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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. 97 P 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. 97 P -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 97 7