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BACKGROUND The City of Pleasanton, like most other cities in California, has a Business License Tax Ordinance, codified in Title 5 of the Pleasanton Municipal Code. The Ordinance imposes a license tax on any person that is transacting or carrying on any business in the City. "Transacting or carrying on any business" is broadly defined and includes any representation that a person is doing business in the City, including all forms of advertising, holding a license or permit issued by a governmental agency, making sales or delivering goods, or performing services. Generally, the tax is computed on the basis of gross receipts: $25 up to $25,000; $50 between $25,000 and $100,000; $75 between $100,000 and $250,000 and $.30/$1000 if gross receipts exceed $250,000. Persons self report the amount of their gross receipts although the ordinance does allow the City to review books and records to confirm the reported amounts are correct. The City currently issues nearly 10,000 business licenses and in fiscal year 2007 collected over three million dollars in business license taxes. The proposed amendments to the ordinance are largely intended to clarify how the license tax is imposed on certain businesses; it does not raise the license tax itself as to do so would require a vote of the people. The businesses in question are residential rental properties, commercial properties, non revenue producing businesses and start up companies. The other changes to the ordinance are non-substantive and largely housekeeping. DISCUSSION Under the existing ordinance, a person who owns three or more residential rental properties is required to pay a tax on the gross receipts from those rental properties. For ease of administration, City staff has required that a person submit a license application/renewal for each such property. In other words, the City issues a business license for each residential rental property so that the City can track more efficiently if a property is sold. Because the ordinance, however, is somewhat ambiguous about requiring an application for each property, staff is recommending that the ordinance be changed to make it clear that a separate application is required for each property. Similarly, for commercial properties, City staff has requested that applicants provide the names of the tenants on the property so that staff can be assured that each of those businesses also have a business license. Again, however, the current ordinance does not expressly require this information so staff is recommending a change to the ordinance to make that requirement express. Within the City are a number of businesses, such as corporate headquarters, branch offices, management companies, etc., that do not themselves generate revenue but provide the administrative or technical support to businesses located outside the City that do generate gross receipts. Because the business license tax is premised on gross receipts, another method must be employed to impose the business license tax on these businesses. The method that has been used is the amount of the business' office expenses, including payroll, rent, utilities, and supplies. As more and more of these businesses locate in Pleasanton, staff has found some resistance from some of these Page 2 of 3