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Home My WebLink AboutCC 2-19-2026 Item No. 7 Potential November 2026 Revenue Ballot Measure_PresentationCC 2-19-2026 #7 Potential November 2026 Revenue Ballot Measure Presentation City of Cupertino Revenue Enhancement Opportunities Report February 2026 Executive Summary HdL evaluated five potential revenue enhancement opportunities: •Vacancy Tax •Transactions and Use Tax •Parcel Tax •Business License Tax •Business License Tax for Ride Share Services Evaluation of Revenue Enhancement Opportunities Description of Tax Implementation Process Pros and Cons Potential Revenue Estimate Voter Approval Requirements Taxes can be approved for general or special use of funds General Use of Funds Special Use of Funds •Require 2/3 majority approval by City Council •Require simple majority (50 + 1) for voter approval of measure •Transactions and Use Taxes always require 2/3 City Council approval •Require simple majority (50 + 1) approval by City Council •Require 2/3 majority (66 + 1) for voter approval of measure •Parcel Taxes can only be used for specific purposes Ballot Measure Timeline In 2026, proposed ballot measures must follow the timeline below: August 7 August 11 August 12 August 18 October 5 November 3 City Council must approve and submit a resolution to the County Registrar of Voters Primary arguments for a measure must be filed with the City Clerk’s Office Last day to amend or withdraw a ballot measure Submission of rebuttal arguments and impartial analyses Registrar of Voters begins mailing vote- by-mail packets Election day •Tax on unoccupied properties and undeveloped land •No current tax in Cupertino •Tax in Berkeley, Oakland, and San Francisco •Pending court decision on legality of San Francisco vacancy tax on multi-family units •Oakland model could generate $846 thousand - $1.4 million in annual revenue Vacancy Tax •Destination based sales tax •No current tax in Cupertino •Campbell (1%), Los Gatos (0.125%), Milpitas (0.25%), and San Jose (0.25%) •Tax of 0.25% could generate $5.4 million in annual revenue •28.8% of a Cupertino TUT would be paid by non-residents Transactions and Use Tax Active TUTs in Cupertino Tax District State Base Sales and Use Tax Santa Clara County Transit District Santa Clara County Valley Transportation Authority Santa Clara VTA BART Operating and Maintenance TUT Santa Clara County Retail TUT Silicon Valley Transportation Solutions Tax 2020 Peninsula Corridor Joint Powers Board Retail TUT Measure A Santa Clara County Sales Tax Increase Public Transit Revenue Measure District Sales Tax Add On Rate 7.25%0.5%0.5%0.125%0.125%0.5%0.125%0.625%0.5% Contribution to 2% Cap -0.5%0.5%0.125%0.125%0.5%Exempt Exempt Exempt Effective Date -10-1- 1976 4-1-2006 7-1-2012 4-1- 2013 4-1-2017 7-1-2021 4-1- 2026 2026 Ballot Measure Cupertino can impose a TUT of up to 0.25% without state legislation Total sales tax rate of 9.75% in Cupertino starting April 1, 2026 Potential sales tax rate of 10.25% in 2027 Parcel Tax •Flat tax on parcels by uniform application (e.g. land use or building square footage) •Must be for a specific purpose •No current tax in Cupertino •San Jose charges $29.84 per single-family home for library operations •Revenue depends on the nexus of fee to service ($435 thousand – $20.5 million) Business License Tax •Tax on businesses to support services provided to the business community •Cupertino charges tax on floor area •Cupertino proposed an employment tax in 2018 that was not approved by Council •Adoption of a gross-receipts model could generate $3.1 million in revenue •Adoption of an employee model could generate $2 - $10.2 million in revenue Ride Share Services Tax •Business license tax on ride share services (transportation network companies) •No current tax in Cupertino •Ride share contractors are already subject to business license taxes •Tax in San Francisco on service providers •Tax is based on the gross receipts of rides that start in the city for the portion of the trip within the city Conclusion Considerations when placing a tax measure on the ballot should include: Administrative Ease Equity Administrative CostsRevenue Potential Effort to set up and monitor collection and audit of the tax Impact of the tax on residents and businesses in the community Potential increase in annual tax revenue Resources required for monitoring and compliance with the tax Questions?