to the BLT for RPRP's. 2. Exempting all rental property owners that have only one residential rental unit. However, the fiscal impact on exempting the estimated 567 current businesses of this type could result in an approximately $62k loss (based on the new rates) to the City. As a result, staff s recommendation is to continue with its current practice of reviewing customer request letters for a tax and penalty waiver and make appropriate reductions according to administrative criteria. Residential Property Statistics and Revenues Collected Business Licenses Issued and Revenue Collected During the first eight months of 2006, the City has collected $256k in business license tax revenue from residential property rentals. This represents a $138k increase from 2005 over the same period. The increase in revenue primarily reflects the auditing efforts provided by MBlA I. 1 Eight months of data were used in order to provide a comparable analysis.