Victory Alert: Manhattan Beach REJECTS Gross Receipts Business License Tax
Victory Alert:
Manhattan Beach REJECTS Gross Receipts Business License Tax
By Janet M. Gagnon
Chief Corporate Affairs Officer and SVP, Government Relations
On August 4th, the Manhattan Beach City Council voted unanimously to reject a “gross receipts” business license tax resolution. This vote preserves the existing flat-rate business license tax that properly takes into account the differences between various types of businesses, including rental housing.
Had the resolution passed and been sent to the ballot for passage, it would have More Than DOUBLED the business license fee for rental housing providers by turning a blind eye to the substantial costs associated with providing housing. Further, it would have created a gross receipts amount that was DOUBLE that of any city in Los Angeles County.
AAGLA lobbied against this harmful resolution, including attending several city council meetings in person to provide oral testimony and submitting a formal, detailed comment letter. No other rental housing organizations spoke against this ordinance. However, we thank our colleagues at the South Bay Association of Realtors for joining us in opposing this very damaging change to using gross receipts for all businesses. Also, many local businesses turned out and spoke against the resolution, including rental housing providers. When owners and managers show up and speak out at City Council meetings, We Win!!!
This issue was prompted by a hugely flawed survey conducted by TrueNorth Research as a consultant to the City’s Finance Director. Only 459 responses were received and of those a paltry, 24 were from businesses, which is only 5% of those individuals directly impacted by the resolution! The city staff used this survey as their anchor for pushing forward this horrific concept of gross receipts. Also, city staff grossly misstated the number of cities utilizing gross receipts in California falsely claiming 80% when factually it is only 20% statewide. AAGLA repeatedly pointed out that only 7 cities of all 88 cities within Los Angeles County use gross receipts and, of those cities, the majority specifically exclude rental housing and instead utilize a flat-rate tax. Also, city staff purposefully mislead survey respondents and City Council Members by stating that 75% of business would see a reduction without mentioning that many industry sectors would see huge increases, including rental housing providers. By mixing apples (number of businesses) with oranges (impacted industries), city staff purposefully hid the dire consequences for particular industries. Further, city staff failed to conduct any analysis of the 7 cities with gross receipts in Los Angeles County or the impact such a structure would have on driving local businesses out of Manhattan Beach and into other neighboring cities with far lower “flat-rate” business license tax. Manhattan Beach is a clear example of city staff pushing a personal agenda rather than bringing impartial data for the City Council to consider and be fully informed. This is precisely why we need rental housing owners and managers to show up and speak against such misleading information and harmful policies at City Council meetings!!!
We ask our members in Manhattan Beach to remain vigilant as more harmful policies could be pushed by city staff in the future. Also, there was still some mention of “updating” the existing business license fee, so a different proposal that harms rental housing providers could be brought forward at a future date.
This article is for informational purposes only. If you have any questions regarding your property or specific leasing issues and the requirements of any legal changes described herein, please consult with an attorney.