South City nixes business tax: Officials still in talks with billboard company about digital signs

No vote was required since the council came to a consensus that it didn’t want to consider placing it on the ballot.

During a private, closed session meeting, city staff reviewed a confidential alternative proposal presented by a billboard company Clear Channel’s Bruce Qualls, vice president of Real Estate and Government Affairs. The company opposed the council’s measure. It is also planning for new digital billboards in the city.

Assistant City Manager Marty Van Duyn said city ordinances don’t allow for digital billboards, and to pave the way for Clear Channel to install its billboards, the council considered the tax change. Clear Channel’s application to the city to allow for digital billboard installation in the city is still a live issue, he said.

“Asking the city to change legislative policy,” Van Duyn said. “It’s a big thing to do. They are still seeking legislative amendments [from the] city for digital billboards. Our ballot measure gave a level of opportunity, so that if we had a tax on billboards, revenues would increase.”

Councilman Pradeep Gupta echoed much of the council’s views.

“It’s a complex issue, in my opinion, digital billboards and non-store tax proposals have implications that go beyond the limits of the city,” Gupta said. “We want to make sure we’re not exposing to the city to risk.”

Gupta added that he would prefer to have dialogue with other cities in the area about dealing with business taxes before making any changes. He said the council could come back with a new measure in 2015.

Councilwoman Karyl Matsumoto said she would like to push back until later and that Clear Channel’s proposal was not for the greater good.

“What was proposed was not acceptable,” said Councilman Richard Garbarino. “We don’t find it necessary to go forward with the measure since it’s not worthwhile at this point.”

With the proposed measure, the new business license tax change, the city would gain $350,000 more revenue annually, and increasing up to $1 million annually if the tax were fully implemented and if potential new revenue based upon business expansion plans were realized, according to a city staff report. This would come from a $50 tax per up to $100,000 in gross receipts, $100 for $100,001 to $200,000 in gross receipts, $2,000 for $200,001 to $300,000 in gross receipts, $5,000 for $300,001 to $500,000 in gross tax receipts, all the way up to $40,000 for the first $500,001 of gross receipts plus $8,000 for each increment of $100,000 of gross receipts over $500,000, the staff report stated.

At a public hearing July 31, a representative from Clear Channel said that the $1 million revenue is the same as the current revenue numbers from business license tax and that this proposed measure unfairly targets the billboard industry.

“We have a long-term relationship and we’d like to foster that going forward,” Qualls said at a meeting Monday. “I can see the pressure from the community to balance the budget and still offer them services. We feel like right now we proposed an alternative that was aggressive for us and we hope that you’ll consider it.”

angela@smdailyjournal.com (650) 344-5200 ext. 105

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