All right.

All right.

Oh.

Okay.

Okay.

Okay.

Oh.

Well, Thank you for your patience as our closed session ran a little bit long.

The current time is 7 06, and I'm calling the meeting of the San Leandro City Council to order.

This is a special meeting, meaning it's outside of our standard sequence.

It's not the first or the third Monday.

It is the second Monday.

And we've called a special meeting so we can take at least a small set of actions.

Today is Monday, June 8th.

Um Madam Clerk, would you please take the roll and then I will lead us in the pledge of allegiance after that?

Council member James Aguilar.

Present.

Councilmember Victor Aguilar.

Present.

Councilmember Fred Simon.

Present.

Councilmember Bowen.

Present.

Vice Mayor.

Council Councilmember Bolt.

Thanks for the promotion.

Present.

Vice Mayor Vivero Swalton.

Present.

And Mayor Gonzalez.

Present.

Okay, please join me in the Pledge of Allegiance.

Stand if you're able to.

I pledge allegiance to the flag of the United States of America and to the Republic for which it stands.

Indivisible with liberty and justice for all.

The City of San Leandro connects orderly meetings to fulfill its mandate.

And so discriminatory statements or conduct that would potentially violate the Federal Civil Rights Act of 1964.

Or conduct or and or the California Fair Employment and Housing Acts, California Penal Code sections 403 or 415 are per se disruptive to a meeting, our meeting in particular, and will not be tolerated.

Please see the city council handbook and city council meeting rules of decorum for more information.

Madam Clerk, your announcement, please.

If you would like to make a public comment during the meeting, you can do so in person or via Zoom.

If you are present at the meeting, please complete a speaker card and submit it to the city clerk before the item is presented.

Then wait for public comment on that item to be called.

If you wish to participate in public comment via Zoom, you can use the raise your hand tool when the item is called during the public comment session.

Speakers will be invited to speak and will have a set time to share their comments.

Thank you, Mayor.

Um I do not like to move the consent calendar.

Okay, so we'll take the motion right after we hear from the public, and I will come to you first on that.

Uh no, I'd like to recuse myself from item 4B.

Item 4B.

So here's my question for you.

Would you like for us to take two votes?

Or would you just like to step out for the consent calendar so we can take our vote and then uh just be done?

I'm I'm happy to do it either way, because we can take two votes if you'd like.

I can step out for that for B.

For the full for just for 4B.

Okay.

Is that what you're saying?

Yeah, I'd like to participate in the other consent calendar.

No problem.

Uh thank you for the identification of the recusal.

At this point in time, any other questions or request to pull items?

Seeing none.

Let's move to public comment on this item.

Mayor, we have not received any comment cards.

We have one hand raised online.

Please proceed online.

We've opened and closed public comment in person.

Our online speaker is Douglas Spaulding.

Uh good evening, council members.

We are all indoors, uh shielded from the wind and the cold.

Uh, I'd like to um just bring to everyone's attention item 4E, which looks to be another uh consulting services agreement, uh to the tune of 376 some thousand dollars.

And as I read through the item, I'm a I'm a little confused because it seems like we have a consultant to uh to advise in terms of uh crosswalks, crossings.

And uh if I'm and I'm you know, I'm I'm not the most technically adept at these things.

I could well have it wrong, but it it looks like um the the role of the consultant is to do things that are already done by uh fine organizations like Caltrans, like PGE.

It's like basically uh maybe the go-between between the city and these organizations, and I and I just I it it it uh it confuses me why we'd be spending so many hundreds of thousands of dollars on on something that seems like it could just kind of be happening because it's people's jobs already.

I don't know.

Uh so maybe somebody there knows more than I do and could get back to me and uh and and help me understand.

Thank you.

Thank you.

Mayor, there are no more hands raised online.

Okay, so we will close public comment um in our written agenda up here that we're working off of to manage our meeting.

The numbering is a little bit misaligned, so I think you'd like to recuse yourself on the Heron Bay item.

Is that correct?

Okay, so council member, and that's item four C, as in Charlie.

And so for council member uh Victor Aguilar, I think you wanted to make the motion.

I'm assuming that you'd like to make a motion for 4A, B, D through H.

Is that what you are moving at this time?

I think we'll not forget to do it.

So there was a slight misalignment.

Okay.

So it's C.

So it would be, I think your motion is for 4A, B, and then 4D, David through H.

Yes.

That's your motion.

Okay.

Do I have a second on that motion?

Councilmember James Aguilar.

I'll second, Mayor.

Okay, so we've got a motion and a second by first by councilmember Victor Aguilar with a second from James Aguilar for 4A, 4B, and then D through H.

Any further discussion?

Seeing none, please vote.

All votes are in and the motion carries unanimously.

Okay, if you would please step out briefly while we move through the second item.

So do I have a motion for item four C.

Vice Mayor?

So moved.

Do I have a second?

Councilmember Bolt.

Second.

On a motion by the Vice Mayor with a second or council member bolt.

Is there any further discussion?

Seeing none, please vote.

All votes are in and the motion carries unanimously with six yes votes and council member Fred Simon being recused.

Thank you.

So six-one.

Thank you.

City attorney, if you can assure the council member Simon returns, and then at this point of time, we'll move to item five 5AR presentation regarding receiving our feedback regarding a potential November 26 measure as listed in our agenda.

We've got Deputy City Manager Eric Engelbart here to present.

Okay.

Good evening, Mayor and Council and members of the public joining us tonight in person and on the Zoom.

Happy to be here tonight to provide this presentation on the our efforts to explore the business license tax modernization.

So we've got a some highlights of our agenda that we'll be running through here as part of our staff presentation tonight.

We'll start off with a summary of prior actions and how we got here, a summary of the robust outreach efforts that we've conducted to date on this topic.

We'll then hear some updates on just both the fiscal and regional context that informed these discussions.

We'll also have an overview of both our current business license model as well as an overview of the model that's under current evaluation.

And then we'll wrap things up with some concerns and observations regarding that model as well as some potential changes or mitigation measures that could be explored and wrap things up with direction that we're seeking.

So many of these dates before you should look familiar.

Starting at the left, you can see back in February of 2025, during our annual Saturday annual planning session, at that meeting, the council directed staff to begin work to explore a potential November 2026 revenue measure.

Then in the June of 2025, as part of the budget discussion, staff did propose to incorporate a $500,000 allocation to support further exploration analysis and outreach efforts associated with the November measure.

At that time, council did not authorize the funding to proceed forward, though it did ask just the staff to come back once year and fund balance estimates were known.

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 the polling information was available, we presented it at the April 6th 2026 meeting, at which time council received the results results, authorized consulting services to help support the effort, and then we'll 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 open here just 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.

We also uh 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 uh an exec a special executive board meeting to provide a presentation of that April presentation slide deck and address any questions.

Um the chamber then followed up with some additional follow-up questions via email and responsive information was provided back to them.

Um, then on May 19th, you can see there we launched a uh city survey portal, and that that is still live and available today.

One can click on these links here in the materials or visit them and and still continue to provide feedback.

We also established a dedicated project phone line for calls or texts for questions or input.

Uh a physical paper mailer was actually was mailed out as well to nearly 20,000 residents or over 20,000 residents notifying them of this these discussions.

Uh there was also related social media posts, online videos, uh, 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 could calculate and drive 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 at over 7200 businesses in our database, emails to a business associations, and then in all that 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.

Yet, like all municipalities, we we do face we have finite revenue sources, right?

We basically have our general fund and we have reserves.

So it's 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 you know, general mantra as staff has evaluated this is the notion that really kind of have to one has to look at both sides of the budget, right?

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 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 gross receipts structure on the upcoming November ballot.

Also worth noting all the efforts and all 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 as part of the mid-cycle budget process that just wrapped up.

You know, we've identified a path forward to closing an 11.6 million dollar 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 dollars in operating expenditure reductions and interfront 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.

Um, but rest assured one can just click on that link that's visible on the page there to see 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 the 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 for just to highlight a few, you can even see we even have a business classification for for fortune telling with its own distinct um rate as well, just kind of highlights the error in which some of this was originally developed.

Um, and 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 our 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 dollars from that current model.

And 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 Landro that have business licenses and the amount of funds that were derived by breaking broken down by category.

Now we're gonna kind of pivot a little bit here in terms of this this concept of a business license tax modernization, and it includes a number of assumptions that I'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 for a number of reasons.

One of which is generally speaking, they are known as a as a as a community that you know prioritizes economic development.

Also worth noting that they just you know remodernize their own structure in 2024 following a robust public process, and based on feedback we've heard from staff and that organization that generally speaking, the 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.

Um as I mentioned earlier, too, one of the things is our 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 and just a reminder here, and this last item, this last bullet points 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 you know quite a lot of community needs that we hear about in these meetings and in other forums that the public has identified concerns for all these issue areas for which you know sufficient funds to really address all the needs we don't currently have.

And so ultimately, if 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 then 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 this 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 about 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 three million dollars annually.

Uh 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 this is a complex complicated tax 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 row uh cell 1C, you can see basically if you have a restaurant here in San Leandro that currently generates about a million dollars of grocery seats with 12 employees, they're currently paying about $800 a year for their business license tax under 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 a look at someone like a car dealership that's generating sixty-five million dollars with 70-70 employees, and they would see quite a marked 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 typically our 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.

Some there's just some inherent differences between Union City and San Leandro.

We certainly have a number of, well, 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 dollars in annual revenue.

We're also noting there's some examples for ranges for large businesses who 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 dollars 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 um 248,000 on the high end.

And then for any business type, you can see the low end is currently 171 dollars per year, and then the high again is about 200,000.

And then you can see the new rates as well.

But notably, and it's 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 number of smaller business who 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 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 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 some concerns with that that 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've 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 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 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.

Another options could include exploring, you know, maximum level gross receipts that are subject to taxation, though that is not very typical in other cities.

There's also um, 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, you know, increasing that exemption to capture more businesses 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 in partnership with the council through the process of their adopted economic development strategy, which highlights a number of supplies like priority business areas that we're trying to incentivize here in San Leandro, including manufacturing, RD, other large-scale tax sales tax generators, high paying large employers, and of course housing providers, uh, and many of whom are have been impacted as a result of recent policy changes.

Uh some other just generalized consideration, 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, you know, there's certain examples of professional services, you know, using just some examples like dental offices or law firms or others like that, where they're not 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 other 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.

Um, and then nevertheless, with all that said, we also want to ensure that any changes um balance that those impacts with the potential impacts of the businesses, and no, no, these all items all come out of our UD 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.

Um so now we're on the last slide here, and just highlights the direction that we're seeking from you all tonight, about in particular providing direction on those potential mitigations or modification measures that I just highlighted a few moments ago, uh, to help better incentivize you know business retention growth hiring and expansion, and if so directed, staff is prepared to bring forward a draft ordinance in July for placement on the November 26 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 those deadlines in order to get it on the ballot.

And that wraps up staff's presentation and 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 elaboration.

So, questions first, please.

And mayor also interject, I apologize.

I would on note too, we have Eric Myers, who is our tax consultant from HDL who's on the line virtually with 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 list 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 councilmember Bolt.

Yes, thank you for the presentation.

Um I know we spoke a lot about Union City, and I get it, that's two communities that are um quite often looked at, you know, 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.

Uh that is certainly some of the type of analysis that you all could direct us to to do.

I will share that these these by the very nature of these models of this particular business, like tax or this particular tax structure is inherently complicated.

Right.

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 it's much more straightforward and clean apples to apples comparisons.

And so, 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 I think mine's geared more to just if we have businesses that operate multiple cities, understanding what they're paying in those cities as well.

So I'm not saying like 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 that's all I have.

Thank you.

So we'll come to Councilmember Victor Aguilar.

Thank you, Mayor, and thank you, Eric, for the presentation.

I just might what I'm having a hard time wrapping my head around is the potential 700% increase with regards to manufacturing.

Um yes, it's great that you know we can potentially garner the revenue, but I I just wanted to, you know, I'm having a trouble trying to figure out like what is equitable.

Um, you know, with regards to warehouses, I mean, you know, warehouses, does that include storage facilities like public storage?

Is that considered a warehouse?

Because I I I I think that decrease is something that shouldn't not be existent.

Um, but the increase with regards to manufacturing, I think there's you know, we've and we received a lot of emails from a lot of businesses with regards to this.

And I can see why um folks are talking about this is trying to figure out what makes sense and like my council colleague mentioned what are other businesses and other cities being charged, because you know the last thing I want to do is lose a major company, um, to uh a neighboring city who is not charging these astronomical rates with a 700% increase.

So, how how are we going to make this equitable?

Thank you, council member, for your question.

I think this all speaks to you know these these concerns and observation, acknowledging given the the time constraints available.

Um we provided this analysis.

We worked with our tax consultant to derive it.

These estimates were derived.

They we've we've highlighted for you this the very similar concerns you've just you just highlighted as well in your your comments just now.

And so that's why we're we're suggesting mitigation measures.

I think this all speaks to this kind of first bullet point here about refining those rates and 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 that's my question.

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 my okay.

So what we'll do is we'll let them do the research and we'll continue with council members uh with their questions.

Councilmember Bowen.

Thank you, Mayor.

Um, I'll I'll try to ask just the questions and then come back for comments.

Um I really appreciate the the initial outreach that's been done.

Um, but I know that um we've if we go to that slide of the outreach, sort of, you know, wouldn't when the council gave direction to um go out there and figure out if we want to do this, like this does not seem like enough time to come up with a fully baked policy um for this November.

Would we best practice normally spend more time than what we've had to come up with what this um structure would look like?

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

Okay, because I did notice earlier you said you know there were time constraints and it does feel really truncated.

Um the other question I had is on the um slide six, um, in terms of a regional contact uh context, nine of the 14 cities in Alameda County use gross receipts, Hayward and Livermore do some sort of mix, um, but most businesses do, so it seems that only Dublin and Albany um do not.

Um and so um it does seem like we are on the right track, if 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 um 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 better term, somewhat of an outlier now in terms of the 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 um public storage in the model is is listed under property rental.

So I can answer Councilmember Aguilar's question from earlier.

Okay.

And then in terms of possible mitigations, um help me, Eric, if you could understand the time frame 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 um give staff more time to be able to fully understand what these possible mitigation efforts would look like?

Sure, I would say either either is possible.

I mean, certainly we are prepared if so directed.

If the if the goal is 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 in 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 struct with tax like this, the there's just quite a different ways and variety in ways in which it could be modified.

Great.

And then the last question is for the last slide or um slide 15 around policy considerations.

Tax changes should balance potential impacts to businesses, retention and growth hiring expansion.

Is that what is what is driving what would need to happen for slide 14 possible mitigations?

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

Thank you.

Can I through the mayor too?

Um, just to respond to the confirming the public storage would be would fall under warehousing to your question.

It is warehousing.

I thought I heard property rentals.

We verified it looks like it would be under uh warehousing.

Under warehousing.

Okay, thank you.

Thank you.

Um thank you, Councilmember Bellan.

Coming to Councilmember James Ecular.

Yeah, I have one question.

I think that kind of fits into Councilmember Bowen's point about timing.

Um 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 ult my understanding is it's I believe the very beginning of August.

Um, and given that we have a typically here have an August recess.

What that means is a practical matter is by 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 then you had been in there, council member Simon.

You're out.

You're back in.

Okay, there you go.

Councilmember Simon.

Thank you for the presentation.

Just so I understand the slide here.

Our current fee model is based upon number of employees in square footage.

Generally speaking.

And this gross receipts that we're considering, are we can 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 to reflect that.

Okay, so regarding the restaurants, you mentioned it your current rate goes from $800 to $320.

Could you illustrate kind of how that happens?

Uh well I think in this instance we're with the comparison here, and then again, this is a specific like hypothetical example, and knowing that every restaurant is different, but under this example, it's assume we have a restaurant that makes one million dollars even of annual revenue.

And then you apply the the new formula, Union City formula for that category of business, and then you that 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 um, and you can see I don't know if we can see restaurants on here, but you can you can see how that the current formula works, which is really more focused on the not well, it's just not focused on gross receipts.

So are you are you pulling in expenses from the restaurants or how are you telling what their profit margin is?

We well, so state law for these types of taxes really limits us to gross receipts.

We're not able to have some kind of net like with that's not a structure or model that we're able to utilize.

And so the idea is ideally that that the structure itself or the formula that's applicable for a category takes into account the general, you know, 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 model.

Yeah, I'd 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, 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 do is there a summary of comments from the business community?

Do we have um we do, yeah, we do.

I will 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 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 work outreach work we've done over the last since the last check-in with council.

Uh 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, you know, who are coming tonight.

As so to have that give them the feedback session.

And it 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.

It really the public can provide feedback to it as well.

But we have certainly have uh information on 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 San Landro registered voters in San Francisco.

Yeah, we live in San Landro, correct.

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.

Um, but you are 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.

Um, 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 uh a different that's a fee, and that's that's actually voted on by the property owners directly.

But okay.

Thank you.

A couple of questions or a few questions from me.

Um have we tracked any sort of tax holidays that other cities are undertaking currently for either new or existing businesses?

Uh we have heard anecdotally of some that are doing that, but we have not we don't have a a slide though, summarizing that.

And then I know that the focus is definitely uh 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 restaurant it's pretty easy because restaurant sites 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 um the bypass this is state law and constitutional provisions, we can only tax activity that takes place within our jurisdiction within the balance of the jurisdiction of the city of San Leandro.

So using example, say of a big contracting company that may be headquartered here, but they do um construction projects all over the Bay Area.

We can only tax the gross receipts on activity or projects that actually happen 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 gonna ask if uh if we have Eric Myers from HDL, who's our tax consultant available on the line here, he may be able to drill down on some of these more technical questions.

Thank you.

Sure.

Good evening.

Good evening.

Um, 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 gonna take into account where the customers are located.

So if they're only participating location, uh is in San Leandro, uh 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 gonna get generally sourced to San Leandro, and to the extent that that business says, well, I actually have uh an office somewhere else, great, let's talk about that.

Um, 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.

Uh generally the answer is yes, where the job site is often gonna have the majority of the revenue attributed there.

Okay, and then what about some of our large um manufacturers that sell their product uh around the world?

So, again, um, setting aside any of the complexities of sort of water's edge for the moment, let's what we're gonna look at is how much taxable activity is happening in the city of San Leandro.

Um we don't really look to where the customer is located.

So what we're looking to is how much taxable activity is measured by gross receipts is happening in San Leandro.

There's 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 uh 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 or house 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?

Uh 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.

Uh 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 uh 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.

Sorry.

So why is that since no risk no um 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, and so you'd have to come up with an apportionment between you know, let's call it just for the sake of the hypothetical 50 50.

There's two locations participating.

One builds the stuff, trans ships 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 apportion 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 it akin to that type of transfer pricing analysis?

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

I will uh, that's the concept.

This concept of apportioning economic activity is going to be at the core for our bigger custom for our bigger businesses in the city.

That is correct.

And it is similar to what you will see in the income tax realm, right?

Um, maybe not necessarily the international treaties, but um the general apportionment rules will look to payroll and property as proxies for business activity in a given location.

Okay, let's talk.

Uh 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.

Okay, 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.

Uh 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.

Pergir.

Thank you.

James A.

Bigir, followed by David Stark and Jennifer Rizzo.

Mr.

Begin.

James McGear.

Um, good evening, Mayor and members of the city council.

James McGeeer Cluster, we have Big Gear Avenue.

Apparently, for online reasons, if you wouldn't mind standing click on it.

That's what they can hear you online.

Thank you.

My great-great-grandfather started uh this trade festival parade, Doug.

You enjoyed yesterday, 117 years ago in 1909.

We came from Germany in 1885.

That's what my dealer plate says on my deater plate, 1885.

We were able to choose that number for the DMV.

So anyway, we're a long stand 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 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 uh, so I'm gonna get folk laser focused, not drift on too much.

Um, so we strongly urge the council to adjust the current draft of the business license tax extremely.

Gross receipts are deeply unfair for high volume, low margin industries.

A vehicle sales in involves high asset cost, but extremely thin net profit margin, especially on new cars.

You we have often just one or two percent, okay, profit.

Okay, modeling this measure with the union city.

I noticed 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 Unit City.

Modeling the measure from the union city without protections will intentionally disinvestitate local dealerships, charging a retail rate, dollar twenty-five per thousand of gross revenues sounds a little tiny, but for a dealership moving 50 million uh in inventory, that is sixty-two thousand five hundred dollars annual tax bill.

That eats up over ten percent of our actual in 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 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?

Well done.

Um the key here, you guys need to look at free lines, you need to look at San Jose, and look at the thing in the cap.

You need to put a tap on these cards like this, and you've asked me.

Thank you for that additional context.

And again, feel free to email us because we do we do review that information.

You can also 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, uh Mayor and members of 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's indicated there'll be savings from the proposed gross receipt model, but they may be modest and maybe outweighed by the newly adopted rent program expenses.

We ask you to evaluate the cumulative effect of these policies, not just the um proposed business license structure.

Second, the unknown impact on real estate agents and brokers.

Real estate is different from 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 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 two billion dollars 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 Kerry, and San Leandro Chamber of Commerce.

I grew up here in town.

Do any of you people own a business?

I mean, you passed that the rent control with the state already had it.

And then I've had clients who 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.

Just why do we have to be so anti-business?

Thank you.

Thank you.

The next three speakers are Jeff Kerry, San Leandro Chamber of Commerce, and Jeff Krop.

Yeah, I'm Jeff Kerry, uh, longtime uh business owner in San Leandro, a resident for a long time.

Uh I 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.

Uh a lot of our business has been terribly affected by the parking in the downtown area.

We think it's unfair.

Uh we have never had an official accounting as if the city was going to go ahead and remove additional parking on Callan 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's business practices in the downtown regarding their parking.

Thank you.

Thank you.

The next two speakers are San Leandro Chamber of Commerce and Jeff Krop.

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 uh this is you all are looking to modernize the um the tax structure as other cities have done.

And we are being told that it's gonna help close uh 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 an 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 presentation.

Thank you.

Your time has elapsed.

Our last in-person speaker is Jeff Krop.

Hello, council members.

Um 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.

Um and I'm kind of there with Councilmember 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.

Um, with a minimum of 150 dollars for all categories.

Um, 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, you know, exemptions of who knows what special interests wants your attention.

Um, but my suggestion is handle it more even-handedly than that and compare to other groups.

Um, when I did receive my poll, um, 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.

Um, 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 $7500.

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 uh looking at this was the um it looks to me like regressive taxation.

I mean, what I'm getting from this is like you have flat tax rates already.

Um at least with what was the base fee.

And I just want to point out that you know, 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.

Um, and the federal government granted tax cuts, which should be considered a part of uh mitigation, and even so far as uh those tax cuts are also very destructive to the US 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 need last year, 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 uh 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 deficit, too.

Uh, 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 Stacey Cooper Dent.

Good evening, Mayor Gonzalez and Council members.

My name is Stacy 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.

Toronto moved to San Leandro in 2020, and we made a long-term 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 Toronti, 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 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, health care, professional services, nonprofits, and me 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 the city.

We have invested in this 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 citizen's parcel tax.

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 uh flight jobs nor companies.

Um 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 uh 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 a is a an exemplary business.

Uh so you know, have your your employees move to San Leandro to take advantage of the uh the rent stabilization ordinance, our excellent schools, our progressive policing, our uh reconciling with the 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 Lakeshore 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 No.

Yes.

I I'd like to just raise concern on behalf of the businesses that there needs to be more input.

The gross revenue uh seats are not an accurate measure of how well a business is doing.

A lot of businesses are struggling, especially with COVID.

Uh, 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 alternative to that is really non-existent because non-profit housing providers were evicting people after the pandemic uh ended, and that was tracked in Berkeley because they're 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 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 based.

Sir, your time has elapsed.

Mayor, there are no more hands raised online.

So we're closing public comment online and coming back to the chambers for any further questions or discussions.

Beginning with council member Bowen.

Thank you, Mayor.

Um, a few things that I want to share.

I think I mean from the very first um 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?

And so I 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 um recently when we took the vote um to expend money to be able to go out there and figure out if we actually do even want to um 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, you know, yesterday, today, I announcement around, you know, 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 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.

Like there, we we do need to find a way to modernize.

We do need to find a way to do um to be able to work together with the business community.

Um 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.

Um, and so uh 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.

Um, that um that we want retention, we want growth, we want hiring, we want expansion.

It really worries me that um some of the percentage hikes are 200% to 700%.

Um 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 um uh 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 um 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 or asking of our businesses, but we're asking of people that um work at these businesses.

Thank you.

While 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 further deferral and more work going to council member bolt, please.

Yes, um, start and finish with the same sentence.

We need help.

Um, it should go from both sides.

It's uh it's if both sides of the equation, the residents and the businesses.

With that said, uh some of the comments that I do agree with coming from the business, and I and I saw notes being taken, and I appreciate that by staff, but the overlaps 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.

Um a cap on certain industries where we're seeing an astronomical increase.

Uh I know that is the intention of staff.

I I felt it through the presentation.

So I want us to continue to work on that to understand that and know that we're not gonna uh lose businesses to other cities that are doing business here in another city, like I mentioned earlier, uh, 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 uh bridge area of do I hire someone else and what does it mean to the bottom line instead of uh yes, let's hire more, we have more work to do.

So I like that we haven't really approached that.

Uh thank you, and I don't want to see us go that way.

Um the last thing I'll ask is, and I don't know who to ask this up, so I'm gonna put it out there, not look at anybody in particular, but hopefully I get a response.

Uh, could we uh earmark the increase in funds towards uh um the 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 um well, I'll stop there and see who if anybody could answer that.

Okay, 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.

I'm just confirming with uh Mr.

Enkelbart, 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.

Okay.

Oh, that solves that.

Uh lastly, I'll just say this.

Um, second to last.

Um I don't want to see a decrease.

I know businesses don't want to hear that, especially if they saw this and they were like, sweet.

I don't think anybody should get a decrease in these times.

Uh and then I'm gonna end with uh 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 we have a better understanding of of what it's gonna 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.

Uh so next I will come to Councilmember Simon.

Uh thank you.

I agree with uh 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 gonna 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 uh councilmember bolt's comment, and I agree fully this should come from both the businesses and the residents, and and I 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.

They 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 the residents.

So uh I think we should be fair here uh 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.

Um but when you pencil it out with the expenses, it may not be that case.

So I think more work needs to be done.

Um I would 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.

Um, 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.

Um, 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 councilmember James Aguilar.

Thank you, Mayor.

Um, I'm gonna agree with the sentiment something needs to happen.

That's 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 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 Councilmember 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 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 Councilmember Victor, are you there?

Thank you.

Thank you, Mayor.

I I agree with my council colleagues with um council member and Simon and Angla.

I think we we all have to work together to to pitch in to establish some sort of revenue um measure to come in.

And I, you know, I I have been supportive of this, but I think we need to work together and I I had asked a question to staff with regards to um equity and to make sure that we look at some sort of models that that make sense um that are not completely astronomical, um, but that are you know equitable and somewhat competitive.

Um, but I I think we need to go back and and do some more research, but uh you know, you know, I will be supporting this um to move forward on the November third ballot.

Those are my comments.

Thank you, Mayor.

A couple of thoughts uh that I wanted to share just in terms of uh moving, my hope is that we get to November with uh something, and I think having just uh voted on a on an annual budget for this upcoming fiscal year, we are um 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 uh in my head.

Those are those concurrent lanes and figuring out what that how they how that both of those things can be balanced.

Um just a couple of of um two main kind of drill downs for our discussion in November and uh July is what does high paying mean in terms of a high paying employer?

Um I'm definitely want to ensure that um we think about what is high like uh is it like an executive level position versus uh an employer that does manufacturing but pays a livable wage, um and even you know, more than that.

Um so like what is high paying employers and like what does that mean within the context of the Sal Leandro economy?

Um I did submit an item uh for the last uh planning session on research and development, and so um I know that there's a lot more information in our economic development strategy around our research and development um uh plan uh to attract and retain um RD.

Um that continues to be a growing um uh a growing um field.

Looking ahead, um, I am thinking about um the what are neighboring not just cities in Alameda County but throughout the bay, um where would for example a um where would like a data center fit in here?

Um that kind that is something that is hot.

Uh it's it's uh it's an emerging um issue for many communities, and it's unclear to me how forward facing this strategy is.

It looks to me that is um, it is based on who is here now, and so I'm trying to think ahead on um on those emerging uh uh types of industry that may be coming our way.

Um, and how does this uh how do we plan for that?

Um I'm not necessarily supportive of that one example, but that's something that I'm thinking about, like where where would that fit within the categories?

Um so I know our economic development team has thought about, you know, what are some of those emerging industries?

Um I also wanted to balance um the um the climate impact of some of the industries that we have um and how is that offset um uh and and and so like how many of them would fit into these categories right like high pay employers large uh large revenue um or sorry receipts um but i'm also thinking about some of the other impacts um that as a community and as a regional community that we're all kind of bearing through um and so that's 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 um are also beneficial to the community at large so I'm thinking of climate impact I'm thinking of um resource impact such as water and electricity um so if they're a high water high um electric um user or business user um fine-tuning this to mitigate for that but also kind of mitigating the you know there they are large sales tax generators so that's kind of what I'm where my head is at I would like to see something in July I hope that we can be ready by uh the end of July to send something uh 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 biennial budget and so um appreciate uh the business community and the community at large who took the time to answer the the survey and who took the time to email us um and to call us and to ask of our time um 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 um 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 been a lot of work in a short period of time trying to 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 um 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's not 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 the concept that was raised by one of the council members I don't remember who exactly was hey well for this business that operates in multiple cities how how does it play out for that business across multiple cities and what they pay here in San Lander what they will pay someplace else.

So these kinds of things are 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 the survey I did not like the structure of the survey because I thought the survey was a bit 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 um it's a it's a I don't know I just I did not like it.

I've had a number of businesses say that to me I've had residents who you know like the idea of themselves not paying the tax say to me that they saw that the survey was not fair in itself.

And that's that's problematic because that's our brand our brand needs to be one of of fairness and and um and equity in treating people right.

Um I've also gotten a lot of pushback from both residents and from businesses on what exactly is happening here.

What what are the impacts going to be for different businesses?

Um 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 a 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 just 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 um raise our right hand and promise that we're gonna use it a certain way, the council rotates every two years, and you get new council members and different needs, and um 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.

Um, 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 Man, no, please don't, please not 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 uh staff has a list of questions, further um 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 uh 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 funnel those questions?

Uh council members can send the questions directly to me.

Okay, thank you very much.

Uh, 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?

Um in July.

I do not have an exact date right now.

Um tomorrow the team meets our executive team now that we have quite a bit of feedback.

Our original plan was to come back on um the 15th, but due to the fact that we have some work to do in 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 be 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 uh Deputy City Manager Engelbart has shared, we only have July for the decision, and if we come back at the the only time we come back as 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 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 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?

Two-thirds uh 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.

And do you want to sorry, Mary?

Did you want me to mention?

Yes.

There is a provision under state law that's uh court created that allows 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 um another follow-up question is from a parcel tax perspective, and this is kind of maybe out there, but like Prop 13, and uh some businesses that have been here for a long, long time barely pay any property taxes, oras a new business that comes in like Toronto or someone paying high property tax.

Is there any way that we as a city can try to address that uh inequity between businesses in that scenario?

Because it's not an agendized item, I'm gonna say let's take that conversation offline.

Okay, as opposed to having that discussion in an open session where it's not agendized.

Thank you.

Okay, at this point in time I see no further hands.

I believe you have the 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.