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<br />6.3A
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<br />
<br />
<br />October 22, 2007
<br />
<br />SUBJECT
<br />Conform Business License Ordinance to California State Law
<br />
<br />RECOMMENDATION
<br />Introduce Ordinance Amending business license ordinance, section 32.133, to conform
<br />to Health and Safety Code section 1596.803 (b) (2) to exempt small family day care
<br />homes that provide child care for eight (8) or fewer children, and repealing section
<br />32.154 (Adjustments) as this section has been nullified by Proposition 218.
<br />
<br />BACKGROUND
<br />Staff has become aware that a section of the City's business license ordinance is not in
<br />conformance with a specific provision of California state law. In 1990 when the most
<br />recent comprehensive revision of the business license ordinance occurred, an
<br />exemption was provided to child care operators who cared for six (6) or fewer children.
<br />In 1997 the California State Legislature amended Health and Safety Code section
<br />1596.803 (b) (2) to exempt small family day care homes that provide child care for eight
<br />(8) or fewer children from business license taxes.
<br />
<br />Although the City of Redwood City is a charter city, in this particular situation the City's
<br />ordinance is preempted by this provision of state law. The Health and Safety (H&S)
<br />Code 1596.72 (b) provides that it's the intent of the state to provide a comprehensive
<br />quality system for licensing of child day care facilities. H&S 1596.90 provides that day
<br />care centers for children shall be subject to licensure exclusively in accordance with this
<br />chapter of Health and Safety Code.
<br />
<br />With respect to adult day care, Health and Safety Code 1569.84 continues to provide
<br />that facilities for six (6) or fewer adults are not subject to the business license tax. The
<br />City is in conformance with this proviSion of the state law.
<br />
<br />At this time, staff also recommends the repeal of section 32.154 as this has been
<br />nullified by Proposition 218, which was approved by the voters in November 1996. This
<br />section, which was added in May 1995, provided an adjustment to business taxes
<br />annually by a percentage equal to the percentage change in the Consumer Price Index
<br />(CPI). When the business license ordinance was adopted by Council in April 1990, the
<br />ordinance contained a provision for a 5% annual increase in the business license tax
<br />through June 1995 and did not provide for any tax increases thereafter. Accordingly,
<br />there was no provision in the business license ordinance that allowed increases in
<br />business license taxes after June 30, 1995. Since section 32.154 was approved by
<br />Council in May 1995, such action was nullified under Proposition 218 as Proposition
<br />218 requires that any general tax increases approved by governing bodies on or after
<br />January 1, 1995 be submitted to the electorate for ratification.
<br />
<br />Since we are recommending an amendment to the business license ordinance to bring
<br />the taxation of child care operators into conformance with state law, we also
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