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Consider adopting a resolution calling an election, requesting consolidation with the November 3, 2026 Statewide General Election, and requesting election services from the Registrar of Voters to submit to County voters a proposed ordinance amending Article XII of Chapter 11 of the Solano County Code to modernize and expand the County's business license tax structure for commercial energy production and resource extraction businesses and increase business license tax rates (4/5 vote required)
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Published Notice Required? Yes ___ No __X__
Public Hearing Required? Yes ___ No __X__
RECOMMENDATION:
The Department of Resource Management recommends the Board of Supervisors:
1. Adopt a resolution calling an election, requesting consolidation with the November 3, 2026 Statewide General Election, and requesting election services from the Registrar of Voters to submit to County voters a proposed ordinance amending Article XII of Chapter 11 of the Solano County Code to modernize and expand the County's business license tax structure for commercial energy production and resource extraction businesses and increase business license tax rates (4/5 vote required); and
2. Delegate authority to the County Administrator and County Counsel to take all actions necessary to place the measure on the November 3, 2026 ballot.
SUMMARY:
The Department of Resource Management requests Board adoption of a resolution calling an election and submitting to Solano County voters a measure entitled "An Ordinance Amending Article XII of Chapter 11 of the Solano County Code Relating to the Business License Tax Imposed on Commercial Energy Production, Resource Extraction Facilities, and Data Centers in the Unincorporated Areas of Solano County." The measure would be considered by voters at the November 3, 2026, General Election.
The current business license tax structure does not include adjustments for inflation and does not address other forms of commercial energy production, energy storage, resource extraction, or emerging land uses such as data centers.
Following Board discussion on June 9, 2026, staff evaluated revised tax rates, annual Consumer Price Index for All Urban Consumers (CPI-U) adjustment mechanisms, and the potential inclusion of data centers. The proposed ordinance would amend and expand the County's existing business license tax provisions applicable to commercial energy production and resource extraction businesses. Specifically, it would increase the existing commercial wind turbine business license tax, extend applicability to commercial solar energy systems, establish annual CPI-U adjustments, and create new business license taxes for natural gas extraction facilities, battery energy storage systems, and data centers.
FISCAL IMPACT:
Based on existing facilities and current production levels, staff estimates the proposed ordinance would generate approximately $353,000 in additional annual revenue. This estimate excludes any future revenue from data centers.
The costs associated with preparing this agenda item are nominal and are included in the Department’s FY2025/26 Working Budget. The estimated cost for a countywide ballot measure is approximately $138,651.
DISCUSSION:
Following Board direction on June 9, 2026, staff evaluated revised tax rates, annual CPI-U adjustments, the inclusion of data centers, and associated legal considerations.
The proposed ordinance would amend Article XII of Chapter 11 of the Solano County Code by:
• Increasing the business license tax on commercial wind turbine generators from $0.00003 to $0.00008 per kilowatt-hour of electrical energy generated;
• Extending the business license tax to commercial solar energy systems at $0.00008 per kilowatt-hour of electrical energy generated;
• Establishing a business license tax of $1.50 per megawatt-hour of approved electrical storage capacity for front-of-the-meter battery energy storage systems;
• Establishing a business license tax of $0.30 per thousand cubic feet (McF) of natural gas extracted;
• Establishing a business license tax of $0.12 per square foot of gross floor area for data centers; and
• Establishing annual CPI-U adjustments beginning January 1, 2028.
Staff evaluated the inclusion of data centers based on Board direction at the June 9, 2026 Board meeting. Because no data centers currently exist or are proposed within the unincorporated areas of the County, no revenues are currently projected for this category. Inclusion of data centers would establish a business license tax framework should future data center facilities be proposed within the unincorporated area.
Staff evaluated several alternative approaches for establishing a data center business license tax, including taxes based on electrical consumption, server capacity, and building size. Staff recommends a gross floor area-based tax because it is straightforward to administer, does not require access to proprietary operational data, and can be verified through building permit and assessor records.
Staff has not identified any major U.S. data center markets that rely primarily on a recurring square-foot business license tax for data centers. Most jurisdictions derive data center revenues through property taxes, taxes on business personal property and equipment, utility-related taxes, or negotiated development agreements. In addition, we noted that in the state of Virginia, which is home to the largest number of data centers in the country, they have also established specialty taxes on data center equipment. A square-foot business license tax may represent a unique local approach rather than a commonly used industry model.
The proposed rate of $0.12 per square foot annually is at the low end of the range of rates evaluated by staff and would generate approximately $52,000 annually from a 436,000-square-foot data center comparable in size to recently approved facilities in California. Attachment D includes examples of California data center facilities ranging from approximately 244,000 to 436,000 square feet. At the proposed rate of $0.12 per square foot annually, these facilities would generate approximately $29,000 to $52,000 in annual business license tax revenue.
Legal Framework and Ballot Requirements:
The attached resolution would call an election and submit the proposed ordinance to the voters pursuant to Government Code section 53724, Revenue and Taxation Code section 7284, and Elections Code section 9140.
Consistent with the current tax structure, revenues generated by the business license tax are deposited into the County General Fund and may be used for any lawful governmental purpose. Because the measure would amend a general tax, voter approval requires a simple majority vote pursuant to Article XIII C of the California Constitution (Proposition 218).
The measure would apply to facilities located within the unincorporated area of Solano County. Because the tax is a county general tax, all registered voters within Solano County would be eligible to vote on the measure, regardless of whether they reside within a city or the unincorporated area.
The resolution proposes the following ballot question:
"Shall Solano County update its business license tax to raise the commercial wind turbine rate ($0.00003 to $0.00008 per kWh) and extend the tax to commercial solar energy systems ($0.00008 per kWh), battery energy storage systems ($1.50 per MWh), natural gas extraction facilities ($0.30 per McF), and data centers ($0.12 per building square foot), with annual inflation adjustments, generating approximately an additional $353,000 annually, until ended by the voters?"
To qualify for the November 3, 2026 General Election ballot, the Board must approve ballot placement no later than August 4, 2026.
Public Outreach:
Staff will prepare informational materials regarding the proposed measure and election process. All materials and communications prepared using County resources will be reviewed by County Counsel to ensure compliance with applicable laws prohibiting the use of public resources for campaign advocacy. The County’s communications will be limited to factual and informational content and will not advocate for approval or rejection of the measure.
Environmental Review:
The proposed ordinance amendments are exempt from the California Environmental Quality Act (CEQA) Public Resources Code §21000, et seq., pursuant to CEQA Guidelines (Cal. Code Regs., tit. 14, §15000 et seq.) Section 15378(b)(4) and Section 15061(b)(3) (Common Sense Exemption).
ALTERNATIVES:
The Board could choose not to adopt the resolution and instead direct staff to evaluate alternative tax structures or tax rates, or return with a revised proposal. The existing business license tax structure would remain in effect, and the County would not realize the additional revenues associated with the proposed amendments unless approved through a future ballot measure.
OTHER AGENCY INVOLVEMENT:
None.
CAO RECOMMENDATION:
APPROVE DEPARTMENTAL RECOMMENDATION