ADMINISTRATIVE REPORT

Date: September 26, 2002
Author/Local: A. Straka/6427

RTS No. 02921

CC File No. 113 / 1755

CS&B: October 10, 2002

TO:	Standing Committee on City Services and Budgets
FROM:	Chief License Inspector in consultation with the Director of Finance
SUBJECT:	Year 2003 Business License Fee Amendments

RECOMMENDATIONS

A. THAT with the exception of liveaboards, adult entertainment stores, financial institutions, late night dance events, secondhand dealer/pawnbrokers, vending machines and the charitable or non-profit categories listed in Appendix A, Council approve an across-the-board increase in business license fees of approximately 2.25% (when rounded) for Year 2003 as an inflationary adjustment reflecting the estimated growth in City costs, subject to any other fee increases approved by Council in two companion licensing reports dealing with vending machines and payment and terms of license fees;

B. THAT the license fee for Adult Entertainment Stores be increased from $116.00 per annum to $245.00 per annum;

C. THAT the license fee for Financial Institutions be increased from $95.00 per annum to $795.00 per annum and a new Financial Institution license category be defined and included with the corresponding fee in Schedule A of License By-Law No. 4450;

D. THAT license fees for Late Night Dance Events be increased by

approximately 7% (when rounded) for Year 2003 as an inflationary adjustment reflecting the growth in City costs over the past three years and a Late Night Dance Event license category with associated fees be included in Schedule A of License By-law No. 4450;

E. AND FURTHER THAT the Director of Legal Services be requested to prepare the necessary By-law amendments to the License By-Law to be effective January 1, 2003.

CITY MANAGER'S COMMENTS

The City Manager supports recommendations A through E and recommends that Council request staff to review the 2003 license revenue generated by the new financial institution, vending machine and bank machine fees and report back to Council as part of the annual fee report for 2004.

GENERAL MANAGER'S COMMENTS

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

COUNCIL 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 2003 business license fees. A 2.25% fee increase is proposed for all business license categories with the exception of adult entertainment stores, financial institutions, late night dance events, charitable or non-profit categories listed in Appendix A, secondhand dealers/pawnbrokers, liveaboards and vending machines. The first four categories are to be treated differently for reasons outlined in this report. License processing and fee changes for vending machines and payment and terms of licenses are addressed in separate companion reports. Reports addressing proposed license categories and fees for secondhand dealers/pawnbrokers and liveaboards will be presented to Council at a subsequent meeting.

DISCUSSION

1. Year 2003 Business License Fees

This report recommends that business license fees for year 2003 be increased by approximately 2.25 % (when rounded) for Year 2003 as an inflationary adjustment reflecting the estimated growth in City costs. This increase would apply to all fee categories with the exception of those related to charitable or non-profit work (Appendix A), adult entertainment stores, secondhand dealers/pawnbrokers, live-aboards, financial institutions, late night dance events and vending machines. The primary reason for the increase is to keep fees consistent with estimated 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 listed in Appendix A. As in previous years, no fee increase is recommended for these licenses.

2. Year 2003 Adult Entertainment Store License Fee

The current license fee charged for adult entertainment stores in Vancouver is no longer sufficient from a cost recovery perspective. In the recent past, a number of property use enforcement issues, including, but not limited to, inappropriate displays and illegal use of private viewing booths, have occurred at certain adult entertainment stores, requiring considerable staff time and attention.

Presently, the license fee for adult entertainment stores is $116.00 per year. It is recommended that this fee be increased to $240.00 (2002 fee) per year to match the current license fee for arcades, a similar type of use in terms of enforcement. The additional revenue would be used to cover increased inspection costs associated with these businesses.

3. Financial Institutions

It has become evident in the recent past that the current license fee charged for financial institutions (ie. banks, credit unions and trust companies) in the City of Vancouver is no longer appropriate. As can be seen in Appendix B, a comparison to other Lower Mainland municipalities indicates that Vancouver's license fee is substantially lower. In previous years, Councillors have also expressed concern with the low fee for financial institutions.

Therefore, staff recommend that the annual license fee for financial institutions be increased from $95.00 per annum to $795.00 per annum. This fee is the same as the bank license fee charged by the City of Surrey and is in the range of the fees charged by other municipalities surveyed for medium sized financial institutions with approximately 50 employees.

Finally, it is also recommended that a new Financial Institution license category be defined and included with the corresponding fee in Schedule A of License By-Law No. 4450.

4. Include the Late Night Dance Event license category in Schedule A of License By- Law No. 4450

Currently, there is a section in the License By-Law outlining provisions pertaining to the operation of late night dance events and corresponding fees based upon proposed patron capacity. However, the late night dance event license category and fees are not listed in "Schedule A" of the License By-Law. The omission of this category means that the annual inflationary fee increases applied directly to all fees listed in "Schedule A" have not been applied to late night dance event fees since licenses for this type of business were first issued in Year 2000.

Therefore, it is recommended that Section 19.2(10) of License By-Law No. 4450 which details the fees for late night dance events be deleted and the fees be represented in "Schedule A" under a new "Late Night Dance Event" license category. Furthermore, as the fees for this type of business have not been increased since 2000, it is recommended that an inflationary adjustment of 7% be applied to the existing fees to account for the growth in City cost over the past three years.

FINANCIAL IMPLICATIONS

The proposed inflation adjustment fee of 2.25% for 2003 business license fees (except those related to charitable or non-profit work (Appendix A), adult entertainment stores, secondhand dealers/pawnbrokers, liveaboards, financial institutions, late night dance events and vending machines) will be revenue neutral as it is expected that costs will increase by a similar amount. An additional approximately $100,000 will be collected under the new financial institution fee and allocated to temporary staff hired for license collection.

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 liveaboards, adult entertainment stores, late night dance events, financial institutions, secondhand dealers/pawnbrokers, vending machines and charitable or non-profit license categories) of 2.25% for year 2003 to recover estimated inflationary cost increases resulting in the growth of City expenses.

An increase from $116.00 to $245.00 is being proposed to the adult entertainment store license fee category to cover increased inspection costs. The license fee for financial institutions is to be increased from $95.00 per annum to $795.00 per annum to bring it closer in line with fees charged by other Lower Mainland municipalities.

The license fees for Late Night Dance Event permits is to be increased by approximately 7% (when rounded) for Year 2003 as an inflationary adjustment reflecting the growth in City costs over the past three years and a Late Night Dance Event license category with associated fees is to be included in Schedule A of License By-Law No. 4450;

License processing and fee changes for vending machines and payment and terms of licenses are addressed in two separate companion reports. Reports addressing proposed license categories and fees for secondhand dealers/pawnbrokers and liveaboards will be presented to Council at a subsequent meeting.

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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 License Fees for Banks in Lower Mainland Municipalities

Municipality	Year 2002 License Fee for Bank
Burnaby	First Year Fee: $426.00 Renewal Fee: $125.00
Richmond	# of Employees Fee 1-5 $103 6-10 $180 11-15 $263 16-25 $386 26-50 $556 51-100 $809 101-200 $1138 201-500 $1648 501-1000 $2482 1001 > $3000
New Westminster	# of Employees Fee 1-3 $135 4-10 $196 11-25 $372 26-50 $743 51-100 $1516 101 > $2060
Surrey	$795
Coquitlam	$1,400
District of North Vancouver	# of Employees Fee 1-25 $1,019 26-50 $1,441 51-100 $1,844 For each additional 10 employees over 100: $208 Maximum $3,300

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(c) 1998 City of Vancouver