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City of San Leandro <br />Meeting Date: July 18, 2017 <br />Staff Report <br />Agenda Section:File Number:17-431 DISCUSSION ITEMS <br />Agenda Number:2.B <br />TO:Finance Committee <br />FROM:Chris Zapata <br />City Manager <br />BY:David Baum <br />Finance Director <br />FINANCE REVIEW:Not Applicable <br />TITLE:Summary of Voter Approved Measures OO, PP, and NN <br />In November 2016, San Leandro voters approved Measures OO, PP, and NN. The Measures <br />passed and took effect on January 1, 2017. A summary of these measures and revenue <br />estimates through June 30, 2017 are set forth below. <br />1) A medical cannabis business tax of up to 10% of gross receipts; <br />2) A modified business license tax that would reduce fees for small businesses, while <br />charging up to 10% of gross receipts for parking lots, and also charging $100 per 1,000 <br />square feet of real property that is used for warehouse businesses; and <br />3) An increased transient occupancy tax of up to 14%. <br /> <br />These potential revenue sources align with previously adopted City Council goals and policy <br />priorities, as outlined below. Furthermore, these new revenue sources would not directly <br />impact the vast majority of San Leandro residents, as they would be paid by a select number <br />of businesses and people from out of town. <br /> <br />Overview of Potential Cannabis Business Tax - no revenue pending the opening of the <br />first dispensary <br />Now that the City has issued three cannabis dispensary permits, the City has an opportunity <br />to derive an important new source of revenue from these businesses. Similar to many other <br />communities that have permitted the operation of cannabis businesses, the tax in San <br />Leandro is based on the cannabis dispensaries’ annual gross receipts. Given that the specific <br />rates of such taxes vary by jurisdiction, coupled with the rapidly evolving legal and regulatory <br />landscape surrounding the cannabis industry, the ballot measure was structured such that the <br />tax amount would be “up to” 10% of gross receipts. The language allows the City flexibility to <br />modify the rate over time up to that maximum 10% threshold. The ordinance has also been <br />structured such that it would apply to any business involving the use of any component of the <br />Page 1 City of San Leandro Printed on 7/13/2017 <br />239