Ordinance amending the Business and Tax Regulations Code to lower the gross receipts tax rates for business activities described in North American Industry Classification System (NAICS), Code 721 (Accommodation), the classification generally applicable (with some exceptions) to providing lodging or short-term accommodations for travelers, vacationers, and others, applicable to taxable gross receipts between $2,500,000.01 and $25,000,000 in tax years 2025 and 2026, from 0.253% to 0.201%; in tax year 2027, from 0.264% to 0.209%; and in tax year 2028 and subsequent tax years, from 0.271% to 0.215%, all conditioned on the passage of the ballot measure, entitled the “Local Small Business Tax Cut Ordinance,” at the November 5, 2024, General Election.

City leaders requested the Offices of the Controller and the Office of the Treasurer & Tax Collector to recommend changes to the tax code to mitigate economic risks from COVID-19.

A project team presented recommendations to diversify the tax base and alleviate burdens on small businesses, which included developing a ballot measure for the November election.

A coalition submitted a proposed ballot measure to the Department of Elections, which included tax rates for the accommodations sector that inadvertently reflected an 11% tax cut instead of the intended 12%.

The Budget and Finance Committee recommended the ordinance to lower gross receipts tax rates for the accommodations sector, contingent on the passage of the ballot measure.

The Board of Supervisors finally passed the ordinance, which will take effect only if the related ballot measure is approved in the November 2024 election.