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File Number: 17-431 <br />cannabis plant <br />Given that no permitted cannabis dispensaries are yet operating in San Leandro, there is <br />uncertainty as to how much revenue will be derived from the tax. However, based upon <br />revenue estimates provided by permit recipients (Harborside San Leandro, Blum and Davis <br />Street Wellness) as part of its application materials for their dispensary permits, staff <br />estimates that this revenue measure could potentially generate more than $500,000 per year <br />based on the initial rate of 6% of gross receipts. <br /> <br />Overview of Modifications to the Business License Tax - $500,000 is expected through <br />June 30 <br />The modifications to the business license tax have been designed to align the City’s business <br />license tax rates with City Council priorities to support small businesses located in San <br />Leandro, while also incentivizing the productive use of the City’s industrial areas. <br /> <br />Small Business Discount: <br />As structured in the ordinance, the per-employee component of the business license tax for <br />small San Leandro businesses with three or fewer employees is eliminated. Previously, these <br />businesses paid a flat fee of $128.20, plus a per-employee fee that varies by business type. <br />The per-employee fee is waived for small businesses. <br /> <br />This modification results in a tax reduction for approximately 2,300 small businesses located <br />in San Leandro and an estimated decrease in business license tax revenue of $250,000 <br />annually. <br /> <br />Warehouse Rate Change: <br />Additionally, the ordinance modifies the tax rate applied to warehouse and distribution <br />businesses. They were previously charged a flat fee of $128.20, plus a per-employee fee. <br />The ordinance charge them $100 per 1,000 square feet of building space. The rationale for <br />this change is to align the business license fee with the impact of such businesses, much of <br />which comes from the physical size of their business rather than the number of employees. <br />Warehouse and distribution businesses cause heavy wear on local streets through truck and <br />delivery traffic, but generate relatively few jobs and limited business license revenue or sales <br />tax. By modifying the business license tax rate based on square footage, the tax would better <br />reflect such businesses’ impacts on City infrastructure and services. The estimated additional <br />business license revenue to be generated from this change in collection methodology is <br />$450,000 annually. <br /> <br />Parking Lot Range Change: <br />Lastly, the ordinance would modify the business tax rate that is applied to parking lots (such <br />as those providing long-term parking for Oakland International Airport). Previously, parking <br />lots paid a flat fee of $128.20, plus $38.50 per parking space. The ordinance charges such <br />businesses a rate of 10% of gross receipts. In comparison, the rate in the Oakland is set at <br />18.5% of gross receipts. The rate would enable the City of San Leandro to capture additional <br />revenue while still providing parking lot businesses in San Leandro a competitive advantage <br />over those located in Oakland. The estimated additional business license revenue to be <br />generated from this change in collection methodology is more than $600,000 annually. <br />Page 2 City of San Leandro Printed on 7/13/2017 <br />240