South Tahoe business regulations

STAFF REPORT
CITY COUNCIL MEETING OF FEBRUARY 12, 2008


Date: February 5, 2008

TO: Honorable Mayor and Council

FROM: City Manager

RE: REQUEST FOR AUTHORITY TO DEVELOP CITY CODE CHANGES TO STRENGTHEN COLLECTION OF REVENUE OWED THE CITY, PREFERENCE TO LOCAL PROVIDERS OF SERVICE, AND INCENTIVES TO PEOPLE TO IMPROVE THEIR BUSINESS PROPERTIES

RECOMMENDATION:

1. Hear staff Report
2. Take public comment
3. Approve in concept the proposed policy initiatives and direct the City Manager to have prepared the specific code language changes needed by no later than your second City Council meeting in March 2008.

ISSUE AND DISCUSSION:

We are in the process of reviewing and preparing proposed amendments to our business license and procurement ordinances. During this review, I am requesting City Council direction in support having prepared the following clarifications and changes to the City’s business license and procurement practices:

1. Strengthen the process for collecting fees owed the City - Tighten up the business license ordinance for clarity to provide specifically (and in one place in the ordinance) that it is illegal for any business to operate within the City limits unless it has a business license and pays all fees legally imposed by the City (e.g. business license, BID, multi-family inspection program as applicable). Should a business fail to pay all fees in a reasonable period of time, the City Manager or his designee is authorized to take all legal steps in accordance with the law to collect funds owed and/or action to see that the business is closed for non-payment including the filing of civil and/or criminal actions (the latter in the case of fraud).

The current business license ordinance has been found who use it on a daily basis to be too cumbersome and deficient in defining City government’s intentions to collect all fees owed it in a timely manner and providing a process for Finance staff to achieve the objective.

The intent of the code change is not to punish business but rather to ensure collection of revenues owed the City. A vast majority of business owners and operators pay all legally assessed City fees, and it is unfair for them who pay on time for others not to do so.

2. Give preference in purchasing to City businesses - In regard to the purchasing of products by City government, it is proposed that the City shall grant to businesses located within the City limits and holding a valid City business license a 5% preference margin if the product and/or service being procured is of equal quality or better than from a non-City vendor. The City Manager is authorized to prepare and promulgate administrative policy to ensure implementation of this City Council direction.

At the present time, the City code (Section 22-15) provides for a 1% preference. I suggest and recommend that the amount of preference be increased to 5% assuming that the proper findings can be made. I am informed that there is a 9th Circuit case that upheld a limited local preference in San Francisco on the basis that there was a legitimate public purpose for the preference due to the higher cost of doing business in San Francisco and the limited scope of the preference that was given (5%). Doing business in South Lake Tahoe is clearly more expensive than outside of the City and State. The reason for suggesting a 5% preference is because there is authority by the court that such a preference is legal under certain circumstances. The current 1% incentive is also not much of one according to our Purchasing Manager.

3. Create an incentive for businesses to remodel and expand - Business owners and operators within the City limits who apply to remodel or expand their existing small businesses (needs to be defined) will be given a 5% reduction in their City permit fees. The purpose is to support and encourage the remodel and expansion of existing smaller local businesses.

To the extent that business expansion creates new permanent jobs, local businesses may also be eligible for grants and loans under the City’s existing or evolving business assistance program (e.g. CDBG, RDA).

If the City Council agrees in concept with these policy initiative proposals, the City Manager should be directed to bring back a report and proposed policy change language by no later than your second meeting in March 2008.


FINANCIAL AND/OR POLICY CONSIDERATION:

There will be some administrative time and cost needed to proactively collect dollars owed the City on business license and other legally assessed City fees, but this should be offset by receiving dollars owed City government in a timely manner.

The local preference provision for procurement should have a minimum impact on City costs that might well be somewhat offset by more local firms getting City business.

The reduction of fees proposal for local business should have minimum financial impacts if the policy initiative results in more reinvestment in improvements to private business properties.


DAVID M. JINKENS