CC – Item 7A– Staff Report AB 2065 (CARDENAS) "Lk
' stat
*re teport
TO: HONORABLE MAYOR
AND MEMBERS
',rROOSEMEAD CITY COUNCIL
FROM: J rRANK G. TRIPEPI, CITY MANAGER
DATE: YYY JULY 7, 1998
RE: AB 2065 (CARDENAS) PREEMPTION OF MUNICIPAL BUSINESS TAX
ON HOME BUSINESSES
Attached is a letter from the City of Los Angeles requesting our support in opposing AB 2065
(Cardenas) which preempts the business tax of any city that has imposed a home occupation
business tax. Although the City of Rosemead's Business License Code does not provide for
licensing a home business, we may want to consider opposing this legislation from the standpoint
that if it passes, it might prohibit us from regulating home businesses.
RECOMMENDATION
It is recommended that the City Council direct staff to draft the appropriate correspondence for
the Mayor's signature.
m�unwv9E
COUNCIL. AGENDA
JUL 141998
ITEM No. Q • 4.
u !Y0(/ . CITY COUNCIL OF THE CITY OF LOS ANGELES
"..noel OFFICE or THE PRESIDENT
JOHN FERRARO
"-SC. CITY HA
COUNCil MAN _TH OISIR ANGELES,
CA 90012
June 11, 1998 (213) 463 3337
FAX (213) 624-7610
The Honorable Margaret Clark
Council Member
P.O. Box 399
Rosemead, CA 91770
Dear Council Member Clark;
At the June 4th meeting of the Los Angeles Division of the League of California Cities, a member of
my City staff urged the membership to send letters and to make phone calls to oppose AB 2065
(Cardenas) which preempts our cities' business license taxation of home occupation businesses. The
purpose of this letter is to reiterate that call for action.
AB 2065 is a serious assault on a very local taxation authority which could only lead eventually to
complete preemption of the business license tax. Consideration of the impact of losing a home
occupation business license tax is enough for most cities to object strongly to AB 2065, which the
League already opposes. The arguments used by the proponents of this bill suggest that their real
objection is to the ability of cities to impose a business license tax on any business, regardless of
where it is located. If this tax loophole is enacted, there will be a strong incentive for many small
(one or two employee) businesses now licensed for commercial locations to move into residential
homes to avoid the local tax. In the City of Los Angeles alone, our home occupation tax now
generates a little over one million dollars annually; if we look at small businesses that could relocate
into homes, our loss could rise to over S30 million per year.
I urge all of you to be sure your voice of opposition is heard by the Senators on the Senate Local
Government Committee, where the bill will be heard on July 1st (see attached list). Your phone calls
and letters in opposition to this wrong-herded legislation can help to defeat this bill.
Thank you for your efforts.
Sincerely,
a.
- 2,
IiN FERRARO
I sident
•s Angeles City Council
Attachment: 1. Senate Local Government Committee Members
2. AB 2065 (Cardenas)
SENATE MEMBERS : LOCAL GOVERNMENT COMMITTEE
NAME: AYALA, RUBEN S
DISTRICT: 32, Senate
AFFILIATION: Democrat, Chino
CHIEF OF STAFF: Cons: Sandy Miller
CAPITOL ADDRESS: Rm. 5108, State Capitol,
Sacramento, CA 95814
916 445-6868
DISTRICT ADDRESS: 9620 Center Avenue, Suite 100
Rancho Cucamonga, CA 91730
909 466-6882
STANDING COMMITTEES: Agriculture&Water Resources (VC); Local Government(VC);
Business & Professions; Finance, Investments & International Trade; Legislative Ethics; Rules;
Transportation; Veterans Affairs
CITIES WITHIN DISTRICT: Chino, Chino Hills, Colton, Fontana, Grand Terrace, Highland,
Loma Linda,Montclair, Ontario, Pomona, Rancho Cucamonga
NAME: COSTA, JIM
DISTRICT: 16, Senate
AFFILIATION: Democrat, Fresno
CHIEF OF STAFF: Chf of Stf: Terry Reardon
CAPITOL ADDRESS: Rm. 5100, State Capitol,
Sacramento, CA 95814
916445-4641
DISTRICT ADDRESS: 2550 Mariposa Mall, Suite 2016
Fresno, Ca 93721
209 264-3078
STANDING COMMITTEES: Agriculture& Water Resources (C); Local Government
CITIES WITHIN DISTRICT: Arvin, Avenal, Bakersfield, Coalinga, Corcoran, Delano, Dinuba,
Fowler, Fresno, Hanford, Huron, Kerman, Kingsburg, Lemoore, Madera, Maricopa, McFarland,
Orange Cove, Pallier, Reedley, Ridgecrest, Sanger, Selma, Shafter, Taft, Tulare, Visalia, Wasco
NAME: CRAVEN, WILLIAM A
DISTRICT: 38, Senate
AFFILIATION: Republican, Oceanside
CHIEF OF STAFF: Stf Dir: Scott B Johnson
CAPITOL ADDRESS: Rm. 3070, State Capitol,
Sacramento, CA 95814
916 445-3731
DISTRICT ADDRESS: 2121 Palomar Airport Rd., Suite 100
Carlsbad, CA 92009
760 438-3814
STANDING COMMITTEES: Local Government (C); Legislative Ethics (C); Elections &
Reapportionment(VC);
CITIES WITHIN DISTRICT: Carlsbad, Encinitas, Escondido, Laguna Beach, Laguna Beach
City, Laguna Niguel, Oceanside, San Clemente, San Juan Capistrano, Solana Beach, Vista
NAME: JOHNSTON,PATRICK
DISTRICT: 5, Senate
AFFILIATION: Democrat, Stockton
CHIEF OF STAFF: Chf of Stf: Ross Sargent
CAPITOL ADDRESS: Rm. 5066, State Capitol,
Sacramento, CA 95814
916 445-2407
DISTRICT ADDRESS: 1020 N St., Suite 504
Sacramento, CA 95814
916 323-4306
STANDING COMMITTEES: Appropriations (C); Insurance; Agriculture & Water Resources;
Energy,Utilities & Communications; Local Government;Natural Resources & Wildlife
CITIES WITHIN DISTRICT: Escalon, Galt, Lathrop, Lodi, Manteca, Ripon, Sacramento,
Stockton, Tracy
-2-
NAME: KOPP, QUENTIN L
DISTRICT: 8, Senate
AFFILIATION: Independent, San Francisco
CHIEF OF STAFF: Chf of Stf: Dan Friedlander
CAPITOL ADDRESS: Rm. 2057, State Capitol,
Sacramento, CA 95814
916 445-0503
DISTRICT ADDRESS: 2171 Junipero Serra Blvd. Suite 530
Daly City, CA 94014
415 301-1721
STANDING COMMITTEES: Transportation(C); Revenue &Taxation (VC); Budget & Fiscal
Review; Local Government, Public Safety; Finance, Investments & International Trade
CITIES WITHIN DISTRICT: Brisbane, Burlingame, Colma,Daly City, Foster City,
Hillsborough, Millbrae, Pacifica, San Bruno, San Francisco, San Mateo, South San Francisco
NAME: MONTEITH, DICK
DISTRICT: 12, Senate
AFFILIATION: Republican, Modesto
CHIEF OF STAFF: AA: Dan Dellinger
CAPITOL ADDRESS: Rm. 2048, State Capitol,
Sacramento, CA 95814
916 445-1392
DISTRICT ADDRESS: 620 N. Carpenter Road, Suite A-4
Modesto, CA 95358
209 577-6592
STANDING COMMITTEES: Local Government(VC); Agriculture &Water Resources;
Natural Resources &Wildlife; Transportation; Education
CITIES WITHIN DISTRICT: Atwater, Ceres, Chowchilla, Dos Palos, Firebaugh,Fresno,
Gustine, Hughson, Livingston, Los Banos, Madera, Mendota, Merced, Modesto,Newman,
Oakdale, Patterson, Riverbank, San Joaquin, Sonora, Turlock, Waterford
-3-
NAME: POLANCO, RICHARD
DISTRICT: 22, Senate
AFFILIATION: Democrat, Los Angeles
CHIEF OF STAFF: AA: Chris Hammer
CAPITOL ADDRESS: Rm. 2032, State Capitol,
Sacramento, CA 95814
916445-3456
DISTRICT ADDRESS: 300 S. Spring Street, Suite 8710
Los Angeles, CA 90013
213 620-2529
STANDING COMMITTEES: Senate Majority Leader; Business & Professions (C); Public
Safety; Elections & Reapportionment; Finance, Investments & International Trade; Health &
Human Services; Transportation; Local Government; Budget & Fiscal Review
CITIES WITHIN DISTRICT: Los Angeles
NAME: RAINEY, RICHARD K.
DISTRICT: 7, Senate
AFFILIATION: Republican, Walnut Creek
CHIEF OF STAFF: Diane Longshore
CAPITOL ADDRESS: Rm. 4090, State Capitol,
Sacramento, CA 95814
916 445-6083
DISTRICT ADDRESS: 1948 Mt. Diablo Boulevard
Walnut Creek, CA 94596
510280-0276
STANDING COMMITTEES: Public Safety (VC); Constitutional Amendments; Environmental
Quality; Transportation; Local Government
CITIES WITHIN DISTRICT: Antioch, Brentwood, Clayton, Concord, Danville, Dublin,
Hercules, Lafayette, Livermore, Martinez, Moraga, Orinda, Pinole, Pittsburg, Pleasant Hill,
Pleasanton, San Ramon, Walnut Creek
-4-
NAME: WATSON, DIANE E
DISTRICT: 26, Senate
AFFILIATION: Democrat, Los Angeles
CHIEF OF STAFF: Chf of Stf. John Miller
CAPITOL ADDRESS: Rm. 4040, State Capitol,
Sacramento, CA 95814
916 445-5215
DISTRICT ADDRESS: 4401 Crenshaw Blvd., Suite 300
Los Angeles, CA 90043
213 295-6656
STANDING COMMITTEES: Health& Human Services (C); Budget &Fiscal Review; Public
Safety; Education; Local Government
CITIES WITHIN DISTRICT: Culver City,Los Angeles
-5-
AMENDED IN ASSEMBLY MAY 19, 1998
AMENDED IN ASSEMBLY MAY 13, 1998
CALIFORNIA LEGISLATURE-I997-98 REGULAR SESSION
ASSEMBLY BILL No. 2065
Introduced by Assembly Member Cardenas
February 18, 1998
An act to add Section 37101.3 to the Government 16002.7 to
the Business and Professions Code, relating to cities.
LEGISLATIVE COUNSEL'S DIGEST
AB 2065, as amended, Cardenas. Cities: license fees.
Existing law authorizes the legislative body of a city to
license for revenue and regulation, and to fix the license tax
upon, every kind of lawful business transacted in the city,
except as specified.
This bill would provide that no legislative body of a city shall
impose prohibit the legislative body of a city or city and
county, including a charter city, from imposing work permit
requirements, requiring or imposing a
regulatory license, or—impese imposing a regulatory license
fee or business tax on any person working in his or her own
home under specified conditions.
The bill would also require that none of these provisions be
construed to have any effect on the authority of a city; county,
or city and county for zoning.
Vote: majority. Appropriation: no. Fiscal committee: no.
State-mandated local program: no.
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AB 2065 —2—
The people of the State of California do enact as follows:
_ • . . ... . - .
2 Gweer..,xent Code, to mad:
3 37101.3. Notwithstanding Section 37101, or any other
5 SECTION I. The Legislature finds and declares all of
6 the following:
7 (a) Many persons work at home in a manner !hat does
8 not involve those activities, typically associated with the
9 conduct of a business, that result in impacts that require
10 the application of business regulations and levies.
11 (b) Business regulations and levies should not be
12 applied to those persons whose activities do not result in
13 the impacts that the regulations and levies were intended
14 to address.
15 (c) Subjecting persons who work in their homes in
16 journalistic, creative, or artistic endeavors to local
17 regulations and levies, previously applied only to local
18 businesses, would have a chilling and detrimental effect
19 upon the ability of those persons to freely exercise their
20 constitutionally guaranteed rights offree expression.
31 (d) Differing local standards with respect to the
22 application of business regulations and levies necessarily
23 result in confusion, difficulty, and administrative burdens
24 on those individuals who quietly perform in their homes
25 those productive economic activities that do not
26 adversely impact their neighbors or their community.
27 (e) Subjecting an individual who works at home to
28 local business levies and regulations will have a
29 dampening effect upon the most basic level of economic
30 initiative that is essential to the ongoing economic
31 prosperity of individuals and the state as a whole.
32 (t) A statewide standard for the application of business
33 regulations and levies will not unduly interfere with
34 municipal affairs, including any local fiscal concerns, but
35 will instead address those valid statewide concerns,
36 unrelated to revenue issues, that are expressed in this
37 section.
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-3— AB 2065
I SEC. 2. Section 16002.7 is added to the Business and
2 Professions Code, to read:
3 16002.7. Notwithstanding any other provision of law,
4 the legislative body of a city or city and county, including
5 a charter city, shall not impose work penult
6 requirements, require or impose a regulatory license, or
7 impose a regulatory license fee or business tax on any
8 person working in his or her home if the person does not
9 do any of the following:
10 (a) Have more than one employee engaged at home
11 in the work activity or business.
12 (b) Have more than two business-related deliveries at
13 home per day.
14 (c) Have more than one client visit at the home per
15 hour. As used in this section, "client" means a person or
16 entity that pays , for the services or products of the
17 home-based worke .
18 (d) Advertise to the public at large. As used in this
19 section, "advertise to the public at large" does not include
20 the use of business cards, stationery, or computer
21 websites or an e-mail address.
22 (e) Nothing in this section shall be construed to have
23 any effect on the authority of a city, county, or city and
24 county for zoning.
0
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