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HomeMy WebLinkAboutFS 2011-03-22 Item 2B - Ordinance - Business License and Revenue Generating Regulatory License (RGRL) e ILA a ss City of Tukwila e. Jim Haggerton, Mayor s 0 MEMORANDUM 90•� INFORMATIONAL TO: Mayor Haggerton Finance and Safety Committee FROM: Shawn Hunstock, Finance Director DATE: March 18, 2011 SUBJECT: Business License and RGRL Regulatory Changes ISSUE Since implementation of recent business license ordinance changes, and implementation of the Revenue Generating Regulatory License (RGRL) fee, several things have come to our attention that need to be addressed in the implementation of both fees. The attached ordinance is intended to address some of those issues, and additional changes will be coming later this year. Some inconsistencies between the business license regulations and the RGRL regulations were identified after implementation of the RGRL fee. For instance, both regulations defined what non profit organizations were, but only the RGRL ordinance specifically exempted non profits from that fee. The business license regulations did not specifically exempt non profits from the business license fee. There were also inconsistencies between organizations that would be exempt from either the business license fee or the RGRL fee. BACKGROUND The City Council adopted the Revenue Generating Regulator License fee on July 19, 2010 with Ordinance No. 2297. The Council also adopted several changes to the business license provisions in the Tukwila Municipal Code with Ordinance No. 2315, adopted November 15, 2010. The business license regulatory changes adopted in November were primarily housekeeping items, identifying the Finance department as the administrator of the fee. The ordinance also removed some provisions of the business license regulations that were no longer applicable. DISCUSSION Temporary License The business license regulations do not currently provide for a different type of license for businesses that operate within the City for a short period of time. The license is issued at any time throughout the year and is valid for the entire calendar year. There are several circumstances, for instance vendors at the Backyard Wildlife Festival or at Tukwila Days, where the business might operate within the City for only a short period of time. For these businesses, an annual license is not necessary and the fee collected by the City might make it prohibitive for the businesses to participate in these types of short term events. 65 INFORMATIONAL MEMO Page 2 Staff is recommending amending the business license fee schedule to allow for a temporary license for businesses operating in the City for less than five consecutive days. This would allow businesses participating in the shorter, maybe one -time events to operate with a valid City issued business license. Completion of the business license application would initiate the standard approval routing process for these applications. For instance, if the vendor was planning on using a temporary structure outdoors to sell goods from, the City could obtain information regarding maximum occupancy, placement and number of fire extinguishers (if required), location of access points for the public and emergency response personnel, etc. The proposed fee for the temporary license is $20. While this amount might not recover all possible costs for reviewing and approving the license application, it would still recover some of those costs and yet be low enough to not prohibit participation in these types of events, particularly for small vendors. Non- Profit Exemption Ordinance 2315 defined non profit organizations in the business license regulations. However, nowhere in the business license chapter did it specifically exempt these businesses from paying the business license fee. Staff is recommending adding wording to the business license regulations that would tie the exemption to the RGRL exemption. In other words, a business exempt from the RGRL fee would also be exempt from the business license fee, and vice versa. Appeal Process and Fee After implementing the new RGRL regulations, it came to the attention of staff that there are inconsistencies between the appeal provisions for non issuance of a business license contained in the RGRL regulations in TMC Section 5.04.112 and the regulations in the Code Enforcement section, Chapter 8.45. Staff is recommending an amendment to the business license regulations in TMC Section 5.04.112 that would clarify the appeal process for denial of a business license, and the appropriate fee to be assessed for an appeal. Multiple RGRL Fees After implementation of the RGRL fee it became apparent that there are a number of businesses in the City that are owned by the same individual. One of the concerns that was expressed by these people was that they were paying more than one RGRL fee for essentially the same employee, themselves. With the current business license and RGRL regulations, these individuals are paying two or more business license fees, plus two or more RGRL fees. As you are aware, the RGRL fee is specifically based on the number of employees, and in the case of a sole proprietorship the owner is considered an employee for calculation of the fee. This means that if that person owns multiple businesses, they would be paying multiple RGRL fees even though the "employee" is the same person for each business. Staff is recommending an amendment to the business license regulations. The change would be applicable to sole proprietors who own and operate more than one business within the City. For businesses owned by the same individual, only one RGRL fee would be paid by that person. The fee paid would be the highest calculated fee for any one of the businesses. For instance, if a person owned a landscaping business with no employees, plus a janitorial business with three employees, the RGRL fee would be based on the three employees in the janitorial business. There would be no RGRL fee assessed on the landscaping business in this example. 66 W :12011 Info Memos\ BusinessLicenseAndRGRLChanges .doc INFORMATIONAL MEMO Page 3 Another example might be two businesses with no employees that are owned by the same person. In that case, the RGRL fee would be assessed to one of the two businesses, and would be calculated based on one "employee," the owner. The other business would not be assessed an RGRL fee. It should be noted that this amendment to the RGRL regulations would only be applicable to sole proprietorships with just one owner. As such, it would not apply to partnerships, corporations, limited liability corporations, or any other type of ownership. RECOMMENDATION Staff is recommending adoption of the attached ordinance amending the business license and RGRL regulations. This item is scheduled for the March 22, 2011 Finance and Safety Committee meeting, the March 28 Committee of the Whole meeting, and the April 4th Regular Council meeting. ATTACHMENTS Draft Ordinance W:12011 Info Memos1BusinesslicenseAndRGRLChanges .doc 67 68 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, AMENDING ORDINANCE NO. 2315, §1 (PART), AS CODIFIED AT VARIOUS LOCATIONS IN TUKWILA MUNICIPAL CODE CHAPTER 5.04, TO ADD "TEMPORARY BUSINESS LICENSE" TO THE DEFINITIONS AND FEE SCHEDULE, TO REVISE APPEAL PROCEDURES AND TO REDEFINE BUSINESSES EXEMPT FROM FEES; AMENDING ORDINANCE NO. 2297, §1 (PART), AS CODIFIED AT TUKWILA MUNICIPAL CODE SECTION 5.62.020, TO CLARIFY THE CITY'S REVENUE GENERATING REGULATORY LICENSE FEE FOR A PERSON OPERATING MULTIPLE BUSINESSES AS SOLE PROPRIETORSHIPS AND FOR BUSINESSES ELIGIBLE FOR A TEMPORARY BUSINESS LICENSE; PROVIDING FOR SEVERABILITY; AND ESTABLISHING AN EFFECTIVE DATE. WHEREAS, the current business license ordinance defines nonprofit organizations but does not exempt them from paying the business license fee; and WHEREAS, the City Council desires to exempt qualified nonprofit organizations from both the business license fee and the Revenue Generating Regulatory License fee; and WHEREAS, a temporary business license will provide an alternative license for businesses operating within the City on a very short -term basis; and WHEREAS, changes to the appeal procedures are needed for clarification and efficiency; and WHEREAS, the City Council desires to apply the Revenue Generating Regulatory License fee only once for a person operating multiple businesses as sole proprietorships within the City; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY ORDAINS AS FOLLOWS: W: Word Processing \Ordinances \Business lic -RGRL revisions strike -thru 3 -15 -11 SH:bjs Page 1 of 5 69 Section 1. TMC Section 5.04.010, "Definitions, Amended. Ordinance No. 2315, §1 (part), as codified at TMC Section 5.04.010, is hereby amended to read as follows: For the purpose of this chapter, the following definitions shall apply: 1. "Business," means any operation performed by any person which involves the manufacturing or processing of materials of any type, the sale of goods, wares or merchandise, the rendition of services or the repair of goods, wares or merchandise to the general public or a portion thereof for any consideration at each established place of business, store, office, shop or yard within the City limits. 2. "Department," means Finance Department. 3. "Director," means the Finance Director or his or her designee. 4. "License or licensee," as used generally in this chapter, means and includes respectively the words "permit" or "permittee" or the holder for any use or period of time of any similar privilege, wherever relevant to any provision of this chapter or other law or ordinance. 5. "Nonprofit organization" includes individual person(s), partnerships, joint ventures, societies, associations, churches, clubs, trustees, trusts or corporations; or any officers, agents, employees, factors or any kind of personal representatives of any thereof, in any capacity, acting either for himself or any other person under either personal appointment or pursuant to law who qualifies under definition of and certification by the Internal Revenue Service as nonprofit. 6. "Person," means any individual, receiver, agent, trustee in bankruptcy, trust, estate, firm, co- partnership, joint venture, company, joint stock company, business trust, corporation, society, or group of individuals acting as a unit, whether mutual, cooperative, fraternal, nonprofit or otherwise. 7. "Person engaged in business" means the owner or one primarily beneficially interested in lawful business for profit and not employees. 8. "Home occupation" means any business conducted in a residence within the corporate city limits of Tukwila, such business being subject to the requirements set forth in TMC 18.06.430. 9. "Temporary business license means any business conducted within the corporate limits of the City for less than five consecutive days in a calendar year. Section 2. TMC Section 5.04.020, "Application and Fees Required," Amended. Ordinance No. 2315, §1 (part), as codified at TMC Section 5.04.020, is hereby amended to read as follows: W: Word Processing\Ordinances\Business lic -RGRL revisions strike -thru 3 -15 -11 SH:bjs Page 2 of 5 70 A. Any person desiring to establish or conduct any business enterprise or undertaking within the corporate limits of the City shall first apply to the Finance Department for a license to conduct such business. The application shall be upon a form furnished by the Finance Department on which the applicant shall state the company name and address; the nature of the business activity or activities in which he desires to engage; the place where the business will be conducted; the number of employees, whether full or part -time, on the payroll as of January 1, or, if a new business, the number to be employed on the opening date; and other information pertaining to the business as required by the City. B. The application must be accompanied by a check, cash or money order for the amount of the license fee. All fees will be based on the number of employees, whether full or part -time, as follows: 0 to 10 $100.00 11 to 20 $150.00 21 to 50 $300.00 51 to 100 $400.00 101 and up $600.00 Home Occupation (pursuant to TMC 5.04.010) $50.00 Temporary business license (pursuant to TMC 5.04.010) $20.00 Section 3. TMC Section 5.04.090, "Exemption," Amended. Ordinance No. 2315, §1 (part), as codified at TMC Section 5.04.090, is hereby amended to read as follows: A. Nothing in this chapter shall be construed to require a license for any farmer, gardener, or other person to sell, deliver or peddle any fruits, vegetables, berries, butter, eggs, fish, milk, poultry, meats or any farm produce or edibles raised, caught, produced or manufactured by such person in any place within the State. B. Any business exempt from paying the Revenue Generating Regulatory License fee. in accordance with Tukwila Municipal Code Section 5.62.040. shall also be exempt from paying the business license fee in TMC Section 5.04.020. Section 4. TMC Section 5.04.112, "Appeal of Notice of Denial, Suspension or Revocation," Amended. Ordinance No. 2315, §1 (part), as codified at TMC Section 5.04.112, is hereby amended to read as follows: A. ,4ppea4s from o Notice of Den-ia -I, Sucpe• P 'e shall be conducted in tho :,a..- e•• --e e- .-e- Tukwila Municipal Codc Chapter 8. 1-5- 1.!!. W: Word Processing \Ordinances \Business lic -RGRL revisions strike -thru 3 -15 -11 SH :bjs Page 3 of 5 71 A. Whenever the Finance Director, or his /her designee, determines there is cause for suspending, denying or revoking any license issued or applied for pursuant to this chapter, the Finance Director, or his /her designee, shall notify the person holding the license, by registered mail or hand delivery, of his /her determination. Notice mailed to the address on the license shall be deemed received three business days after mailing. The notice shall specify the grounds for suspension, denial or revocation. D. The licensee or applicant may appeal the decision of the Finance Director, or his /her designee, to suspend, deny or revoke a business license by filing a written appeal to the City Clerk within 10 calendar days of the decision. The appeal must state the grounds for appeal and the basis for why the decision was incorrect. To be accepted the appeal must be accompanied by an appeal fee of $200.00. C. Upon receipt of the notice of appeal, the Finance Director shall set a date for hearing the appeal before the City's Hearing Examiner. Notice of the hearing will be mailed to the licensee or applicant. D. The hearing shall be de novo. The Hearing Examiner may affirm, reverse or modify the Finance Director's, or his /her designee's, decision. E. The decision of the Hearing Examiner shall be final. Any appeal from the administrative hearing shall be to King County Superior Court within 14 calendar days of the Hearing Examiner's decision. Section 5. TMC Section 5.62.020, "Revenue Generating Regulatory License Fee (RGRL)," Amended. Ordinance No. 2297, §1 (part), as codified at TMC Section 5.62.020, is hereby amended to read as follows: A. General. In addition to the business license fee, the highest applicable RGRL in this section shall be paid for the annual license issued under this chapter. 1. A business with less than $12,000.00 of average annual gross receipts shall be exempt from any RGRL. 2. For the purposes of this section and in determining the applicable RGRL, the term "employee" means and includes each of the following persons who are not required by the City to have his /her /its own separate City of Tukwila business license: a. Any person who is on the business's payroll, and includes all full -time, part -time, and temporary employees or workers; and b. Self- employed persons, sole proprietors, owners, officers, managers, and partners; and c. Any other person who performs work, services or labor at the business, including an independent contractor who is not required to have a separate City of Tukwila business license. W: Word Processing \Ordinances \Business lic -RGRL revisions strike -thru 3 -15 -11 SH:bjs Page 4 of 5 72 3. An entity that is entirely exempt from paying the business license fee shall be exempt from any RGRL. 4. An entity with some activities or functions that are exempt from the business license fee and some that are not exempt shall pay an RGRL based on the number of its employees that are involved in the functions or activities that are not exempt. 5. An individual person operating more than one business as sole proprietorships, including leasing of non owner occupied housing, within the corporate limits of the City shall pay only one RGRL fee. at an amount equal to the highest RGRL fee for any one of the multiple businesses, if not otherwise exempt from paying the RGRL fee. pursuant to this chapter. Section 6. TMC Section 5.62.020, "Revenue Generating Regulatory License Fee (RGRL)," Amended. Ordinance No. 2297, §1 (part), as codified at TMC Section 5.62.020, is hereby amended to add the following: K. Businesses eligible for a temporary business license, pursuant to TMC Section 5.04.010. shall be exempt from payment of an RGRL fee for businesses, with fewer than five employees. Section 7. Severability. If any section, subsection, paragraph, sentence, clause or phrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining portions of this ordinance or its application to any other person or situation. Section 8. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force five days after passage and publication as provided by law. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 2011. ATTEST /AUTHENTICATED: Christy O'Flaherty, CMC, City Clerk Jim Haggerton, Mayor APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Published: Effective Date: Shelley M. Kerslake, City Attorney Ordinance Number: W: Word Processing \Ordinances \Business lic -RGRL revisions strike -thru 3 -15 -11 SH:bjs Page 5 of 5 73