Year 2002 Business License Fee Amendments

ADMINISTRATIVE REPORT

Date: November 7th, 2001
Author/Local: P. Teichroeb/7545

RTS No. 02366

CC File No. 1758

CS&B: November 22, 2001

TO:

Standing Committee on City Services and Budgets

FROM:

Chief License Inspector in consultation with the Director of Finance

SUBJECT:

Year 2002 Business License Fee Amendments

RECOMMENDATION

A. THAT, with the exception of the charitable or non-profit categories detailed in Appendix A and certain liquor establishments, live-aboard and one family dwelling license categories, Council approve an across-the-board increase in business license fees of approximately 2.5% (when rounded) for Year 2002 as an inflationary adjustment reflecting the growth in City costs;

B. THAT the fees for live-aboard boat owners be increased in 2002 by 3% reflecting the increase in residential property taxes in 2001;

C. THAT the application of fees for the license categories of Cabaret, Dining Lounge, Dining Room, Lounge, Marine Public House, Neighbourhood Public House and Public House be changed from a flat fee per business basis to a $4.00 per seat basis for Year 2002 with a minimum and maximum fee of $95 and $2000, respectively;

D. THAT the license fee for renting one family dwellings be increased to match the new proposed Year 2002 fee for renting a Dwelling Unit;

E. THAT new fees be incorporated for obtaining copies of licenses and requiring a business license change of name or address;

F. THAT the minimum penalties charged for failure to pay a prescribed license fee be increased from $5.00 to $20.00 when the fee is paid within 30 days from the date fixed for payment and from $10.00 to $40.00 when the fee is paid more than 30 days from the date fixed for payment; and

G. THAT the Director of Legal Services be requested to prepare the necessary By-law amendments to the License By-Law to implement the revised fees, to be effective January 1, 2002.

GENERAL MANAGER'S COMMENTS

The General Manager of Community Services RECOMMENDS approval of the aforementioned recommendations.

POLICY

It is Council policy that fees and charges be established on the basis of the cost of providing the associated services or at market level where the service is provided in a market environment.

It is Council policy that new or expanded service costs be fully offset by expenditure reductions or new revenues.

PURPOSE

The purpose of this report is to seek Council approval for Year 2002 business license fees and live-aboard license fees and the incorporation of new fees into the License By-law for certain administrative tasks requiring additional processing time. A 2.5% fee increase is proposed for all business license categories with the exception of live-aboards, liquor license establishments and one family dwellings. These three categories are to be treated differently for the reasons outlined in this report.

DISCUSSION

1. Year 2002 Business License Fees

This report recommends that business license fees for year 2002 be increased by approximately 2.5 % (when rounded). This increase would apply to all fee categories with the exception of those related to charitable or non-profit work (Appendix A) andlive-aboards, liquor establishments and one family dwelling rentals which are addressed separately. The primary reason for the increase is to keep fees consistent with City administration and enforcement costs.

In the past, a number of charitable and non-profit license categories have been assessed fees that are well below an amount required to recover costs. These fees are detailed in Appendix A. As in previous years, no fee increase is recommended for these licenses.

2. Year 2002 Liquor Establishment License Fees

It has become evident in the recent past that the current license fees charged for liquor license establishments, as well as the means of applying these fees, in the City are no longer appropriate. These establishments include the following license categories: Cabaret, Dining Lounge, Dining Room, Lounge, Marine Public House, Neighbourhood Public House and Public House. In comparison to other Lower Mainland municipalities, Vancouver's license fees are substantially lower in all these liquor license categories with the occasional exception of the Class "B" Dining lounge/room. As well, other municipalities typically have lower business license fees for restaurants compared to other liquor establishment categories (refer to Appendix B).

Current license fees for liquor establishments are also insufficient from a cost recovery perspective. The Police Department requires additional resources to enable the department to adequately service liquor license related problems on weekends (Thursday, Friday and Saturday nights) in the city, particularly at closing time from 1:00 am to 4:00 am in the morning. As well, additional costs are regularly being incurred by the Inspections Division (primarily Property Use and Building Inspectors) for night inspections.

Presently, license fees for liquor establishments are applied as a flat fee per business. For example, in 2001, a cabaret venue was charged a flat annual fee of $607. With 36 licensed cabarets in the City at the time of this report, the resulting revenue is

$21, 852. At a total of 7,800 cabaret seats, the license fee was actually being applied at a cost of $2.80 per seat. Calculations for other liquor establishment license categories conclude that the average license fee per seat for 2001 was approximately $2.15 with a range from $0.52 per seat to $7.27 per seat as indicated in Appendix C. Applying a flat rate to each separate liquor business does not deal with the differences in community impacts. As a general rule, smaller liquor license establishments typically experience fewer patron-related disruptions thereby requiring lower policing costs. The larger venues can accommodate more patrons and consequently may require more frequent night inspections by City staff and consistent police patrols on Thursday, Friday and Saturday nights. Therefore, applying a license fee for liquor establishments on a per seat basis (with a maximum of $2,000) rather than as a flat rate is more equitable.

It is recommended that in Year 2002, fees for the license categories of Cabaret, Dining Lounge/Room, Lounge, Marine Public House, Neighbourhood Public House and Public House be applied on a $4.00 per seat basis with a minimum and maximum of $95 and $2,000, respectively, for each establishment. This amount is to be applied to indoor seats only. Outdoor patio seats are to be excluded at this time. Staff is planning to undertake a review of issues pertaining to outdoor patios in general and will report back to Council at a later date.

The recommended $4.00 per seat license fee for liquor license establishments will bring resultant fees closer in line with those of other Lower Mainland municipalities and generate additional revenue to recover costs. The current flat fee structure generated approximately $346,000 in business license fee revenue. Staff anticipate that in the Year 2002, the $4.00 per seat business license fee would generate an estimated business license revenue of $646,000, representing an increase in revenue of approximately $300,000.

The additional $300,000 in revenue could then be used to offset inspection and policing costs and potentially fund some of the changes required as a result of the Provincial Liquor Review. Although the detailed costs of these changes are not yet known, a certain portion of the revenue will be set aside for this purpose. Staff will report back to Council in 2002 with the costs that had been attributed to such changes and the amount of revenue necessary to recoup the same upon completion and implementation of the Provincial Liquor Review.

3. Year 2002 One Family Dwelling License Fees

In 1994 after considerable discussion, the City decided to include one family dwelling rentals as a separate business license category with a fee equivalent to the license fee at that time for apartment units. When the report seeking approval for the inclusion of this new category proceeded to Council, a report presenting an inflationary adjustment for all business license fees across the board went forward simultaneously. Both reports were approved concurrently resulting in a discrepancy between the two license fee categories. This discrepancy has grown even greater over the past seven years due to regular annual inflationary adjustments requiring the rounding of fees when applied. Currently, the 2001 license fees for the rental of a single apartment unit (ie. dwelling unit) is $46 and only $40 for the rental of one family dwellings. As a result, the proposed fee increase of $7 to the one family dwelling license category is required to bring the fee in line with the proposed $47 license fee for apartment house units in 2002.

4. Live-Aboard License Fees

Since 1974, the City has levied a license fee on marina owners for each live-aboard boat moored at a marina. The purpose of this fee is to ensure that those residents who live aboard their boats contribute to the provision of public services in a manner similar to those who occupy assessable real property. The comparison with property tax is made, as it is the mechanism through which other residents pay for public services.

In 1996, Council established that the most appropriate way of adjusting live-aboard fees would be to base the increase on the change in property taxes paid by residential taxpayers. Using this methodology, the proposal for year 2002 live-aboard fees is to apply a 3% increase based on the 2001increase in residential property taxes.

The current and recommended live-aboard fees are listed in the table below:

Live-Aboard License Fees

Length of Boat at Waterline Fee

Current Fee

Recommended Fee

<=21'

$705

$726

>21' and <26'

$852

$878

>26' and <31'

$958

$987

>31' and <37'

$1,094

$1,127

>37'

$1,207

$1,243

5. New Fees for Administrative Requests

Recently, the License Office has been receiving a greater number of requests for certain administrative tasks which require additional processing time. In particular, such tasks include requests for copies of individual or groups of licenses and changes in name and/or address. In order to recoup the labour costs expended for these administrative tasks, the following fees are being proposed:

ADMINISTRATIVE TASKS

PROPOSED FEES

Obtaining copy of license(s)

$5.00 per copy

Change of business name

$10.00

Change of address

$20.00 per address

6. Increase in Minimum Penalties for Failure to Pay Prescribed License Fee

In recent years, it has become evident that the minimum penalties charged for failure to pay a prescribed license fee are not substantial enough to encourage timely payment. Section 29(3) of the License By-Law specifies that if the late prescribed fee is paid within 30 days from the date fixed for payment, a penalty of 5% of the license fee or $5, whichever is greater, is charged in addition to the prescribed license fee, whereas if the late fee is paid more than 30 days from the date fixed for payment, a penalty of 10% of the license fee or $10, whichever is greater, is charged. It is recommended that these penalties be increased from $5.00 to $20.00 when the fee is paid within 30 days from the date fixed for payment and from $10.00 to $40.00 when the fee is paid more than 30 days from the date fixed for payment. The percentages are to remain the same. It is expected that these penalty increases will be substantial enough to serve as an incentive for a greater number of businesses to pay on or before the designated payment date.

CONCLUSION

Business license fees are adjusted annually to ensure full cost recovery of City administration and enforcement costs. This report recommends an across-the-board increase (with the exception of live-aboard, certain liquor establishments and one family dwelling license categories) of 2.5% for year 2002 to recover inflationary cost increases resulting in the growth of City expenses.

License fees for the liquor establishments are to be applied on a $4.00 per seat basis with a minimum and maximum of $95 and $2,000, respectively, for each establishment. This would bring the existing fees closer in line with those of other Lower Mainland municipalities and generate additional revenue to cover costs. This additional revenue could then be used to offset inspection and policing costs and potentially fund some of the changes required as a result of the Provincial Liquor Review

An increase of $7 is being proposed to the one family dwelling $40 license fee category to bring it in line with the new 2002 license fee for apartment house units.

Fees for live-aboard boat owners are adjusted annually based on changes to the property tax rate in the previous year. This report recommends that the fees be increased by 3% in year 2002, reflecting a similar property tax increase for 2001.

Finally, because of additional processing time required for certain administrative tasks, new fees are recommended for some of the most common requests, including obtaining copies of licenses and name and/or address changes of business licenses. As well, an increase in the minimum penalties charged for failure to pay prescribed license fees on or before the date fixed for payment are recommended as an incentive for more businesses to pay on or before the designated payment date.

APPENDIX A
Current Exceptions to Fee Increases

It is recommended that fees for the following license categories not to be increased. Historically these fees have remained constant.

Blind Peddlar $1 per annum
Blind Retail Dealer $1 per annum
C.N.I.B. Concession Stand $1 per annum
Club Manager of a Community Association $2 per annum
which pays a $2 license fee under this schedule
Community Association or similar organization $2 per annum
incorporated under the "Societies Act"
Junior Achievement of BC $10 per annum
Soliciting for Charity $10 per annum

APPENDIX B

COMPARISON OF 2001 BUSINESS LICENSE FEE SCHEDULE BY LIQUOR LICENSE CATEGORY:
VANCOUVER VERSUS OTHER MUNICIPALITIES

CLASS `A'
HOTEL LOUNGE OR PUB

CLASS `B'
RESTAURANT: DINING LOUNGE/ROOM

CLASS `C'
CABARET

CLASS `D'
NEIGHBOURHD PUB

Beer & Wine

VANCOUVER

Lounge = $ 312
Pub = $ 607

$787 *

* includes the $491 Restaurant Business license fee

$ 607

$ 312

$ 174

BURNABY

$3000 (1^st year)
$2577 (renewal)
$2250 (prorate)

no additional fee

$3000 (1^st year)
$3000 (renewal)
$2250 (prorate)

$3000 (1^st year)
$2577 (renewal)
$2250 (prorate)

$557 (1^st year)
$252(renewal)
$417.75(prorate)

NEW WEST
prorated by the month (fee/12)

$2020

$252 with no entertainment
$1010 with entertainment

$2020

$2020

RICHMOND

see below

$262

see below

see below

SURREY

$1500

$500* (Dining Lounge)

$250* (Dining Room)

*in addition to Restaurant fee

$3000

$1500

$500

VICTORIA

$280, plus $6 per seat to a maximum of $1050

$ 100 or
$ 200 with a holding area

$280, plus $6 per seat to a maximum of $1050

$500

$280

Richmond Business License Fee structure for Class `A', `C' and `D' liquor establishments:

SEATS FEE
0 to 30 seats $ 400
31 to 60 seats $ 795
61 to 90 seats $ 1195
91 to 120 seats $ 1595
121 to 150 seats $ 1990
151 to 180 seats $ 2390
181 to 210 seats $ 2785
over 210 seats $3000

APPENDIX C

TABLE OF VANCOUVER LIQUOR LICENSED ESTABLISHMENTS AND REVENUE FOR 2001

ESTABLISHMENT TYPE

# OF EST's

LICENSE FEE

TOTAL REVENUE

TOTAL NUMBER OF SEATS

AVERAGE PER SEAT FEE

Class `A' Pub

53

$607

$32,171

9,871

$3.26/seat

Class `A' Lounge

113

$312

$35,256

33,660

$1.05/seat

Total Class `B'Dining Lounge/Room:

852

$296

$252,192

109,059

$2.31/seat

Total Class `B' Restaurant C-1:

844

$296

$249,824

106,924

0 to 50 seats

280

$296

$82,880

11,404

$7.27/seat

51 to 100 seats

305

$296

$90,280

23,493

$3.84/seat

101 to 150 seats

114

$296

$33,744

14,171

$2.38/seat

151 to 200 seats

62

$296

$18,352

10,983

$1.67/seat

201 and over

83

$296

$24,568

46,873

$0.52/seat

Total Class `B' Restaurant C-2:

8

$296

$2,368

2,135

0 to 50 seats

0

$296

$0

0

51 to 100 seats

2

$296

$592

185

$3.20/seat

101 to 150 seats

3

$296

$888

390

$2.28/seat

151 to 200 seats

0

$296

$0

0

201 and over

3

$296

$888

1,560

$0.57/seat

Class `C' Cabaret

36

$607

$21,852

7,800

$2.80/seat

Class `D' Neighbourhood Pub

15

$312

$4,680

1,084

$4.31/seat

GRAND TOTAL OF
ALL LIQUOR LICENSES

1,069

$346,151

161,474

$2.14/seat

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TO:	Standing Committee on City Services and Budgets
FROM:	Chief License Inspector in consultation with the Director of Finance
SUBJECT:	Year 2002 Business License Fee Amendments

Length of Boat at Waterline Fee	Current Fee	Recommended Fee
<=21'	$705	$726
>21' and <26'	$852	$878
>26' and <31'	$958	$987
>31' and <37'	$1,094	$1,127
>37'	$1,207	$1,243

ADMINISTRATIVE TASKS	PROPOSED FEES
Obtaining copy of license(s)	$5.00 per copy
Change of business name	$10.00
Change of address	$20.00 per address

	CLASS `A' HOTEL LOUNGE OR PUB	CLASS `B' RESTAURANT: DINING LOUNGE/ROOM	CLASS `C' CABARET	CLASS `D' NEIGHBOURHD PUB	Beer & Wine
VANCOUVER	Lounge = $ 312 Pub = $ 607	$787 * * includes the $491 Restaurant Business license fee	$ 607	$ 312	$ 174
BURNABY	$3000 (1^st year) $2577 (renewal) $2250 (prorate)	no additional fee	$3000 (1^st year) $3000 (renewal) $2250 (prorate)	$3000 (1^st year) $2577 (renewal) $2250 (prorate)	$557 (1^st year) $252(renewal) $417.75(prorate)
NEW WEST prorated by the month (fee/12)	$2020	$252 with no entertainment $1010 with entertainment	$2020	$2020
RICHMOND	see below	$262	see below	see below
SURREY	$1500	$500* (Dining Lounge) $250* (Dining Room) *in addition to Restaurant fee	$3000	$1500	$500
VICTORIA	$280, plus $6 per seat to a maximum of $1050	$ 100 or $ 200 with a holding area	$280, plus $6 per seat to a maximum of $1050	$500	$280

ESTABLISHMENT TYPE	# OF EST's	LICENSE FEE	TOTAL REVENUE	TOTAL NUMBER OF SEATS	AVERAGE PER SEAT FEE
Class `A' Pub	53	$607	$32,171	9,871	$3.26/seat
Class `A' Lounge	113	$312	$35,256	33,660	$1.05/seat
Total Class `B'Dining Lounge/Room:	852	$296	$252,192	109,059	$2.31/seat
Total Class `B' Restaurant C-1:	844	$296	$249,824	106,924
0 to 50 seats	280	$296	$82,880	11,404	$7.27/seat
51 to 100 seats	305	$296	$90,280	23,493	$3.84/seat
101 to 150 seats	114	$296	$33,744	14,171	$2.38/seat
151 to 200 seats	62	$296	$18,352	10,983	$1.67/seat
201 and over	83	$296	$24,568	46,873	$0.52/seat
Total Class `B' Restaurant C-2:	8	$296	$2,368	2,135
0 to 50 seats	0	$296	$0	0
51 to 100 seats	2	$296	$592	185	$3.20/seat
101 to 150 seats	3	$296	$888	390	$2.28/seat
151 to 200 seats	0	$296	$0	0
201 and over	3	$296	$888	1,560	$0.57/seat
Class `C' Cabaret	36	$607	$21,852	7,800	$2.80/seat
Class `D' Neighbourhood Pub	15	$312	$4,680	1,084	$4.31/seat
GRAND TOTAL OF ALL LIQUOR LICENSES	1,069		$346,151	161,474	$2.14/seat