2.37.045 Order of calculations.

   Tax owed shall be determined by applying the terms of this ordinance in the following order: first, application of the tax rate in subdivisions (a) or (b) of Section 2.37.040 to the square footage of the business; second, application of business tax offsets as set forth in Section 2.37.080, if any; and third, application of the tax cap in subdivision (c) of Section 2.37.040, if applicable.

(Ord. 5581 § 1 (part), 2022)

2.37.050 Annual adjustment of tax rate and cap.

   Beginning with the 2026-27 fiscal year, and each fiscal year thereafter, the tax rate in subdivision (b)(2) of Section 2.37.040 and the cap in subdivision (c) of Section 2.37.040 shall be automatically increased by two and one-half percent (2.5%).

(Ord. 5581 § 1 (part), 2022)

2.37.060 Disposition of tax revenue.

   The tax imposed by this chapter is for the purpose of raising revenue for the general governmental purposes of the city. All of the proceeds from the tax imposed by this chapter shall be placed in the city’s general fund.

(Ord. 5581 § 1 (part), 2022)

2.37.070 Exemptions from tax.

   (a)   The following businesses are exempt from the tax imposed by this chapter:

      (1)   Any business exempt from the tax by the laws of the United States or the State of California;

      (2)   Grocery stores;

      (3)   Businesses that occupy or use 10,000 square feet or less in the city; and

      (4)   Transitory businesses.

   (b)   If a business operator operates a single integrated business that has two or more parts, one or more of which could be exempt from the tax imposed by this chapter if operated as a separate business, the city may, at its discretion, exempt from the tax any part of the business that would be exempt if operated as a separate business, provided the business’s square footage can be reasonably allocated between the parts. If the city determines that the square footage cannot be reasonably allocated between the different parts of the business, then the entire business shall be taxed, unless to do so would violate a law of the United States or the State of California.

   (c)   A business that contends it is exempt under this section must apply to the tax administrator for an exemption.

      (1)   The tax administrator may require a business claiming an exemption to submit additional information to support the exemption. The request for additional information must be made in writing and the information must be provided within thirty (30) days.

      (2)   If the tax administrator determines that the business claiming an exemption is not exempt, the tax administrator may make an initial determination of the amount of tax due under subdivision (a) of Section 2.37.150.

(Ord. 5581 § 1 (part), 2022: Ord. 5607 § 3, 2024)

2.37.080 Business tax offsets.

   (a)   A business operator that operates a hotel in the city may deduct from the business tax it owes for a quarter for the business of operating the hotel an amount equal to the total transient occupancy tax collected and remitted to the city in the same quarter of the previous fiscal year from transients staying at the hotel.

   (b)   The business operator of a business that has discretion to determine the location of the place of sale, place of use, or principal place of negotiation for sales or use tax purposes and which exercises that discretion and designates the city as the place of sale, place of use, or principal place of negotiation for sales or use tax purposes which results in the city receiving sales or use tax revenues that it would not otherwise have received, but for the business’s exercise of its discretion to designate the city as the place of sale, place of use, or principal place of negotiation for sales or use tax purposes (“discretionary sales or use tax”) may deduct from the business tax it owes for a quarter an amount equal to one half of the total sales tax or use tax received by the city from the discretionary sales or use tax of that business in the same quarter of the previous fiscal year. This offset can offset up to, but no more than, 75% of the business’s quarterly business tax. If any of the sales or use tax that served as a basis of an offset from business tax is subsequently reallocated to another jurisdiction, the business operator shall reimburse the city for the amount of the offset. This reimbursement shall include all offsets within the five (5) years preceding the date that a determination or decision is made to reallocate sales or use tax, including the entirety of any quarter that falls partially within this five- year period. The city and a business operator may enter into an agreement implementing this section.

   (c)   A business operator of a business that has rights to property due to property ownership, a ground lease, or a lease that permits subleasing, and that is offering that property for sale or rent, may deduct from the business tax owed for the business an amount equal to the business tax associated with the square footage being offered for sale or rent, provided that the area to be sold or rented is completely vacant and available for immediate occupancy.

   (d)   A business claiming an offset under this section must claim the offset with its tax filing for the quarter for which the offset is claimed.

      (1)   If the information necessary for a business to claim an offset is not available, the business may defer claiming an offset for up to one year or for another period of time set by written agreement with the city.

      (2)   The tax administrator may require a business claiming an offset to submit additional information to support the claim of the offset. The request for additional information must be made in writing and the information must be provided within thirty (30) days.

      (3)   If the tax administrator determines that an offset claimed by a business is incorrect, the tax administrator may make an initial determination of the amount, if any, of the offset and the amount of tax due under subdivision (a) of Section 2.37.150.

(Ord. 5581 § 1 (part), 2022: Ord. 5607 § 4, 2024)

2.37.090 Quarterly tax payments.

   (a)   The tax imposed by this chapter shall be paid quarterly. The tax for each quarter is due the first day of the following quarter and is delinquent thirty (30) days later.

   (b)   For the first quarter in which a business begins operating in the city, the business’s tax shall be prorated for the number of days that the business was operating in the quarter.

   (c)   For the last quarter in which a business operates in the city before closing, the business’s tax shall be prorated for the number of days that the business was operating in the quarter.

(Ord. 5581 § 1 (part), 2022)

2.37.100 Business tax filing for a new business.

   When a business begins operating in the city for the first time, the business operator must provide the tax administrator with the following information, verified by the business operator as true and correct under penalty of perjury of the laws of the State of California, before beginning the operation of the business in the city:

   (a)   The name of the business and the address or addresses at which it will be operating in the city;

   (b)   The date on which the business will begin operating;

   (c)   The nature of the business’s activities;

   (d)   The square footage in which the business will be operating in the city; and

   (e)   Any other information required by the tax administrator that is reasonably required to administer this Chapter 2.37.

(Ord. 5581 § 1 (part), 2022)

2.37.110 Quarterly tax returns.

   With each quarterly tax payment, a business operator must submit a quarterly tax return which contains the following information, verified by the business operator as true and correct under penalty of perjury of the laws of the State of California:

   (a)   The name of the business and the address or addresses at which it is operating in the city;

   (b)   The nature of the business’s activities;

   (c)   The square footage in which the business is operating in the city;

   (d)   If the business operator claims an offset under Section 2.37.080, sufficient information and documentation to establish the business’s right to the offset and the amount of the offset;

   (e)   Any other information required by the tax administrator; and

   (f)   The amount of tax due based on the square footage of the business.

(Ord. 5581 § 1 (part), 2022)

2.37.120 Agreements for installment payments.

   The tax administrator may enter into an agreement with a business operator, or may adopt regulations that apply to all or a group of business operators, to allow payment of the tax on a more or less frequent basis.

(Ord. 5581 § 1 (part), 2022)