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File Number: 18-603 <br />Additionally, an amendment to the business license tax ordinance modifies the tax rate applied to <br />warehouse and distribution businesses. They were previously charged a flat fee of $128.20, plus <br />a per-employee fee. The amended ordinance now charges them $100 per 1,000 square feet of <br />building space. The rationale for this change is to align the business license fee with the impact <br />such businesses impose on city resources and services, much of which comes from the physical <br />size of their business rather than the number of employees. Warehouse and distribution <br />businesses cause heavy wear on local streets through truck and delivery traffic, but generate <br />relatively few jobs and limited business license revenue or sales tax. By modifying the business <br />license tax rate based on square footage, the tax better reflects such businesses’ impacts on City <br />infrastructure and services. The additional business license revenue to be generated from this <br />change in collection methodology is $510,000 in FY 2017-18. <br />Parking Lot Range Change: <br />Lastly, the ordinance modified the business tax rate that is applied to parking lots (such as those <br />providing long-term parking for Oakland International Airport). Previously, parking lots paid a flat <br />fee of $128.20, plus $38.50 per parking space. The new ordinance charges such businesses a <br />rate of 10% of gross receipts. In comparison, the rate in Oakland is set at 18.5% of gross <br />receipts. The rate would enable the City of San Leandro to capture additional revenue while still <br />providing parking lot businesses in San Leandro a competitive advantage over those located in <br />Oakland. The estimated additional business license revenue to be generated from this change in <br />collection methodology is $750,000 in FY 2017-18. <br />In summary, staff estimates that the above modifications to the City’s business license tax, which <br />align the taxes collected with the economic priorities of the City, could generate more than <br />$1,154,000 annually, while simultaneously reducing the tax burden for approximately 2,300 small <br />businesses located in San Leandro. <br />Overview of Increase in Transient Occupancy Tax - $455,000 received through June 30, <br />2017 <br />The City’s previous transient occupancy tax (TOT) was 10%, which is charged to travelers when <br />renting overnight accommodations of a limited duration in a hotel, inn, tourist home or house, <br />motel or other lodging located within San Leandro. Other communities in the region have <br />established higher rates, including the cities of Oakland and San Francisco, each of which <br />presently have TOT rates of 14%. In addition, the redevelopment of the San Leandro shoreline <br />area is expected to result in the creation of at least one new hotel in San Leandro, which could <br />provide an important source of additional TOT revenue in the future. An additional $455,000 in <br />annual revenue is anticipated, with the potential for greater increases in the future as new hotels <br />are constructed. <br />ANALYSIS <br />Amounts of Transaction and Use Tax revenue generated by Measure HH <br />The adopted Budget approved in June 2017 anticipated $11.2 million in Measure HH tax receipts <br />for FY 2017-18. Actual receipts were $11.2 million. The City was allocated its Measure HH sales <br />tax starting April 1, 2015, but it did not budget a full year of receipts until FY 2015-16. The first <br />receipts were received in the fall of 2015. <br />Page 4 City of San Leandro Printed on 11/27/2018