July 28, 2020 Staff Business Meeting

10:03:37 From Katrinka Ruk : people are having problems getting in call
10:10:47 From Larry Ficken : Larry Ficken with AAK 1145 Harbour Way South
10:11:13 From Sandra Escalante : Sandra Escalante with Laner Electric Supply
10:11:21 From Stacy Engel-Boyum : Stacy Engel-Boyum with North Richmond Properties Inc.
10:11:49 From Jill Rodby : Jill Rodby
10:12:34 From Joshua Genser : Why were no business groups invited to participate? They, after all, would pay the proposed tax.
10:13:17 From Joshua Genser : You could have invited the business groups in April.
10:13:59 From Jill Rodby : I agree with Josh. Why did the City not poll the businesses? It may be the nail in coffin for many of them!
10:14:11 From Katrinka Ruk : good morning – Katrinka Ruk, Richmond resident, Ex Dir Council of Business & Industries – thank you to City Staff for conducting this meeting this morning.
10:15:55 From Sean Hallinan : why were we not polled? that is not honoring and respecting the business community since this is the first we heard of this ordinance! Sunshine Commercial Construction.

10:17:09 From Sandra Escalante : This would be detrimental to small/mid size businesses
10:18:35 From Joshua Genser : How were the rates in the proposed new ordinance established? They seem arbitrary.
10:20:22 From Jill Rodby : What Class does heavy industry fall under? None apply to metal recycling?
10:20:57 From Leisa Johnson : What are you proposing a tax on gross receipts vs. net profits?
10:21:10 From Joshua Genser : So, the rental tax is not progressive.
10:21:10 From Katrinka Ruk : yes- how does a business determine what class they are in – is it based on NAICS (?) code? what if they have multiple classes at one address-
10:21:12 From Sandra Escalante : Gross Receipt is not the best model for business. Our current fee is $900 annually. Based on this new proposed model we will end up paying $13,275. Our gross revenue is $10M but our NET PROFIT as a distributor is LESS THAN 1%. It’ll wipe out 1/4 of our net profit.
10:21:54 From Katrinka Ruk : thank you for the new information – can we obtain copies of these slides? different than what’s currently posted
10:22:48 From Joshua Genser : The draft ordinance we saw most recently still has references to businesses classes that have been removed.
10:22:58 From Stacy Engel-Boyum : Yes not good for business, ours would go roughly from $400 to estimated $30k to $40k, thats a 10,000% increase!
10:23:21 From Sean Hallinan to Katrinka Ruk(Privately) : Gross receipts is a terrible model for businesses especially small and midsize. It’s making us pay disproportionately for the budget deficit
10:23:51 From Christina Redse : During COVID-19, a gross receipts tax is inappropriate. Many of us will be posting net losses — a gross receipts tax will just compound this.
10:24:33 From Sandra Escalante : With all of the challenges we are facing with this Pandemic, not a good time to hurt your local business.
10:24:54 From Leisa Johnson : The rental tax will be the final nail in the coffin for many ma & pa housing providers.
10:24:57 From Sean Hallinan to Katrinka Ruk(Privately) : It also seems that the polling was sent to residents who of course would rather see businesses pay taxes rather than parcel property taxes that affect them the shift the burden directly to business!
10:25:12 From Christina Redse : It’s just too rushed to put on the ballot. Take the time to really understand the impact of this, especially with all the other uncertainties at this time.
10:25:45 From Sean Hallinan : agreed
10:25:50 From Michael Vasilas : Small housing providers will be facing the third highest tax rate under this proposal. We’re already dealing with mounting losses, as rent is unpaid and we have no legal way to recoup these losses now or in the foreseeable future. This tax structure is guaranteed to raise our tax liability exponentially. This is on top of the exorbitant rent program fees we already pay
10:25:59 From Tiffany Silva : I believe they are rushing this to ballot on purpose!
10:26:25 From Sean Hallinan : It also seems that the polling was sent to residents who of course would rather see businesses pay taxes rather than parcel property taxes that affect them the shift the burden directly to business!
10:26:52 From Sean Hallinan : we never were contacted as a poll participant.
10:26:54 From Stacy Engel-Boyum : Most businesses dont even know this measure is being taken into consideration….
10:27:04 From Sandra Escalante : I’m also a Richmond resident and our Property Tax is already one of the highest in the Bay Area
10:27:08 From Leisa Johnson : Rushed policy with inadequate input from key stakeholders = bad and ineffective policy that will likely result in many businesses closing their doors or leaving for a more business-friendly city, if they survive. This will also discourage new businesses from coming here. So in effect, this bad policy may very likely results in reduced revenue for the City, not an increase.
10:27:10 From Vivian Williams : This item is too rushed!
10:29:12 From Sean Hallinan : what is the outreach that is happening?
10:29:21 From Sean Hallinan : is this it?
10:29:48 From Christina Redse : This is it.
10:30:34 From Leisa Johnson : Just like with Measure L, you cannot say this is bad policy, put it before the voters, and then say it will be fixed after the fact. That is irresponsible to business owners.
10:31:32 From Leisa Johnson : And Measure L was never fixed. So to say business rates will be adjusted downwards after the fact is insufficient.
10:31:35 From Hakim Johnson : If the intent is to allow flexibility to adjust rates to allow ongoing dialogue, then why not postpone to have meaningful dialogue and sufficient time for the engagements?
10:31:39 From Larry Ficken : Not fair for only Businesses to carry the load of this proposed new tax. I feel this should be shared with residents that live in Richmond
10:31:53 From Sandra Tarbet : Hmmm. I don’t want to vote for a measure that can be “flexible” and changed later. Isn’t that blind voting? WHO in their right mind would vote for a measure that is not completed and clear?
10:32:16 From Geoff Johnson : This is moving too quickly and the impacts on local businesses have yet to be studied or understood, especially with the additional challenges of Covid-19.
10:33:17 From Michael Vasilas : We are not Berkeley Oakland or San Francisco
10:33:45 From Larry Ficken : The community (Individuals) will vote this in as they will not have to pay anything more, we the businesses carry this tax.
10:34:05 From Tiffany Silva : Business are leaving San Francisco at a fast rate and Richmond wants to model this tax after what they do. Not smart thinking.
10:34:11 From Sandra Tarbet : Isn’t rather “lazy” to just “based off of Oakland” rather than do our own research for our own city?
10:34:24 From Katrinka Ruk to Sean Hallinan(Privately) : why model after Oakland & SF – their economic environment doesn’t compare to Richmond – why not look at Emeryville/San Pablo/Rodeo, El Sobrante/Concord/Martinez/Antioch to name a few – many of which use # ees
10:34:25 From Michael Vasilas : This will be a net loss for the city once businesses close and sales tax is gone
10:34:34 From Leisa Johnson : I strongly recommend business owners and City Staff read this article: https://taxfoundation.org/gross-receipts-tax/
10:34:41 From Sandra Escalante : Oakland and San Francisco protects their businesses with a very stringent and enforced LBE “Local Business Enterprise” participation. Richmond has LBE, but not enforced! What has the City of Richmond done for us?
10:35:42 From Norma La Bat : C
10:35:45 From Michael Vasilas : Why is a group not part of the City writing policy for the city?
10:36:05 From Sandra Tarbet : Since everyone agrees there has not been sufficient outreach and you clearly haven’t done your homework, why not put this off? And who chose Lift Up Richmond? Someone’s personal connection somewhere? Sounds VERY fishy to me. Sounds like something Donald Trump would do!
10:36:17 From Norma La Bat : exactly
10:36:37 From Rich Doellstedt : Just because sales revenue is larger, doesn’t mean there is a proportional amount of net income to absorb this huge tax increase (for us this will be over $100,000 vs. $1,900 before – thus we are seeming to be penalized due to higher sales revenue.
10:37:14 From Leisa Johnson : There should be a blue ribbon committee formed and there should be sufficient time for all businesses to have a seat at the table and input provided to craft such a critical change in tax structure.
10:37:20 From Katrinka Ruk to Katrinka Ruk(Privately) : why model after Oakland & SF – their economic environment doesn’t compare to Richmond – why not look at Emeryville/San Pablo/Rodeo, El why base on SF/Oakland – different economies, why not check into ElSobrante/Concord/Martinez/Antioch/Emeryville/SanPablo to name a few – many of which use # ees

10:37:22 From Jason Dreisbach : Is the City concerned that this ordinance is drafted and researched by a particular special interest group with little to no input from impacted stakeholders.
10:37:45 From Sandra Tarbet : Sorry, but just “copying” the other cities is, frankly, lazy and sloppy work.
10:38:16 From Leisa Johnson : It’s not clear that Lift Up Richmond entities understand how businesses operate or the difference between gross receipts and net profit.
10:38:43 From Sandra Tarbet : And, what’s the payoff to “Lift Up Richmond”? How much are they paid for this?
10:38:52 From Christina Redse : I agree with Sean — this absolutely needs to be postponed for adequate input and assessment of impacts before being put on the council agenda. As many have pointed, in its current form this could well end up costing the city money as businesses fail or leave.
10:40:12 From Larry Ficken : Gross Receipts can be large, compared to what the margin/profit is for the Business. Not a good way to Tax Businesses.
10:40:37 From Christina Redse : I agree with Jason, too — no more special interests having the loudest voice on Richmond policy-making. Our residents and local businesses need to be represented first and foremost.
10:40:47 From Sandra Escalante : That’s correct Larry!
10:40:57 From Katrinka Ruk to Katrinka Ruk(Privately) : If this is adopted, contractors have indicated that they may not be able to hire local or work on local programs therefore impacting hiring of union members. this would have a huge impact on our local workers, union members and economy
10:41:37 From Michael Vasilas : The city is supposed to be working for its residents and businesses, not the other way around
10:41:45 From Joshua Genser : Oakland has postponed this issue for a year and appointed a Blue Ribbon panel to look into it.
10:42:15 From Larry Ficken : You didn’t have time, so the City is now pushing this forward. This voting should be pushed off.
10:42:46 From Michael Vasilas : exactly
10:43:42 From Leisa Johnson : The Council directed City Staff to let Lift Up Richmond take the lead on this. That is wherein a huge part of the problem lies. Concerns need to be expressed directly to the Council for allowing the tail to wag the dog, with businesses being forced to first suffer the consequences, and then the residents once revenues decline due to businesses moving, closing their doors, and not choosing to come here.
10:43:59 From Sandra Escalante : As business owners we are already facing so many challenges, this is a nail to our coffin!!!
10:45:35 From Leisa Johnson : What is the proposed revenue increase — $4.9M as stated on one of your slides or $7.9M as stated on the proposed ballot language?
10:46:32 From Sandra Tarbet : But salaries aren’t being reduced, right? If every employee had a 5 or 10% reduction in salaries, the problem would be solved!
10:46:33 From Leisa Johnson : Are businesses and the Public going to see how you calculated whichever estimate you’re going with?
10:48:20 From Leisa Johnson : Richmond still has a FY2020/21 deficit. How is the City addressing this when any revenue from this potential ballot measure wouldn’t hit the books until at least FY2021/22 IF it even passes.
10:48:27 From Sandra Tarbet : Regarding cannabis, this is an industry that the City pleaded for as an industry. We all know that cannabis manufacturers are not earning the revenue that was expected. Thus, the black market on cannabis is thriving. Why is the city taxing cannabis a high rate of 5%? They WILL go elsewhere.
10:49:30 From Sandra Tarbet : Good point. Compare us to Martinez, Concord, Antioch, Vallejo. Our city has way more in common with those cities.
10:49:41 From Katrinka Ruk to Katrinka Ruk(Privately) : most local cities base their’s on # of employees; a few use gross receipts but it is hugely reduced from the Oakland model
10:50:20 From Sandra Tarbet : Rich, then you will be forced, sadly, to take your business elsewhere.
10:50:51 From Katrinka Ruk to Katrinka Ruk(Privately) : josh unmute
10:54:26 From Leisa Johnson : I’m pretty sure there has to be two readings of a “final” ordinance.
10:55:00 From Katrinka Ruk to Katrinka Ruk(Privately) : again, if multiple classes in Richmond – how determine- per ordinance you need to pay highest rate. For ex if Richmond is your headquarters, you do sales, wholesale and construction work
10:56:04 From Sandra Tarbet : No one wants to slash their budgets. This is where leadership comes in and makes those changes.
10:57:02 From Sandra Tarbet : RIGHT! We’re being consulted by the UNIONS.! of course. How neutral are they?
10:57:44 From Sandra Escalante : As small businesses we have had to slash our budgets, reduce our workforce and do everything to survive.
10:58:16 From Sandra Tarbet : The payoff for “Lift Up Richmond” is obvious They’re paid off by highly influencing the outcome!
10:59:14 From Sean Hallinan : Richmond has a history of physical miss management and corruption. Agree just taxes on businesses is not going to dig them out of this hole this is a historical systemic problem that Richmond has. And I’m very curious what the added services will be for the additional taxing taxes because right now there is very little representation as evidenced by the lack of communication with the business community that they plan on taxing
10:59:15 From Jason Dreisbach : Lift up Richmond = A special interest group that did the City’s work so they could protect their constituency from job cuts and pension reform on the backs of business.
10:59:21 From Leisa Johnson : How many of Lift Up Richmond members actually live in Richmond?
10:59:23 From Sean Hallinan : fiscal
11:00:01 From Sean Hallinan : well said
11:00:03 From Larry Ficken : For us, our cost will go from $3,300 to >$400,000
11:00:20 From Jill Rodby : Unions want to save its jobs – understandable. But what about private sector employees that were laid off. This tax could ensure these jobs will not come back!
11:00:21 From Christina Redse : Who are the Lift Up Richmond members? Why didn’t they reach out to Richmond business to include them as part of Lift Up Richmond?
11:00:46 From Michael Vasilas : So is this a measure put together by unions to protect their jobs at the expense of our jobs businesses and livelihoods?
11:00:46 From Tiffany Silva : well said everyone, Lift up Richmond does not have our small business interests in mind!
11:01:09 From Katrinka Ruk to Katrinka Ruk(Privately) : we understand that several union positions will not be filled and unfortunately due to closed negotiations we are not aware of the progress these negotiations are taking in regards to consessions
11:01:38 From Leisa Johnson : Many people have lost their jobs or incurred salary reductions. No one wants to see this, but the City is putting the livelihoods of ~670 employees, many of whom don’t live in Richmond, over that of 110,000+ residents and numerous businesses.
11:02:13 From Sean Hallinan : we would see from $1500 to $28K! for what?
11:02:13 From Christina Redse : And at the expense of Richmond employees, too. How can businesses continue to support their staff if their tax burden increases exponentially?
11:02:28 From Michael Vasilas : They can’t
11:02:47 From Christina Redse : Yes, Hakim for council! We need fiscally responsible leadership now more than ever.
11:03:01 From Tiffany Silva : we would see from $1100 to $87,000
11:03:13 From Sandra Tarbet : What annoys me is why our City is lying about who they are! We have to prod the details about some new organization “Lift Up Richmond” (sic) in order to find out their organization is basically the unions, covering themselves. How deceptive of you all to not tell us that!!!
11:04:05 From Sean Hallinan : we should pay based on sales in Richmond…which would be zero.
11:04:12 From Leisa Johnson : As per the City’s Staff Report, “The Lift Up Richmond coalition consists of SEIU Local 1021, Richmond Police Officers Association (RPOA), IAFF Local 188, IFPTE Local 21, RYSE, Alliance of Californians for Community Empowerment (ACCE), Asian Pacific Environmental Network (APEN), and many more community and labor advocates.”
11:05:51 From Leisa Johnson : Why is ACCE controlling Richmond’s Tax Policies? They claim on their website that they were single-handedly responsible for passing the Real Estate Transfer Tax (Measure H) in Richmond in 2018. Now they are trying to effectively put the final nail in the coffin for housing providers and other businesses.
11:09:05 From Stacy Engel-Boyum : Is that accurate considering the rush on this? only 400 businesses or property owners impacted? doesnt sound correct
11:10:45 From Katrinka Ruk to Katrinka Ruk(Privately) : even if “only 400” businesses impacted per Antonio – how would the City fare if 1/2 of those businesses cut back their staff, stopped hiring local, and/or even leave the City?
11:11:14 From Michael Vasilas : The estimated tax on rental property owners alone under this plan would be over $4M/year
11:11:59 From Sandra Tarbet : Please address the question regarding cannabis. Why are they being targeted for a higher rate?
11:13:43 From Michael Vasilas : Good question
11:15:23 From Katrinka Ruk to Katrinka Ruk(Privately) : is this a general tax or transfer tax as listed in the Resolution?
11:15:29 From Leisa Johnson : This tax is a general use tax, which means it requires only a 50% majority to pass. It also means that the revenue will go into the General Fund and can be used by the City as it sees fit and not what is stated in the ballot language. The ballot language is designed to encourage a yes vote. And just like with Measure U (sales increase in Richmond), that revenue was used to address the City’s significant long-term deficit.
11:16:22 From Katrinka Ruk to Katrinka Ruk(Privately) : not answered – how does a business determine what class they are in if multiple classes apply?
11:16:49 From Michael Vasilas : How did you come up with your increased revenue numbers?
11:17:01 From Leisa Johnson : Lift Up Richmond stated they chose the gross business tax over a further increase to the Real Estate Transfer tax, both of which polled comparably, because it provided more revenue. They both only require a 50% majority to pass.
11:18:53 From Sean Hallinan : these numbers are being discussed as if they are disconnected from any human concern; 4.9, 3.5 etc. this is money out of the pocket of business which is struggling at this time. These are VERY REAL numbers to those of us directly affected by the proposed tax.
11:19:50 From Stacy Engel-Boyum : So how are you proving your gross receipts, from your taxes?
11:19:51 From Christina Redse : Accurate polling would include the full picture — i.e. Would you favor an increased business tax that causes x number of layoffs and y number or businesses leaving Richmond and/or going bankrupt?
11:23:15 From Michael Vasilas : Was the tax liability imposed on rental housing providers considered “uncaptured”?
11:23:38 From Ahmad Anderson : The lack of clarity and engagement of our business community , small and large is very concerning. Fiscal responsibility and leadership is essential