Part 3 — TAXES ON AVERAGE NUMBER OF EMPLOYEES BASIS

Every person engaged in business in the city shall pay a business tax as calculated in this part based on the average number of employees, unless the basis of the tax is otherwise prescribed in Section 4.76.355 or in Part 4 of this chapter or the business is exempted from the tax as prescribed in Part 5 of this chapter.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

A.

For the purposes of this section, the following terms have these meanings:

"Real estate agent" or "agent" means a salesperson or broker-associate who places his or her real estate license issued by the state department of real estate with a real estate broker.

"Real estate broker" or "broker" means the holder of a real estate broker's license issued by the state department of real estate who owns or legally controls a real estate brokerage business and who does not place his or her broker's license with another person or entity as a prerequisite to brokering the purchase or sale of real estate.

B.

The collection of the business tax imposed under Section 4.76.170 shall be suspended with respect to the business of any real estate agent who meets all of the following requirements:

Is engaged in any business activity in the city for which a real estate license issued by the state department of real estate is required by law, including, but not limited to, brokering the purchase, sale or lease of real estate, engaging in property management, and originating real estate loans;

Is identified by name as an employee of a real estate broker for the broker's business tax assessment which first becomes due concurrently with, or within three hundred sixty-four days after, the agent's business tax first becomes due, on an agent listing form submitted to the director; and

Is counted as an employee in the calculation of the amount of business tax owing by that real estate broker for that business tax assessment.

C.

A real estate broker wishing to count real estate agents as employees for the purpose of assessing and calculating the business tax shall submit such information as the director finds reasonably necessary to determine whether a suspension of the business tax under this section is warranted, including but not limited to the name of the real estate agents, on an agent listing form provided by the director, together with the broker's application for business tax certificate or renewal.

D.

Notwithstanding Sections 4.76.030 and 4.76.040, each agent listed on the agent listing form submitted by a broker shall be deemed to be an employee of that broker for the broker's business tax assessment in question for the purpose of calculating the amount of business tax owing by the broker under Section 4.76.360, regardless of the number of days or hours actually worked by the listed agent.

E.

The amount of business tax payable by a broker who submits an agent listing form shall be calculated by adding the number of real estate agents identified by name on the agent listing form to the average number of employees of the broker who are not real estate agents. The sum shall be the basis for calculating the broker's business tax.

F.

No broker is required to submit an agent listing form; however, every real estate agent shall be liable for payment of the agent's own business tax unless the agent is, in fact, an employee and not in business as an individual or has been listed on an agent listing form by a broker who has paid a business tax which included the listed agent.

G.

Nothing herein shall be construed as creating an exemption from or suspension of collection of the business tax for real estate brokers.

H.

Nothing herein shall be construed as preventing a real estate agent who is not listed on an agent listing form from providing the director with evidence that the agent is, in fact, an employee of the broker and, therefore, is not liable for payment of the business tax.

I.

The designation of a real estate agent as an employee for the purposes of this section shall not be determinative of employment status for other purposes under this Code or any other law.

J.

The decision of the director as to whether a business tax shall be suspended under this section shall be final.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

From and after July 1, 2017, every person engaged in business in the city, whether or not at a fixed place of business in the city, shall annually pay to the director the following prescribed tax:

A.

A minimum business tax of one hundred ninety-five dollars per year, plus an additional per employee tax per year in the amounts set forth below in Subsection B., based on the average number of employees over two, not to exceed a maximum of one hundred fifty thousand dollars per year, subject to annual adjustments set forth in Section 4.76.365.

B.

The per employee tax shall be as follows:

Average Number of Employees Tax per Employee

1 - 2 $ 0

3 - 35 $30

36 - 100 $40

101 - 500 $50

501 + $60

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)

The minimum business tax of one hundred ninety-five dollars, the additional tax based on the number of employees over two, and the cap referenced in Section 4.76.360 above, shall each be adjusted annually, commencing July 1, 2018, and every year thereafter, if the cost of living in the city has increased over the preceding base period as shown by the CPI Index, but in no event shall the adjustment exceed three percent per year on the tax based on the number of employees, three percent per year on the cap, and one and one-half percent per year on the minimum business tax. For purposes of this section, the base period for the first adjustment period commencing on July 1, 2018 shall be the CPI Index reported for February 2017 to February 2018. The base period for each subsequent adjustment period thereafter shall be February to February. In the event the CPI Index is no longer published, the director shall use as a reference another index published by either the State of California or a federal department or agency that is charged with the responsibility of measuring the cost of living in the geographical area that includes the city.

(Measure G (Ord. 2016.2), adopted by electorate, 12-13-16)