The Silicon Valley Voice

Power To Your Voice

Proposed Business Tax Measure Not ‘Business Friendly,’ Council Says 

The Santa Clara City Council discussed two tax measures for the November ballot, agreed to fund an assessment of its Loyalton Ranch property and approved objective design standards for City developments at the July 5, 2022 meeting.

“Fair share” was the phrase of the night at the Santa Clara City Council meeting when the Council considered two ballot measures to funnel money into its general fund.

At its Tuesday night meeting, the Council opted to delay a new business license tax and approved another tax that would transfer utility revenue to the general fund. With a looming $27 million deficit that City employees attribute to the pandemic, the ballot measures would add millions to the City’s general fund.

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Many stressed that Santa Clara-based tech giants like Nvidia and Intel need to pay more in business license tax. The proposed business tax measure would increase how much the City collects for such a tax ten-fold, increasing it to roughly $9 million annually.

However, the Council found the measure draconian after hearing from opposition, saying it wants to maintain Santa Clara’s business-friendly environment.

As it is, the tax structure caps at $500 a year, something Council Member Raj Chahal called “a joke.” The proposed “headcount” measure would increase business tax on businesses across the board with the largest companies seeing a hike from $15 per employee to $135 per employee.

“Any increased taxes on employer[s] generally means increased taxes and prices to your residents who participate, get services and buy products from your businesses,” said Pete Constant, professor of public policy at Jessup University. “That means higher prices — even higher prices — than our inflation-impacted prices for local businesses and residents.”

Constant said the tax would have the “unintended consequence” of less spending in the City.

Similarly, Christian Malesic, President and CEO of Silicon Valley Central Chamber of Commerce, called the hike a “super hyper progressive” tax, one that will make Santa Clara the least business-friendly environment in the valley.

The City’s business tax and license structure has not been updated since 1992. Additional taxes collected from the business tax measure would go to fund City services such as police and fire and storm sewer and park maintenance.

The Council is short on time to ensure it can get any measure on the ballot in November. But in the interest of balancing the wishes of the Chamber with the need to update the tax structure, the Council took the advice of Council Member Kathy Watanabe, who suggested deferring the item until its July 12 meeting because it is not “fully baked.”

Council Member Kevin Park said he would like to see Santa Clara’s structure be as friendly as Mountain View’s on the low end and as friendly as San Jose’s on the upper end.

“We want you to contribute to our City, but we are not going to squeeze you for everything we can get. I think that is the essence of being a business-friendly city,” he said.

While the business tax increase would be more stable than more volatile types of taxes like the City’s transient occupancy tax — paid by hotel guests — or sales tax, the Council worried it could de-incentivize businesses from operating in Santa Clara, a risk it wasn’t willing to take.

Mayor Lisa Gillmor said, as proposed, the tax would put the City at a competitive disadvantage, saying she would rather work with businesses than hurt them.

“If you start to bite the hand that feeds you, you are going to be in trouble in the long-term,” she said.

The Council unanimously voted to defer the business tax measure until July 12 and work with the Chamber in the meantime to establish a structure more amenable to local businesses.

The second proposed measure — to transfer 5% of utility revenue to the general fund — passed unanimously. That measure, if passed, would generate roughly $30 million for the City’s general fund annually but would not increase taxes for residents.

Loyalton Ranch in Need of Assessment

Understanding what is needed to get Loyalton Ranch — which, after much deliberation, the Council decided to put on the market back in June — up to snuff will cost the City $173,581.

The Council approved a contract amendment for services with Bellecci & Associates, Inc. to understand what rehab the Loyalton Ranch property, located just outside Reno, needs. However, the approval excluded plans and specifications, authorizing roughly $63,000 of the total.

A fire in 2020 razed 90% of the structures on the land, which has been used for cattle grazing for the past few decades. However, with the sale imminent, the property needs a facelift in order to make it viable for sale. The contract is just for assessment and does not include any demolition or construction.

Manuel Pineda, director of Silicon Valley Power, said knowing what it would take to clean up the site, even if the Council opts to sell the property as-is, is helpful. He said he is “concerned” with the condition of the site, adding that he is “uncomfortable” with its state.

Pineda said he would seek Council approval on spending the remainder of the money once the initial estimate is complete. The motion passed 6-1 with Park voting “no.”

Council Adopts Objective Design Standards

The Council also adopted objective design standards to get ahead of a state law that hampers local control. In the interest of adding to housing stock in the valley, SB 9 expedites subdivision development projects that meet certain criteria.

Cities still have authority to block developments if they do not meet objective design standards set by the City previously, provided they do not conflict with SB 9. The Council unanimously approved the new standards.

Consent Calendar Spending

The Council also approved the following items in one motion via the consent calendar:

  • A $2.5 million contract with Blue’s Roofing Company for recoating the existing traffic bearing membrane in the seating bowl and concourse areas at Levi’s Stadium;
  • A one-year $80,000 contract with Tyson Group, LLC for Stadium Builder License (SBL) sales training services.

The next regularly scheduled meeting is Tuesday, July 12 in the Council Chambers at City Hall, 1500 Warburton Ave. in Santa Clara.

Members of the public can participate in the City Council meetings on Zoom at https://santaclaraca.zoom.us/j/99706759306; Meeting ID: 997-0675-9306 or call 1(669) 900-6833, via the City’s eComment (available during the meeting) or by email to PublicComment@santaclaraca.gov.

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