Mayor Miller acknowledged, and verified via password,  Councilmember Vorreiter's teleconference call from 260 Steamer Court, Estes Park, Colorado. 

Mayor Miller led the salute to the flag.

Mayor Miller announced that last night was National Night Out and thanked all the participants in the event.

Vice Mayor Risch moved, and Councilmember Howe seconded, to approve the Consent Calendar. The motion carried unanimously.

Mayor Miller requested the two proposed tax increases be discussed separately.

Peter Gonda, Senior Management Analyst, assisted by Mary Bradley, Director of Finance, presented the staff report. He stated the proposed resolution calls for a Special Election, to be held in conjunction with the General Municipal Election on November 4, 2003, to vote on ballot measures which would amend the Sunnyvale Municipal Code to increase the City’s Business License Tax and/or Transient Occupancy Tax. A series of actions must be taken prior to the Special Election. First, the City Council must approve the ballot questions that will be presented to Sunnyvale voters. Second, the Council must consider amendments to the Municipal Code to incorporate the proposed tax structure changes. Third, the Council must decide who will draft the ballot argument for each measure. Staff estimates that the proposed increase in the Transient Occupancy Tax to 10% will net approximately $900,000 in annual revenue at today’s level, and estimates that the proposed increase in Business License Tax will net approximately $830,000 at today’s level.

Councilmember Vorreiter inquired if there was any consideration given to incorporating the processing fee into the tax. Mr. Gonda responded there was discussion but the processing fee does not require a Proposition 218 election and staff felt it should be considered separately. Director Bradley added they could consider increasing the tax slightly to cover the processing fee as an alternative which would be built into the first application. She stated the $50 would reflect the renewal fee rather than the new business license.

Mayor Miller inquired for the record if there were any members of the public present at Councilmember Vorreiter’s location. Councilmember Vorreiter responded the only other person present was her husband and public notice had been posted on her garage.

Councilmember Fowler inquired why staff was recommending to place these initiatives on the ballot and adopt a resolution when there was no staff recommendation at the July 15 Council meeting. Director Bradley responded staff was responding to the direction given by Council at the July 15 Council meeting to come back to Council with a recommendation.

Councilmember Walker made inquires about including the processing fee in the tax. City Attorney Armento responded if they put the processing fee in conjunction with the tax, and members of the public vote on it, then the only way the fee can be changed is by a vote of the people. If the fee is separate, they can reduce or raise it based on economies of scale.

Councilmember Walker inquired if Council had the option to collect the TOT (Transient Occupancy Tax) at a lower rate than ten percent. City Attorney Armento responded that with clear direction and administrative policies, the City could collect less than what was approved by the voters.

Councilmember Walker inquired if the same applied to the Business License Tax. City Attorney Armento responded they could find a way to do that as the authorization from the public is for the maximum.

Mayor Miller inquired if a formal action by Council would be needed to rescind the processing fee. City Attorney Armento responded the processing fee is included in the master fee resolution and if Council decides to roll everything into one, and it is approved by the voters, they would be simultaneously removing the processing fee. She further stated that the action by Council tonight would only be putting the questions on the ballot.

Vice Mayor Risch inquired if there were any other cities putting tax measures on the ballot. Mr. Gonda responded he did not know of anyone in the immediate area.

Councilmember Valerio inquired what the threshold would be for voter approval to pass the proposed new taxes. Mr. Gonda responded it would be a majority vote.

Mayor Miller inquired what was omitted from the report. Mr. Gonda responded the approval for Budget Modification No. 7 for $27,000 was left out which would cover additional costs.

Mayor Miller opened the Public Hearing at 5:30 p.m.

Steve Summers, owner of the Ramada Inn of Sunnyvale, provided a history of the TOT. He stated that once the contract was cancelled with the Convention Center, the two percent that was slated to promote business for hotels went back into the General Fund. He inquired how the increase in TOT would help support hotels.

Director Bradley clarified that Mountain View, Palo Alto and Cupertino do not share the TOT.

Tom Bryant, of Network Appliance, stated the larger businesses in the City would be impacted and may impact the local economy. He stated it would be a zero sum gain as businesses would be looking at alternatives to recover the cost. He stated that they currently pay $120,000 in TOT in Sunnyvale.

Gary Lind, General Manager of the Four Points Sheraton in Sunnyvale, stated maintaining the competitive advantage is critical to their business given the economic climate and urged Council not to increase the TOT.

Werner Gans, a member of the public, stated ten percent is the going rate in the county and it is unfair to ask citizens to accept a cut in service because of increasing costs. He stated he is in favor of putting this on the ballot.

Suzi Blackman, President and CEO of the Sunnyvale Chamber of Commerce, urged the Council not to approve the 10% TOT as they do not believe it the proper way to address the shortfall. She stated they are concerned with the total cost of doing business in Sunnyvale and this increase could negatively impact the amount of business conducted in Sunnyvale.

Thom Mayer, a member of the public, stated he is opposed to any tax increase and feels the statement should say this is a tax on local business. He opined there are some basic City services that could be reduced.

Mayor Miller closed the Public Hearing at 6:03 p.m.

Councilmember Walker moved, and Councilmember Valerio seconded, to adopt the resolution calling for a Special Election regarding the Transient Occupancy Tax, and exercise the right to draft a ballot argument for each measure, and authorize a representative or representatives to proceed with their preparation.

Councilmember Vorreiter offered a friendly amendment to offer a phased in approach for the TOT. The amendment was not accepted by Councilmember Walker.

The motion failed with Mayor Miller, Vice Mayor Risch and Councilmembers Fowler and Howe dissenting.

Mayor Miller opened the Public Hearing at 6:08 p.m.

Suzi Blackman, President and CEO of the Chamber of Commerce, stated the Board of Directors voted to urge Council to vote no on the proposed increase to the Business License Tax (BLT). She stated that fees have been raised across the board increasing the total cost of doing business in Sunnyvale, and the impact to the business community has not been fully assessed. She asked that the City look at long term solutions rather than short term fixes.

Dr. Allyson Hughes Handley, President of Cogswell College, stated they have had to make 30 percent in cuts in order to balance their budget. She stated this type of tax puts residents against businesses and felt this was not the time to increase the tax due to the economic climate. She felt this tax would encourage businesses to look elsewhere to conduct business.

Thom Mayer, a member of the public, stated voters are willing to pass a tax on businesses but not on themselves. He commented he feels that taxes should not be raised on businesses unless taxes can be raised on residents. He felt the tax should be given further consideration by staff.

Werner Gans, a member of the public, stated the current business tax is 34 years old and the proposed increases are so small, that he does not believe any business would suffer from the increase.

Ryan Minniear, of Tri-County Apartments Association, stated they oppose this tax increase and the owners would either have to absorb the cost or pass it on to tenants.

Leslie Laughton, a member of the public, stated she is a small business owner and has experienced a significant loss of business. She urged Council to consider an incremental increase versus one large increase.

Mike Klein, Chair of the Sunnyvale Chamber of Commerce, stated that increasing the BLT will not solve the budget shortfall and encouraged the City to look for new innovative ways to find a solution. He stated Sunnyvale should encourage and foster businesses coming to Sunnyvale.

Debbie Owens, Board Member of the Chamber of Commerce, stated she has concerns with the language and process in the measure and felt it was asking voters to place a tax on someone else.

Mayor Miller closed the Public Hearing at 6:35 p.m.

Councilmember Walker moved, and Councilmember Valerio seconded, to adopt the resolution calling for a Special Election regarding the Business License Tax in accordance with the staff recommendation with the following changes: limit the cap to $7,500, eliminate indexing the tax to the CPI, and direct staff to undertake a study to look at ways to reduce the collection costs and fees.

The motion failed with Mayor Miller, Vice Mayor Risch and Councilmembers Fowler and Howe dissenting.

Kim Parnell, a member of the public, stated the Digital Clubhouse needs a new location with the closure of the Sunnyvale Mall. He stated he believes this organization should stay in Sunnyvale with a membership of 1300 people and urged Council to assist in finding a new location. Councilmember Walker requested staff report back to Council in the next week with an update on what they are working on.

Jo Lin, a member of the public, shared her experiences in participating in the Digital Clubhouse programs and feels this program should remain in Sunnyvale.

Andrew Parnell, a member of the public, spoke to his personal experiences with the Clubhouse and requested support for keeping the Clubhouse in Sunnyvale.

Julius Talyanslry, a member of the public, spoke to short term benefits for kids to go and serve their community. He spoke in support of keeping the Clubhouse in Sunnyvale.

Sarah Smith, a member of the public, spoke in favor of keeping the Digital Clubhouse in Sunnyvale.

Russell Snead, a member of the public, distributed an article to the Council on the benefits of the Digital Clubhouse and spoke in support of keeping it in Sunnyvale.

Fredo Rubalcara, a member of the public, stated he would not be able to visit the Clubhouse if it is moved from Sunnyvale and asked that a new location be found in Sunnyvale.

Councilmember Howe announced he has received a letter from a group of home owners in Sunnyvale on Linnet Lane and requested that staff prepare memo of what has been done.

Councilmember Vorreiter thanked the staff and Council for their assistance with the teleconference.

Mayor Miller announced the next regular Council meeting is scheduled for August 12 at 7:30 p.m.

There were no comments.

Mayor Miller declared the meeting adjourned at 7:10 p.m.

Respectfully submitted,
Cathleen McKay, Interim City Clerk