Tax Panel to Present Proposal to Council

The Hermosa Beach business license tax could soon see some serious changes from one of two clashing tax proposals, which would both raise taxes for some establishments if passed.

Residents and business owners gathered at a , organized by the city’s , to weigh in on two tax plans to be considered for a citywide vote in the upcoming Nov. 8 municipal election.

One is a plan proposed by Hermosa Beach resident Jim Lissner, which  for the November ballot last week.

Based on its formula, the initiative could raise the business license tax on late-night bars and restaurants from costing about $2,200 to nearly $639, 576 a year, according to city staffers (see accompanying city staff report under photo.)

The Business License Tax Review Committee is preparing the rival initiative. Local business owners and community members Andrea Jacobsson and Brittny Burford sit on the committee alongside City Councilman Kit Bobko and Mayor Peter Tucker.

Both tax plans aim to generate more revenue for the city, but the Business License Tax Review Committee members argue that their initiative has made more of an effort to remain fair for businesses.

The committee Monday unanimously agreed to prepare its proposal to present to the City Council for ballot consideration in a council meeting July 12. Chamber of Commerce President Jed Sanford, owner of the Union Cattle Company steakhouse, originally created the initiative for the committee to consider.

"What he did here is a nice synthesis of many of the things we talked about," Bobko said.

Under Sanford’s plan, businesses would see a general flat rate of $175 and then additional costs depending on where that business fits into six subcategories, he told the committee.

The categories include:

• automobile and boat dealers;
• gas service stations;
• state-licensed professionals;
• lodging;
• retail;
• and restaurants—the category that was given the most attention Tuesday.

Sanford’s plan would slightly raise the base tax for eateries to a minimum of $250, which would increase based on whether the restaurant sells alcohol, offers live entertainment, allows dancing, or closes after 12 a.m.

Plus, a 20 percent increase is added if the business is located downtown (near or on Pier Plaza.) If the business is located on upper Pier Avenue, only a 10 percent increase is added.

Also under Sanford’s proposal, liquor stores closing before 12 a.m. could see a tax credit and new businesses would be given a one-year tax credit.

Sharkeez sports bar co-owner Greg Newman told committee members Monday that both the committee's and Lissner’s proposal would raise taxes for businesses like his—but that the committee’s proposal wouldn’t be as drastic.

For example, under Lissner’s proposal, the committee calculated that Newman would pay at least $250,000 in taxes. He currently pays about $2,200. 

Under Sanford’s proposal, Newman would pay about $5,000 along with a 20 percent downtown fee, totaling $6,000.

“I’m actually fine with it. It’s fair, it’s a substantial increase for us [but] I’m good with it,” Newman said at the town hall meeting about Sanford’s plan.

Lissner’s initiative argues that restaurants selling alcohol "have been making extraordinary, and increasing, demands on city services [such as police enforcement], while the city’s business license tax on the categories... is a flat $2,268 annually. 

"For many years the City Council has discussed asking the voters to approve a substantial increase in this tax, but thus far has not put the matter on the ballot," the initiative reads.

By increasing taxes on restaurants and bars, Lissner’s proposal aims to raise an extra $4.7 million for the city.

“We’re trying to bring in the revenue to cover police and address it, but not in such a punitive way that would put businesses out of business, like Lissner’s,” Jacobsson said at the town hall meeting.

She and her fellow committee members also argued that Lissner’s plan probably would not raise the extra millions of dollars because his proposed fee increase would cause many local businesses to shut down.

At the meeting, Tucker denied rumors that the tax revenue generated under the proposed business license plans would help the cash-strapped Hermosa Beach City School District.

“Any money raised by Mr. Lissner’s or even our initiative goes to the city. It does not go to the schools,” Tucker said. “We’re a separate entity than our schools… this money would come right to the city.”

He and Bobko agreed to organize a subcommittee to help prepare the Business License Tax Review Committee's ballot initiative for council consideration in July.