City of Culver City, California
City Council Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council consider 1) the introduction of an Ordinance
amending Culver City Municipal Code §11.01.220 relating to the business tax
certificate application/renewal processing fee (Attachment 1); and 2) the adoption of
a Resolution to increase the business tax certificate application/renewal processing
fee and establish a business planning review fee (Attachment 2).
BACKGROUND:
The following proposal was submitted to the City Council for consideration in
“concept form” at the time of adoption of the City’s 2006/07 budget on June 26,
2006. The proposal is now being brought forward per City Council’s instruction for
further consideration and direction to staff on its implementation.
Every year approximately 2,400 new businesses apply for a business tax certificate
from the City’s Treasury Division. Each business is unique, and so is the manner in
which each business is charged for its presence in any particular city. The Treasury
Division uses substantial staff resources to explain the City’s rates and processes to
every new business coming into the City of Culver City so that the business
understands the cost of doing business in the City. While some of this
communication is initially over the phone, in the final stages it is normally at the
public counter.
Meeting Date: 07/24/06 Item Number: A-5
AGENDA ITEM: 1) Introduction of Ordinance Amending Section 11.01.220 of the
Culver City Municipal Code relating to Business Tax Certificate
Application/Renewal Processing Fee; and 2) Adoption of Resolution to Increase
the Business Tax Application/Renewal Processing Fee and to Establish a
Business Planning Review Fee.
Contact Person/Dept.:
Nagam Rao/City Treasurer's Office
Phone Number: (310) 253 5889
Fiscal Impact: Yes [x] No [] General Fund: Yes [x] No []
Public Hearing: [] Action Item: [x] Attachments: [x]
Public Notification:
Culver City Chamber of Commerce (7/19/06); Downtown Business Association
(7/19/06); Master Notification List (7/19/06)
Department Approval: Crystal Alexander
(7/13/06)
City Manager Approval: Jerry B. Fulwood
(07/19/06)
City Controller Approval: Marlee Chang
(07/19/06)City of Culver City, California
City Council Agenda Item Report
In subsequent renewal years, while the time at the counter is decreased, the
customer contact is increased in the form of auditing and correcting entries and
calculation errors on renewals. Additionally, there is an average of 20 to 25 special
permits processed per month for business tax customers.
The City has been assessing a $45 application/renewal processing fee to cover the
cost for the City Treasurer’s Office (CTO) administration of the business tax program
for the last sixteen (16) years. In addition, as is often the case for what is described
as “current planning” activities, there has been no fee assessed for work performed
by the Planning Division of the Community Development Department. Planning’s
work is vital to ensure compliance with the Zoning Code and General Plan, which
further lends toward a more harmonious relationship between the commercial and
residential areas of the community. This is especially the case for home occupation
businesses, for which certain kinds of activities are restricted.
Establishing a new business planning review fee of $20 in conjunction with the
business tax certificate application process, and increasing the business tax
certificate application/renewal processing fee to $60, recognizes the significant
passage of time since the City last adjusted these business related fees. Currently,
Culver City’s business tax certificate fees are only covering 44.4% of the costs
incurred by the City Treasurer’s Office and Planning Division to administer the
business tax program and conduct a planning review of new in-City businesses.
DISCUSSION:
Current Business Tax Certificate Program
The City does not issue business licenses. Our business tax ordinance exists solely
to raise revenues for general municipal purposes, and does not regulate businesses
in any way. Accordingly, the business tax certificate that we issue is simply
evidence that the business tax has been paid. It is not assurance that the business
is in compliance with any City regulatory requirements (or those of any other
agency).
All new and renewed business tax certificate applications must be processed and
administered by the City Treasurer’s Office. Additionally, all new applications must
be reviewed for consistency with zoning and building requirements by Planning staff.
In-City businesses with a change of location shown on their renewal applications
would also be subject to this process. Businesses with offices principally located
outside of the City are not reviewed by Planning staff.
Current Business Tax Certificate Application and Renewal CostsCity of Culver City, California
City Council Agenda Item Report
There are regulatory aspects in how the Treasurer’s Office processes business tax
certificate applications and renewals. For example, Planning staff reviews all new
business tax certificate applications, and location changes for existing certificate
holders, for compliance with zoning and building regulations. In effect, there is
already a regulatory aspect of the City’s business tax program, but the City is not
recovering the costs for this review.
The various activities of the City Treasurer’s Office in processing a first time
business tax certificate application, or its renewal in subsequent years, involves a
number of activities, in addition to the one-on-one interaction with the customer.
Attachment 3 lists the major activities involved in processing a business tax
certificate application and renewal, and depending upon the level of staff involved,
the associated cost to arrive at the direct staff cost. Added to these figures was the
proportionate share of the indirect administrative overhead costs. These costs were
based on the projected budget figures for 2006/07. Based on these projected cost
figures, the cost of processing a business tax certificate renewal is approximately
$70. Analysis utilizing the Consumer Price Index (CPI) applied over the period June
1989 and June 2006 yields a projected cost of $73.62, which is listed in Attachment
4.
If a business is located in Culver City, the Planning Division must approve the
business tax certificate application. The Culver City Zoning Code establishes
regulations concerning where and under what conditions a business may operate in
the City. The Planning Division verifies if the business meets the zoning
requirements, in addition to whether other types of review, like an administrative use
permit or a conditional use permit, are required. Additionally, when a business tax
certificate is evaluated, the planner must check that the parking requirements that
apply to the type of business and location are being met. In some cases,
researching planning files and business tax certificate records may be necessary to
determine if prior business activity at that specific location constitutes a legal non-
conforming use. The Planning Division also assures that businesses that are
operated in residential units are limited to low intensity office uses that are clearly
secondary to the use of the dwelling, and compatible with surrounding residential
uses. Thus, it is the policy of Planning staff to inform the applicant of the home
occupation regulations and to make sure the applicant reads and acknowledges
receipt of such regulations. Attachment 5 details the major activities for Planning
staff in processing a business tax certificate application. Based on these projected
cost figures, the cost of processing a business tax certificate application or renewal
is approximately $31.59, as shown in Attachment 5.
Consistency with User Fee Cost RecoveryCity of Culver City, California
City Council Agenda Item Report
Policy. Implementing a new business planning review fee will help recover the
administrative costs the City is already incurring. In short, it will not create any new
requirements, but simply recognize the efforts and related resources already in
place.
Practices in Other Cities. Other cities issue business receipts/licenses and set
minimum fees as needed to recover their total cost of issuance. Business License
Application and Renewal Fees in neighboring cities are shown in Attachment 6.
Customer Service Impact. Staff believes that this modest fee will have a nominal
impact on the business community. As noted above, the cost for obtaining a
business tax certificate has remained unchanged since 1990. For businesses
renewing their business tax certificate, which have not changed their in-City location,
the City Treasurer’s Office processing fee will be adjusted to $60, the same rate to
be paid by new businesses.
FISCAL ANALYSIS:
Proposed New Business Planning Review Fee
Based on the proposed rate structure, implementing a new business planning review
fee, plus an inflationary adjustment to the business tax certificate application/renewal
fee will generate $201,000 to $209,000 on an annual basis.
Estimated New Business Planning Review Fee Revenues
Projected Figures
Annual
Activity
Current
Business
License
Fees
Proposed
Business
Lic. Appln &
Renewal
Fee
Proposed
New
Business
Planning
Review Fee
Revenues at
CURRENT rates
Additional Revenue
due to fee change
& intro of Planning
Review Fee
New Applications
- Located in
City*
900-1,000 $45 $60 $20.00 $40,500-$45,000 $31,500-$35,000
- Located out of
City
1,400-1,500 $45 $60 $63,000-$67,500 $21,000-$22,500
Annual Renewals 9,900-10,100 $45 $60 $445,500-$454,500 $148,500-$151,500
Total $549,000-$567,000 $201,000-$209,000
*Excludes commercial property rental, gardeners, handbill distributors and vending machine
operators business tax receipts, which are not sent to Planning staff for review.City of Culver City, California
City Council Agenda Item Report
ATTACHMENTS:
1. Proposed Ordinance
2. Proposed Resolution
3. Cost Analysis for the Business Tax Division at the Application and Renewal
Stages;
4. Effect of Adjusting the $45 Fee by the Consumer Price Index;
5. Cost Analysis for the Community Development /Planning Departments’ Business
Planning Review Fee;
6. Business License Application and Renewal Fees for Neighboring Cities.
MOTION:
That the City Council:
1. Introduce for first reading the Ordinance amending Section 11.01.220 of the
Culver City Municipal Code relating to the business tax certificate
application/renewal processing fee; and
2. Adopt the Resolution increasing the business tax certificate application/renewal
processing fees and establishing a business planning review fee.
MEETING DATE: 07/24/06
AGENDA ITEM: 1) Introduction of Ordinance Amending Section 11.01.220 of the
Culver City Municipal Code relating to Business Tax Certificate
Application/Renewal Processing Fee; and 2) Adoption of
Resolution to Increase the Business Tax Application/Renewal
Processing Fee and to Establish a Business Planning Review Fee.
ATTACHMENTS
Pages
1. Proposed Ordinance
2. Proposed Resolution
3. Cost Analysis for the Business Tax Division at the Application and
Renewal Stages
4. Effect of Adjusting the $45 Fee by the Consumer Price Index
5. Cost Analysis for the Community Development/Planning Departments'
Business Planning Review Fee
6. Business License Application and Renewal Fees for Neighboring Cities|1010|1 - 6
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ATTACNNI_ENT #1
ORDINANCE NO. 2006-
AN ORDINANCE OF THE CITY OF CULVER CITY,
CALIFORNIA, AMENDING SECTION 11.01.220 OF THE
CULVER CITY MUNICIPAL CODE RELATING TO THE
BUSINESS TAX CERTIFICATE APPLICATION RENEWAL
PROCESSING FEES.
WHEREAS, every year approximately 2,400 new businesses apply for
business tax certificates from the Treasury Division of the City Treasurer's Office. All new
and renewed business tax certificate applications must be processed and administered by
the City Treasurer's Office; and
WHEREAS, there is a regulatory aspect to the processing of a business tax
certificate application/renewal, which consists of Planning staff review of all new business
tax certificate applications for compliance with zoning and building regulations. In-City
businesses with a change of location at the time of renewal are also subject to this
process; and
WHEREAS, Section 11.01.220 of the Culver City Municipal Code sets forth a
specific dollar amount for the business tax certificate application/renewal processing fee;
and
WHEREAS, the application/renewal processing fee to cover the costs of the
services performed by the City Treasurer's Department has not been adjusted in 16 years,
and there has never been a fee assessed for services performed by the Planning Division;
and
WHEREAS, in the interest of saving City staff time and costs involved in
amending, by ordinance, the City's Municipal Code on every occasion where it is
30determined that there should be an increase in fees; and
WHEREAS, there is outdated language contained in §§ 11.01.220 (3) and (4)
that is no longer applicable today.
NOW, THEREFORE, the City Council of the City of Culver City, California,
DOES HEREBY ORDAIN as follows:
SECTION 1. Section 11.01.220 of the Culver City Municipal Code is hereby
amended to read as follows:
§ 11.01.220 COMPUTATION OF TAXES AND FEES.
A business whose tax is based on gross receipts shall compute and pay its
business tax and fees as follows:
A. Application. At the time an application is made for a business tax
certificate, the applicant shall pay an application fee of Forty Five Dollar*
($15.00) in an amount set by resolution of the City Council.
B. Renewal. At the commencement of the first renewal period, or at
the termination of business in Culver City, should such termination be prior to
the commencement of the first renewal period, the tax certificate holder shall
file with the City Treasurer, on a form provided by the Treasurer's Office, a
verified statement of gross receipts or a verified statement of the cost of
operations should the taxable gross receipts be less than the cost of
operations, for the initial period and based on the statement shall pay the tax
due for the initial period. At the same time, for the first renewal period, the tax
certificate holder shall pay a renewal fee of Forty Five DoHare ($45.00) in an
amount set by resolution of the City Council and the tax based on the verified
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statement of gross receipts or the verified statement of the cost of operations
should the taxable gross receipts be less than the cost of operations
projected to estimate gross receipts for the renewal period.
1. For each succeeding renewal period, the tax certificate holder
shall pay a renewal fee
- Re
in an amount set by
resolution of the City Council and shall file a verified statement of gross
receipts, or a verified statement of the cost of operations should the taxable
gross receipts be less than the cost of operations, for the preceding twelve
(12) month period and shall pay a business tax computed on such statement
at the rate specified for the applicable business category.
2. At the time an application is made for a business tax certificate,
or at the time of a renewal of a business tax certificate, where the tax is
determined by a flat rate, the applicant or tax certificate holder shall pay an
application fee or renewal fee of Forty Five Dollars ($15.00) in an amount set
by resolution of the City Council in addition to the flat rate tax.
3. Thc business tax period bcginning July 1, 1090 shall end
December 31, 1990. Businctmes applying for a business tax certificate during
the period July 1, 1990 through December 31, 1990 shall, at the time an
-ee
e
provided by thc Treasurer's Office, a verified statement of gFoss rcccipts or a
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a6 : 2.! e e- e--
C ee 4. 1'.
ee- e
"' e
e ee- e -e. - - e e -••-•
receipts bc less than the cost of operations.
/1. a. Businesses filing for a renewal of their business tax
December 31, 1990, shall compute their business tax as follows:
(1) For those businerA-,es whose start data in Culver
City is prior to January 1, 1989; the business tax shall be b „cd
on one half ( 1 /2) of the taxable gross receipts produced during
incurred during calendar y ar 1989 should the taxable gross
receipts be lew, than the cost of operations.
(2) For those businesses whose start date in Culver
City is prior to July 1, 1989 and after January 1, 1989; the
business tax shall be based on one half (|1010|/2) of-the-taxable-WASS
receipts produced during the period from their start date in
Culver City through December 31, 1089 or on one half ( I A) of
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(3) For those businesses whose start date in Culver
31, 1989 or on the cost of operations incurred from their start
0.0
r., • * t •
taxable gross receipts be less than the cost-of operations.
December 31, 1°90 shall pay no renewal fee.
C. Business Planning Review Fee. At the time an application is
made for a business tax certificate, or upon renewal if the business has
changed location, the applicant shall pay a business planning review fee in
an amount set by resolution of the City Council.
SECTION 2. Pursuant to Section 619 of the City Charter, this
Ordinance shall take effect thirty (30) days after the date of its adoption. Pursuant to
Sections 616 and 621 of the City Charter, prior to the expiration of fifteen (15) days after
the adoption, the City Clerk shall cause this Ordinance, or a summary thereof, to be
published in the Culver City News and shall post this Ordinance or a summary thereof in at
least three places within the City.
SECTION 3. The City Council hereby declares that, if any provision, section,
subsection, paragraph, sentence, phrase or word of this ordinance is rendered or declared
invalid or unconstitutional by any final action in a court of competent jurisdiction or by
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30reason of any preemptive legislation, then the City Council would have independently
adopted the remaining provisions, sections, subsections, paragraphs, sentences, phrases
or words of this ordinance and as such they shall remain in full force and effect.
APPROVED AND ADOPTED this day of , 2006.
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CIO
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GARY SILBIGER, Mayor
City of Culver City, California
ATTEST: APPROVED AS TO FORM:
CHRISTOPHER ARMENTA, City Clerk CAROL A. SCHWAB, City Attorney
-6-ATTACHMENT #2
RESOLUTION NO. 2006-R
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CULVER CITY, CALIFORNIA, INCREASING THE BUSINESS
TAX CERTIFICATE APPLICATION AND RENEWAL
PROCESSING FEE AND ESTABLISHING A BUSINESS
PLANNING REVIEW FEE.
WHEREAS, every year approximately 2,400 new businesses apply for business
tax certificates from the Treasury Division of the City Treasurer's Office. All new and renewed
business tax certificate applications must be processed and administered by the City
Treasurer's Office; and
WHEREAS, there is a regulatory aspect to the processing of a business tax
certificate application/renewal, which consists of Planning staff review of all new business tax
certificate applications for compliance with zoning and building regulations. In-City businesse
with a change of location at the time of renewal are also subject to this process; and
WHEREAS, pursuant to Section 11.01.220 of the Culver City Municipal Code,
the City Council may, by resolution, establish fees for the processing of business tax certificat
applications/renewals; and
WHEREAS, the application/renewal processing fee to cover the costs of the
services performed by the City Treasurer's Department has not been adjusted in 16 years;
and there has never been a fee assessed for services performed by the Planning Division; an
WHEREAS, the current fee of $45.00 for the processing of business tax
certificate applications/renewals does not cover the City's costs; and
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IiWHEREAS, it is the intent that the costs associated with the administration and
regulation of business tax certificate applications/renewals be recouped from the applicants;
and
WHEREAS, these costs are currently calculated to be Sixty Dollars ($60.00) for
the services performed by the City Treasurer's Department in the processing of business tax
certificate applications/renewals; and Twenty Dollars ($20.00) for the services performed by
the Planning staff for all new business tax certificate applications and all renewals where the
business has changed its location; and
WHEREAS, on July 24, 2006, at a duly noticed public meeting, the City Council
considered an increase of the business tax certificate application/renewal fee, and the
establishment of a business planning review fee, for the costs involved in processing busines
tax certificate applications/renewals; and
WHEREAS, after giving the public an opportunity to be heard and considering al
information before it, the City Council approved said fees; and
WHEREAS, the fees established herein are based upon the reasonable cost of
providing the services for which the fees are imposed.
NOW, THEREFORE, the City Council of the City of Culver City, California,
DOES HEREBY RESOLVE as follows:
1. The fees established in Exhibit "A," attached hereto, are hereby adopted.|1010|I|1010101010101010 10
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282. This Resolution shall take effect concurrently with Ordinance No. 2006-
APPROVED and ADOPTED this 24 th day of July, 2006.
GARY SILBIGER, MAYOR
City of Culver City, California
ATTEST: APPROVED AS TO FORM:
CHRISTOPHER ARMENTA, CAROL A. SCHWAB,
City Clerk City Attorney
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28|1010|9EXHIBIT "A"
The following fees are established for and applicable to the processing of
business tax certificate applications and renewals as described in Section 11.01.220 of the
Culver City Municipal Code:
Business Tax Certificate Application Processing Fee: $60.00
Business Tax Certificate Renewal Processing Fee: $60.00
Business Planning Review Fee: $20.00|10101010101010101010 10
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(-)Time taken in minutes
low I high Average
Average
Personnel
Cost per $ per hour Personnel Category
ATTACHMENT #3
COST ANALYSIS FOR THE BUSINESS TAX DIVISION AT THE APPLICATION & RENEWAL STAGES
COST ANALYSIS:
Senior Account Clerk $38.70 34 46 40.00 $25.80
Acccounting Technician $40.10 8 11 9.50 $6.35
Account Clerk $32.43 4 6 5.00 $2.70
46 63 54.50 $34.85
Indirect Treasury Division costs ( note #1) a 39.83% $13.87
Sub-total: Treasury Division costs $48.72
Indirect Treasury Administration costs (note #2) 43.41% $21.14
Total Transaction cost $69.86
ACTIVITY ANALYSIS:
'Activity 'Level I minutes I minutes
Counter Time Senior Account Clerk 15 20
Receipt Processing Senior Account Clerk 8 12
Pull Back-up Docs Senior Account Clerk 1 2
Enter into HdL Senior Account Clerk 10 12
sub-total 34 46
Review Documents Acccounting Technician 2 3
Post in HdL Acccounting Technician 5 7
Review Certificate Acccounting Technician 1 1
sub-total 8 11
File Account Clerk 1 2
Mailing Account Clerk 3 4
sub-total 4 6
Total Time Taken 46 63
Note # 1:
The Indirect Treasury Division cost percentage was arrived at as the ratio of the "Maintenance & Operations"
cost to the "Personnel Services" cost, using the CAO's recommended figures for the Budget Year 2005/06.
The "Maintenance & Operations" cost = $261,514
The "Personnel Cost" = $656,610
Indirect Treasury Division Cost % = $261,514,000 / $656,610 = 39.83%
Indirect Treasury Division Cost in $ = 39.90% of $33.64 = $13.42
Note # 2:
The Treasury Department's proportionate share of the combined costs of the 3 operating divisions was taken
as the basis for its share of the Treasury Adminstration expenses, and referred to as the Indirect Treasury
Administration costs.
Treasury Division $918,524.00 43.41%
Accounting $512,623.00 24.22%
Accounting Operations $685,021.00 32.37%
total $2,116,168.00 100.00%Consumer
Price Index
(CPI)
The $45 Fee
adjusted for CPI
Year Ended
ATTACHMENT #4
Effect of Adjusting the $45 Fee by the Consumer Price Index
If the original Business Tax Application / Renewal Fee had been linked to the
Consumer Price Index, then the $45 would have become $73.62 as of 6/30/2006.
6/30/1989
100.00
$45.00
6/30/1990
104.63
$47.08
6/30/1991
108.86
$48.99
6/30/1992
113.17
$50.93
6/30/1993
115.56
$52.00
6/30/1994
116.60
$52.47
6/30/1995
119.47
$53.76
6/30/1996
120.91
$54.41
6/30/1997
122.75
$55.24
6/30/1998
124.58
$56.06
6/30/1999
126.82
$57.07
6/30/2000
131.13
$59.01
6/30/2001
137.19
$61.74
6/30/2002
139.43
$62.74
6/30/2003
143.34
$64.50
6/30/2004
149.56
$67.30
6/30/2005
154.59
$69.57
6/30/2006*
163.61
$73.62
* since June 2006 figures are not yet available, the actual figures for May 2006 were taken
Source:
U.S. Department of Labor, Bureau of Labor Statistics
Consumer Price Index - Urban Wage Earners & Clerical Workers for Los Angeles,
Riverside, and Orange County, CAATTACHMENT #5
COST ANALYSIS FOR THE COMMUNITY DEVELOPMENT / PLANNING DEPARTMENTS'
BUSINESS PLANNING REVIEW FEE
Time taken in minutes Average
Personnel
Cost per
Personnel Category $ per hour low high Average transaction
Assistant Planner $41.81 12 67 39.50 $27.53
Total Personnel cost $27.53
Indirect Administrative Overhead Costs:
Planning Division costs ( note #1) @ 14.75% $4.06
Total Transaction cost $31.59
Note # 1: Indirect Administrative Overhead Costs: Planning Division
This percentage figure was arrived at as the ratio of the "Maintenance & Operations" cost to the
"Personnel Services" cost, using the CAO's recommended figures for the Budget Year 2006/07.
The "Maintenance & Operations" cost = $141,221
The "Personnel Cost" = $957,658
Indirect Planning Division Cost % = $141,221 / $957,658 =14.75%
Indirect Planning Division Cost in $ = 14.75% of $27.53 = $4.06ATTACHMENT #6
BUSINESS LICENSE APPLICATION AND RENEWAL FEES FOR NEIGHBORING CITIES
MINIMUM FEE FOR
CITY NEW APPLICATION RENEWAL PROCESSING FEE PLANNING FEE RETAIL BUSINESSES
CULVER CITY $45.00 $45.00 $45.00 PLUS $1 PER $1,000 GROSS RECEIPTS (GR)
LOS ANGELES 0.00 1 0 1 $110.86 FOR UP TO $75,000 (GR) AFTER WHICH
$1.48 PER $1,000 (GR)
WEST HOLLYWOOD $25.00 $25.00 $24 PLUS $0.48 PER $1,000 (GR)
SANTA MONICA $75.00 $75.00 10.6 2
100.27 2 $185.87 PLUS $1.25 PER $1,000 (GR).
BEVERLY HILLS 0.00 3 0.00 3 $75.00 PLUS 1.25 PER $1,000 ( GR) OVER $60,000
EL SEGUNDO 88.00 4 88.00 4 $88.00 BASE FEE PLUS $109 PER EVERY EMPLOYEE
OVER TEN, PLUS $0.21 PER SQ FOOT ENCLOSED SPACE
OVER 5,000 SQ.FEET.
INGLEWOOD $0.00 $0.00 $22 PLUS $1.10 PER $1,000 (GR) OR FRACTION THEREOF
ABOVE $20,000
TORRANCE 0.00 5 0.00 5 $21.00 $176 PLUS $52 PER PERSON EMPLOYEED AT THAT LOCATION
Footnotes:
1.
Per discussions in June 2006 with City of Los Angeles staff, they are thinking of introducing fees for the application and renewal of Business Tax Certificates.
2. Fees in Santa Monica are increased by CPI on July 1 each year.
3.
Beverly Hills has no Application or Renewal fee, but imposes a Minimum Tax for all activities ranging from $75.00 for Retail, Wholesale and Manufacturing,
to $1,152.81 for Professional Services.
4.
El Segundo has a Base Tax, plus additional amounts when number of employees and floor space exceeds 10 and 5,000 respectively.
5.Torrance charges flat rate taxes determined by activity.