REPORT TO COUNCIL
SUBJECT
Title
Action to Adopt a Resolution to Provide Santa Clara Small Businesses Reporting 49 or Fewer Employees a One-Time Subsidy to Help Offset Costs of Modernized Business License Taxes Using Existing Silicon Valley Chamber of Commerce Settlement Funds Up to $330,000
Report
COUNCIL PILLAR
Promote and Enhance Economic, Housing and Transportation Development
Enhance Community Engagement and Transparency
BACKGROUND
On September 7, 2021, the City Council approved the appropriation of funds from the Silicon Valley Chamber of Commerce (Attachment 1). These funds were received as part of a settlement agreement reached between the City and the Silicon Valley Central Chamber of Commerce (“SVCCC”) in June 2021. As part of the settlement the City received funds in the amount of $330,000 for outreach and assistance to small businesses in Santa Clara.
On July 12, 2022, the City Council took formal action to submit to Santa Clara voters a Business License Tax Modernization Measure as part of the November 2022 General Election. During that discussion, staff included details of several components of the business tax intended to ensure equity and the protection of small businesses including a one-time subsidy for businesses for Santa Clara companies reporting 49 or fewer employees (Attachment 2).
On November 8, 2022, nearly 60% of Santa Clara Voters approved Measure H to update the City’s Business License Tax program. The new rates will go into effect on July 1, 2023 and affect nearly 6,100 businesses in Santa Clara. Information about the revised program can be found on at <https://www.santaclaraca.gov/our-city/departments-a-f/finance/business-license-tax-2023-update>.
DISCUSSION
During the outreach process related to the proposed measure, a core value that was identified by stakeholders and the City Council was the importance of mitigating the impact on small businesses in Santa Clara.
With that in mind, staff began to explore various options on how to mitigate the impact of the new fee structure on small businesses to ease the initial transition. One solution that was identified early on was the availability of funds in the amount of $330,000 in the settlement agreement with the Silicon Valley Chamber of Commerce that had been earmarked for the purpose of providing outreach and support to small businesses. The purpose of this report is to request authorization to allocate that funding to support a one-time credit to Santa Clara businesses reporting 49 or fewer employees.
This subsidy would be applied as a credit during the 2023/24 fiscal year renewal process starting on July 1. The recommended subsidy aligns with the outlined use of those funds for outreach and assistance to small businesses in Santa Clara.
As shown in Table 1, 5,700 of the approximately 6,100 total number of businesses in Santa Clara would be eligible to receive a one-time subsidy with an estimated cost of $323,190. It should be noted that the number of businesses and employee counts are based on the best information at the time. The actual subsidy provided, and number of businesses, will vary based on actual counts at the time of the business license tax renewal. Eligible businesses will be required to have an office located in the City of Santa Clara and funds will be disbursed on a first come, first serve basis until the $330,000 is exhausted.
Table 1: Estimated Tax and Proposed Subsidy by Employee Range
|
Employee Range |
# of Businesses |
Estimated Business Tax Revenue |
Average Tax per Business |
Subsidy per Business |
Total Subsidy |
|
0-4 |
3,838 |
$ 408,105 |
$ 106 |
$ 30 |
$115,140 |
|
5-9 |
842 |
279,675 |
332 |
75 |
63,150 |
|
10-19 |
559 |
360,855 |
645 |
100 |
55,900 |
|
20-49 |
445 |
610,920 |
1,373 |
200 |
89,000 |
|
Total |
5,684 |
|
|
|
$323,190 |
ENVIRONMENTAL REVIEW
The action being considered does not constitute a “project” within the meaning of the California Environmental Quality Act (“CEQA”) pursuant to CEQA Guidelines section 15378(b)(5) in that it is a governmental organizational or administrative activity that will not result in direct or indirect changes in the environment.
FISCAL IMPACT
Funding in the amount of $330,000 was received in FY 2021/22 and carried over as those funds remained unspent. A separate action is included in the FY 2023/24 budget adoption on the June 27, 2023 City Council agenda to carry these unspent funds to FY 2023/24 for the purposes recommended in this report.
COORDINATION
This report was coordinated with the City Attorney’s Office and Finance Department.
PUBLIC CONTACT
Public contact was made by posting the Council agenda on the City’s official-notice bulletin board outside City Hall Council Chambers. A complete agenda packet is available on the City’s website and in the City Clerk’s Office at least 72 hours prior to a Regular Meeting and 24 hours prior to a Special Meeting. A hard copy of any agenda report may be requested by contacting the City Clerk’s Office at (408) 615-2220, email clerk@santaclaraca.gov <mailto:clerk@santaclaraca.gov> or at the public information desk at any City of Santa Clara public library.
RECOMMENDATION
Recommendation
Adopt a Resolution to provide a one-time subsidy to small businesses located in Santa Clara reporting 49 or fewer employees, applied upon business license tax renewal for Fiscal Year 2023/24, using existing Silicon Valley Chamber of Commerce settlement funds on a first come first serve basis in an amount not to exceed $330,000.
Staff
Reviewed by: Cynthia Bojorquez, Assistant City Manager
Approved by: Jōvan D. Grogan, City Manager
ATTACHMENTS
1. RTC 21-1134 Silicon Valley Chamber of Commerce Funds
2. July 12, 2022 City Council Business License Tax Modernization Presentation Slide 5
3. Resolution