HomeMy WebLinkAboutCRPS-09-132 - Permanent Vendor Licence FeesREPORT
REPORT TO:
Councillor B. Vrbanovic, Chair and Members of the Finance
and Corporate Services Committee
DATE OF MEETING:
October 5, 2009
SUBMITTED BY:
R. Gosse, Director of Legislated Services/City Clerk
PREPARED BY:
Patricia Harris, Manager of Licensing
WARD(S) INVOLVED:
N/A
DATE OF REPORT: September 28, 2009
REPORT NO.: CRPS-09-132
SUBJECT:
PERMANENT VENDOR LICENCE FEES
RECOMMENDATION:
Council’s direction is requested.
BACKGROUND:
At the Council meeting of August 24, 2009 staff was directed to consider an alternate fee
structure for individual entrepreneurs (home businesses) as opposed to a set fee for all
businesses.
REPORT:
Chapter 549 (Vendor-Markets) of the Municipal Code came into effect January 1, 1998 with the
Permanent Vendor portion of this Chapter replacing Chapter 598 (Transient Traders) when the
business tax was eliminated and the transient trader licence was no longer applicable. The
current Chapter 549 (Vendor-Markets) of the Municipal Code was passed December 6, 2004.
In 2004, the Municipal Act of 2001 required that a municipality could only exercise its licensing
powers, for one or more of the following purposes:
Health and Safety
Nuisance Control
Consumer Protection
Chapter 549 was therefore, passed under the justification of consumer protection and nuisance
control. By licensing permanent businesses it protects consumers as there is a record of licence
holders and the ability to hold them accountable where the business is not conducted in
accordance with the law or with honesty or integrity. Having to obtain a licence also ensures,
amongst other things, the business is located in a properly zoned premise and meeting all other
requirements to mitigate issues such as parking. As well by licensing all types of businesses it
provides a record of the licensed business so if a business fails, a customer is able to obtain
information regarding the business owner and municipal address.
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In addition to the specific purposes for which a municipality can licence a business, in 2004
municipalities could only charge licence fees based on cost recovery. Staff undertook a
comprehensive cost analysis with regards to all licensing categories taking into consideration a
number of factors such as: administration; enforcement; preparing by-laws; and, attendance at
Committee meetings, court time, etc. Once the analysis was completed it was determined that
based on costs, the maximum fee that could be charged to a permanent vendor was $603.80.
After careful consideration the licence fee for 2005 was set at $258.00, an increase of $40.00
over the previous year. Although the fee did not cover costs, it was felt it was a reasonable
increase without adding a financial burden. Licence fees have increased 3-6% in the last few
years as directed by Council. Since 2004, the Municipal Act has changed and no longer
requires licence fees to be based on cost recovery, however, staff still use the costing model
established in 2004 in which to base licence fees on.
A permanent vendor is defined as a person who sells goods or services at one specific location
in the City, either directly or by way of sample or catalogue for delivery later, for more than 250
days in a calendar year. This includes businesses that operate in commercial establishments
and home businesses.
Currently the licence fee for a Permanent Vendor is $301.00. It is a one-time fee and applies for
as long as the business is owned by the same entity. If the business relocates, there is no
further fee, however a new application is required and a new licence is issued to update the
City’s files.
In 2008, 106 Permanent Vendor Licences were issued for total revenue of $27,746.00. Of
those, 41 were home businesses for revenue of $11,644.00. Up to September 15, 2009, 53
Permanent Vendor licences have been issued for total revenue of $15,551.00. Of those, 32
have been home businesses for a total revenue of $9,632.00. Based on projections for 2009,
total revenue for permanent vendor licences in 2009 should be approximately $30,000.00.
Staff is providing three options for the Committee’s consideration.
1.
Status quo – Continue to charge the current one-time fee of $301.00. It is being
proposed through the budget that in 2010 the fee will increase to $317.00. For the most
part new business owners (both commercial and home businesses) have not
complained about the fee and enjoy the fact it is a one time cost and they don’t have to
budget for it each year.
2.
Lower the one-time licence fee to $200.00 for both commercial and home businesses,
but charge a renewal fee of approximately $50.00 (which is the fee charged for most
renewal business licences). Based on an average of 100 Permanent Vendor licences
issued per year, initial revenue would drop by $10,000.00, however, revenues would be
recovered with the renewal fee in subsequent years. This would only be achieved if all
businesses survive for at least 3 years.
3.
Establish a separate category for home businesses with a one-time licence fee of
$200.00. Commercial businesses would continue to pay the current fee. Based on
2008 data, this would reduce revenue by approximately $4100.00 per annum.
It is staff’s belief that the current licence structure and fees work well for Permanent Vendors
with very few complaints being received. The structure creates an equal playing field for all
businesses regardless if home based or located in a commercial premise. A lower licence fee
for home businesses, which includes on-line businesses, could arguably provide a competitive
disadvantage to commercial business owners. Many home businesses provide the same types
of goods and services as a commercial business such as landscaping, interior design, home
inspections, building renovators, computer services and web design and other on-line services.
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They compete for the same customers as a commercial business but may be able to offer their
goods and services at a more competitive rate because they do not have the same overhead
costs, nor do they take the same risks (i.e. rental of a commercial unit). It could be viewed as
discriminatory towards small commercial enterprises.
In regard to the current fee for this licence, as mentioned previously, there have been very few
complaints on the amount and the fee represents a small amount in context to start up costs for
a new business. Also, it is felt that a one-time fee is more preferable to businesses than a
licence that requires yearly renewal at escalating fees.
FINANCIAL IMPLICATIONS:
Option 2 would provide for an initial reduction of revenue of approximately $10,000 in the first
year and approximately $5,200.00 in the second year. Most revenues will be recouped in
subsequent years, however, there will be a small loss with the failure of some businesses that
occur within the first two years. Based on 2008 data, Option 3 will see a loss of revenue of
approximately $4100.00 and this loss will continue in future years.
ACKNOWLEDGED BY:
T. Speck, General Manager of Corporate Services
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