BACKDOOR Business Improvement District (BID)???

CONSIDER:

• At the 2 May 2006 City Council meeting, during Public Hearings, the City Council considered the following item: “Consideration of a proposed ballot measure to increase the business license tax to $1.00/$1,000 gross receipts per year.” However, in the City Council’s Agenda Item Summary, prepared by Finance Director Joyce Giuffre, the Description included increasing the business license tax from $0.88/$1,000 gross receipts per year to $1.00/$1,000 gross receipts per year “plus allow for a tax rate escalator for future years based on the San Francisco Consumer Price Index. (CPI).”

• During the public comment period, Maria Murray, past chair of the Carmel Chamber of Commerce and Monta Potter, CEO of Carmel Chamber of Commerce, spoke in support of the proposed ballot measure.

“...My name is Maria Murray. I’m the immediate past chair of the Carmel Chamber. And for the record, we would like to communicate with you that our Board recently voted to support the increase of the business license. And we fully support it.”

“I’m Monta Potter, the CEO of the Carmel Chamber of Commerce. I want to reiterate what Maria said that the Board had a presentation from Rich and Joyce and did vote to support this. We also asked our membership what they thought through one of our Zoomerang surveys and there was strong support for it because people thought that it wasn’t significant enough to make a difference. Though there were some people opposed to it as you would expect...When the membership voted on this and when the board had the presentation we did not discuss the tax rate escalator. So I think that probably we need to look at that because I don’t know if there would have been as favorable of support if we had talked about it at that time...that was not in our survey or in the Board discussion.”

• Ralph Andersen & Associates Business License Tax Update for the City of Carmel-by-the-Sea (February 6, 2006)

In their update of their 1996 report, the consultants state that the City’s “Major Five” revenues have remained flat over the years. They argue that Carmel-by-the-Sea will not be at a competitive disadvantage with the institution of an increase in the business license tax from $0.88/$1,000 of gross receipts per year to $1.00/$1,000 of gross receipts per year. As evidence, the consultants cite the base tax and rates of Monterey ($26 base tax, $1.20-$2.40/$1,000 of gross receipts per year) and Pacific Grove ($15 base tax, $1.00/$1,000 of gross receipts per year), for example. However, both Salinas and Marina have no base tax and $0.75-$1.00/$1,000 of gross receipts per year and $0.08-0.625/$1,000 of gross receipts per year, respectively. Most significantly, the more pertinent contextual issue is whether an increase in business license tax makes sense now given the City Council’s and the Carmel Chamber of Commerce’s recent vehement stance against the Transient Occupancy Tax Increase Initiative. The City Council’s and the Carmel Chamber of Commerce’s support of the business license tax increase has the appearance of a possible quid pro quo; that is, the revenue generated by the increase could be used for marketing, a backdoor Business Improvement District, which failed previously.